What car insurance companies don’t tell you about the rates?

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    Why is my car insurance so high

    Getting a car insurance policy is one of the critical financial decisions you could ever come across with. A lot of decisions have to be made, and each one of them can affect your premium rate. The insurance executive asks you a series of questions before giving the exact pricing for your car insurance premium. Most of the time, you don’t even know why these questions even matter.

    What reasons lie behind these hefty car premiums? Is there a way to lower your premium cost? In this article, we have covered some of the best ways to lower the amount you pay for your car insurance.

    Here is a list of things your car insurance company may never reveal to you:

    You don’t need all add-ons

    Motor insurance comes with a wide range of add-on covers, from gap covers to engine covers. These add-ons are optional, and taking them won’t make any significant difference. Choosing the add-ons wisely can help you minimize the overall car insurance cost. For example, if you are a good driver and usually drive your car in a less-crowded street, you can skip the ‘new car replacement insurance’ or ‘gap insurance’ for a couple of years. However, if the chances of getting your car completely wrecked are high, these add-ons can help you recover the total cost of your vehicle.

    A high Voluntary Deductions can lower your premium

    Voluntary deductions refer to the amount of money you agree to pay for any road accident. If your voluntary deductions are zero, then your insurance company will bear the entire claim amount for any future repairs. If you agree to pay a specific amount as a voluntary deductible, you have to pay that amount out of your pocket before the insurer pays the rest of the claim.

    Your voluntary deductive is inversely proportionate to your premium share. The higher you keep your voluntary deductible, the lower you will pay your insurance premium.

    According to the insurance information institute, you can lower your collision and comprehensive coverage by 15 to 30 Percent by raising your deductible from $200 to $500. Increasing the deductible further up to $1000 can save 40 percent or more.

    While opting for a higher deductible, you must set aside enough money before filing for a claim. For example, if the repair cost after a car crash is $5000, and your deductible is $500, you need to pay $500 out of your pocket to repair your damaged vehicle.

    Before going for a higher deductible, make sure:

    • You are a safe driver, which lowers your chances of getting into an accident
    • You have not claimed insurance for a few consecutive years

    You can transfer your No Claim Bonus (NCB)

    No Claim Bonus or NCB is a discount you get on your premium if you have not made any claims during your last policy term. What you may don’t know is that you can transfer an NCB of your old vehicle to your new one. Therefore, make sure to retain the insurance in your name after selling your old vehicle. Then you can ask your insurance to grant a no-claim certificate. You can carry forward your accrued no claim bonus and lower your car insurance premium rate when you buy a new car.

    Adding a driver may actually lower your premium

    Contrary to what most people believe, adding a driver to a car policy might lower the premium rate. However, it all depends on the primary and secondary drivers mentioned in the policy. ValuePenguin compared the premium quotes for drivers of three age groups and how adding another driver changes the quotes.

    The quotes were taken for an 18 years man, a 30-year man, and a 50-year woman. The study state that adding a driver to an insurance policy lowered the premium rates of the primary driver. It is more beneficial for younger drivers. When an 18-year-old man adds a 30-year-old individual as an additional driver, the premium rates drop more than $500. However, for the 30s category, the price difference was not much significant. For instance, when a 30-year man adds another 30-year man as an additional driver, the price drop was less than $5. 

    However, things do not look suitable for a 50-year woman as her premium rate goes up when she adds a 30-year-old man to her coverage.

    This is because your insurance company sets the rate based on the driver’s chances of getting into a crash or an accident in the future. Youngsters, compared to adults, are more likely to get into accidents. Therefore, adding them to a driver can increase your insurance premium rate. However, if a car is shared by a teen or an adult over 30, the likelihood of it getting into an accident is also low. 

    Bundle Insurance Policies can save you money

    Some insurance companies offer an additional discount to policyholders who take multiple policies. This includes taking your car, home, and even boat policy from a single insurance provider. This also goes by the name bundling discount or multi-policy discount. 

    Generally, you can save from 5 percent to 25 percent through such offers. 

    You may ask for special insurance discounts

    Some auto insurance companies offer an extensive range of discounts aside from bundle discounts. Some of these discount includes:

    Good driver discount: If you remain a good driver without any accident or traffic valuation, then your insurer may provide you an additional discount between 10-40 percent.

    New car discount: If your car is less than three years old, you may get a discount between 10-15 percent.

    Multi-car discount: If you have more than one car, you may get a discount from 8-25 percent from getting your vehicles insured from one insurer. 

    Good student discount: Full-time high school or college students aged 16-25 can get an extended discount of 8-25 percent for scoring at least a B average.

    If a policyholder doesn’t file any claim on their automobile insurance plan, it entitles them to a No Claim Bonus for a claim-free year. The NCB is approximately 20 percent of the insurance premium.

    If you file a claim for small changes such as minor repairs, you won’t be entitled to any NCB. The key is to analyze the amount of the NCB that you would earn and compare it with the repair charges. If the repair charges are higher than the NCB, then feel free to file a claim for the same.

    Installing Safety Devices Lowers Your Premium

    If you have installed safety equipment such as security cameras, airbags, and accident prevention censors, then your insurance premium will come down. This is because having robust safety devices decrease your chances of getting into a crash and prevent theft. 

    Sign-up for usage-based car insurance

    Signing up for usage-based car insurance can trim your premium rate to a significant number. For instance, if you join a SafePilot program, you may get up to a 30 percent discount in premium. When you sign-up, you will have to plug a device into your car to track your driving behavior. It involves tracking the miles your drive, speeding, and how often you use the brakes. 

    If the data indicates that you are a good driver, you will qualify for the discount. However, this program only works well for low-mileage drivers who don’t drive at night and practice safe driving habits. 

    Faqs

    Why is my car insurance so high?

    Common reasons for your car insurance to get high are linked with your age, driving record, credit history, location, and the type of car your drive. For example, if you are a youngster, your chances of getting into a crash are higher, which is reflected in the premium price. Similarly, if you have a previous claim or a traffic violation, your premium prices may also go up. Overall, anything that links you to having an accident in the future and filing a claim can increase your car insurance premium.

    Why does my car insurance keep going up with no accidents?

    This may be due to an address change, purchase of a new car, or a claim in your zip code. Your zip code is taken into account when deciding the premium rates. 

    If you are from a particular ZIP code, several factors can affect your car insurance rate, such as;

    • Number of stolen vehicles
    • Fraudulent injury claims
    • Number of vandalism
    • Claims for stolen property from the car

    Can I lower my car insurance by parking it in the garage?

    The car insurance premium rate is affected by where you park your car. Whether in the driveway or garage, or on the street. Parking a vehicle in a garage is less likely to get stolen.