Recently, CNBC reviewed a report by The Consumer Federation of America (CFA) which studied the factors that car insurers take into account in determining how much to charge an individual for insurance coverage. You will likely be surprised by the factors that are taken into consideration. The factors are so diverse, and often so seemingly unrelated to safe driving, that CNBC had this to say, “A new study shows auto insurers frequently charge good drivers higher premiums than those who recently caused an accident. And it appears from this research that the safe drivers who pay more are often lower income.” Since we at Women Drivers advocate that you take time each year and with each change of circumstances to review your car insurance policy and update it if appropriate, you will want to take these new findings into consideration when doing your research. Let’s start with the basics:
Change Your Policy When Your Circumstances Change – You May Need Less or More Coverage
- Are you now driving a shorter or longer distance to work than you did when your current policy was written? Or, do you drive your car strictly for personal use now when you were working in the past?
- Are there fewer people in your household now so fewer drivers? For example, has a teenager gone away to college?
- Have you gotten a divorce? You might lose the benefit of having multiple car insurance policies with one company but pick up benefits because your driving record is clean while your spouse’s is not.
- Another factor is the age of your car so if you now have the older car and he has the newer one, your rate could go down accordingly.
- Do you have passengers in your car who you want to protect or do you generally drive alone?
- Do you still live in the same place or have you moved to an area with heavier and more difficult driving conditions, heavier traffic or increase crime rates?
- Have you upgraded your car’s safety by adding equipment such as LED lights?
Compare Different Insurers and Take the Time to Find the Company That is Best for You
- While it would seem to go without saying, not all insurers charge the same amount for the same coverage. Moreover, not all insurers are created equal. Some may cost a little more but provide better, more efficient service with less hassle. It’s worth it to do your research.
- Also, what is “best” for one person, may not be “best” for another. Consider affordability, value of services and responsiveness and well as price. Prioritize according to your needs.
- We suggest you do a search of “sites to compare automobile insurers” to come up with many different online websites that will compare insurers for you.
- Your state’s insurance department website probably has a comparison chart that lists rates for your area for hypothetical customers. We strongly urge that you take advantage of this service. Find a link to your state’s insurance department at: National Association of Insurance Commissioners. For example, using that link for the Commonwealth of Pennsylvania we were led to several possible topics with links, including Why You Need Insurance, Types of Policies, How to Choose a Company and others. Clicking on Types of Policies we were able to discover what an insurance company in Pennsylvania will consider in quoting a premium amount. While it may not discriminate based on race, religion, nationality or ethnic group, age, sex, family size, occupation, place of residence or marital status, it may take into account the type and age of the vehicle, safety features, where the vehicle is garaged, the average number of miles driven in a year, the coverage and limits chosen for the policy and the driving history of the drivers, to name a few.
Consider the Safety Features of Your Vehicle and Make Sure They are Taken Into Account by Your Insurer Insurance companies will give consideration to safety features in your car when quoting a rate to you. Some of the features that they consider are these:
- Anti-lock brakes
- Whether your car is garaged
- Back-up rear view monitors, sensors and cameras
- Front and side, passenger and backseat airbags, particularly when they are designed to sense the size, weight, and seating position of each occupant.
- Day time lights – these help not only your vision but your visibility to other vehicles
- Keyless starters
- Window Sketching – this means that the VIN number is literally etched into the glass so it cannot be altered by thieves
- Stolen vehicle recovery systems that help police locate stolen vehicles
- Tire pressure monitoring systems which keep your car running more safely and for a longer time
- Anti-theft devices and built in alarms
- Wireless tracking devices that monitor driving behaviour – these are installed by the insurance company at your request and gauge mileage and speed
- Alcohol sensors – these will prevent the car from being driven by someone under the influence of alcohol
- LED lights
- Blind spot detection and lane departure warning systems, both relatively new developments, let you know when an object is in your blind spot and sense the speed and distance of oncoming vehicles.
Driver Discounts are Available
- Your gender – although varying by state, the average car insurance rate for women is around 9% lower than for men
- A safe driving record, for every year that you’ve had no accidents or tickets;
- Low mileage
- The higher your credit score the lower your premium
- Retiree, generally for drivers aged 55 or older
- Women as head of the household
- College student who lives 100 miles away from home that does not have a car on campus
- Taking adult and student driver education courses
- Holding more than one car insurance policy with the same insurance company or bundling your auto, life and home insurance with the same insurer
- Having a larger up-front deductible
- According to the CNBC report insurers also consider, whether they should or not, age, education, occupation or in some cases, your credit score. Believe it or not, accountants and teachers are considered to be in “low risk occupations” and pay less than other professionals. So whether those criteria are obvious in the calculation or not, be aware that they may be unspoken factors taken into consideration by the insurance company.
Take a look at your car insurance policy at least annually and take nothing for granted. You may find that an hour of work can save you hundreds of dollars. It’s worth your time.