How Do Accidents Affect Your Premiums?
Nobody wants to get into a car accident – that’s why they call them accidents after all, they are unintended consequences of us driving. When that happens, all of us worry about how the accident will affect our insurance, and the cost of the premiums that we pay. The good news is that the effects don’t always have to be drastic, but it’s important to understand what potentially could happen to you.
First, you have to realize that there is no golden rule for how an accident is going to affect you and your premiums. There are many factors to consider here, including your long term and short term previous history, the type of insurance you have and the company that provides it, whether or not you were proven to be at fault in the accident, and much more. All of this will have an impact in how the incident changes your coverage, so it can be difficult to say with certainty how it will affect you.
That said, there are a lot of basic guidelines that you can come to expect. For example, if you are proven to be at fault in an accident, and it’s the first accident you’ve had or the first you’ve had in a number of years, then the increase on your premium is likely to be between 10% and 20%. If you had a good driver discount, that’s basically taking that away, and if you didn’t, then it’s added on top of what you already pay.
Fault is very important for an accident. If you’re involved with something but it wasn’t caused by you, you shouldn’t be held liable. That’s why getting a police report of the incident is so important, to make sure there is no confusion legally and with the insurance company for who did what. Without that, both drivers might share the blame, and both will have their insurance premiums go up.
If an accident is considered minor, less than $1,000 or $2,000 in damages depending on your circumstances and coverage, then it might not raise your premiums at all. If it does, then the boost might be smaller than it would be for something more major. The raise might be closer to 2 or 3% as opposed to 10 or 20%.
Second and third accidents on top of the first one you have in a short window of time will lead to much more substantial rises in premiums. In the eyes of the insurance company, you are now becoming a major risk and cost liability. A second accident might raise your premium another 30%, and a third could raise it another 50% potentially. More than that, and you’re risking being dropped by your company altogether.
As mentioned, there is no single golden rule here, but these are the basic guidelines you can use to try to make sense of how accidents will affect your premiums. Keep in mind, rises in premium prices generally last for about three years after the date of an incident before they return to their normal, lower prices. It can be a hefty price to pay for a small lapse in focus or judgment, which means you have even more incentive to be careful on the road.
5 Tips for Finding Cheap Auto Insurance Prices
Finding cheap auto insurance can be tricky, but it really doesn’t have to be overly confusing or time consuming. When you know what to do and how to do it, you’ll be able to find affordable prices that you’ll be more than happy to pay. Take a look at these 5 tips for finding cheap auto insurance prices and you’ll be well on your way to a reasonable and affordable car insurance plan.
1. Comparison Shop and Research: As you begin to search for cheap auto insurance prices, the first thing that you have to do is complete some research, and do some comparison shopping. One price might seem super cheap, but then you might go and look up two others which are cheaper, or you might find that the super cheap is option is also very limited in terms of what it offers. Research is the key, and you have to arm yourself with the knowledge to make an informed decision.
2. Get Discounts: One of the best ways to find cheap auto insurance prices is to look into all of the great discounts that are available. There are potentially dozens of different discounts, ranging from associations you’re a part of to your age and background, to the features of your vehicle, the types of plans you have with a company, and more. Use every discount that you can to lower the price of your plan.
3. Personalized Protection: It’s of the utmost importance when you’re shopping for cheap auto insurance prices that you find a personalized or customized plan based on your own needs. If you have a great driving record, you have a safe vehicle loaded with the latest and greatest features, you don’t drive often and so forth, you should have a plan that matches those points and offers you discounts. Never pay for anything you don’t need, and never pay more for anything that you should be able to find for less.
4. Online Quotes and Brokers: Many auto insurance companies allow you to get quick and easy online quotes through their websites. Many of these also offer you comparison prices right on their own site, so you can see which is the cheapest. From there though, brokers who work with a variety of insurance companies may be able to offer you the broadest and easiest comparison pricing. It’s a simple and effective way to find the lowest rates.
5. Credit Scores: Your credit score can either be a blessing or a curse. If you know you have a good one, then you should turn to a company which checks credit scores. They will see your strong rating and reward you with a lower price, which is fantastic. On the other hand, if you know your credit score is poor or sketchy, then you should turn to an auto insurance company which doesn’t check it to begin with. Then you’ll avoid higher rates, or even being turned down completely, either of which would be a negative outcome.
Should I Go With a Huge Auto Insurance Company or a Local One?
