In today’s post I’d like to cover a few items that are related to saving money on your Automotive Insurance, or to put it another way some of the factors that go into premium calculation.
Some of these things we can control -like our credit and driving history and others we have less input in like our zip codes, type of car, miles driven and even sex and marital status.
Just last week I had two clients with virtually identical rates (one at $950 and the other at just over $1,000) however the married couple with two new vehicles paid almost the same as a single woman with 1 car.
You may be asking yourself ‘How can that be?’.
The two biggest factors in these examples were Driving History and Credit.
Couple A had impeccable credit and a clean driving history with no accidents or claims in the past 5 years. They both drove new model SUVs and had low yearly mileage.
Customer B, the single lady, had 1 ticket and another accident with a claim in the past 3 years and admittedly her credit was not the greatest. She paid almost as much in premium for her 10 year old compact car as did the married couple with their late model SUV’s.
The point is, in the risk profiles generated by Insurance Company Actuaries, factors such as poor credit and prior accidents and claim events indicate a greater likelihood of future claims, thus the higher premium is charged to those that fit into such a profile.
Accidents happen and for most of us, our credit will go up and down during our lifetimes.
Doing our best to maintain high credit ratings and using ‘best practices’ when driving such as leaving early so as not to speed and be in a rush, not texting or using a hand held cell phone, and being an active participant behind the wheel will not only save you from misfortune, but add to your bottom line via lowered insurance premiums.
The other factors such as where we live, whether to remain single or married, and what vehicles we drive are somewhat less controllable.
It all boils down to Risk.
Certain zip codes might have a higher auto theft rate, or more uninsured motorists, therefore the rates would be higher (think Rural -low rates- vs. Urban -typically higher rates).
Sports cars, or vehicles that are high on the national stolen vehicle list would rate higher than a typical 4 door sedan.
Married couples get a lower rate as they are thought to be in a lower risk category than single folks. Youthful drivers are rated higher than middle aged automobile operators, as I think we can all attest to the exuberance and lack of experience that often accompanies being young (Just ask my mom and dad about my umm humm ‘noteworthy’ driving record when I was in my teens).
Bottom line is this- do what you can to stay out of trouble on the roads by being mindful when driving. Do your level best to maintain the best credit that you can and you will be rewarded with lowered Auto Insurance Premiums.
The marriage, age and where you live factors, well I will leave those up to you to sort out…
Until next time, I remain-
Keith Royle – the Florida Insurance Guy