When Auto Insurance Rates Change the Most

There are many internal and external considerations in play when it comes to calculating premiums. Currently, many motorists are seeing hiked renewal rates due to external factors, mainly rising prices all across the products and services. There isn’t much they can do about it but they can learn about the factors they can influence to get cheaper vehicle insurance quotes from other companies and switch if it is saving money.

Many people don’t realise it but shopping for the best deals is one of the most effective ways of reducing premiums. Often, the price difference between the cheapest car insurer and the most expensive can be over $1,000. This amount would be much more for people who are high risk and young. And some people could only save a couple of hundred dollars if they have been regularly checking for the lowest prices and switching to keep costs down.

A few real-life events can dramatically change the risk levels of a policyholder. When these changes happen, automobile insurance rates have to be adjusted to reflect the new position. Regardless of it being negative or positive, it is always advisable to get a few quotes from multiple companies to figure out the new fair premium.

If you don’t shop around, you won’t find out if your current carrier is overreacting to the changes or not. For example, some companies love middle aged motorists with a sensible family automobile and they give them large discounts. The moment there is anything to raise their eyebrows like adding a teenager to a policy or changing to a more powerful car they take away these savings.

These are the events that may reduce or raise your auto insurance rates the most;

1.     Replacing the Car Insured

This is a pretty common occurrence and a recent survey shows that this is the number one reason why people start getting a few quotes to compare their options. As a general rule, lower engine power, vast production, typical features and reasonable price makes a vehicle a low risk. Even a slight upgrade or downgrade can change premiums charged a lot, especially with a younger driver on the policy.

If you are moving from a two-door coupe to a minivan you are likely to save a lot of money on your car insurance. The opposite is true as well. People who have driven both types would know why that would be. While a sporty car would be raving to go, a minivan just wants to take its time and go when it is good and ready. This may not make much of a difference in the experienced hands but changes everything when the driver is young or novice.

Also, the more exotic you go the more you will have to pay to insure it. Almost any garage can fix a typical and widely available auto and its parts are cheap and plenty. The same cannot be said for a rare imported automobile. The more complicated, modified and filled with fancy gadgets the costlier it becomes to fix it, should it be involved in an accident.

2.     Adjusting a multi-vehicle policy

The same principles apply here too. You could add more or replace the ones in a multi policy. You should remember one thing here. You can actually arrange different coverage and deductibles for each auto in a multi deal. For example, a vehicle driven mainly by the parents can have full coverage and low deductibles while a car insured for a teenager can be liability only.  

3.     Adding or Removing a Driver

When someone moves in with you or gets a driving license you need to add them to your policy. And the moment they leave you should drop them to save money. Also, it is a very good time to get a few vehicle insurance quotes from several companies since your risk structure has changed substantially. Premiums can swing a lot after such adjustments to coverage.

4.     Adding a Teenager to a Policy

A middle-aged couple would have a pretty low premium. This will all change the moment they add a teenager to parents’ policy as youngsters are the highest risk group of drivers. At times, they may be forced to look for alternative coverage because their current carrier may not want them anymore. This would be mainly due to the bad combination of a sporty car and young driver. When this happens, you shouldn’t be discouraged to look for affordable auto insurance. Not every company is so punishing.

5.     DUI or Reckless Driving Citation

These are really big blemishes in people’s driving records. In many states, driving licenses get suspended after a drunk driving incident. Also, there are conditions attached when the suspension is over and it is harder to get coverage. It takes a few years before rates come down to reasonable levels again.

In those periods you may want to shop around real hard and do a few adjustments to coverage. For example, increasing deductibles may be really helpful. Some companies offer good discounts for people who choose to have large deductibles since it reduces the types of claims they can make to larger ones. Most claims are small and statistically a larger accident is less likely. That is why higher deductibles can work for many motorists when they struggle with insurance costs.

6.     Accidents and Claims

An at fault accident can ruin your years of clean history, especially when the damages are large. And the size of it may not matter for many carriers. Once it is determined that you are a liability, they want to offload you. On the other hand, some companies are more lenient and look at long history, credit score, home ownership, occupation and many other factors to determine the likelihood of it happening again.

Actually, having several small claims in a short time may be a lot worse than having one large one. That is why you need to be selective with claims and pay out of pocket where you can. In any case, don’t just accept the substantially hiked rates just because they paid out a lot of money due to your mistake. Many people pay premiums for years and never make a claim and they all even out each other.

7.     Change of Address

Moving can require switching auto insurers, especially if you cross a state line. There is a tremendous amount of information stored in a zip code and a change will result in totally different quotes, not just from the current provider but from others as well. You may have had a few quotes last year and your carrier may have come on top that time. But this shouldn’t prevent you from looking at the alternatives again.

People see huge fluctuations in rates when they move out of state, city center or high traffic and crime areas. There is a high chance your rates will go down a lot. In the opposite scenario, you would pay more. You should make sure that you find out what a fair premium is at your new location by checking with competitors.

8.     Financial Hardship or Improvements

Many motorists don’t realize it but most of your financial activities are recorded by credit agencies and scored. If you are having a good life and everything is peachy you should take advantage of it by getting the best auto insurance you can. And when things are going down and you start missing a few payments and having problems with your credit card payments you should try to reduce the hit by getting alternative quotes.

County court judgements and bankruptcies are the worst. Many companies would start quoting really high rates for drivers with bad credit records, even if they have very good driving and insurance history. This may be the time to switch to a different carrier who wouldn’t care about credit score as much.

9.     Buying a Home

Being a homeowner changes many companies’ perspective of you. They see this as settling down, getting responsibilities and they usually take it as calming down as a driver. You could easily get around ten percent savings by just ticking that you are a homeowner. You could save more when you bundle home and car insurance.

10.  Marriage or Divorce

Believe it or not many companies prefer married people as they find them more committed and less likely to take risks on the roads. You need to make totally new arrangements in both cases. You need to add your partner in case of marriage and take off in case of divorce. So, why not see if you should still be with the same automobile insurer or it is time to change that as well.

When you are going through significant changes in your life in general or motoring life, you should always carry out an audit of your vehicle insurance arrangements to see where these adjustments take you. Divorcing from your current carrier is actually very easy. The only catch is that you have to make sure you find a new match immediately.

Once again, shopping for the best quotes is the most effective way of reducing premiums because no two vehicle insurers charge the same amount for an identical policy. Finally, you may not realize but changes may be happening in the background internally and externally. That is why it is highly advisable to check if you are still paying a fair amount or it is time to switch to a cheaper provider.