One of the key decisions that you’ll have to make are you’re shopping for auto insurance is whether you want to go with one of the huge auto insurance companies with millions and millions of customers, or whether you want to go with something more local or regional. Will bigger be better for you and your protection, or does something smaller offer unique benefits that cannot be replaced? Take a look at this comparison to learn which option may be right for you.
First of all, the biggest auto insurance companies are usually that large for a reason. If they have millions of customers, it means they are doing something right. Today, one of the main benefits to utilizing one of the largest companies is that they typically offer lower rates and protection plans. The scale of their operation allows them to offer you more savings than a local or regional outlet will be able to.
The six largest auto insurance companies are State Farm, Allstate, GEICO, Progressive, Farmers and Nationwide, and more often than not, it’s with one of these outlets that you can save the most. Which one allows you to do that can depend on any number of factors, but all of them typically offer you affordable plans and a range of discounts.
The downside to choosing one of the big boys is that you may be sacrificing a level of attention to detail and personal attention, customer service, or individualized and customized care and coverage. This isn’t always the case, but it’s one of the main concerns that people have.
When you choose a more regionally based outlet, you can usually rest easy knowing that they will be more available to you, and may be willing to work with you more to match your unique needs. It should be noted that none of the six largest companies are within the top four highest rated companies for car insurance, and four of them are rated beneath average for customer satisfaction.
Another reason that some individuals end up choosing smaller companies is because of their driving or legal history, or even their credit score and financial history. Most of the big auto insurance companies won’t cut you any breaks, they have clear lines for what they do or do not accept. But smaller and local companies are often willing to take customers that others wouldn’t. That means if you have a poor credit history, you have been in a lot of accidents in the past, or anything else, you can find a safe haven with a smaller outlet that’s willing to work with you anyway.
So is bigger better, or is there something about the quality of smaller and more local companies which cannot be replicated by the huge companies? There is no single answer or solution, and different people can end up equally happy with either option depending on their own needs. Think about factors such as pricing, customer service and availability, customizability of coverage, your own driving background and record, and more, and you will be able to find a great option.
Different Types of Auto Insurance Coverage
Before you go ahead and purchase a new auto insurance plan, or upgrade or change the one that you currently use, you better understand what kinds of coverages are out there, and what exactly it is that you’re paying for. You want to avoid paying for protection plans that you don’t really want or need, and you also want to avoid missing out on the kind of protection that can save the day in the event of an accident or emergency. Take a look at this list of some of the most common forms of auto insurance coverage.
• Collision Coverage: Collision coverage is the most basic of all auto insurance protections. It will reimburse you for damage to your vehicle stemming from an accident on the road, and you’ll be working with a deductible in terms of compensation and how much you’re liable for.
• Comprehensive Coverage: Comprehensive coverage is what protects your vehicle and the money that you have put into it in the event of all kinds of mishaps, excepting accidents. This includes natural disasters, robberies, animal incidents and more. You’ll have a deductible and will receive compensation beyond that.
• Liability Insurance: Liability insurance protects yourself, your family and your assets from being held financially responsible from liability stemming from an accident, including property damage and bodily injury. Liability for bodily injury and property damage can be combined with a “single limit” or have separate or split limits for each category.
• Bodily Injury: Bodily injury coverage is for financial responsibilities relating to an accident for which you are responsible, including medical bills and other damages.
• Property Damage: Property damage of course relates to the expenses of another person’s property including their car, home or other property for an accident that you’re legally responsible for.
• Medical Payments: Medical payments covers your medical bills and expenses, or the bills for a passenger of your vehicle, from injuries suffered through an accident. This can also protect you when you’re riding as a passenger in another vehicle, depending on your plan. This is opposed to bodily injury coverage which covers the expenses and bills of the individuals from the other vehicle.
• Uninsured Motorist Protection: This kind of coverage protects you when you’re in an accident with another motorist and he or she ends up not having insurance, or not having an adequate plan.
• Customized Equipment and Vehicle Modifications: This is coverage for aftermarket accessories and modifications to your vehicle, including CD players and stereo systems, navigation and GPS units, and so forth, typically as long as they are permanently installed.
Hopefully by now you should have a better idea about what’s out there, and what kinds of auto insurance coverage that you may end up needing. Also remember, states will require you to have specific forms of coverage, in specific amounts, and these regulations will change from state to state. Get the protection you need, and know what you’re paying for, and you’ll be a happy insurance customer.
