There are different formulas used for pricing the car insurance money finance, which can be treated similar to a black box. The insurance rates could be affected due to different factors which the common man generally does not control or even does not have any idea about it. Studies conducted have found that people on an average save around $859 annually simply by shopping around for the best car insurance quotes. This is because, pricing is often uneven among providers upon similar coverage.
Five reasons for getting penalized while availing insurance rates
- Having poor or fair credit: Studies have acknowledged that there exists a correlation between higher and lower credit ratings that drivers usually claim. Although using credit for pricing auto insurance rates is seen to be discriminatory, providers do take it into account. Hence, even if the insurance bills are paid dutifully on time, in case, other bills get behind on payment and dings the credit, then the car insurance premium is likely to rise. Furthermore, bad credit could push up the insurance rate even more when compared to car accidents. Solution here it to try improving the credit scores.
- Loyal customer: It has been that there are many people who tend to stick with the same auto insurance provider, until they have experienced something bad. A sneaky system has been introduced in the industry known as ‘price optimization’. Data is analyzed and small price hikes tested by insurers for guessing as to which customers would stay, even if rates are hiked. It is legal in some jurisdictions.
- Driving a high risk vehicle: In case, a particular model that the person owns, has a poor track record, then it is obvious that more amounts are to be paid as insurance premium, irrespective of how the person drives it. It can be true, if the person purchases comprehensive and collision coverage. Hence, one should try to stick with medium or small sized SUV’s and minivans for paying lower rates.
- Agent contact for filing a claim: It can be a real delicate decision, whether a file is to be claimed or not. Considering hiring the insurance agent for the job needs to be given a second thought. This is because, any damages to the vehicle is reported to the agent, this inquiry is likely to be placed on the record and hence, affect rate of insurance in future, although no previous claims had been made. Multiple inquiries would only make the case worse.
- Not enquired about discounts: The person may think that the insurance provider could apply automatically the applicable discounts. But without asking, the best rates might not be availed. In few cases, the agent or the insurer may not know about the changes that have taken place in the customer’s life which could possibly trigger rate reduction.
As a matter of fact, insurance providers do have plenty of discounts and tracking them can be tough. But asking the agent to have available discounts to be reviewed can really help. Paramount car insurance offers discounted auto insurance to its customers without any hassle attached.
Conclusion: Some of the reasons for which the car owner might not get the best deal on purchasing an auto insurance policy could be out of his bounds and annoying. Knowing some can help to get the rates reduced and money saved in the process.