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.