Car Insurance Rates

7 Pricing Options to Look for When Comparing Car Insurance Rates

Drivers in all 50 states must carry sufficient automobile insurance coverage to be compliant with state laws. Insurance companies set premium amounts based on actual accident statistics and repair cost information from previous years. Classes of drivers are created to allow the insurance companies to predict the risk of loss for each group. An individual cannot be assigned a different annual premium for car insurance from premiums assigned to other people in the group. Certain pricing options are offered by each insurer to lower the cost of insurance for many drivers. When shopping for insurance, compare the following aspects of the policy coverage prior to signing on with a certain company.

  1. Liability Only: All 50 states require that drivers carry liability insurance coverage to pay for the damage to the property and wellbeing of others. Older cars might not be expensive enough to repair or replace to justify carrying a policy that has more coverage than the liability component will offer. Drivers who choose this option must be prepared to pay for repair or replacement of the vehicle out of pocket if damage occurs. Saving money on insurance should not cause a financial hardship following a claim.
  2. Coverage Components: The amount of coverage offered under the policy will be used to calculate the annual premium. Standard coverage amounts for the comprehensive and collision components of an auto insurance policy are set by the insurance company at the time the quote is offered. Some insurance companies choose to lower the initial amounts to make their rates look much lower than other insurers. Drivers must be aware of this tactic to avoid being surprised after the policy is purchased and a claim is filed.
  3. Payment Frequency: Most insurance companies offer a discount for drivers who pay their entire annual premium at the beginning of the coverage year. One payment is less expensive to process than 12 monthly payments. Some insurance companies offer quarterly and semi-annual payment options to reduce the overall number of payments made during the year. The savings will add up over the life of the auto insurance policy.
  4. Payment Method: While electronic payments are advertised as the most convenient option for the policyholder, the truth is that the insurance company receives their money on a predictable schedule, directly to their bank account without having to process paper payments. The discount offered for agreeing to make electronic payments is worth investigating.
  5. Driver Profile: Perceived risk of loss through driver error or carelessness will increase auto insurance rates and place a driver in a different insurance group. Credit scores are used to determine how responsible a driver is in other areas of life. This method increases the insurance costs for many drivers. The driving record and age of the driver are key factors that are used to assess the probability that an accident will occur. Mature and responsible drivers are rewarded through substantially lower premiums.
  6. Premium Discounts: Responsible behaviors behind the wheel are encouraged by insurance companies through their creative use of discounts. Good students are offered lower rates, which encourages young people to do well in school and become a responsible adult. Multi-policy and multi-car discounts are offered to encourage drivers to purchase more insurance from the same insurance company. Anti-theft devices and safety features will earn discounts because of the ways they reduce the risk of theft of the vehicle or injury to the occupants. Wise drivers seek every possible discount by asking questions of the insurance company prior to purchasing the policy.
  7. Policy Deductible: Policyholders are required to pay a portion of every claim, which is called the deductible. Some insurance companies require a certain deductible on the auto insurance policy to qualify for discounts on other policies. Drivers must be careful to set the auto insurance deductible at an appropriate level to prevent financial hardship after an accident. The amount of money agreed to in the deductible should be saved in a savings account. Another consideration for all drivers is the possibility of multiple concurrent losses, which would require that all policy deductibles be paid at one time.