Image via Flickr user Rahul Ramakrishnan
1. Your credit impacts your insurance rates
Insurance providers have found that certain credit characteristics for an individual are useful to predict of how likely it is that the individual will have insurance claim. It is not the same ones that a bank uses to measure lending risk but rather, insurers may use credit-based insurance scores to assess the likelihood of claims submitted. These variables may include the age, driving record, claims history, place of residence, type of car and the average miles driven.
2. Brand loyalty can cost you
If your mind-set about automobile insurance is “set it and forget it,” you might want to reconsider. Today, that list of factors when calculating the premiums has grown to a confusing criteria causing insurance rates to differ dramatically from provider to provider. Instead of allowing your policy to automatically renew, you may want to compare with other insurance agencies once a year to ensure you’re getting the best auto insurance rates.
Some companies provide policies direct to consumers, while others sell policies through agents or brokers. An easy place to start is by getting auto insurance quotes online, which could save you money. If you’re worried that lower rates mean less coverage or poor service, don’t be. Today, there are plenty of insurance companies that offer affordable premiums, well-rounded coverage and excellent customer service.
3. Stopping payment? You will pay in the long run
If you are thinking that switching car insurance companies is as easy as just stopping payment, please think again. Your policy will be cancel, but your existing insurance company could report you to the credit bureaus for non-payment, which will cause damage to your credit score in the process. Furthermore, your insurance history will reflect a cancellation, which may cause a new provider to decline your application or charge you higher premiums in the future. Thus, it is important to complete the necessary paperwork with your existing provider, such as a policy cancellation form, and start your new policy at the right time on the date your old policy ends.
4. Your car insurance company can cancel or non-renew at any time
Your insurance company have the rights to cancel your policy at any time if you violate one or more of its guidelines during your policy period, same goes for non-renewal. Things such as failing to pay your premium on time, losing your driving license due to suspension or revocation, submitting too many at faults claims or misrepresenting your driving history or past insurance claims could all be the reasons for cancellation or non-renewal.
However, when it comes to cancellation, your insurance company is requires by law to state the reason, not so with non-renewal. If you want a reason, but aren’t provided with one, you must send your insurer a written request. In any ways if you believe you have been unfairly treated, you may have legal recourse through your state’s department of insurance.
The binding period, the time when your insurance company is especially conscious of your risk level, usually occurs within 60 days following your auto insurance application. If your insurer finds a discrepancy on your application, driving record or with your credit, it can cancel your policy.
5. You could save money by paying your car insurance premium in full
You might be surprised to learn most car insurance companies charge an administrative fee to break up your premium payments into instalments, such as paying every six months, every three months or every month.
The more you divvy up your payments in instalments, the more these convenience fees add up, and your once-cheap car insurance can now cost substantially more. There may also be charges for the method of instalment payment you choose, such as automatic bill pay or pay-by-phone.
Be sure to ask your provider what its administrative fees are. If it makes financial sense and you can swing it, pay your premium up front and in full. Not only will you avoid the added expense, you won’t have to worry about missing a payment, or being late on payments, both of which could be grounds for cancellation. Other factors, such as the type of car you drive, can cost or save you money on car insurance as well.
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