Simple Debt-Free Finance

A Simple Approach to Getting Out of Debt & Into Wealth

6 Things to Know About Car Insurance.

Posted on | October 10, 2009 |

1. It’s not as simply as it seems.

Your premium is the result of a fairly complicated formula, and in some cases different formulas are used by different companies and locations. Some common factors that influence your premium include:

  • The age of the primary driver
  • Driving record
  • Type of car being insured
  • Location
  • Average driving distance

…to name a few. Basically, if you park or keep your car in a location with a high crime rate or drive your car more than average, you will probably pay a little more because you’re seen as riskier to insure.

Some insurers also use your Credit Based Insurance Score (CBIS), which factors in things like your credit history - yet another reason to improve your credit score!

Also note that rates on new model cars are based in part on the MSRP, since they lack the historical data of used cars and average accident occurrence and repair costs.

2. Vanity will cost you.

Whether you’re experiencing a mid-life crisis, or just want to look like you are, that sports car is going to cost you more to insure. A recent list of Insure.com’s priciest cars to insure for 2009 lists the usually suspects at the top: BMW M6, Dodge Viper and the Nissan GT-R. At the bottom of the list are the family cars - no one steals the family minivan, and it’s hard to qualify for nascar with one.

Another factor is the average cost of repair. At the top of the low cost of repair list for 2009 were Kia Sportage,Hyundai Santa Fe and Hyundai Entourage.

3. Remember: safety first!

Having two or more accidents will drive up the cost of our premium, and so will traffic and speeding tickets. In some states, these count as points against your license. Get too many points and you lose your license. But you can be far from losing your license and still have enough points to tack on another 30-50% to the cost of your premium.

The lesson here is clear - keep your nose clean. Avoid reckless driving, tickets and DUI/DWI’s.

4. You don’t need everything.

If you have enough of an emergency fund to be able to pay for car repairs out of pocket, or if your car is older than five years and the loan is paid off then you can save a bundle by canceling the collision and comprehensive coverage. If it’s not paid off, but you can afford most repair costs, then consider raising the deductible.

5. Don’t forget the discounts.

Common discounts include:

  • Multi-policy discount (same insurer for auto and home owner’s or renter’s)
  • Taking a defensive driving course
  • Driving a car with certain safety and security features.
  • Low-mileage discount if you drive less than 10,000 miles a year.

It never hurts to ask the agent if there are other discounts to be had - every percent helps.

6. Shop around.

You’re likely going to spend close to $1,000 or more on auto insurance, so it pays to shop around. Contact a couple of local insurance agents and get auto insurance quotes online from Insurance.com and Esurance.com. Just be sure to compare the same coverage. It won’t mean much if the quotes from two insurers differ by $100/month, but one is with a $500 deductible and the other is $1,000.

Bookmark and Share
Related Posts Related Websites
Category: Insurance
Tags: > > >

Comments

3 Responses to “6 Things to Know About Car Insurance.”

  1. 6 Things to Know About Car Insurance. | Talking Insurance
    October 10th, 2009 @ 4:03 pm

    [...] How Decrease Your Auto Insurance Premium by 40% or More. Life Insurance : How much do I need? 12 Costly Necessities That Aren’t See the rest here: 6 Things to Know About Car Insurance. [...]

  2. Debt Free Dude
    October 11th, 2009 @ 9:47 pm

    Another thing to keep in mind is that the cheapest rate may not be the best overall. Having a company where you can actually walk in and talk to someone can be pretty valuable. Also there are often some very big discounts for combining your home insurance and car insurance all from the same company.

  3. Joe
    October 12th, 2009 @ 9:54 pm

    Debt Free Dude,

    Excellent point about the having a company you can walk into. I had progressive for a long time, and eventually dropped them because I could never actually meet with a rep. This was before they opened offices, when they were just an online and phone based company. I had to drop them because they would send me cancellation notices before they sent the bill! I never actually had my insurance
    canceled, but it became such a hassle after the 4th time they did it that I just moved on…

Leave a Reply





  • Search

  • Get Updates

    Subscribe in NewsGator Online
    Add to Technorati Favorites

  • Recent Comments

  • Tags

  • Contact

    If comments aren't enough, feel free to contact me at:

  • Frugal Hackers badgeMoney Hackers Network
    RSSMountain On our way to 1,000,000 rss feeds - millionrss.com Blog directory
    Investing Blog Directory RSS Search Blogged.com hihera.com

  • Blog Catalog Visitors

  • Disclaimer

    The information and opinions provided on this site do not constitute professional advice. This blog is intended to provide general information only about the author's own personal financial journey. While all information shared here is believed to be accurate, the owner/operator of this website specifically disclaims all warranties expressed, implied or statutory, regarding the accuracy, timeliness, and/or completeness of the information contained herein. You are advised to discuss your specific requirements with an independent financial adviser. All posts are © 2008-2011, Simple Debt Free Finance.

  • Unique visits since 2008:

  • ss_blog_claim=f34d742cbb91cfd8bb6b4f0e010113be ss_blog_claim=f34d742cbb91cfd8bb6b4f0e010113be

  • Useful Links: