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Category: Insurance

  • CCDC41 Changes Explained: How Contractors Are Affected

    CCDC41 Changes Explained: How Contractors Are Affected

    In the construction industry, understanding and complying with insurance requirements is crucial.The Canadian Construction Documents Committee (CCDC) recently updated CCDC41, the document that outlines essential insurance obligations for contractors. Here’s what you need to know.

    What is CCDC41 and Why is it Important for Contractors?

    CCDC 41, titled ‘Insurance Requirements for Construction,’ is a standard form contract document developed by the Canadian Construction Documents Committee(CCDC). It outlines the mandatory insurance requirements that contractors must meet during construction projects. This document is crucial for contractors as it sets forth the insurance obligations and responsibilities of all parties involved in a project, thereby helping to mitigate risks and ensure adequate coverage.

    What Are the Recent Changes to CCDC41?

    CCDC41(2020) introduced significant updates to the insurance requirements for construction projects. These changes include revised insurance limits, updated definitions, and a clearer delineation of insurance responsibilities.

    The document came into effect in 2020, so contractors should ensure they are familiar with the updated requirements for projects initiated after this date.

    Common Insurance Limits inCCDC41(2020)

    The specific insurance requirement limits outlined in CCDC 41 (2020) can vary depending on the type and size of the construction project, as well as other factors such as contractual agreements and regional regulations.However,CCDC41(2020)generally specifies minimum insurance coverage limits for various types of insurance commonly required in construction projects.

    Commercial General Liability(CGL) Insurance

    $10,000,000 CGL insurance, covering bodily injury, property damage, and personal and advertisinginjuryclaims.UmbrellaorExcessLiabilitypoliciescanbeusedtoincreasethese limits if necessary.

    Automobile Liability Insurance

    $10,000,000 per accident,including bodily injury,death,and property damage,covering all owned or leased vehicles.

    Pollution Liability Insurance

    $5,000,000 pollution liability insurance must be in place to cover claims related to pollution incidents during construction activities.

    How Do the Changes in CCDC41 Impact the Insurance Requirements for Contractors?

    The changes in CCDC41(2020) impact contractors by specifying updated insurance limits and introducing new coverage requirements. Contractors need to adjust their insurance policies to meet the new standards outlined in the document to ensure compliance with project contracts and mitigate potential risks.

    The new version of CCDC41(2020) has updated insurance limits for various types of coverage, including commercial general liability (CGL) insurance, automobile liability insurance, professional liability insurance, and pollution liability insurance. CCDC 41 (2020) includes revised definitions of insurance terms to improve clarity and consistency in the interpretation of insurance requirements. The updated version of CCDC 41 (2020) introduces changes in coverage requirements, such as adding new types of insurance coverage or modifying existing coverage obligations.

    How Should Contractors Adjustv Their Practices to Comply with the Updated CCDC 41 Requirements?

    Contractors should review their insurance policies with their brokers to ensure compliance with the updated CCDC41(2020)v requirements. This might involve adjusting coverage limits,adding new types of insurance, or modifying policy terms. This may involve updating coverage limits,

    adding new types of insurance, or adjusting policy terms to align with the revised document. Contractorsshouldalsocommunicatewiththeirinsuranceproviderstoensuretheyunderstand and comply with the updated requirements.

    What Are the Potential Risks for Contractors if They Fail to Comply with CCDC 41 Changes?

    Contractors who fail to comply with the CCDC41(2020) changes risk breaching their contracts, facing inadequate insurance coverage, increased liability, legal disputes, and damage to their reputation..Non-compliancecouldleadtofinanciallossesandstrainedrelationshipswithclients and subcontractors.

    Contractors can ensure they are up-to-date with CCDC 41 (2020) changes by regularly checking for updates from the CCDC or in dustry associations, consulting legal or industry experts for guidance, reviewing contract documents and insurance requirements for each project, and maintaining open communication with clients, subcontractors, and insurance brokers.

    How Do the CCDC41 Changes Affect Subcontractors and Their Insurance Requirements?

    The changes in CCDC41(2020) significantly impact subcontractors and their insurance requirements in several ways:

    • Increased Insurance Obligations: Increased Insurance Obligations:Subcontractors now face heightened insurance obligations due to the updated CCDC 41 (2020)

    Alignment with Prime Contractor’s Requirements: Subcontractors must ensure that their insurance policies align with the insurance requirements specified by the prime contractor in accordance with CCDC 41 (2020).

    • Coordination with General Contractor or Project Manager: Subcontractors should communicate closely with the prime contractor to understand any changes in insurance requirements resulting from the updated CCDC 41 (2020).
    • Potential Cost Implications: The updated insurance requirements in CCDC 41 (2020) will result in increased insurance costs for subcontractors,particularly if higher coverage limits or additional types of insurance are mandated.

    Contractors can negotiate insurance requirements outlined in CCDC 41 (2020) with their clients to some extent, but negotiations will depend on the specifics of the project and the contractual agreement. Contractors should communicate openly with clients about insurance requirements and seek legal or insurance broker advice to balance the interests of both parties while ensuring adequate protection.

    As a contractor, your commitment to understanding and adhering to the updated CCDC 41 requirements is crucial for protecting your business and ensuring the success of your projects. Don’t leave your compliance to chance. Take the following steps now to safeguard your operations and maintain strong client relationships:

    1. Review and UpdateYourInsurance Policies: Schedule a meeting with your insurance broker to evaluate your current coverage and make necessary adjustments to meet the new CCDC 41 (2020) standards.
    2. Consult with Legal Experts: Reach out to a legal advisor specializing in construction law to ensure that your contracts reflect the updated insurance requirements and protect your interests.
    3. Communicate with Your Team and Subcontractors: Ensure that your entire team, including subcontractors,understands the new requirements and is prepared to comply. Clear communication can prevent costly misunderstandings and delays.
    4. Stay Informed and Proactive: Regularly check for updates from the CCDC and industry associations to stay ahead of any further changes. Continuous education and proactive adjustments will keep your business compliant and competitive.

    Don’t wait for issues to arise before taking action. By proactively aligning your practices with the updated CCDC 41 requirements, you not only protect your business but also build trust with your clients and partners. Start today—review your policies, consult with experts, and ensure your projects are fully compliant.

  • 5 Strategies for Effective Life Insurance Management You Need to Know

    5 Strategies for Effective Life Insurance Management You Need to Know

    Life insurance has to be a part of your financial planning, just like the 90 million American families who’ve already made it a part of theirs. It’s a critical safety net that offers your family much-needed financial safety in case of your untimely death. And since we live in unpredictable times, with the aftermath of the COVID-19 pandemic still hanging over our heads, you cannot deny the importance of life insurance planning.

    However, life insurance management is often an uphill battle for most people, especially without professional guidance. It is only natural to feel overwhelmed when selecting your policy, understanding its terms, or deciding the premium. Don’t worry. At the end of this post, you’ll have a clear idea of how to choose your life insurance policy and what goes into its proper management.

    Let’s get started!

    How to Select the Right Life Insurance Policy

    Term life, whole life, universal, with so many options to choose from, you might feel overwhelmed when deciding which policy fits your requirements and budget. But if you pay attention to a few critical things, your life insurance planning can feel like a breeze.

    Here’s what you’ve got to do:

    Evaluate Your Needs

    It’s not a pleasant topic to discuss, but your life insurance coverage needs to be enough to cover the financial loss your family has to bear after your death. On average, it should be 10 to 15 times your income. But this may vary depending on where you live, how big your family is, and your age. You can use an online calculator to understand how much insurance coverage you require.

    Understand Key Policy Features

    Policy documents are lengthy and full of legal jargon. It’s not everyone’s cup of tea to go comb through these documents word for word. But you should at least check the key features of your policy, like premiums, death benefits, and cash value growth, among other things.

    You might also want to consider a policy’s extra coverage for specific situations, such as accidental death or critical illness. This directly affects your life insurance management.

    Consider a Reputed Local Insurance Company

    When we say local, we mean an insurance agent or office within your driving distance. For example, if you live in the Sunshine State, a local agency offering life insurance services in Florida, particularly in your area, might be a great fit.

    Why? Because:

    • It’s easy to reach your local agent if you have doubts or need to revise your policy.
    • Local experts understand your insurance needs better than online tools.
    • They can help you understand your choices and educate you about life insurance planning.
    • Local consultants often provide other financial services, which simplifies your wealth building.

    Always Compare Policies

    There is no shortage of insurance companies or insurance products in the market. In Florida, for instance, you will come across term, whole, universal, and variable policies, with each option and company offering different benefits (and drawbacks).

    If not understood before signing the document, these terms can become a major headache later. So, always compare the shortlisted policies to ensure you get the best benefits for a reasonable premium.

    5 Proven Strategies for Effective Life Insurance Management

    Selecting the right policy and its effective management are two sides of the same coin. If your policy is not updated regularly or lacks specific riders or added benefits, your family will be hung out to dry.

    Here’s what you should do to avoid this:

    Review and Update Your Policy

    Our lives continue to evolve with time. Maybe you didn’t have kids when you took out your policy, but now you do, or you’ve got a new, high-paying job, and your lifestyle has improved. All these changes do affect your life insurance planning.

    Review your policy at least once a year to ensure it meets your changing requirements. You might need to adjust your coverage or add or remove a rider to meet your requirements. Think it over and make the necessary changes as soon as possible.

    Update Your Beneficiaries When Required

    Another critical factor in effective life insurance management is updating your beneficiaries. This is needed when you go through life-changing events like marriage, divorce, or welcoming a new tiny human into your life. Be sure the benefits go to the right people after you’ve kicked the bucket. This simple step protects your family from financial uncertainty.

    Manage Your Policy Debts

    Most life insurance policies have a cash value component, allowing you to borrow money against it. But know how this affects your policy payout before borrowing the money. If you fail to repay the debt on time, the policy coverage may reduce, or worse still, your policy may lapse, leaving your loved ones unprotected.

    Think About Riders and Additional Benefits

    Riders are optional add-ons that provide extra coverage. The most common riders include accidental death, waiver of premium, and critical illness coverage. However, your insurance provider may offer other unique riders and add more value to our policy. Understanding these riders is a part of your life insurance management. Talk to your insurance company about the riders, how much they cost, and how they can benefit you.

    Consult A Financial Advisor

    You should not take life insurance planning should not lightly since it affects the future of your loved ones. We recommend speaking with a financial advisor to understand your options and choose a policy that protects your legacy. These seasoned experts often provide other financial management solutions, helping you to balance your debts, investments, and insurance more effectively.

    Secure Your Family’s Financial Future Today

    It’s never too late to start planning your financial future, including life insurance coverage. Just make sure to understand the terms, premium costs, riders, and other factors involved in your policy. But more importantly, keep your policy updated to make sure your loved ones receive the financial security they deserve after you die. This should straighten your life insurance management.

  • Best Add-on for Car Insurance One Should Know

    Best Add-on for Car Insurance One Should Know

    Buying a car is a pragmatic and emotional decision. Hence, keeping it safe and insured is a wise choice. Picture this: you are driving down a soaked path during heavy rain. The water level rises rapidly, and before you know it, your car gets stuck in the middle of a waterlogged road. The engine fails to start due to water intake. You might think your car insurance policy will protect you against the damages.

    Well, the chances are your insurance will be inadequate for such specific conditions. While the law mandates you to insure personal and commercial vehicles before you hit the road, basic car insurance can only cover a limited extent. That is why investing in add-ons is necessary to ensure entire coverage.

    How do you pick suitable covers when there are numerous options available? This article will list the best add-ons you can consider.

    Add-ons for Car Insurance

    An add-on provides additional coverage you can leverage with car insurance plans. These extra coverage benefits offer enhanced protection to the insured car. It enables you to improve your coverage benefits for damages excluded from a standard car insurance policy.

    1. Zero Depreciation

    Car insurance typically requires the insurer to cover the cost of replacing damaged parts after considering depreciation. It often results in you having to pay some of the price yourself.

    However, you can sidestep these out-of-pocket expenses like the ones occurring due to accidents, water related damages or others. Zero depreciation car insurance cover allows you to claim the entire cost of replacing these parts without having to pay anything extra.

