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Why do I have to renew auto insurance every 6 months?

directautoinsurance — Thu, 05 Jan 2012 01:07:19 +0000

Most auto insurance policies are renewed on a six-month basis. Some car insurance companies offer 12 month policies but the most common term for auto insurance coverage is six months. Why must you renew your auto insurance every six months?

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When you apply for insurance, you present the company with certain information such as your age, your present address, the type of car you drive and your driving record. Based on this information, they will issue a policy and calculate your premium. However, auto insurance companies realize that things can change between the time you apply for your policy and the time you pay your next premium payment and insurance providers have determined that six months is the optimum time to allow between policy renewals, for several reasons.

Affordable Premiums

First, six months’ worth of premiums is a manageable amount for most people. If auto insurance companies allowed yearly renewals, the total bill could be so high that many people may have a problem paying it and by breaking the yearly premium into two payments, insurance companies have fewer customers with problems paying their renewal fees. However, how much consumers can afford is secondary to the risk factor associated with longer policy terms.

Limited Risk

Auto Insurance companies base premiums on risk and six months is the optimum period in which insurance companies feel that a drivers profile will not drastically change and if it does then they have a limited window of commitment for insuring the driver under his/her new risk profile.

If you have had speeding tickets, unreported accidents, a DUI charge, a car accident or filed a claim for damage your risk profile is obviously higher than a driver with none of these variables.

Prices can also increase if your address changes. If you move into a zip code which has a higher rate of accidents, your premiums can increase. Auto insurance companies usually calculate these increases at the six-month renewal period rather than on the day you move. Similarly, increases or decreases in your premium rate relative to your age often occur at the renewal period. For example, if you turn 25 on April 15, and your renewal is April 30, the insurance company will bill you for a new, lower premium rate on your April 30 renewal. However, many companies will also send you a refund check for the fifteen days between your birthday and the renewal period, pro-rated to reflect the decrease in premium price.

Similarly, DUIs are reported to state databases and may not show up on your insurance record until you are up for renewal. At that time, your insurance company may decide to drop your coverage. Insurance companies can choose not to renew policies, and often make this choice when faced with insuring a very high-risk driver. DUIs are one thing that immediately places you in the highest risk category possible, and many companies will simply choose not to do business with you after you are convicted of a DUI. You may also find this problem if you are involved in an accident which is your fault and costs a great deal for the insurance company to settle.

How common are 6 month premiums?

Six-month premium assessments and renewals are standard across the auto insurance industry. If you have an accident which involves a claim, for example, you will probably not see an increase in your premium until your renewal period occurs. At that time, you can examine the increase and re-assess your companies and take advantage of “new customer” prices and discounts offered by companies looking for your business. On the other hand, if you had an accident which required an expensive claim to be filed, it is likely you are better off sticking with your present company, at least for the first two years after your accident.

Your renewal period should not, however, generally be a time of fear or uncertainty. If your information has remained the same, you can count on your premiums remaining very steady. In fact, you should see a gradual decrease in your premiums as your car ages. However, if your insurance premiums continue to climb each renewal period, and your demographic information and driving record has not changed, it is probably time to begin shopping for a new insurance company.

Many insurance companies will break six-month payments into two three-month payments or even allow monthly payments if premiums are very expensive, particularly for young people.

How can I lower my auto insurance deductible?

directautoinsurance — Thu, 05 Jan 2012 01:01:18 +0000

Deductibles are the amounts which you agree to pay under an auto insurance policy if you are required to make a claim. For example, if you have a collision deductible of $500, you are required to pay the first $500 of any repairs to your vehicle before the auto insurance company pays its portion.

Many people raise their car insurance deductibles in order to have more affordable car insurance premiums. By doubling your insurance deductibles, you can shave as much as 40% off the price of your premiums.

However, this is only a good idea if you have money put aside to pay the deductible if you have an at-fault accident. If you cannot access this money easily, you may not be able to pay your portion of repair bills, and your car may not be fixed in a timely manner. Worse, you could be under obligation to pay for a portion of damages to someone else’s property, and be unable to do so. Many people without large reserves of cash must keep their deductibles low. In order to do this, however, they often have to pay higher premiums.

