Credit.com: 11 things car insurance companies don’t want you to know

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Car insurance can be confusing. First, there are all the policy considerations: Do you want a policy with comp and collision? How much liability should you carry? Do you need uninsured motorist coverage? Even once you make decisions on all these things, the bill that arrives can be difficult to understand—exactly what goes into the pricing for your car insurance premium? Here’s what car insurance companies don’t want you to know about premium pricing.

  • Your car insurance may not be tied to the driver.
  • The type of car you drive matters.
  • Prior claims and questions raise rates.
  • You can check your report for errors.
  • Your credit score impacts your car insurance costs.
  • Where you live impacts your premium account.
  • Your age affects your car insurance premium.
  • Gender, marital status, job and education level can affect premiums.
  • If you bought your car with a loan, your premium may be higher.
  • You can lower your insurance rates.
  • You have options if insurance denies your claim.
Is car insurance tied to car or driver?

Technically, car insurance is tied to the car. That means if you let someone else drive your car, your insurance may kick in if there is an accident. Not all insurance policies cover all uses of your vehicle, though, so read the fine print on yours before you allow someone else to drive it. You may also be able to exclude drivers who live with you from your policy if you don’t ever want them driving your car and don’t want them impacting the cost of your policy.

Does it matter what kind of car you drive?

The total value of your car, what type of vehicle it is and what type of safety rating it has all factor into the cost of your policy. Other factors can include how many miles you drive each year, where you park your car, and how many expensive extra features your car has.

Does your driving record affect your insurance?

Every claim you make—and even if you ask an insurance agent about making a claim—gets entered into a database that your current and future insurance carriers can access. If you have had any recent accidents or traffic violations, you may be more expensive to insure than someone with a clean driving record. If you’ve made any recent claims, your insurance premiums will likely go up. And if you shop around for a new company, they’ll have access to your records and will take your driving record into consideration.

Can you check your insurance reports?

Your insurance companies share information with two databases: the Comprehensive Loss Underwriting Exchange (CLUE) and the Automated Property Loss Underwriting System (A-PLUS). These databases are run by outside agencies—LexisNexis runs CLUE and Verisk Analytics runs A-PLUS—and any claims you make stay in your report for five to seven years, depending on the database.

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The Fair Credit Reporting Act entitles you to one free copy of your report every 12 months. You can dispute inaccurate or incomplete information on your report. You are also entitled to notice about any negative decisions based on information in your report. Requesting your reports does not affect your credit score.

  • Request your CLUE report from LexisNexis online or call 866-312-8076.
  • Request your A-PLUS report from Verisk by calling 800-627-3487.
Does credit score impact your car insurance cost?

In most states, your credit score can impact the cost of your car insurance. The only states that don’t allow car insurance companies to use credit score as a factor in pricing are California, Massachusetts and Hawaii. Statistical studies from the Federal Trade Commission and other research organizations show a correlation between credit score and how much a person is likely to cost a car insurance company. In short, someone with a poor credit score is seen as a greater risk, so the insurance company may charge more for the insurance to help cover expenses related to future claims.

Does where you live impact your premium amount?

Where you live can impact your car insurance cost. In 2018, for example, the average car insurance premium in Michigan was 64% higher than the national average. Other states with car insurance premium averages on the high end included Louisiana, Florida, Rhode Island and Connecticut. States with the least expensive average car insurance premiums included Vermont, Ohio, Virginia, Idaho and Iowa.

Does age impact your premium?

When it comes to what car insurance companies don’t want you to know, this one isn’t super secret. Age does impact your premiums, with the youngest and oldest drivers typically paying the most on average.

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The youngest drivers pay the most for insurance. Premiums are highest at the age of 18 and decline steadily until the driver turns 25. In the eyes of carriers, drivers then enter adulthood, during which time premiums stay pretty flat for the next 30 years or so, until the age 55. Premiums inch up slowly between ages 55 and 65 before jumping way up around the age of 75.

In addition to your age, your gender, marital status, education level and even your job can affect your insurance rates.

If you bought your car via a loan, is your insurance cost higher?

If you don’t own your vehicle outright, then you may pay more to insure it. If you own a vehicle outright, you’re only required to carry liability on it. Liability is the part of your insurance policy that kicks in to cover damage caused to other people’s cars or property in an accident you’re at fault in.

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When you have a loan, the bank is concerned about protecting its investment. That means it may require you to carry comprehensive and collision as well. This is the part of an auto policy that covers damage to your car in an accident in which you’re at fault . A policy with this added coverage is more expensive than one without it.

How can you lower your car insurance costs?

No matter your age, gender, or location, you can potentially lower your car insurance via a variety of methods. Here are some tips your car insurance company doesn’t want you to know to put into action to save on premiums.

  • Drive carefully. Not only does driving carefully help you avoid rate-raising accidents, but many companies also provide good driver bonuses when you haven’t had an accident or filed any claims for a certain amount of time.
  • Pay your bills on time. Paying your bills on time goes a long way toward improving your credit score, which can improve your rate depending on where you live. Paying your bills on time also demonstrates trustworthiness to your insurance company, which means you may be able to negotiate for a lower rate.
  • Ask for discounts. When it comes to your insurance rates, it doesn’t pay to be shy. Ask your insurance company about discounts, including multi-driver or multi-car discounts, good student discounts or safe driver discounts. You may be able to score a large portion off your premium because you’re a good student or you follow all the traffic laws.
  • Review your credit report. Know what’s on your credit report and what you can do to drive up your score. Once you’ve improved your score, ask for a new quote for car insurance.
  • Consider a higher deductible. Look carefully at your coverage and consider whether you can tweak anything in your policy. If you can afford to cover $2,000 in damages if you get in an accident, consider changing your deductible from $500 to $2,000 to save on your monthly premium.
  • Shop around for a better rate with other insurance companies. The insurance market is highly competitive, and you may find a better rate with an online company or through a broker that works with multiple companies. If you find a better rate, go back to your current company to see if they’ll match or beat the offer.
  • Choose your next vehicle carefully. Because the type of car you drive affects your insurance rates, do your research before your next purchase. Look for a car with plenty of safety features (but without too many other bells and whistles) that will get you a lower rate.
What happens when car insurance denies a claim?

Of course, you don’t just pay for car insurance for the fun of it. If you get into an accident, you expect the insurance to step in and help cover the expenses. If your insurance company denies your claim, you have some options for appealing the claim.

  • Contact the insurer. After you’ve reviewed your claim denial, reach out to the insurance company directly. You may be able to explain your claim better or gather additional information to help you understand the reason for the denial.
  • File an official appeal. Most insurance companies will have an appeals process clearly set out online. You’ll want to write a clear, direct letter that explains why the evidence you originally gathered and submitted with your claim contradicts the insurance company’s decision to deny the claim.
  • Talk to a legal professional. If you feel that your insurance company is denying your claim in bad faith, talk to a legal professional about your options.
Bringing down the total cost of car ownership

Car ownership is expensive. Make sure you pay attention to all the potential expenses to get the best possible deal overall—and don’t forget to shop around for the best rates before locking yourself in.

This article originally appeared on Credit.com.

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