    Standard car insurance policies typically only reimburse the depreciated value of the car parts. Hence, the depreciation waiver cover can come in handy and facilitate higher claim amounts.

    2. Full Invoice Cover

    Comprehensive insurance comes with a limitation; the maximum payout is tied to the Insured Declared Value (IDV), which typically depreciates each year. Simply put, your car is insured for a fraction of its original price as it ages.

    Full Invoice or Return to Invoice cover is an optional safeguard. It becomes useful in the unfortunate event of a total loss or theft of your vehicle. It helps you recoup the entire amount you initially paid for the car.

    Say the insurer deems the car beyond repair or a total loss. Then, Return to Invoice cover ensures that you, as the policyholder, receive the original invoice value of the vehicle rather than its depreciated worth.

    3. No Claims Bonus Protection

    A no claim bonus cover of NCB protection cover helps protect the insured against losing No Claim Bonus even if the claim is made in the policy period. If you haven’t made any claims for past few years, then your NCB value will be higher, which means you will get higher discounts in premium.

    However, if you make a claim without having NCB protection cover, you will lose all the benefits accumulated over the years in terms of No Claim Bonus.

    4. Engine Protector

    The engine, often described as the heart of a car, is the powerhouse that drives its functionality. Surprisingly, standard car insurance plans do not protect this crucial component from non-accidental damages.

    It is where an add-on cover comes into play! An engine protector cover offers insurance against various issues like oil spills or water damage. Investing in it if your vehicle is under five years old is highly recommended.

    5. Roadside Assistance

    Car breakdowns can occur unexpectedly. While they are not uncommon, it can be highly inconvenient when they happen in the middle of a city street. Of course, preventing breakdowns is not in your hands, but receiving quick assistance can make the situation better.

    Roadside assistance cover can be valuable when traveling in remote areas where locating a mechanic can be tough. It acts as your safety net and informs your insurance company about the situation. Thus, they quickly arrange the necessary service and mechanic for you.

    Choosing a roadside assistance cover ensures you have access to support for fixing wheels, arranging a tow for your car, and more. It saves you from being left stranded for extended periods without any assistance.

    6. Key Protection

    Losing car keys to theft or an unfortunate mishap is disheartening. A standard car insurance policy would not help you replace them. But a key protection cover can!

    The key protection cover is an add-on that steps in when you find yourself in a tight spot. It covers all expenses for replacing lost, stolen, or damaged car keys. Additionally, it even takes care of the cost of repairing the lock set if your keys are compromised.

    In short, it is like having a safeguard for those unexpected key-related emergencies. The cover has an upper limit on how many times you can claim it, so be careful about misplacing your keys.

    7. Medical Expenses Cover

    Car accidents can be distressing and traumatic, resulting in injuries demanding medical attention. Medical expenses add-on shine as a reassuring aspect to ensure peace of mind and cover associated costs up to a specified limit.

    Medical expenses add-on cover ambulance and medical costs, including ambulance fees and emergency treatment, for all on board. It protects you and your passengers who sustained injuries from the car accident.

    You can also leverage this cover if another vehicle injures you while walking. It is essential to note that the coverage extent varies from one policy to another and location.

    8. Daily Cash Allowance

    A car breakdown can leave you reliant on public transportation. However, commuting daily via buses or taxis can be expensive, especially during peak hours. But what if you can travel without worrying about the costs while your vehicle gets fixed?

    The daily allowance cover is an extra option that gives you an allowance for your daily travel costs when your insured car is in the shop for repairs. It helps reimburse your expenses when renting a vehicle or using public transportation while your car is at the repair shop.

    Remember that this coverage only applies when your car is being fixed at the garage approved by the insurance company. Further, it is typically available when the repair takes over two days.

    Conclusion

    A car is more than a transport mode; it is a cherished investment and deserves protection from potential mishaps. Add-ons equip you with complete coverage to guard your automobile and you from financial losses in multiple ways. You can choose any of the mentioned supplementary covers or check various covers for car insurance online.

    Also, car insurance add-ons are not free. You must pay the extra premium amount to purchase the required cover. Keep in mind to check the claim settlement ratio and read the terms and conditions carefully before investing.

