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:
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.
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:
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:
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:
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.
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.
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.
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:
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.
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.
Every state requires you to have a certain amount of coverage. In Oklahoma, the minimum coverage you must have is:
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:
It’s important to note that property damage liability doesn’t cover damage to your property.
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.
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:
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.
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.
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:
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.
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.
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.
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.