Of course, you want the lowest auto insurance premiums you can get. Who doesn’t? But the cheapest auto insurance rate, while good for your wallet, may not be the best when it comes to protecting you. Here are some reasons why the cheapest car insurance may not be the best:
- Less coverage and increased repair costs. You can get a cheaper rate by choosing the minimum coverage required by Oklahoma law will save you money, but if you have collision damage to your car, it probably won’t pay. And forget about filing a claim for vandalism. You would pay out of pocket for repairs.
- Minimal limits mean minimum protection. You can save money by only buying the minimum coverage limit set by Oklahoma, but you might be surprised how quickly you use up your limits. You’d have to pay the difference out of your own pocket.
- A higher deductible means more out-of-pocket costs for you. Your deductible is what you pay before your insurance pays anything. If you choose a higher deductible, your insurance price will be lower, but be sure that you choose an amount you can afford.
Remember that you buy auto insurance to protect you, but if you buy the cheapest policy possible, you may not get the protection you really need.
To get the lowest rate that you can, shop around. An independent agent (one that represents multiple car insurance companies instead of just one, like State Farm) can compare auto insurance rates for you. They can do the leg-work for you in making car insurance comparisons.
Getting the cheapest price doesn’t just depend on the insurance company you choose. There are other things that can affect your rates.
7 Things That Affect Your Auto Insurance Rates
You probably don’t like taking big risks that might hurt you in some way, and neither do insurance companies. There are a number of things they look at when pricing your policy, including:
1. Your Demographics
Demographics are statistics that insurance companies use to figure out how risky it would be to insure you. They use this data to predict how likely it would be that you would be involved in an accident and file a claim.
The most important demographics used by insurance company are:
- Age. This is one of the most important things for insurance companies. Teen drivers and drivers below age 25 are considered high risk because of their lack of experience. On the flip side, drivers over 70 are considered high risk because of possible medical issues, hearing and sight loss and prescription drugs.
- Gender. It’s been shown that teen boys are more likely to cause accidents than teen girl drivers of the same age. But, when it comes to senior drivers, older women are more likely to be involved in minor accidents than senior men.
- Marital status. A study by the National Institutes of Health said that drivers who were never married or divorced have a much higher rate of accident crash injuries than married drivers. Married people are considered more responsible drivers. For example, if a man with a clean driving record gets married, his rates will be cut nearly in half.
- Occupation. It makes sense that people who drive more have more risks of getting into an accident. So if you’re a delivery driver, your rates will be higher. But airline pilots, who usually just drive from home to an airport and don’t spend much time on the road, would get a lower rate.
- Where you live. Insurance companies take your zip code and look at things like car theft rates, car repair costs, road conditions, unemployment rate and whether you live in a city, suburb or in the country.
- Years of driving experience. If you only started driving at age 23, you’ll more than likely have a higher rate for car insurance at age 25 than someone who’s been driving since you’ve been 16, and you’ll probably see a drop in rates as you gain driving experience.
2. Your Geography
Where you live is another thing that insurance companies look at. Your zip code can make all the difference between a high and low rate. Insurers review:
- Number of cars stolen
- Claims filed for property stolen from cars
- Number of fake injury claims
- Vandalism reports
- Weather risks like tornadoes, hail, hurricanes, etc.
- Whether you live in a
Basically, it comes down to the insurance company’s experience with losses in your neighborhood. Other factors can affect your auto insurance rates, such as the use of public transportation also play a part. Each insurance company does its own calculations and has its own claim experience. These can make a big difference when you’re comparing rates.
3. Your Driving Record and Your Vehicle
It makes sense that better drivers have lower auto insurance rates and that filing a lot of claims that the insurance company pays might increase your rates, but it’s important to know, as you're shopping for that great rate, just what they look at.
Your Driving Record
In general, a good driving record means you get a lower car insurance premium. On the other hand, if you have a history of accidents and speeding tickets, that makes you a higher risk to insure and you’ll pay more.
When you apply for car insurance, the insurance company looks at the risks they will take by insuring you, so they review your driving history, including moving violations and at-fault and not-at-fault accidents.
If you have several accidents or traffic tickets, the insurance company sees you as someone that will probably have the same problems in the future, which means more financial risk for them. They may decide you are too risky to insure or charge you a high rate to compensate for what they probably will have to pay out.
It’s important to know that in addition to moving violations and accidents, your Motor Vehicle Report also includes information about any criminal convictions that have to do with driving, including DUIs and any time you failed to appear at a court hearing about violations. It also lets the insurance company know if you have any restrictions on your license, such as not being able to drive at night because of poor eyesight.
Tickets and accidents don’t stay on your driving record forever, though. In Oklahoma, they are removed from your driving history after three years.
Age has a big effect on insurance rates while people are young and after they reach age 70, but after that, your choice of car affects your premium more than your age. This includes:
- The type of car you drive. Your car insurance rates are partly based on the claims filed with your insurance company by other people who drive the same model car.