  • Consumers Are Increasingly Turning to Independent Insurance Companies To Save Money

    Consumers Are Increasingly Turning to Independent Insurance Companies To Save Money

    A growing number of consumers are recognizing the value of independent insurance companies, and independent agents now make a majority of insurance policy sales in some areas. In the life insurance field, for instance, independent agents now make up52% of the market. Independent agents can help their customers comparison-shop, which allows customers to find the best deals. Customers can also benefit from building a long-term relationship with their independent agent, which should lead to better advice and better customer service over time.

    What Is the Advantage of an Independent Insurance Company?

    Independent insurance companies sell policies from multiple insurance companies. Compared to captive insurance agents, who only work with one insurance company, independent agents offer much more flexibility and cost savings for their customers. Many consumers are taking advantage of these benefits by working with independent agents.

    Comparison shopping among different insurance companies is often the best way to get a good deal on coverage. Working with an independent insurance agency means that the customer gets to compare personalized quotes without needing to do the work of contacting each insurer themselves. The insurance agent will have a thorough understanding of what each policy covers and any concerns to watch for, so they can also help make sure the customer is making a fair comparison between quotes.

    The independent agent can also negotiate with the insurance company for better rates, especially when the customer is looking for multiple policies. Independent insurance companies should be familiar with all of the insurers they work with, so they’ll know where bundling discounts and other opportunities for savings are available. They’ll also have an idea of which companies tend to offer better coverage for people in certain life stages or financial situations. Finding this information on their own can be difficult or impossible for consumers.

    While bundling can work, getting the best insurance deals might mean choosing different policies from different companies. If a customer decides to go with home insurance from one company and auto coverage from another, an independent agency can help with all the logistics involved. This includes analyzing and comparing quotes as well as actually purchasing the different policies.

    Why Choose an Independent Insurance Agent?

    Consumers’ needs change throughout their lifetimes, so committing to a single insurance company isn’t always a good financial choice. While customers are always free to switch insurers, if they work with captive agents, choosing a new insurance company will mean building a relationship with a new insurance agent. Working with an independent agent allows consumers to switch companies while maintaining a potentially lifelong relationship with their insurance agent.

    While a good insurance agent should be able to offer good advice from day one, a long-term relationship lets the agent get to know the customer and make better and better recommendations over time. Factors like risk tolerance, lifestyle, family situation, and financial plans can all affect the insurance coverage a person needs. An ongoing relationship with an independent agent gives the agent time to discuss the customer’s long-term goals and in-depth concerns so they can make solid suggestions for the best policies.

    Is It Better to Go With a Local Insurance Company?

    A local independent insurance agency can offer additional benefits for customers over a larger national company. First, local independent insurance agencies are usually smaller businesses, which makes building a relationship with an insurance agent much easier. Because of the smaller setting, agents can offer more personalized service. This can include keeping an eye out for better coverage or rates, even after the customer has chosen a policy. If the market shifts and better prices become available, a local agent is more likely to have both the time and the focus on the customer’s needs to proactively recommend that the customer update their policies. Customers are less likely to receive this level of service at a larger company.

    Local insurance agents are also more familiar with their state and local regulations and insurance markets. Some insurance requirements are fairly consistent nationwide, but others vary by state. For example, each state has its own requirements for how much and what types of auto insurance drivers need to carry. A local company’s agents will have a deeper understanding of their state’s rules and the policies available that comply with those rules. Local agents will also be more familiar with location-specific risks, which can help them provide better advice to customers. As an example, different areas are more or less prone to storm damage, which can affect the best home insurance options for customers in the area.

    What Are the Criteria for Choosing an Insurance Company?

    Finding the right locally-based independent insurance company can be a challenge. When looking for an agent, consumers should start by making sure the agent has the required licensing. They can also look for additional credentials and certifications in specific insurance areas, like the Charted Life Underwriter certification for life insurance agents. These credentials demonstrate in-depth knowledge in the agent’s field and a commitment to continuing education, which means the agent is more likely to be up-to-date on the latest developments in the insurance field.