Is there a way to lower your deductible and still keep your premiums manageable?

There are several ways you can accomplish this goal. Each method takes some planning and discipline, but each can be achieved by anyone looking for a low deductible and a low premium.

First, you can choose to insure with a company which offers a “vanishing deductible” program. According to these programs, your deductible decreases by a set amount each year that you are accident-free and claim-free. Some of these programs allow you to lower all of your deductibles, and some only allow you to lower your collision or liability deductible. Different companies offer different amounts for the deduction and at different rates. You can compare programs to find one that works well for you.

Another option is to create a plan in which you gradually save the amount of your deductible while slowly raising your deductible each six months. Here is how this would work: suppose that your current deductible is $250, the lowest your company allows. Now suppose that you would save $100 per renewal period by raising your deductible to $500. If you do so and save the money you saved on your premiums, plus your initial $250, you would have $450 in one year, almost enough to pay your new deductible. You can continue to save money so that you can gradually raise your deductible to $750, then $1000. You may even choose to raise your deductible higher than this if your company permits you to do so. As you slowly raise your deductible, your premiums will decrease, allowing you to save up the money you will need to pay the new, higher deductible.

You can also find a company which offers “accident forgiveness.” With accident forgiveness, you can be “forgiven” for your first accident with no deductible if the accident does not exceed a certain dollar amount in total cost. This is very useful to save your deductible fund if you have a minor fender-bender. You can also save money and pay for damages yourself if the accident is very minor; in this way, by not making a claim, you keep your premiums lower and do not have unexpected increases in the price of your automobile insurance.

Other ways you can lower your deductible are to apply for a deductible reduction with your insurance company, which can be balanced by other discounts for which you may be eligible. If you are not currently taking advantage of all possible discounts, you may be cheating yourself out of savings which could pay for a lower deductible.

Be sure to consider all the separate deductibles which apply to your policy as a whole. If you have full coverage, which includes liability, comprehensive, and collision, you probably have separate deductibles for each policy. In addition, you probably have a deductible for such things as uninsured motorist coverage. Some states set the deductible for uninsured motorist coverage by law; you cannot raise that deductible even if you want to. However, most states allow you to pay with the deductibles on your collision and comprehensive policies, raising or lowering them as you see fit. Remember that you will need to pay these deductibles for any claims made under these policies separately; if you have an accident for which you are at fault, you may have to pay a property damage or liability deductible as well as your own collision deductible to have your car repaired.

Can my auto insurance company deny a claim?

directautoinsurance — Thu, 05 Jan 2012 00:54:48 +0000

Auto insurance is supposed to cover you for any events which happen under the umbrella of protection offered by a policy. However, in reality, auto insurance companies can deny coverage in certain events and refuse to pay claims under some circumstances.

There are very specific and limited instances in which an insurance company can deny coverage to a paying customer. Generally speaking, when an insurance company offers a policy to a customer, it is for a six-month period and covers anything which happens to the driver during that time. If the customer has an at-fault accident, the company must cover it, but may decide to drop the customer at the next renewal period. However, the company is still liable to pay all damages according to the policy for the accident which occurred during the coverage period.

However, there are exceptions to this rule. Generally, a company can refuse to pay a claim if it does not meet the covered events under the policy. Common exceptions or exclusions to policies include illegal actions and non-payment of premiums in a timely manner.

Violating the Law

If you use your car in a way which violates the law, you are often excluded from making claims under your insurance policy. For example, if an insured person allows his or her car to be used in the commission of a robbery (whether the insured driver was actually driving or not) the insurance company may claim an exclusion to the policy due to the fact that illegal acts are not covered. Similarly, many companies have DUI exclusions, which means that the company specifically puts in writing than any damages caused by an accident in which their insured driver had a blood alcohol content, or BAC, higher than the legal limit, are not covered.

Reckless and Careless Use of the Vehicle

Illegal acts are not the only ones excluded by insurance companies. In many cases, if it can be proven the insured driver of the vehicle deliberately used the vehicle in a careless or dangerous way, coverage may be excepted. For example, if a person allows someone to drive his or her car who is known not to have a driver’s license, the auto insurance company may deny the claim based on this type of exclusion.