If you have a sports car, you’ll probably have high insurance rates, because they are more likely to pay out big claims because of speeding drivers. Insurers also look at vehicle information like how much a car will cost to repair, and how likely your car is to damage another car in a collision.
- The trim package you chose. Cars with add-ons like GPS and fancy audio systems can cost more to repair than base models, and that makes them more expensive to insure. When you buy a car, upgrading to a higher trim level usually raises the price of the car and also the insurance premium.
- The safety features of your car. Vehicles with a great safety record and safety features often cost less to insure, says the Insurance Information Institute. But some safety features can lead to higher insurance rates because high-tech safety equipment is more expensive to repair or replace after an accident.
- Your car’s probability of being stolen. If the model you drive is preferred by car thieves, your premiums will be higher because of that risk.
- How much you drive. If you don’t drive much, you’ll often get cheaper car insurance premiums, because if you spend less time on the road, that means less risk of an accident.
- Whether you own or lease. Insuring a leased car may cost more than insuring one you own, because often a leasing company will require you to have more coverage. For their own protection, these companies usually require low-deductible collision and comprehensive coverage, as well as gap insurance that will pay the difference between the car’s value and what is owed for the balance of the lease.
4. Your Insurance Claim History
When you file a claim with your insurance company and they pay on your behalf, you may see higher rates at your next policy renewal, or if you change insurance companies. Your insurance claim history is also used to calculate your insurance credit score.
Studies show that on average, drivers with a recent accident that was their fault can pay over 50% more for a full coverage policy than those with no accidents on their record. Some insurance companies offer accident forgiveness, and promise not to raise your premiums because of a crash that was your fault, but adding that may cost extra.
5. Your Coverage and Deductible Preferences
Every state requires you to have a certain amount of coverage. In Oklahoma, the minimum coverage you must have is:
- $25,000 for bodily injury or death of one person in an accident caused by the owner/driver of the insured car
- $50,000 for total bodily injury or death liability in an accident caused by the owner/driver of the insured car
- $25,000 for property damage per accident caused by the owner/driver of the insured car
Let’s talk about what each of those means; and, other coverage that, while it isn’t required, it might be a good idea to think about adding.
The word “liability” means that you are legally responsible. When it comes to car insurance, it refers to an accident that is your fault, as decided by the law or laws.
There are two types of liability insurance:
- Bodily injury liability. If you’re found at fault in an accident, bodily injury liability will cover injuries to the other party, including medical expenses, lost wages, as well as pain and suffering. If someone else was driving your car with your permission, they are also covered. The “insurance follows the car,” but not if your car is stolen. And there’s no coverage if the person you loaned your car to let someone else drive it without your permission.
- Property damage liability. This covers property damage that you might cause to someone else’s property in a collision. It usually covers cars, but it can cover other items like fences, buildings, mailboxes or lamp posts.
It’s important to note that property damage liability doesn’t cover damage to your property.
Uninsured and Underinsured Motorist Coverage
This type of insurance isn’t required by Oklahoma, but you would be wise to think about adding it to your policy. This coverage is for you.
Uninsured and underinsured motorist coverage is for when you’re in an accident and the other person is at fault and liable, but doesn’t have the liability coverage that they are supposed to have to pay for expenses related to an accident.
If you, someone else you let drive your car, or a member of your family gets hit by an underinsured or uninsured motorist, this type of insurance pays for damages.
Uninsured and underinsured motorist coverage policies can also cover you while you’re a pedestrian and in hit-and-run accidents. This insurance may pay for both your medical costs and your property damage, or you might have to purchase separate coverage for each of those.
When your vehicle gets damaged in a collision, this is the coverage that pays for fixing your car. It can even cover damage from potholes
Collision coverage doesn’t cover you for mechanical failure or the normal aging of your car. If, for example, your transmission fails, you couldn’t use your collision insurance to get it fixed.
If your car is older and not worth much, you may want to skip this cost to save money on your insurance premiums. At the same time, it can be surprisingly affordable, so check the value of your older car before you decide to skip collision coverage.
Comprehensive coverage is for types of damage that didn’t happen during a collision. It can cover damage resulting from fires, missiles, earthquakes, floods, vandalism, hitting a deer, falling objects or explosions and glass breakage.
You may want to consider adding comprehensive coverage to your policy to make sure that you’re not left with an empty wallet if something happens, like a broken windshield.
For example, if your car has rain-sensing wipers and driver-assistance systems like automatic braking and adaptive cruise control, be prepared to spend $2,000 or more for a replacement windshield, recalibrating safety features, and performing a mandatory thrust wheel alignment, according to Kelly Blue Book. Even a replacement windshield for a vehicle with heads up display that doesn’t have driver-assistance systems and rain-sensing wipers can easily cost over $1,500.
