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Tag: Vehicle insurance

  • 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.

  • How to Avoid Long-Term Financial Drains and Obligations

    How to Avoid Long-Term Financial Drains and Obligations

    For many people, the days of having a steady source of income are over. Your income may fluctuate month to month, and sometimes you may change your living situation; either way, there are times when you need to adjust your day-to-day or month-to-month budget. Here are some tips on how to plan and stay in control of your budget to minimize recurring expenses.

    There are multiple types of recurring expenses. Some include various insurance types that can be adjusted. Some include payments that can be completely canceled. And some are necessary to keep, like utility bills, but can be adjusted in different ways. We’ll cover all three categories of expenses.

    Avoiding Long-Term Insurance Financial Drains

    #1 – Auto Insurance

    Monthly vehicle insurance payments can be a big financial obligation. One very strategic way to lower your monthly costs is to sign up for 12 months instead of six months. This allows you to pay less per month because the insurance company views you as locked in.

    So if you know in advance, say, that your income will vary, this can be a great way to plan for harder months.

    #2 – Homeowners Insurance

    There are many feasible discounts you can find for homeowners insurance. For example, you can cut your premiums by as much as 20% if you improve home security. This can entail installing sprinkler systems, fire alarms, and burglar alarms. You can also make your house more disaster resistant.

    These solutions are more long-term to avoid financial drain and can be somewhat expensive at first. However, other recurring expenses, covered below, can be more instantly reduced.

    #3 – Life Insurance

    Now might be just the right time to plan out life insurance and retirement plans. In the case of life insurance, the longer term your policy is, the more expensive your premium will be. Consider changing to a policy that just focuses on when your children are young and financially dependent.

    You can also improve your health to reduce premiums. Try quitting smoking and making sure you stay at a healthy weight.

    #4 – Health Insurance

    Thoroughly research health insurance, and look for plans that have higher deductibles and are HMO plans. These options will lower your month-to-month expenses by lowering your premiums.

    HMO plans do not allow you to see doctors you want without a referral, but this is the trade-off. And a higher deductible also means if you suddenly get injured or seriously ill, you may have to pay more. But again this is the trade-off to lower month-to-month costs.

    Common Financial Drains That Can Be Completely Cut Out

    When examining for instant day-to-day control over your budget, you may find you have more extraneous recurring expenses than you realized. And these can add up. Fortunately, they can also be completely cut out, providing instant relief.

    If you have club memberships, you may need to temporarily cancel them. The same applies to gym memberships. Note, however, that you can still jog in your neighborhood if need be. Or if you live near a lake or beach, swimming may still be an option.

    Other recurring financial drains to check for include subscriptions like Apple Music or Spotify. Perhaps you subscribe to a blog, a newsletter, or a podcast. Or maybe you use services similar to Netflix.

    Go through your card statement to keep track of what you are subscribing to since it can be hard to remember. And beware of free trials. You may find in your card statements that you are paying for a service you don’t even want or use.

    Also consider switching entirely to internet usage, rather than paying for cable TV. Much of the content overlaps, and an entire bill vanishes.

    Lastly, some people have remote storage of physical items that they pay for monthly. See if you can find places for these items temporarily; family or friends may be willing to help.

    These options provide great immediate relief for long-term financial drains.

    Adjusting Other Common, Necessary Financial Obligations

    Aside from insurance, there are many other necessary bills that can be reduced, though not cut out entirely.

    Tips for reducing utilities include: taking shorter showers, purchasing energy-efficient appliances, adjusting your freezer and fridge temperatures, adjusting your thermostat when you’re not home, and using LED light bulbs.

    You can also opt to average your bill. For example, if your summer months are when you know your income will be in a tough spot, air conditioning could be an issue. So choose to average your costs and pay more during the winter months to cover your summer costs.

    For reducing rent or mortgage, Airbnb can be a great way to reduce your costs. Consider renting out a room temporarily, after thoroughly checking the tenant, of course. This can contribute to helping you pay your rent or mortgage. And yes, Airbnb is available to renters, too.

    For phone bills, see if you can change your data plan and use less data. And lastly, for credit card bills, check the terms and find out the minimum payment.

    Dorothea Hudson researches and writes for the car insurance site, CarInsuranceComparison.com.  She is passionate about helping her readers budget and save.