What Auto Insurance Companies Do Not Want You to Know
Auto insurance, like health insurance, can be a hard-to-navigate pool of difficult lexicons, industry-only jargon and rates that rise and fall like the stock market. Fortunately, you can get behind the wheel of your own policy and cruise in comfort by learning the money-saving secrets the insurance companies do not want you to know.
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Open Contracts
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Even if you pre-paid your auto insurance premiums, your policy is not a binding contract. If you choose to change auto insurance carriers, your original insurer will send you a pro-rated refund check for the months that you are no longer insured. Despite popular belief, there are no "early termination fees," but you may have a lot of paperwork to go through when you switch to a new company.
Insurance Risk Scores
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Like a credit score, insurance risk scores are checked by your auto insurance company when you call for a rate quote. Knowing your credit score can save you a lot of trouble with high-cost premiums. The insurance risk score, which is for the insurance industry's eyes alone and not available to consumers, is based on your current credit, including how often you open new accounts and your payment history. If your credit score is not stellar, only sign with an insurer that does not look at past credit history when assigning a rate and policy. If you do have excellent credit, make this known during your quote estimation.
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Accident Forgiveness
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Many insurance companies, according to the website MoneyCentralMSN.com, have what is known as a "forgive the first accident" policy, which prevents a premium increase if the policy holder caused an accident. If your driving and accident record is clean but you want to prevent the 40 percent premium increase that occurs post accident, only sign with an insurer who offers this protection. This is especially true if you have a teen driver on your insurance, as teens have the highest risk of at-fault accidents.
Vehicle Worth
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You may think your vehicle is worth the Kelley Blue Book value in the eyes of the auto insurance industry, but if insurers paid this amount for every totaled car, they would be out of business. However, if you disagree with your vehicle's worth when you get that claim check, there are several ways to regain the difference. Keep vigilant records of your vehicle's routine maintenance, such as oil changes and tune-ups, which can be presented to the auto insurer to show that the vehicle was in good condition when it was totaled. You can also look for a replacement vehicle and bring the cost estimates to your insurer. To prevent low-ball totaled vehicle values in the future, purchase gap insurance, which will cover the difference in cost of your replacement vehicle.
Friend Lending
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Even if your friend was at fault in a traffic accident and you were not even in the car, if the car is yours, the insurance company will fault you for the accident. The consequences of a friend-caused accident include higher premiums and total liability responsibility for any other damage caused to third parties. To prevent costly repairs and payouts, do not lend your car to a friend.
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