Business & Finance Tips

Auto insurance quotes are an essential tool for effective comparison shopping when it comes to reducing insurance costs . However, without knowing exactly what affects auto insurance quotes you are bound to waste a lot of time on just learning how they tend to change depending on different data you enter in the quote form. In order to save yourself from such a perspective it’s much easier to learn the main factors that will affect your auto insurance quotes in the first place. After all there aren’t that numerous and quote easy to understand:

Amount of coverage
The more coverage you include to your policy the higher will be your auto insurance quotes – that’s a fact. This relation is quite simple to grasp since it’s direct and pretty much obvious. If you set your coverage limit low the premiums will be lower since the insurance company won’t be forced to pay a lot. And if you want them to pay more you will have to pay them more first. Keep in mind however that there are minimum limits set for third party liability in each state. So you won’t be able to less than indicated by laws so there will always be a certain minimum level of auto insurance quotes in your state.

Types of coverage included
Besides the amount of coverage included to the policy it also matters what types of coverage you purchase. There are many optional coverage types besides the mandatory third party liability. The most popular are collision and comprehensive coverage that deal with car damage of most types. Uninsured motorist coverage can help in a situation when you get hit by a driver without any insurance coverage. Keep in mind however that the more additional options you include the more expensive your policy becomes. So consider your needs first and then start including them in auto insurance quotes.

Car type
The type of car you want to insure also plays a very important role in determining auto insurance quotes. Sports cars, performance vehicles, luxury autos, SUVs and other types of vehicles that are expensive to repair, cause a lot of damage, have higher risk of an accident or get stolen more often will always hive you higher rates. Of course, it also depends on a particular car make and model, however the rule of thumb is that if you want lower auto insurance quotes you should stick to middle class cars and family vehicles because they usually feature the best best balance of risk and insurance cost.

Driver data
There are several factors that determine how good of a driver you are. First, your driving record indicates all your traffic violations and other data that will help the insurance company assess how it is likely for you to end up in an accident and file a claim. Your age and sex also play a role when determining auto insurance quotes since insurance companies have different demographic groups according to these two factors and depending on which group you belong to your rates can be lower or higher.

You may want to believe insurers are hot competitors and never talk to each other. Except you would be wrong. There’s a steady flow of information into two central databases. The bigger and more important is called CLUE (Comprehensive Loss Underwriting Exchange) with the smaller competitor called A-PLUS (the Automated Property Loss Underwriting System run by Insurance Services Office Inc) which collect a broad range of information about you and how you relate to insurance companies. This is not just details of the claims you make. A range of factors are combined to produce an insurance score. This parallels the work done to create a credit score, and both scores are used by insurers to create a risk profile for you and set insurance rates. So, for example, both organizations record when you ask for clarification of your cover even though this does not result in a claim. It even records whether you are late in paying any of the premium installments. There’s also a positive effort made to collect public information about you, e.g. whether you are involved in litigation, have judgments against you, are subject to foreclosure orders, and so on. If any of this information is incorrect, it could mean you are only offered cover at high rates or you are refused cover. Because of this, many states have passed laws to give you basic rights. You will usually find your local rights set out on the site run by your state’s Insurance Commissioner.

The CLUE reports are sold by LexisNexis and provide information about all claims relating to your home or your vehicle. The key problem is that, if the score is very low, it could cause your home address to be blacklisted. While this might be an accurate assessment of your risk profile, it would do a significant injustice to anyone later buying your home. As an aside, all the information is stored for not less than five years so insurers use your history of claims to assess the risk you will file another.

The Gramm-Leach-Bliley Act is supposed to help you by requiring insurers to tell you when they share your information with anyone else, except CLUE reports are excluded from the Act. This brings us to the Fair Credit Reporting Act (FCRA) which does apply equally to credit and CLUE scoring. You have the right to ask LexisNexis and ISO Inc for one free copy of your insurance report every year. If you find any inaccuracies, you are entitled to have them corrected. If you feel the response of either LexisNexis or ISO Inc is unsatisfactory, you can insist a note is included in your file explaining your views. Unfortunately, you have no right to opt out of this sharing arrangement. Your insurers are entitled to continue sharing this information.

To protect yourself from higher homeowners insurance quotes, you should routinely ask for a copy of your CLUE reports once a year. You also have a right to a free report if the insurer makes an “adverse decision” based on a CLUE report. The FCRA is there to protect your interests and, since homeowners insurance rates can rise rapidly and without explanation, you should always find out what your insurance score is.

In the days when life was simple and there were few risks, the insurance industry was profitable and able to offer a reasonably good service to its customers. But now the world is more complicated, there are real challenges for the insurers. If you look at the market for insuring vehicles, you can see the extent of the change. Back in the 1950′s, there were not that many people on the roads but, thanks to the arrival of the Boomers, the number of drivers increased dramatically and car ownership expanded. Millions of new vehicles came on to the roads. With all the extra vehicles, the chances of being involved in an accident increased. As more people had access to credit, they were buying new vehicles which were more expensive to repair or replace. The cost of labor to do all the repairs was also rising fast. Put all this together and you have a recipe for rapidly rising premium rates.

Apart from accepting a higher deductible, the main way of earning a discount with an insurer has always been to give the insurer more business. So, if your family owns three vehicles, you insure all three with the same company. If you also insure your home, want to cover your health costs or insure your life, a bundle has always been rewarded with sometimes quite substantial savings. But, here comes the problem. While insuring vehicles has consistently remained profitable, homeowners insurance has become increasingly challenging. Even though the US is one of the countries refusing any action on climate change in the current round of talks in Durban, the US insurance industry has recognized a major change in weather patterns over the last twenty years. That’s why you will now find it very difficult to get flooding coverage if you live anywhere near where the water level is known to rise, why hurricane damage is being defined to make it more difficult for you to claim, and why sinkhole, mudslide and earthquake coverage is getting more difficult in the areas at risk, i.e. the land drying out or being affected by more than the usual amount of rain.

