5 Reasons Your Insurance May Be High
With car insurers expected to be upside down on policies in 2024 by nearly 5%, leading to rising insurance rates across the board, it’s no surprise many car enthusiasts are looking to lower their premiums. But when an industry overall is looking to increase premiums, while individuals look for ways to save, the disconnect can lead to a lot of frustration.
In this blog post we look at 5 ways many car enthusiasts may make themselves less appealing to potential traditional and enthusiast insurance companies. You might be surprised to learn that someone else of a similar age with the same kind of car(s) could be paying a vastly different premium than you for similar sounding insurance.
The reality is while car and driving history is part of what makes up your insurance premium, a lot or even the bulk of your premium may come from factors that are not your age or the make and model of he vehicle. This may lead to not only paying higher premiums with your existing insurance, but may lead to higher quotes when shopping for new insurance.
Like all of our blog posts, these are intended to be general information to help you stay informed and ask questions about your own situation. None of these are “magic fixes” and not all will apply to everyone.
In fact, many of these are significant factors in what is known as your insurance score. Your insurance score is like your credit score. It’s a system used by insurance companies to assess your potential for claims, just like a credit score assesses your assumed ability to repay a loan. While both credit and insurance scores have many well documented challenges, they remain the industry standard.
Your Mileage Is Too High
If you drive a lot, it stands to reason your car insurance may be higher. But if you are simply over estimating your mileage, you may be paying too much or limiting your options. Particularly when it comes to weekend/occasional use, collector, enthusiast or even race cars – not having accurate mileage could be costing you a lot of money. Worse, some companies may elect not to do business with you at all because you claim higher mileage.
To make things even more confusing – some companies mileage quotes are “average” or “typical”, while others are looking for you to state “maximum”. And they don’t always make it clear which which they are looking for. While the help of an independent agent or broker can give you some guidance, you should also ask whether you would be open to more options with more accurate mileage reporting.
Your Coverage Levels Are Too Low
When we discuss this with people we don’t blame them for looking at us confused. It seems like opposite land where less coverage means you are paying more. And to make it more confusing, it may save you money in the short term with your existing policy, in the long run you may actually wind up paying more. Having below industry standard coverages actually makes you less appealing to other, particularly premium, insurers.
The reasons are not often discussed, but it’s generally a combination factors. One is potential liability to the insurer. If you carry lower insurance elsewhere and you are named on a policy with higher coverage, they could be at risk. The other is if you cut corners on your insurance coverage, you are more likely to need to make claims, even for minor things.
Traction recommends you maintain AT LEAST 100/300/100 coverage, even though this is well above the state minimum in nearly every state. If you aren’t sure what your coverages are, or even what these numbers mean, we can help you make sense of it.
Your Credit Is Slow Or Poor
Most traditional and many specialty insurance carriers put a fair bit of emphasis on credit score when determining qualifications and rates. We’ve got lots of opinions on the subject, but it’s a reality of the system. We understand it can be hard to pay off debt and improve credit usage while also paying a significant premium for insurance.
Still, there are a few ways to help yourself. One option to look at is getting an enthusiast insurance policy, which may be lower than traditional insurance. Enthusiast insurance companies often place less emphasis on credit scores than traditional insurers. And even when they do, they are generally less expensive than traditional insurance. Of course, not every vehicle, driver or situation qualifies, but it’s a start.
Bottom line, you may need to get creative to find better insurance deals if your credit is slow or poor. A good independent agent or broker can help you navigate.
You Lie To Your Insurance Company Or Agent
Years ago people told each other “just don’t tell your insurance company, they won’t know”. In addition to lying to your insurance company being dishonest, if not outright illegal, it just doesn’t work that well anymore. In fact, it might be hurting you and leading to higher premiums.
The reality is insurance companies share information. That means every claim you’ve made to your insurance company is reported to a national system. Secondly, nearly ever insurance company pulls MVR records now. This means any previous claims will be shared and anything on your MVR will show up.
You can’t ask your agent to just “pull your MVR and tell you what is on it”. In some states, including Georgia where we are based, MVRs can only be pulled by agents for the purposes of underwriting. Rather than playing games and saying you don’t know, just report everything. You might be surprised to find that better insurance companies are more likely to work with you.
And it’s not just tickets. Thanks to a shared insurance system known as CLUE, most insurance providers also have access to you and your vehicles claims history.
Insurance companies, particularly those with direct underwriting like enthusiast insurance or agreed value insurance, will often decline risks where incidents, claims and violations are not properly disclosed. However, knowing the risks up front may be acceptable or may allow your agent or broker to place you with a company that is more accepting of your driving record or situation.
Some companies only look at 3 years of history, other look at 5. Though we should note, depending on the company and state, some very serious violations may need to be reported for even longer. Talk to your agent. Being honest with them, even though it means they’ll need to report it to any insurance company they get a quote for, we often find it leads to a better situation. It allows them to find the right fit. The insurance carrier is going to know about it anyway, so you are only hurting yourself and potentially missing the opportunity to find a better fit.
You Shop For Insurance Too Often/Too Soon
The best insurance companies, often with the best rates, like stability. Insurance as a business is about the law of averages, and more risk spread out over more time is less likely to result in losses than someone that jumps in and out of their policies. So insurance companies generally like to see you stay with the same company. While how long depends on the company and the insurer, good rules of thumb are 36 months (3 years) is the best, 12 is ideal before switching or shopping at all. Under 6 months is generally not recommended, and may even result in companies outright passing on you.
Stay a little longer and then shop. You may be surprised to find rates are lower.
The other “too soon” relates to previous violations or claims. If you’ve been held back or are paying higher premiums due to tickets or claims, the time period you’ll need to wait depends on the company you are get quotes from and the state you live in. While there are plenty of options to save money even if you have a few tickets or a claim, if you’ve recently had significant claims or serious violations, you may need to stay put until it’s time to look again.
Recap – Ways You May Be Hurting Yourself
As you can see, our goal here is to go a little deeper than the typical insurance blog. We want to help inform our customers so they know how insurance companies perceive them. Armed with the knowledge you can make decisions that not only can help ensure you covered properly, but also allow you to maximize the coverage you can get for what you spend.
Of course, some of these suggestions mean making longer term decisions over short. We know that comes with a financial cost and that’s not viable for everyone. In those situations, when we know that is the case, we can still do our best to find you ways to save money. We hope you’ll take advantage of those opportunities to invest in your future.
For Information Purposes Only
Of course, like all of our blog posts – this information is intended to be educational. This blog post is intended for general knowledge and is not direct insurance or legal advice. You should read and review any policies carefully and/or get legal help if you need it.
