By: Blake Wimsey
Special to Guthrie News Page
Blake Wimsey operates Foundation Insurance in downtown Guthrie.
Good question. There are many factors that underwriters use to rate your insurance premiums. In order to take action against your high premiums, it’s important to first understand what factors drive up the cost of your monthly bill.
• Your driving record
This one is no secret. The drivers with accidents, speeding tickets and other traffic violations are going to pay more for insurance. Underwriters view these drivers as a higher risk. Insurance companies have to make money and be profitable in order to pay claims, pay employees and be competitive. Taking on too many risky drivers as clients is not a good recipe for profitability.
• Your credit score
Why would your credit score affect your auto insurance? This goes back to the previous point of insurance companies being profitable. What good would it do for a company to take on all the safest drivers in a zip code if none of them paid their bills? Your credit score is a direct reflection of your ability to pay back your debts as well as a history of your willingness to do so.
• The vehicle you drive
Many people assume that the more expensive your car, the more expensive your insurance will be. That’s not always the case. All vehicles are given a rating symbol that underwriters work with. That symbol uses many different factors to calculate how likely that vehicle is to be in a loss, and how expensive that loss might be to the insurance company. Some of these factors include how much the vehicle costs to repair, how likely the vehicle is to be targeted by thieves, and how the vehicle measured up during crash tests.
• Your age and gender
Nothing you can do about these two. The law of large numbers states that women are less likely to be involved in accidents and when they are, they are less severe then men’s. Mature drivers who have many years experience are also less likely to be in a loss than a teenage driver. Over time, drivers with a clean driving record will ultimately be the most attractive ones to insurance carriers. Here are some tips for fighting back against the high cost of auto insurance:
• Use an independent agent to purchase your insurance
If you’re using an agent that only represents one company, how can they have your best interest in mind? In order to maximize your savings, your insurance agent should actually be a broker who represents their clients and shops it against multiple carriers to find the best deal. If your grocery store only carried one brand of milk, bread and laundry detergent, how would you know if you’re paying too much?
• Raise your deductibles
“But how could I afford to pay $1,000 if my car is in a wreck?”
High deductibles aren’t for everyone. But over time, if you were to carry a higher deductible and place the difference in premiums in a savings account, you’d have the $500 difference in deductibles, and if you didn’t have a claim, that’s YOUR money to keep.
• Educate yourself on the coverage your purchasing
How many $1,000 purchases do you make in a year where you don’t really know what you’re getting? Your reaction is probably to say none! Well, auto insurance shouldn’t be any different. The whole point of insurance is to transfer your risk. Get familiar with what risks you face as a driver, then make an educated decision on whether or not it’s wise to transfer that risk to the insurance company. *For example, a retired couple on Medicare may not need to pay for Uninsured Motorist Bodily Injury coverage. UMBI pays for medical bills and lost wages, so the couple may consider leaving it out of their policy since Medicare would cover their medical bills, and they would have no lost wages to report to the insurance company since they are retired.