It seems as if there is some confusion about how auto insurance rates are set. Premiums have been going up, sometimes when a driver hasn’t had an accident or claim.
The reality is that Insurance companies are finding more of us are on the roads thanks to cheaper gas and an improving economy. As we drive more miles, the result has been an increase in crashes and the amount of money insurance companies are paying out. The cost to fix or replace vehicles damaged by fires, hail and flood has also increased the past few years. These costs are forcing insurance companies to charge more for coverage.
You may be wondering what other factors affect your auto insurance costs. To help you understand how insurance companies determine what they charge, we thought we’d dispel some misconceptions. Buckle up and enjoy the ride as we separate fact from fiction.
Myth 1: The color of your vehicle determines what you will pay for auto insurance.
Fact: We’ve heard it too, but it is just not true. Think about it, have you ever been asked what color car you drive when you’ve bought insurance? Most insurers want to know if the car you drive is a Ford or Ferrari, what kind of driving record you have, where you live and the miles you drive each year.
Myth 2: Older drivers pay more for auto insurance.
Fact: Many drivers over 55 years of age can qualify for a reduction in auto insurance rates if they successfully complete a safe driving course or meet other requirements. Many insurance companies consider a healthy, retired driver who only uses the car sporadically and has a clean driving record a better risk than someone in their teens or early 20’s.
Myth 3: Your state’s minimum liability auto insurance requirements are enough to protect your assets.
Fact: You may have insurance, but if you only have your state’s minimum liability requirements, you probably aren’t adequately protected. Medical costs are soaring and injury lawsuits following crashes are rampant. With minimum liability, if you are found “at fault” for an accident in which others were hurt, you could be paying out of pocket for lost wages, pain and suffering and medical expenses that could easily add up to much more than your liability limits. Losing a lawsuit could also mean having to sell your home and having your future income garnished to pay those bills.
Myth 4: Your auto insurance policy covers damage to your car from a crash or if it’s stolen.
Fact: Not unless you purchased comprehensive and collision coverage. Both are optional with most auto insurance policies and pay when your vehicle is crunched in a crash that you caused, or is damaged by flood, fire, windstorm, vandalism, animals or if it is stolen. If you don’t have comprehensive and collision coverage, you’ll pay out of pocket to repair or replace your vehicle if something happens.
Myth 5: Your personal auto insurance covers business use of your vehicle.
Fact: Most personal auto insurance policies exclude business use of a vehicle. If you are using it to deliver pizzas, or you’ve signed on as an Uber or Lyft driver, you may need a commercial auto insurance policy. You should talk to an insurance advisor as soon as possible.
How to Reduce Insurance Costs
Here are some things you can do to reduce the amount you pay for auto insurance:
- Check for good driver/good student discounts
- Research insurance costs when buying a new vehicle
- Combine your insurance (auto with your home or renters, or if you and your spouse or partner have individual policies)
- Reduce your commute (ride a bike, use mass transit or move closer to where you work)
- Increase your deductibles
- Clean up your credit score
- Get a policy review
If you haven’t looked into the NEA Auto and Home Insurance Program from California Casualty, you are missing exclusive benefits for NEA members not available to the general public:
- Deductibles waived or reduced for vandalism or accidents that occur when your vehicle is parked at work
- Personal property damaged or lost in a collision, fire or taken from your car is covered up to $500
- Rates guaranteed for a full year (not six months)
- Free identity theft protection with each policy
- Multiple payment options including E-Z Pay and holiday or summer skips
Contact a California Casualty advisor today. You might be surprised at the savings and all the benefits you qualify for as an educator at 1.800.800.9410 or www.neamb.com/autohome.