In the past, companies would cross-subsidize, treating their profit on vehicle insurance as support for the other divisions. That’s no longer an option. The premium rates have been forced to rise faster than inflation because of the increasing levels of fraud and the rising costs of repairs. There comes a point when the other insurance divisions of home, health and life have to become more profitable. Allstate’s answer is to make it a condition of buying homeowners insurance that owners also buy vehicle insurance. The regulator in North Carolina has just allowed Allstate to drop 45,000 existing policyholders who refused to transfer their vehicle insurance. The same is happening in Arkansas. In most states, it’s lawful for insurers to give just 30 days notice of its intention not to renew. So here’s the big question for you. How will you react if you get a letter from an insurer threatening not to renew your homeowners policy unless you bundle cover together? Will this trigger a rush to other insurers who offer unconditional auto insurance quotes? Ironically, it may force you to discover other companies actually have lower car insurance rates.

In the good old days before there were organized police forces, it was left to a few individuals to enforce the law. When they proved inadequate, there were feuds and vigilante action by the victims. Obviously, this fighting disturbed everyone, so states slowly got into the law enforcement business, recruiting and training people to keep the peace and identify criminals. Today, we rely on state and federal policing agencies, supported by CSI and other forensic agencies. But there’s been a fundamental and unchanging truth from the early days. More people avoid detection and profit from their crimes than are caught. That’s why the courts are forced to use deterrent sentencing. What judges are saying to potential criminals is there will be long periods of imprisonment if they are caught. The irony is that, if people were sure they would be caught, lighter punishments would be sufficient. It would cost us less to keep all these people in jail. Our society would be safer.

So why is it so difficult to detect fraud? Surely dishonesty should be obvious to an experienced insurance company? Well, sadly, detecting which claims are fraudulent is not easy. Let’s take a simple question. Both drivers involved admit there was an accident. One driver submits a medical report showing neck injuries. On what basis should the insurer challenge the medical report? Well, detailed investigation might show this particular clinic advertises for people to report accidents to them. Or this clinic may consistently be receiving business through referral networks. Either way, the clinic is found to specialize in the treatment of traffic accident injuries. This could make them highly skillful and deserving professional respect, or it could suggest the clinic exaggerates the injuries for its own profit when it bills for treatment, paying commission to referral agents and passing only some of the benefit on to “patients” who get settlements for their injuries. Is an insurer supposed to get a second opinion from an independent doctor on every patient from suspect clinics? Or suppose someone wants to get out of an auto loan so stages a small accident and pays a repair shop to set off the air bags and certify more serious damage so the vehicle will be totaled. If this is a one-off event and there’s no pattern to suggest this repair shop is dishonest, why should this particular claim set off alarm bells?

There’s no doubt the level of fraud has been at epidemic levels for a decade and more. Several billion dollars a year are being sucked out of insurance companies by criminals. In turn, all these losses are passed on to us in higher car insurance rates. This makes insurance fraud a political issue, albeit mainly in the no-fault states where the levels of dishonesty seem to be higher. Although there’s a National Insurance Crime Bureau established with the task of coordinating the fight against fraud, there’s little sign of success. It will take a major cultural change to deter people from this type of crime when the chances of being caught are so low. Even when staffing levels are improved by the insurers and the law enforcement agencies, there’s little observed change in behavior. The fraudulent claims keep coming in and the auto insurance quotes keep rising.

When it comes to getting auto insurance quotes for a teen driver most people will definitely be displeased by the fact that cheap and teen auto insurance quotes are considered as antonyms in the car insurance industry. Drivers younger than 25 years old tend to get the highest auto insurance quotes possible and often end up paying twice the amount a typical 40-year-old would pay for his car. Why is that so? And what can be done to give a young driver an opportunity to get affordable auto insurance that wouldn’t be a burden to his or his parents’ budget?

First of all, let’s look at the causes behind such an apparent injustice that makes young drivers pay the highest insurance rates possible. Car insurance providers base the calculation of their auto insurance quotes on a precise assessment of how it is likely for the driver to end up in an accident and file a claim. From this point of view teen drivers are the most risky group because they tend to produce more claims than any other age group and have the most serious accidents because of their risk taking behavior. The statistics prove it and show that teens produce more accidents with more damage in all states. That’s why insurance companies give teens the highest rates possible. Of course, not all teens are bad drivers. But since there are more inexperienced car owners that produce crashes in this group everyone making part of it ends up paying more for insuring their vehicle.

Now, what can you do to avoid having higher auto insurance quotes when you are a teen? There are several strategies that can help you reduce your insurance costs and you can actually combine them in order to raise the chance of getting an affordable policy. Consider the following options:

Ask your parents to include you into their policy

Being a written driver with your parents, who usually have lower premiums will reduce your insurance rates as well. Sure it will raise their premiums a bit but it will still be more affordable than having separate policies. The downside of this option is that you won’t be able to accumulate your own no-claims discount while being a written driver. And if you are a good driver with no insurance claims that sure is disappointing.

Be a good student at school or college

If you have the potential of getting good grades at school or college now you have another reason for doing it. Most insurance providers offer substantial discounts to students with an average of B and higher. You will be required to provide a copy of your grade report periodically but this paperwork will give you lower auto insurance quotes, so it’s really worth it.

Shop around

Shopping around is the easiest thing you can do with all those sites letting you compare auto insurance quotes online. It takes only a couple of minutes and you will get all the information you need to buy the right policy from the right provider. Just make sure you know exactly what coverage types you want to get before shopping around. Define your needs first and then get busy comparing auto insurance quotes.