Failure to Pay Premiums

Non-payment is another issue often raised when insurance companies are expected to pay claims. If a person is behind on his or her premium payments, coverage may be affected. However, most states allow a “grace period” during which coverage is mandatory, even if the person is late paying the premium. If the person is outside the grace period in payment, however, coverage may be successfully denied.

Claims for Damages outside of your Policy Coverage

You may also be denied a claim based on the type of coverage you have. For example, if you drop your comprehensive coverage, the company will deny any claims made by you which would have been covered under your comprehensive policy. This includes theft, weather-related accidents, or accidents which are caused by things other than a collision with another car. Similarly, collision insurance coverage provides payment if your car is damaged in an accident in which you are at fault. If you drop your collision coverage, your company will not pay to have your vehicle repaired if you cause an accident.

Other than these general exceptions, there are few instances in which insurance companies can legally deny a claim. In general, if insurance companies offer you a policy and take your premium payment, they are legally obligated to pay any claims which are covered under the policy, including payment to other parties if you are at fault in the accident.

However, an insurance company can certainly “fight” a claim by another party if it feels that the other party was actually at fault in the accident. In some states, liability can be assessed on a percentage basis; in other words, if both parties were at fault, a court can judge how much of the fault rests with each party. An insurance company can then deny coverage of the claim beyond the party’s legal liability in the accident. As an example, suppose that two insured persons are involved in a wreck. One person is adjudicated to have 80% of the responsibility and the other party 20%. In this case, the insurance company of the more “at-fault” driver would be legally obligated to pay only 80% of the damages caused by its driver, since the other driver was also “at-fault” for 20% of the damages in the accident.

Should I buy car insurance before I buy a car?

directautoinsurance — Sat, 24 Dec 2011 22:52:20 +0000

When buying a car you should never drive it away from the dealership without having car insurance. Not only is this illegal but you are exposing yourself to great personal liability. However, when should you buy car insurance – before or at the dealership?

Auto dealers are in the business of selling cars and not selling insurance so it’s never a good idea to wait until you are sitting down to sign the loan papers to call a “recommended” agent of the dealer. The dealer most likely does not have your best interest in mind, just the kickback he will most likely get from his friend.

When you know what vehicle you want contact different car insurance companies and compare quotes away from the dealership. If you provide the vehicle VIN of your new car it makes comparison shopping even easier.

Should I contact my insurance company before going to buy the car?

Auto insurance can be rather expensive and varies greatly, depending on a variety of factors. It is generally true that the more expensive a vehicle the higher the premiums but this is not always true. Many times a vehicles even $10,000 less has lower car insurance rates. Before making a commitment to buy a car you must understand the cost to insure it. Without this number you are left with only an estimate of your total monthly financial obligation and its never any fun to learn you can’t afford a car after signing loan documents.

If you intend to purchase a second hand vehicle, then make sure you are provided with an honest and accurate record of its history. Car insurance premiums may be affected if:

The car has been in any accidents
Has not been looked after correctly
Has had any features added

On the positive side, if any devices stopping theft or increasing safety have been installed, the premiums are likely to be reduced.

What happens if I drive without insurance?

In most parts of America, you are not allowed to drive without insurance. Even though different states have different ways of enforcing this rule, all drivers must be covered by a minimum of liability insurance. This means that if you cause damage or harm to another party or their property, you will be covered.

You might think that there is very little risk involved in simply driving a car from the dealership or from the previous owner’s house to your place. However, if the police catch you, you will face an enormous penalty and possibly even a jail sentence, depending on where you are.

Moreover, if you do have an accident that causes any damage to someone else or their car, you will be in debt immediately. Depending on the scenario, the amount of damage done and the type of vehicle, this can mean the kind of financial catastrophe that can wreck you for years. Most dealers will not let you drive away without showing proof of insurance first as it’s not worth the risk or hassle for them either.

Some drivers opt to just their exiting auto insurance company and if you already had a car that was covered, the policy can sometimes remain valid for up to thirty days on your new vehicle. However, it is imperative that you contact your insurance company to make sure that this is the case. The smallest miscommunication might mean that you are not actually covered and, if you do have an accident, this could translate to tens of thousands of dollars in payouts.

