Did you know that there are twelve things that you do no know about car insurance? I took a look at these twelve things as suggested by Insure.com and realized that not only are these twelve things I did not know: they’re actually 12 things that could cost me money. In fact, these 12 things are probably draining my wallet–and your wallet, too!
Insure.com, Inc. (NASDAQ:NSUR) has revealed 12 factors that you did not know about your car insurance policy that may be costing you money.
1. You WILL pay for your friend’s bad driving skills
If you let your friend borrow your car and that friend crashes your car you will have to file the claim with your insurance company. Furthermore, you’ll have to pay the deductible. Even though you might get your friend to reimburse you for the deductible, your insurance rates will go up.
2. Stuff that’s In your Car Is Not Covered
Remember the Seinfeld episode where Elaine bought some expensive golf clubs at an auction for Mr. Peterman and she left them in Jerry Seinfeld’s car? And when Jerry had his car worked on by the brother from “Who Loves Raymond” the mechanic started throwing the golf clubs out of the car? Well, guess what? Stuff in your car, even stolen or damaged items like CDs, your iPod, or your cell phone is not covered by your car insurance.
3. You may be entitled to payment for sales tax and registration fees for a new car
If you wreck your car the car insurance company is required to pay sales tax on total loss settlement. Some states require it and some require that sales tax only be paid if you purchase a replace car within a certain time period. In any case, make a request for a sales tax reimbursement no matter where you live.
4. You may be entitled to a diminished value claim in some states
Diminished value means that even though repairs were done to your car after an accident, it’s always going to be worth less: because your car was in an accident. Most states all car insurance companies to use language in your insurance policy that officially “disallows diminished value claims”.
According to Insure.com, there is one way that you may be entitled to a diminished value claim: “If someone else hits you and you make a damage claim on that person’s insurance. That’s called a third-party claim and it’s possible to get diminished value damages as a third party.”
5. Stack Your Insurance Coverage and You’ll Save
If you’re able to, you should “stack” your insurance coverage. Stacking your uninsured/underinsured motorist coverage means that you can collect payment more than once within the same auto policy or across two auto policies. There are two different ways you could stack your insurance coverage:
1. If you own more than one car, you can collect the limit of your uninsured/underinsured policy to cover full payment for damages.
2. If you have more than one car insurance policy with uninsured/underinsured coverage, you can make a claim under each policy until all your damages are recovered.
In any case, though, make sure you check your individual insurance policy to see if stacking is allowed.
6. Making a Claim Will Increase your Car Insurance Premium
If you make a claim on your car insurance policy, there’s a good chance that your rates will go up. Whether or not your premium goes up and how much it goes up depends on many difference factors. For example, if you make a claim on your insurance and you birthday falls before the time you have to renew your policy, your age might bump you up to another higher risk category. Combine that with your recent insurance claim and BINGO! Your car insurance premium goes up.
Some insurance companies like Allstate have “accident forgiveness” policies/guidelines. When you buy or renew your auto policy, make sure you ask how to qualify for accident forgiveness and if the insurance company even offers it to you.
7. Don’t drive a lot? Make Sure your Insurance Company Knows
If you do not drive a lot or you recently moved closer to your job (or got a new job that is closer to your house than your old job) you may not drive as much as you used to. Make sure your car insurance company knows how much you drive (how many miles per year your drive). That could save you some money on your insurance premiums.
There’s also such a thing as “usage based’ policies that allow you to buy car insurance based on how much you actually drive. If you don’t drive much, according to Insure.com, “this could save you up to 60 percent on your insurance. Progressive is the first insurance company to offer “pay-as-you-drive” policies through its MyRate program. Your mileage will be measured by a wireless device installed in a car port.”
If your car insurance company does not offer usage-based coverage, ask them about a “low-mileage discount”.
8. Your Credit Score Effects your Premium
Car insurance companies think that your credit score is an indication of whether or not you are going to make a claim on your car insurance. They also think that people with low credit scores tend to be bad drivers. Certain states actually allow car insurance companies to base your rate on your credit score and your credit history. Move to another state where this isn’t allowed or work on getting your credit score up.
Talk to a credit repair service about negative items on your credit and other things that will get your credit score higher.
9. Switch Insurance Companies? Make Sure you Cancel your Coverage
You can cancel your insurance coverage at any time by notifying your insurance company in writing. Tell them the date that you are terminating. If you intend to switch insurance companies make sure that you time it right; and tell your old insurance company that you’re leaving them.
Do NOT assume that if you decide to terminate your car insurance policy at the end of the coverage period, you can ignore your insurance bill. Insurance companies don’t see it that way. The insurance company will send you another bill for the next payment. When you don’t pay it, the old insurance company can cancel you for nonpayment: and that goes on your credit history.
10. Wait to Add your Teenager Until they Get their License
Most car insurance companies do not require that you add your teenager to your insurance policy until they actually have their driver’s license. There may be exceptions to this, especially if you are in what they call a “high-risk insurance pool”. In some cases you might have to tell your insurance company to add your teenager to your insurance policy when your kid gets their permit.
11. Paying in Installment Increases Your Bill
If you choose to pay your car insurance premium in “installments”, check to see how much more it’s going to cost you. According to Insure.com, “fees are usually charged when you divide your annual premium payment into installments rather than pay for a year of coverage all at once. It can be as little as a few dollars per payment, but the more you break it down, the more it adds up. When you apply for the policy, ask what the fees are for paying in installments. If you can, pay your annual premium all at once.”
12. What Kind of Car you Drive Effects How Much You’ll Pay
You will pay a different amount for car insurance depending on the car you drive. And every car is different. Car insurance companies have a rating system. for every make and model, and those are based on “Vehicle Series Ratings” (VSRs) received from the Insurance Services Office (ISO). It’s your car’s rating that say how much it’s going to cost to insure. If your car is more likely to get stolen or more costly to repair then you will pay more for car insurance.
Especially when shopping for a car, contact your insurance company before you actually buy it: ask them how much it will cost for insurance for the different cars that you’re thinking of buying.