Medical Payments Coverage
This covers treatment for injuries for you and passengers in your car. It can cover things like medical payments and funeral costs. Sometimes these are covered by your health insurance policy, so be sure to check. If you have high-deductible health insurance, you might want to add this coverage to your car insurance policy.
The Insurance Information Institute defines gap insurance as, “In the event of an accident in which you’ve badly damaged or totaled your car, gap insurance covers the difference between what a vehicle is currently worth (which your standard insurance will pay) and the amount you actually owe on it.”
In simple terms, gap insurance covers the difference between a car’s reduced worth and the amount of the loan.
The value of your car decreases the second you drive it off the lot. If you put down a small deposit on the car, it’s possible for the loan amount to be more than the market value.
You may want to get gap insurance if:
- You made less than a 20% down payment
- You financed the car for 60 months or longer,
- You leased the vehicle,
- You bought a car that depreciates faster than other vehicles on average
- You didn’t finish paying off the loan on your old car and are buying a new one with a loan
Most auto insurance policies have a clause that prevents you from using your car as a carrier or delivery service, ridesharing included.
That means you could drive to your day job and be covered as you would expect, but if you decide to pick up ridesharing clients after work, your coverage ends as soon as you indicate you’re available for pickup on the app.
There are a couple of insurance carriers that offer a solution for drivers providing rideshare services. The current solution for this gap in coverage is to get a rideshare endorsement added to your policy.
6. Your Credit & Insurance Credit Scores
Before the Fair Credit Reporting Act in 1970, you could be turned down for a loan or insurance just because a banker or insurance agent didn’t like you!
Those days are past, but a good credit score is still important in many areas of life, and the insurance world is no exception. Your car insurance premiums are affected by your credit scores.
Insurers have found certain connections between financial misbehavior and motorist mistakes. People who are less responsible with credit are also more likely to have accidents. And insurance companies consider this when pricing their policies.
Did you know that insurance companies have their own way of coming up with a credit score? But they also look at your other credit scores as well.
Your Insurance Credit Score
An insurance credit score is a rating computed and used by insurance companies. It rates how likely you are to file an insurance claim.
It’s calculated using:
- Your FICO score
- Lapses in insurance coverage
- Late premium payments
- Missed premium payments
- Your driving history
A high score means lower car insurance premiums, while a low score means you’ll pay more. Insurance credit scores have a range, just like credit scores.
Scores of 770 or higher are good, and credit scores of 500 or below are poor. Your score is not permanent, and there are ways you can increase low scores and possibly lower your premiums. Work to improve your FICO score by paying bills on time and reducing debt.
Also, limiting the number of insurance claims filed over a certain period (depending on the insurance carrier) can help boost your insurance credit score.
Your Insurance Credit Score and Car Insurance Premiums
Auto insurance companies have different standards for what they consider a good score.
A low insurance score can be costly, especially for auto insurance coverage, which is legally required in the US. For example, if your insurance score causes your auto insurance premium to increase by $25 per month, you’ll pay approximately $300 more in premiums per year. Over 10 years, it will cost you $3,000, which you could invest or spend in other ways.
7. Previous Insurance Coverage
Insurance companies find that those with continual insurance coverage are less likely to get into an accident, so having a consistent auto insurance history can help get you a better rate.
And it doesn't matter if your prior car insurance policy was with your current insurer or someone else. However, a lapse in coverage can cost you in more ways than one. Law requires you to have insurance and if you don’t have it, you’ll not only face legal penalties, but any damage or medical payments will come out of your pocket.
If you were on your parent's policy previously, let your new insurer know so it won't appear that you were without prior coverage when applying for your first individual policy.
Having a lapse in coverage – even just a day – can result not only in higher auto insurance rates but also get you penalized. Drivers who let their insurance lapse for 60 days can pay about 11% more than the average premium in Oklahoma.
How to Get the Best Car Insurance
Earlier, you read how local insurance companies can give you cheaper rates and often have higher customer satisfaction ratings.
When it comes to customer service, Thrive Insurance is a local agent whose goal is to serve everyone they speak with, and provide real answers. This means no shortcuts, no half-hearted answers to a problem, and no giving up, even when the answer isn’t obvious.
Thrive also has a customer service rating that is two times better than the industry average, due to their focus on quality products, solutions that truly work, and building long-term relationships with both their clients and partners. It’s all about collaboration and teamwork to get their clients the right insurance.
As independent advisors, Thrive doesn’t work with just one carrier. Our loyalty lies with you, and we can truly advise you on what’s best for you and your specific needs--beyond just simply comparing car insurance rates. And a top priority is making buying and understanding insurance easier for you.
For the best rate on your auto insurance and service you can count on, call Thrive at 405-241-9710 or email us using our convenient form and we’ll get back with you as soon as we possibly can. Because together, we thrive.