Can I secure a loan without car insurance?

If you are buying a car with a loan then you will most likely have to buy car insurance first. Most auto loan providers will not close a car loan without written evidence of an insurance policy.

Buying a new or used car can seem like a complex and daunting process. However, whatever decision you make regarding your new vehicle, purchasing car insurance is must before committing to the vehicle purchase.

What does it mean to bundle car insurance?

directautoinsurance — Fri, 23 Dec 2011 22:13:27 +0000

Car insurance payments are a part of life, but wouldn’t it be great if you could save some money and keep all your insurance with one company?

You can – it’s called “bundling”!

Most insurance carriers are eager to get all of your insurance business – not just your automobile policy. They are especially interested in getting the business of good customers who pay on time. Car insurance companies often offer discounts up to 10% or more for customers who bundle multiple policies with the same company.

For example, at State Farm Insurance, you may be eligible for up to 40% discounts on your insurance products simply by bundling your auto, home, and life insurance with that company. If Allstate insures both your home and your car, you automatically get a 15% discount on both products. Nationwide offers up to 20% for bundling, and Progressive also offers multiple-product discounts.

Do all car insurance companies offer multi-policy discounts?

Not every insurer is able to offer these discounts. For example, GEICO is affiliated with Travelers, but buying your car insurance with one company and your homeowners with the other will not gain you any discounts with either company. Similarly, companies which only offer homeowners or only offer car insurance cannot offer multiple policy discounts. If companies do not offer bundling discounts, they may still be able to offer other types of discounts; however, you will not get the number of discounts you could get with another company. This may translate into more expensive car insurance. Most often, larger companies are able to offer bigger discounts, but this is not always the case. Some smaller companies actually have lower prices, even without discounts, depending on where you live and how the company is organized.

Another name for multiple policy discounts is “multi-line” discounts. Many companies advertise “multi-line” discounts, which means bundling at least two policies with that company. The amount of your discount usually rises in proportion to the number of policies you bundle; the more policies you have, the bigger your discount. However, some companies offer larger discounts with fewer policies.

How do I get a discount by bundling my insurance policies at the same provider?

In order to get your bundling discount, talk to your agent. If you are not automatically given the discount, your agent can make sure you receive it. You can tell if you are being given the discount by looking at your declarations page, the sheet which arrives with your renewal statement. Your declarations page outlines your coverage, limits and any discounts you are being given. If you have questions, you can call your agent.

You can also combine the bundling discount with any other discounts available for even more savings. If you are already eligible for good driver discounts, good student discounts, or paid-in-full discounts, these and other types of discounts are usually added to the multi-line discount. Most people save the most money when they have both a multi-car and a multi-line discount, meaning they have at least two cars and at least two different types of policies with the same company.

How much will I save on my car insurance bill?

In order to find out how much you are eligible for in the form of discounts, it is almost always necessary to get a quote from the company in question. While many companies advertise their discounts on their websites or in other materials, very few can give you an honest quote, including all applicable discounts, without getting your demographic and other information. Discounts may vary greatly depending on your age, driving history, and location, so a quote is always the best way to find out exactly which discounts apply to you.

You can get a quote by going online, visiting your agent or calling your insurance company. Getting online quotes is often the easiest way to compare quotes as you can usually compare several providers at once.

What is low mileage car insurance?

directautoinsurance — Fri, 23 Dec 2011 01:10:19 +0000

Everyone is trying to save money these days (including auto insurance companies) and that has led to some interesting offshoots from various industries. You can rent movies on your television rather than pay at the store or the movie theater; you can pay for the time you use an RV to go on vacation or rent a car for a trip; and you can even pay for car insurance on an “as needed” basis. A popular offering for some drivers is a “low mileage” insurance policy.

Low mileage insurance is not a new idea, but many people are rediscovering this form of insuring vehicles as a way to save money and still have coverage on cars which are not driven often. Rather than paying for an entire six month premium with unlimited mileage, low-mileage insurance allows you to pay either (a) based on a lower annual mileage or (b) the time you actually drive your car.

Who is a Low Mileage auto insurance policy for?

