Not All Auto Insurance Policies are Created EqualNot All Auto Insurance Policies are Created Equal


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Not All Auto Insurance Policies are Created Equal

It is important to understand exactly what your auto insurance policy entails, especially if you own an older vehicle and you don’t carry comprehensive coverage. While most insurance policies have general similarities, there can be serious differences between one policy and another, even if you’re only comparing policies offered by the same company. For example, some policies cover things like car rentals if you’re ever in an accident while others won’t even cover the towing costs to get your vehicle to a repair shop. This blog is designed to provide you with some insight into what you should expect from typical policies, and what to look for when comparing your different options to ensure that you’re getting the most bang for your buck.

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Your Auto Insurance Premiums Just Increased. What Happened?

Ever wonder why your auto insurance seems to cost more at each renewal? There are plenty of factors that go into an increase in your auto insurance premiums. The following takes a look at several factors and lifestyle changes that can impact your insurance rates.

You Got Into an Accident

After getting into an auto accident, there's always the chance that your auto insurance premiums may increase. One recent study found that drivers making a single claim totaling $2,000 or more can expect to see a 41-percent increase in their average premiums. Being involved in an auto accident, whether it's a minor fender-bender or a major pile-up on the highway, increases your risk level with your insurance provider. In turn, your provider may charge you a higher premium to recoup its potential losses.

Not every accident results in a premium increase. If you have accident forgiveness coverage, for example, your first at-fault accident won't result in higher premiums. There's also a good chance you won't see your insurance rates increase if the other driver is 100-percent at fault.

You Received a Traffic Citation

Speeding tickets and other moving violations may also have a negative impact on your insurance rates. The overall impact depends on a variety of factors, including your overall driving history and the nature of the traffic citation. Some municipalities may offer the option to attend traffic school to avoid having your traffic citation impact your insurance rates.

You Moved into a New Area

Auto insurance providers look at crime rates, accident rates, and other factors for each zip code, so moving into a new part of town or a new city altogether could result in a change in your insurance rates. Moving to a part of town with higher auto theft rates could cause your premiums to skyrocket, while moving to a rural or suburban area with lower accident and theft rates could result in a decrease in premiums.

You Bought a New Car

Buying a new car can result in an increase in your current insurance premiums. After all, that new car is usually worth more than your old car, which means it'll cost more for your insurer to replace if it's damaged or stolen. However, having the latest vehicle safety features, such as advanced air bags and lane departure alerts, may help offset some of the increase in your premiums.

Your Credit Score Recently Took a Beating

Auto insurance providers don't just look at your driving record when determining your premiums. They may also take a peek at your credit score. Your auto insurance provider may look at several aspects of your credit history, including its age, how many accounts you have in good standing and the amount of credit you have on hand. All of these factors go into a 3-digit credit-based insurance score. If you've recently suffered a few hits to your regular credit score, those hits may also be reflected on your credit-based insurance score, resulting in a premium increase at the next renewal period.

There are a few states that prohibit a person's credit score from being used as a determining factor when it comes to insurance rates. California, for example, forces insurance providers to look solely at mileage, driving experience, and the driver's overall safety record when determining premiums. Massachusetts also prohibits providers from using factors not directly related to driving (such as age, marital status, and income) to assess and adjust insurance rates. You might want to learn more about how your state determines your credit score and insurance rates to know how you can improve your credit.

Your Commute Just Got Longer

A longer commute increases your risk of being involved in an auto accident, so it makes sense that more miles may equal higher rates. Many auto insurance providers add surcharges to your insurance premiums depending on your commute length. If your commute is 20 miles or more, you may end up paying a monthly surcharge of $10 or more. If your commute is 3 miles or less, however, you won't be charged extra. 

For more information, contact an auto insurance agency in your area, like Able Insurance Agency.