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It is certainly possible to obtain low cost auto insurance in any state, considering the fact that there is a lot of competition for business among the carriers.
There are a number of factors that can be considered aside from obtaining a swath of quotes from a cross-section of companies and then simply selecting the lowest rates.
Every driver has the power to secure a quality policy that is still cheap, as long as certain standards are maintained.
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A Little Perspective First
It is important to understand that insurance is the commercial exchange of a premium for a promise to pay for a driver’s liability in the event of an unforeseen accident.
The advent of third-party liability arose with the dawn of the driving age back in the late 1900s and into the turn of the century.
There has been progressively enforced issuance to this day, due to the nature of how a moving vehicle has the propensity to cause damage upon impact.
Unlike tort liability, automobile insurance must uniquely take into account that, while fault may be clearly assessed, the victim may not necessarily be able to collect.
The need for financial responsibility has become today’s compulsory insurance laws with which drivers must comply in order to drive in most states.
What constitutes bargaining power?
Drivers have the ability to be in the driver’s seat when it comes to demanding recognition for their achievements through the highest level of premium credit.
It has less to do with rates, as these are regulated by the Department of Insurance (DOI) and cannot be changed arbitrarily, or by any individual company.
Rather, it’s the decision of a carrier to dip into their own profits; either to acquire new customers or to be generally competitive, that will prove to deliver a better price from one carrier over another.
Essentially, drivers who bring their clean record to the bargaining table represent a good risk, giving them the better position to demand reduced premiums.
Not All That Glistens is Gold
Be aware that the competitive pricing that may be enticing enough to get the insured to leave one company for another may also undergo annual increases as the life of the policy progresses until the credit is eventually offset.
This can be discussed up front, and it can be clearly stated that the new customer to a company offering the seemingly wonderful deal is as prepared to leave this new arrangement for another if such tactics are utilized.
All too often, the hope is that once a driver is placed with a carrier, they won’t be leaving, especially when the encouragement is offered through reduced premiums. Buyer beware is definitely the caveat here.
Buyer beware is definitely the caveat here.
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What determines rates?
Points are used as part of the pricing process. Base rates are adjusted up or down, using underwriting and actuarial tables.
Actuarial tables are the device used to predict the potential for claims, based on specific criteria.
For example, there is no getting around the fact that teenage boys are a higher risk for accidents than are teenage girls, yet both are a youth group, therefore having a particular rate assigned accounting for the ratio of claims per class of driver.
Here is a list of some of the factors that go into determining auto insurance rates:
- Age, Gender, Marital Status – statistically, over age 25 and particularly between the ages of 50 and 65 years, there is less likelihood of getting into accidents. Women have been winning this same argument over men, and married couples tend to win out over individuals
- Territory – where a person lives will have a direct impact on the premiums based upon congestion and crime rates
- Distance To and From Work – on average, the rates consider the distance driven on a regular basis and where that driving takes place
- Average Annual Miles Driven – this gives the underwriter an idea of the greater exposure outside of the regular Monday to Friday grind. The more a person is on the road, the higher the propensity for being involved in a collision or receive moving violations
- Vehicle Type – this does not always mean the more expensive car will have higher rates. Yes, cheaper cars cost less to repair, but as safety features continue to become more sophisticated, they tend to sway in the direction of cheaper rates. It’s the sports car, or those vehicles prone to higher risk that are associated with the higher rates
- Claims History – either a clear record or the ability to prove no at-fault accidents will largely secure lower rates. A number of incidents statistically depict the trend for more of the same, and the rates are structured to account for this
- Driving Record – also provides an opportunity of control for a driver who wants to get the best possible rates. Courteous and defensive driving will contribute to a good driving record
- Credit Score – believe it or not, some states are still allowed to take this factor into account. Controversial as this seems, the economy has made its impact on insurance rates. Options include seeking out carriers that do not need to make this inquiry as it can impact a credit score
- Discounts – it’s advisable to inquire about what discounts are available at the start of the hunt
Many variables are considered for auto insurance discounts
- Multi-car discounts
- Defensive driving courses for young drivers
- Choices of coverage
- Accident forgiveness
- Bundling multiple lines of coverage
- Immediate discount for first time signers buying online
- Paying the whole premium in lieu of installments plans
These are all just some of the available price reductions to check into. Some carriers offer a discount for being able to monitor good driving habits while on the road through a device that is plugged into the vehicle.
It’s best to take advantage of as many as possible. To compare multiple plans at once. enter your ZIP code into our FREE auto insurance comparison tool!
There was once a benefit to staying with a carrier for as long as possible, establishing a long history of steady coverage with very few claims. This, of course, is the action, or lack thereof, that allows a company to balance overall claims activity.
The law of large numbers has taken a backseat to competition as compulsory compliance has given birth to a whole host of providers offering their services online.
Finally, for those in professional lines of work such as educators, firefighters, military, and civil servants, insurance underwriters apply specialized rate classes that provide lower auto insurance premiums.
Additionally, thinking outside the box while staying loyal to a group, there are organizations such as AARP, NASE, USAA, and others that may provide group rates in return for membership or affiliation.