This type of coverage is a great idea for people who often store their cars for extended periods or who drive very little, such as retirees. There are several forms of low-mileage insurance and each has its benefits as well as its disadvantages.

The first type of low-mileage insurance is the “low-mileage discount” insurance, which is basically your standard coverage with a discount for driving fewer than a certain number of miles per year. Many auto insurance companies will lower your premiums if you do not exceed a certain mileage in the coverage period, reasoning that with you on the road infrequently, your risk of being in an accident goes down. However, you have to speak to your insurance company or agent about this discount; it is not automatic. If you choose to utilize this discount, you may be asked to verify your mileage at certain points during your coverage period, or bring your car in to your agent for verification. If you exceed the mileage allotted during the coverage period, you lose the discount.

The advantage of low-mileage discount insurance is that you do not lose any of your coverage. Your regular policy is still in place, just at a lower price. However, the disadvantage is that not all companies offer this discount, and you are responsible for keeping up with the requirements to obtain the discount.

Another type of low-mileage insurance is a “true low-mileage policy.” This is the type of policy that, at its inception, is designed for those who do not drive much and its price is structured accordingly. With this type of insurance, you can often pick and choose your coverage, such as comprehensive or collision, and structure your policy with only the coverage you need.

The advantages of low-mileage policies are that you know from the outset what your mileage limitations are and how much your policy will go up if you exceed them. There is often a surcharge for mileage over the allotment, although if you exceed the limit you may be converted to a regular liability policy at full price. These policies are often less expensive than regular policies with a discount, as well. Low-mileage policies are at a disadvantage, however, in that they are not offered by many companies; you often have to look for a special low-mileage insurance carrier.

What is pay as you go auto insurance?

Some companies also offer “pay as you go” policies. These are designed for those whose driving habits fluctuate often, and premiums are calculated solely based on the miles you have put on your vehicle over the period of coverage, often six months. This means you might drive your car 3,000 miles one month, store it for five months, and pay only for 3,000 miles worth of coverage.

What about a storage policy since I never really drive my car?

There are also special policies called “storage policies” which are very useful for people who must store their cars while they are gone for long periods of time (such as businesspeople who travel overseas, or service men and women who are deployed). However, a storage policy, as its name implies, assumes that the car will not be driven except to take it to a storage facility or to move it from one facility to another; it is not designed to provide coverage for you to drive the car occasionally. Many storage policies are offered directly by the storage facilities themselves, but you can also find them from independent brokers and insurance companies.

By taking out only the insurance you need you can save quite a bit of saving money. Many drivers who buy a full-coverage policy end up paying for insurance based on typical driving habits of other people and with low-mileage auto insurance you can often take back some of the money and still maintain the same level of coverage.

How much is auto insurance with bad credit?

directautoinsurance — Fri, 23 Dec 2011 00:51:06 +0000

Many drivers are concerned with saving money on their automobile insurance and in today’s economy bad credit is often the result of circumstances outside your control. Whether it’s the loss of a job or an unexpected medical expense it doesn’t take much to have a poor credit score and auto insurance companies often charge more regardless of how good a driver you are.

Every state except Maryland and California now allows insurance companies to use credit scores as a means of determining auto insurance premiums. While some states stipulate this practice can only be used for new customers, in some areas people find their premiums jumping due entirely to a bad credit rating.

This may seem very unfair to customers who have been long-standing clients of a particular company. However, auto insurance companies justify the practice by citing the fact that statistically, people with poor credit are far more likely to file insurance claims than those with good credit ratings. Because of this, auto insurance companies classify those with poor credit in a “high risk” group and adjust rates accordingly.

How much can your credit rating cost you in increased insurance premiums?

Unfortunately, quite a lot. In general, people with the lowest credit ratings spend two to three times more than those with good credit ratings to obtain the same insurance coverage.

As an example, a twenty-five year old male in suburban Atlanta, Georgia, driving a mid-sized sedan and with a good driving record might expect to pay $1,300 per year for car insurance. However, if he falls into the lowest credit rating category, he may pay as much as $2,400 per year for the same coverage. This is an increase of 84% overall, and represents an increase of $92 per month for premiums. This difference may mean that the young man with bad credit may have to forego necessary coverage in order to simply afford an insurance policy.

