As an insurance agent I often asked the question: “Am I getting the best rate possible?” This is a good question, but how can we know for sure?
To answer these question let’s compare getting the best auto insurance rate possible with growing a plant. I know it doesn’t make sense now, but please bear with me. In order to get the most beautiful, fruitful plant, there should be the right combination of factors met. Sun, soil, water, and the right weather conditions. Take one of these factors away and the plant may not grow, or won’t grow as strong and beautiful to meet its potential. The same concept applies to insurance. With the right combination of factors your rate can be as great as a beautiful plant. So to understand how to get the best rate, we first need to understand the factors that go into forming an insurance rate.
How much you pay for insurance can be a reflection of decisions you make, the way you drive, how responsible you are, and your priorities in life. I want to change the popular saying “Everything is in our hands” to “Our insurance rate is in our hands” and focus on what we can do to get the best rate possible for our car insurance.
I don’t want to hide the fact that the insurance companies are companies for profit and they structure their prices to make money. Mainly I want to concentrate on what is in our control. The decisions we make can make us or break us in terms of paying for car insurance.
I would like to teach you what you can do to get the best auto insurance premium possible. Please note that not all of the tips I will provide in this article are going to be an easy fix. Some of them will require some time before you will get the benefits.
Some of the main factors that affect your auto insurance rates are:
- Driving history
- Age of all drivers on the policy
- Have you had continuous insurance without any lapses
- Financial responsibility
- Whether you drink alcohol or not
- Marital status
- The cars you drive
- The coverage you choose
- Home ownership and packaging your policies
- Insurance carrier you are with
- Driving History
This one is pretty simple – the cleaner your driving record is the better your price will be.
The amount of tickets and accidents you have will determine if you can be written through a standard or preferred company, and that predetermines the rate tier you are in.
Any at-fault accidents you filed in the past 3 years will significantly affect your rate. If you are shopping for insurance, a carrier that you are getting a quote with will look at an accident as a red flag and charge for them. If you are currently with a carrier and you file a claim, the carrier might surcharge you by raising your rate. Depending on a carrier and amount paid for the claim there is a possibility they might not charge you. But the amount of the surcharge will be lower with your current company so it may be the best strategy to stay where you are.
Having a “lead foot” and getting a lot of speeding tickets most certainly will reflect on your driving record and affect your rate. Depending on the company and age of drivers on your policy, your insurance company might check your Motor Vehicle Report known as MVR, as often as every renewal. Minor violations like speeding tickets, running a red light etc. stay on your record for 3 years. Major violations such as DUI, inattentive driving etc. stay for 5 years.
Tip 1: Try not to get any tickets – slow down, pay more attention. Talk to members of your household and tell them how important to be more careful on the road.
Tip 2: When you are close to your driving record being clean, ask your agent to review your policy with you. You could ask if it is possible reshop your policy with a different carrier. As an insurance agent, I like to relook at the rates of my clients with different companies when tickets or accidents drop off the record. It usually opens the doors to preferred carriers we couldn’t get to before. If you would like us to give you a quote, you can fill out a form here or call us at 801-999-8346.
- Driving Age:
If you are 25 and older you are in the good position. But what if you have young drivers on your policy that just got their driver’s license? Well, it probably will cost you some money. For example: adding a 16 year old male driver to your policy can often double the rate you are paying, and in some cases even triple it.
Until time machines are invented there is nothing you can do to accelerate the pace your kids are growing. But you can make the right choices on what cars they drive, and what coverage is needed. Young drivers combined with an expensive car can cost a fortune for you to insure.
- Continuous insurance
No prior insurance, or a lapse in coverage, will most definitely affect your rate. In fact you wouldn’t be able to be written with preferred carrier or preferred program if you don’t have continuous insurance for the last 6 months. Even one day without insurance can be critical to be eligible for some insurance companies.
Tip 3: Make sure you always have insurance. If you are going to be without a vehicle temporarily you could ask your agent if there is a possibility to do comprehensive coverage only. If you are in the position where you didn’t have continuous auto insurance, get insurance policy as soon as possible. Then wait 6 months and then ask your agents to relook at your policy and see if you could be switched to a preferred carrier or program.