    Communication and customer service are also essential. Customers should look for an agent who takes the time to understand their family and financial situation so they can give relevant advice. A great example of an Independent Insurance Company that consumers in Colorado and Utah are turning to is ALINK Insurance.  Testimonials and other customer feedback are a great way to find out if an insurance company offers the right level of service and expertise, however, customers should also take note of the attention the agent pays them during their initial conversations as well, that personal attention is often a very good sign of how the agency values customer service.

  • Benefits and Drawbacks of Usage-Based Car Insurance

    Benefits and Drawbacks of Usage-Based Car Insurance

    Finding the right car insurance coverage can be exhausting, overwhelming, and downright frustrating. The market seems to grow every year, with companies offering new ways to bundle coverage and reduce premiums.

    Saving money is great, but it can be difficult to find the right coverage at the right price while navigating the endless options. Is full coverage necessary for all drivers? What about people who drive significantly fewer miles than average?

    Let’s face it, commuting to a workplace is becoming less and less common nowadays. More people are preferring virtual jobs and more businesses are opting for virtual offices, resulting in less time in the car. The transition to a more virtual world brings with it advantages while also highlighting some less than practical functions in life.

    Buying a standard auto insurance policy doesn’t always suit the needs and lifestyle of modern individuals. There needs to be a way to pay for only the coverage you use, not the extra you-should-probably-have-this-because-you-drive-everyday coverage.

    Pay-as-you-drive insurance is the solution. This type of coverage allows a driver to pay for auto insurance when they need it – for the miles or amount of time they are actually on the road. But can it really be that simple?
    What is usage-based car insurance?
    Pay-as-you-drive insurance options are a growing trend in the insurance world. These coverages offer the same peace of mind and simplicity as the auto-pay bill option many banks offer. Drivers sign up for the usage-based insurance coverage and pay for the car insurance they use. It sounds simple enough, right? Let’s look deeper.
    Pay-Per-Mile
    Pay-per-mile, as known as pay-as-you-go or pay-as-you-drive, is a coverage option based on how much a driver actually drives. The more miles driven in a year, the more a driver pays for their insurance coverage.
    Pay-How-You-Drive
    Another usage-based option factors in how safely a person drives. This type of coverage requires constant monitoring and analyzes everything from when you drive to how quickly and sharply you turn. The riskier your driving maneuvers, the more expensive your coverage.
    Manage-How-You-Drive
    This type of coverage is much newer than other usage-based options. Manage-how-you-drive is similar to pay-how-you-drive but with more real-time feedback and cost analysis.
    How are drivers monitored?
    Usage-based insurance requires high levels of monitoring. Insurance companies need to know when and how you drive so they can provide discounted rates. Drivers who choose usage-based insurance are usually offered two different options for monitoring.

    Depending on the provider, drivers are provided with a tracking device. This device is small and unobtrusive. It simply clicks into the underside of your dashboard and collects data about your driving habits.

    Other providers outfit their customers with a phone app. The app is activated when inside the car and collects similar data on driving habits.
    What are the benefits of usage-based car insurance?
    Some benefits of usage-based insurance may seem obvious, but there are some that are worth exploring more closely.
    Financial
    The biggest benefit to this type of car insurance is cost. Drivers can see big discounts in their premiums and rates based on how well and how often they drive.

    The biggest savings are seen by those who drive better than statistics suggest, such as young or new drivers. Drivers between 16 and 25 are considered some of the most costly to insure. If a young driver uses usage-based car insurance and drives safely, they could see big savings.
    Societal
    One benefit that is often overlooked is society at large. The more people turn to usage-based insurance, the safer the activity of driving becomes.

    Usage-based insurance encourages drivers to practice safer, more aware driving habits. This means all road users — drivers and passengers — are at lower risk of accident or injury. Those who are more aggressive or higher-risk drivers will be discouraged from these habits when they see an increase in their premiums.
    Security
    This type of insurance coverage also offers security benefits. Cars that are equipped with a tracking device for insurance purposes can be more easily recovered in the event of a theft. Drivers can breathe easier knowing they have an extra layer of support and security.
    What are some drawbacks to usage-based car insurance?
    This car insurance coverage does present some concerns or drawbacks. These drawbacks should be understood and weighed alongside the advantages to determine if usage-based car insurance is the right option for each driver.
    Information Security
    There have been concerns or worries about personal information and data breaches. Because usage-based insurance relies on technology and the collection of personal information, people have voiced concerns about its safety.

