When it comes to purchasing car insurance, it’s important to get the best deal you can. There’s also a great deal of fine print involved, so you need to understand just what you’re getting with your policy. Here are 8 little-known facts that could save you money:
1. You’ll pay less if you have good credit
When we think of car insurance, we don’t often think of credit scores. However, your credit score can affect what you pay for auto insurance. Many home and car insurance companies use your credit information, filtered through a formula to create an “insurance risk score,” to determine how likely you are to file an insurance claim. Your premium bill could rise if you have a bad credit score, even if you haven’t filed a claim. One of the main reasons is that a low score might indicate that you have been missing payments or paying late. If you do that to creditors, auto insurance companies worry that you might do it to them. Also, those who show responsible financial behavior may be more likely to be responsible in their driving behavior, resulting in fewer claims. Make sure you have good credit, and you could save money on your car insurance premiums.
2. Your insurance company may consider your car cheaper to replace than you do
If their car is totaled in an accident, many people expect an insurance company to reimburse them for the amount they paid for it. However, your car depreciates in value the minute you drive it off the dealer’s lot. Car insurance companies use different models to decide how much your car is worth now (not what you paid for it, or what you still owe on it), and will provide you with that amount. Unless you have a special policy, most insurers will value standard cars based on “actual cash value,” which takes depreciation into account.
3. Stolen personal items are not covered
A standard car insurance policy does not cover personal possessions stolen from your car. This includes gifts, cell phones or a laptop that you may have stashed in your car. Fortunately, theft of personal property is covered under your home insurance policy. However, just like with car insurance, you’ll need to file a police report and pay a deductible on your home insurance policy to make a theft-related insurance claim.
4. It’s possible to “stack” your insurance claims
In some cases, it’s possible to file claims under multiple policies or coverages using a practice known as “stacking.” This can be a way to receive full compensation if one policy doesn’t cover it in full. However, you need to be careful, since some states have stacking restrictions. Make sure to ask about your options when signing up for car insurance, and find out what’s allowed in terms of claims stacking.
5. Installment payments may cost you
It’s almost always more expensive to pay your car insurance in monthly installments instead of paying annually or bi-annually. Some insurance companies will even charge convenience fees. |Find out if there are fees associated with breaking up your premium payment into smaller chunks. If you don’t want to pay the added costs for installment payments, you can create your own installment plan. Divide the amount of your premium payment by six (or 12 if you renew every year), and then automatically set that money aside in a high-yield savings account. Then, as your policy is up for renewal and your premium is due, you can transfer the money into your checking account and make a full payment.
6. You can continue being billed if you don’t officially cancel your policy
You should always cancel your car insurance policy in writing. If you don’t cancel using the insurance company’s prescribed method (which generally involves written notification), it may automatically renew your policy and charge you accordingly. If you have your premiums automatically withdrawn from your account, this could mean that these withdrawals continue – even after you think you’ve cancelled your policy. If you don’t pay, you could find yourself reported to a credit bureau. Find out exactly what you need to do to cancel your auto insurance coverage, and then follow the directions precisely.
7. You don’t have to add your teenager to your insurance policy
If your teenager doesn’t have a license or you don’t plan to allow him or her to drive your car, inform your car insurance company. Some insurance companies may automatically add a teen to your policy when he or she reaches a driving age. Make sure you know your insurer’s policy. It’s always cheaper to add a teen to your policy than to have them buy their own. However, know your options. For more, read when to add your teen to your car insurance policy.