- Financial responsibility
Insurance companies want to know that you are responsible, you take care of your property, pay your bills, and do everything you can to be financially stable. The way carriers can find out about your financial background is by checking your insurance score. Your insurance score is very similar to your credit score, but used only by insurance companies. In the future blog posts we will explain the difference between your credit score and your insurance score. But for right now it is sufficient to understand that the better your insurance score is, the better your auto rate will be. When an insurance company checks your financial responsibility it doesn’t negatively affect your credit score. http://www.experian.com/ask-experian/20071128-insurance-inquires-do-not-affect-credit-scores.html
Tip 4: Always work on improving your credit score. To find ways on how to increase your score you can read a good article by Experian here. http://www.experian.com/credit-education/improve-credit-score.html
- Whether you drink alcohol or not
If you completely abstain from alcohol you might get a discount from your insurance company.
In our agency we carry one of the best insurance companies in Utah – Bear River Mutual. Their rates are very competitive and often beat any other insurance company in Utah. How can they do it? They have a strict guideline that an auto policy can only be written only for those individuals that do not consume alcohol and illegal drugs in any amounts or frequency. By being selective and not accepting drivers that drink, Bear River is able to lower the risk of accidents arising from consumption of alcohol. Therefore they can offer lower rates to their policyholders.
By choosing not to consume alcohol or illegal drugs, you potentially choose a better auto insurance rate for you.
- Marital status
A lot of insurance companies give good discounts to people who are married. Marriage discount can vary from 5% to 30%. There are even some companies that won’t write a policy for someone younger than 25 unless they are married.
In the beginning of my career as an insurance agent, I did a quote for a young single man. After shopping around different companies, I found a very good rate for him. While presenting the quote to him over the phone I realized I made a mistake and rated him as if he were married. When I told him that I made the mistake he was a little bit sad that he wasn’t able to get the price I had initially quoted. When I told him that all he needs to do is get married and he will be eligible for it he replied to me “Is this a marriage proposal”.
Tip 5: If you like it, then put a ring on it. Married couples get better rates.
- The cars you drive
Mercedes Benz or Honda Accord? Porsche or Toyota Corolla?
Think about what you are buying. You will make the payments not only for the car, but also for the car insurance. Sometimes the car payments are cheaper than the auto insurance is!
Tip 6: Be smart and check with your insurance agent. Find out how much your auto insurance will cost before you buy.
- Coverage needed
Full coverage or Liability only? It depends on a lot of factors and is directly tied with your vehicle choice.
If you choose to buy a new car and finance it, your financial company will require full coverage.
If you are satisfied with an older vehicle that isn’t worth a lot, liability only might be a good option for you.
Tip 7: Check the value of your vehicles and see if it is time to switch the coverage to liability only to save some money. You can check the value at Kelley Blue Book. http://www.kbb.com
- Homeownership and packaging your policies
If you own a home, you can get a better rate for your car insurance.
You might ask why? Partly because in the insurance company’s eyes, you are more responsible if you own a home.
One of the best ways to get the best rate on your car insurance is to package your auto policy with your homeowners policy, which means to insure your home and auto with the same carrier.
Tip 8: If you own a home and your home and auto policies are not with the same carrier, try to combine them and see if your overall rate is cheaper with one carrier. If you decide to keep your policies separate, make sure your auto insurance company knows that you are a homeowner.
If you don’t own a home, see if you can get a renter’s policy with the same carrier. Very often, insurance companies give a package discount that is greater than the premium of the renter’s policy – you can get two policies for the cost of one.
- The insurance company you are with
Different companies have different rates. Even though the insurance company’s rate have to be approved by the state insurance commissioner https://insurance.utah.gov/ the insurance companies have a way to set their own base rates. Depending on how much insurance companies spend on advertising, how many claims they had to pay out and a lot of other factors some companies can have better prices than others. It is always smart to shop around and to make sure you are getting the best price.
There are preferred carriers, standard carriers, and carriers that offer both preferred and standard. What if you are written with a standard carrier and qualify to be with preferred? It is important to check because the quote could be substantially different.
Tip 9: Ask your agent to shop your auto insurance to see if you are still getting the best rate possible.
If you decide to stay with your current carrier make sure all of the possible discounts are applied.
Creating the right condition for yourself to get the best insurance rate possible may not be as easy as growing a plant. But it is definitely possible, and can bring fruits in the future in the form of saving money.
Both as a team of insurance agents and as husband and wife we understand how important it is to save money for your family. That is why we are determined to find the best quote for you. We can review the current situation with you and advise you on what can be done to improve your rate.
Tip 10: Call Jeremy and Dasha Epperson at 801-999-8346 or fill out the online form to get an auto insurance quote from multiple carriers.