    News of large tech companies falling victim to online hackers has people worried about the vulnerability of their personal information. A breach or loss of data is possible with usage-based coverage.
    Limitations
    Depending on the provider, usage-based insurance can have some serious limitations. Some providers limit when a driver can be on the road, blocking out certain times of day as riskier. Other providers limit this coverage by placing age restrictions.

    This type of insurance coverage can also be limited when circumstances change. If a driver finds a different job with a longer commute, usage-based coverage may no longer make any financial sense. Usage-based insurance can be limiting just by its own nature.

    Usage-based insurance is a new trend. It’s growing in popularity and shaking up the car insurance industry. Similar to when buying car insurance online became the norm, usage-based insurance may soon be the new norm.

    Laura Gunn writes and researches for the auto insurance comparison site, BuyAutoInsurance.com. She and her husband work out of the home, so they understand the need for flexible, personalized auto insurance options.

  • Why High Auto Insurance Costs despite Fine Driving Records

    Why High Auto Insurance Costs despite Fine Driving Records

    Good drivers are highly profitable clients for insurers since they keep paying premiums without asking anything back in return except a piece of paper called policy. Most motorists believe that having no accidents and moving traffic violation tickets is a sure way of getting the best car insurance rates. However, there are other factors that can be as important as motoring history.

    Most of them enjoy great rates compared to other drivers of the same age, experience and locality. However, a few of them still end up paying excessive premiums. In some areas a middle-aged male with good driving history may still have to pay between $1,000 and $1,500 for basic state enforced third party liability coverage. Considering how little cover such policies provide, asking these premiums does not make sense.

    Why Good Drivers Pay High Premiums

    One of the main reasons is that they live in a high crime area with too many uninsured drivers. In order for insurers to be profitable in certain zip codes they have to charge enough for each policyholder in the area. If auto theft, vandalism and accidents are high and the numbers of policyholders are low, the large total claim losses will be divided by a smaller number, making it harder for everyone to get inexpensive vehicle insurance.

    This is usually the case in many large cities and some companies are not happy to be doing business there due to high risks. Therefore, it is not surprising at all that some companies may ask as much as $3,000 for a simple liabilities policy. In these areas price gaps between insurers can really be so large that motorists who fail to shop around may be stung by expensive companies.

    Second reason may be that their state minimum liability insurance requirements are higher than the rest of the country. The best way of checking if you are paying too much or not is to get a few quotes and see what other providers offer. This simple practice clears things out very fast.

    Third reason is that their driving may be spotless but they may fail to impress insurers with the rest of their details. These factors can be as influential as credit scores or as menial as home ownership. There are tens of factors companies can include in their premium calculations. Furthermore, each company would place a different level of importance to each of them.

    Other Factors Influencing Rates

    Lately, there is a new thinking in the industry. Some underwriters think that driving records offer past information and it may not usually be the best tool to look at future possibilities. They feel that motorists’ personal circumstances like being married, having a good job, living in a nice zip code and owning a home and financial positions like credit score may offer more meaningful information as to what type of people they are and if they are likely to make a claim or not.

    That is why someone with a great record but bad financial position may not get as good auto insurance rates as someone with one or two issues in their history like a claim or traffic ticket but have great credit score. This may sound unfair to some people and it may be at times but companies are allowed to look at people’s scores and take them into account when they determine prices.

    What Good Drivers Should Do

    They can start enquiring with the current insurer as to why they are charged high rates. They should be able to look at the particulars and give an explanation. By law companies will have to tell their policyholders why they are applying surcharges. The next step would be to work on those issues and try to turn them around, if possible. For example, you may find out that you are living in an auto theft hotspot and own a car that is stolen the most in your zip code. Changing your automobile to a more secure and safer one would lower your premiums.

    Many studies reveal that large numbers of policyholders stick with their current providers too long. They should have had regular automobile insurance quotes from alternative sources and keep checking the competitiveness of renewal terms. Failing to carry out this simple task would keep costing them until they wake up and check their options because many companies offer great rates for things like having no claims.