Biggest and Most Highly Rated Car Insurance Companies
Which car insurance companies are the biggest? Which car insurance companies have the highest satisfaction and customer ratings? Are the biggest also the best? These three questions will help you to figure out which auto insurance company may be a good fit for you, and will also simply let you know what’s out there. Knowing all of your options will always help enable you to make a smart decision when it comes time for a new policy or a change to your existing one.
First, let’s take a look at the biggest car insurance companies in the United States. At the top of the list are six companies which combine to have over 50% of the market share. Beneath them are dozens of others which split the remaining amount of customers in much smaller increments. These six companies should already be familiar to you, as they all advertise a great deal, but you may be surprised at which ones are the largest.
The single largest car insurance company is State Farm, with a market share of nearly 18% according to 2008 data. Next up is Allstate, with 11% of the market, followed by GEICO with almost 8%. Fourth place is progressive with about 7%, followed next by Farmers with 5.5% and Nationwide with just under 5%. So those six companies have about 54% of the market between them, and as mentioned, there are then dozens of others with smaller shares.
So what about the most highly rated car insurance companies? And most importantly, are the biggest car insurance companies the ones with the highest ratings? That would certainly go a long way towards explaining their popularity and success, after all.
A 2010 survey by J.D. Power and Associates ranks customer satisfaction on a scale of 1,000, with higher numbers being the best. The average customer satisfaction was 777. What might be surprising then is that many of the largest companies, including Progressive, Allstate, Nationwide and Farmers are all beneath the average mark! They have scores of 775, 768, 759 and 757, respectively.
Two of the largest companies though are above average. State Farm has a rating of 795 and GEICO has a rating of 793. Even with the above average ratings though, that places them in fifth and sixth place overall. The highest rated auto insurance company was Amica Mutual, which has been in the spot for 11 straight years, and has a whopping 849, 30 points ahead of second place. The next best is Erie Insurance, followed by Auto-Owners Insurance and Shelter.
So when it comes to auto insurance companies, bigger doesn’t always mean better. Four of the six largest companies fall beneath the average for customer service, and none of them are ranked higher than fifth best. Between the highest rated companies and the largest companies, you should have a much clearer understanding for what might be available to you, which companies you might want to look into further, and which ones you might even want to avoid.
Commonly Available Discounts for Auto Insurance
All of us are looking for ways to save on our auto insurance bills. The good news is that there is a wide range of discounts available, and many of them are quite easy to achieve. The important thing is that you know what you might be eligible for, so that you can take full advantage of them and not let the savings pass you by. Take a look at just a few of the commonly available discounts for auto insurance.
• Good Grades: Students who have good grades can receive substantial discounts on their insurance, which is important, because kids often have the highest rates. Good grades show that the insured student is intelligent and diligent, important for driving safe on the road, and indicators that accidents and violations will be less likely.
• Safe Drivers: Drivers of all ages can take advantage of safe or defensive driving records. A long history of not having any accidents or other incidents such as speeding tickets and violations will offer great discounts on your coverage. It’s just another benefit to driving safely.
• Alarm and Anti-Theft: If your car has an alarm or another anti-theft device then that can translate into cost savings for you. Less likelihood of having to replace stolen goods, or worry about a stolen vehicle, means you don’t have to pay as much for your coverage.
• Unions, Affiliates, Associations Etc: There are a variety of unions, affiliates and associations which offer discounts on auto insurance. Check with your union if you’re in one to see what they are partnered with, or join an AAA program. Another common association discount is available for members of the military. Large employers without unions may still have available discounts.
• Multi-Car, Multi-Policy and Long-Term: Car insurance companies reward their customers for their loyalty. So if you have more than one vehicle insured with a company, you have more than one policy or plan with the same company, or you have been with one company for an extended period of time, then you’ll find great discounts and savings.
• Airbags, ABS, Etc: The safer your vehicle is, the lower your auto insurance rates will be. So airbags, antilock brake systems and other safety devices and innovations will reward you with lower rates.
• Retirement Age: Discounts on auto insurance are available for individuals who are 55 years and older, and are also retired. Further savings may also be available for seniors over the age of 65, on top of or in replacement of the discounts received for individuals 55 and retired.
Of course, there are other forms of auto insurance discounts available as well. They can be anything ranging from new car, farm or utility vehicle, or economy car discounts, to more savings based upon your track record, the features your car has, the type and amount of driving you do, and more. Know what’s out there, and utilize every discount that you can find for your car insurance.