In 26 states, auto insurance companies are required to notify customers if they use credit scores as part of the formula for figuring their premiums, and about 90% of insurance companies do. However, it is possible to find insurance companies which do not use credit scores with some patience and searching. However, beware of companies which advertise “no credit check” insurance; often, missing a single payment with these companies can send your premiums sky-high.

Of course, credit rating is not the only thing contributing to your premium costs

Your driving record, age, location and the type of vehicle you drive all have an impact. The younger you are, the poorer your driving record, the more urban your area, and the more expensive your vehicle, the more you will pay. If you add bad credit on top of those factors, you can be looking at significant increases in price.

The good news is that you do have some control over some of these factors. Keeping to the speed limit and driving defensively will help you avoid speeding tickets and accidents, two things guaranteed to send your premiums skyrocketing.

Another piece of good news is that your credit rating is very much a flexible thing, and being late on a few payments is not likely to significantly impact the cost of your insurance. In fact, you will probably not start to see significant price increases on your auto insurance until you reach a “low” credit level – something which can be avoided by some simple financial planning and common sense such as:

Never max out your credit cards

Although it is tempting to “buy now, pay later,” a high debt-to-limit ratio is one thing that truly raises your credit score. Always pay as much as possible on your credit cards, and avoid using them in the first place by leaving them at home and paying cash for your purchases.

Always pay the minimum on your open accounts

Missing one payment is not the end of the world, but a pattern of late payments drives your credit score down and your auto insurance prices up. In a worst-case scenario, if you are unable to pay your bills, talk immediately to your creditors and arrange affordable payments. Bankruptcy is a very real threat to most unsecured creditors; they will receive little if any compensation if you file, so they are usually eager to work with you to pay your debt. You can also talk to a credit counseling service which can negotiate lower payments for you.

Bringing your credit rating up is not easy, but it is possible. It may involve some life changes, but you can take control of your finances and your auto insurance premiums with some hard work.

Why are young drivers so expensive to insure?

directautoinsurance — Thu, 22 Dec 2011 01:18:01 +0000

Shopping for car insurance for a young driver can end up in “sticker shock.” Young drivers can cost more than double what a driver over 25 costs to insure but why is it so expensive to insure young drivers? Are there things you can do to lower this cost?

According to the Insurance Institute for Highway Safety, young drivers are far more likely to speed, to cause accidents and to be involved in serious crashes than their older counterparts. The statistical rate at which young drivers are more dangerous tends to drop around age 25, so many auto insurance companies offer lower rates to those who are 25 and older. These lower rates continue until about age 65, when people enter another statistically risky group: senior drivers.

Is age the only factor in car insurance rates for young drivers?

Age is not the only factor which may increase young drivers’ rates. Gender also plays a role. Young males are statistically more likely than young females to be involved in accidents; consequently, their rates tend to be higher. “Statistically likely” does not mean that every young driver is a bad driver. Statistics simply show the likelihood of a member of a group to have certain characteristics. Because many young drivers are involved in accidents, young drivers as a group are all categorized as higher-risk.

One of the factors which can contribute to this statistical reality is experience. Young drivers, by definition, lack the experience of older drivers in handling various situations on the road. They are far more likely to rear-end another driver, for example, by following too closely. Another factor is youth’s mentality. Young people have more energy and are more easily excited; they are more likely to speed and to be involved in risky behaviors than older drivers.

How can I find cheap car insurance for young drivers?

There are ways you can lower an individual young driver’s insurance rates however, and at the same time make the teen or youth a safer driver.

Insure young drivers on parents’ policies

The most expensive type of car insurance for a young driver is that which he or she must purchase alone. If a teen or youth can be included on a parent’s insurance policy, premiums tend to be much less. Even college students away from home can often be insured by their parents. Check with your agent to find limitations on putting your child on your insurance.

Take advantage of discounts

Most auto insurance companies offer discounts for good grades, driver training and other factors. Talk to your agent about possible discounts you may be missing with your child’s insurance.

Choose your vehicle wisely

Handing the keys to a brand-new sports car to a teen may make him delirious with happiness, but it will certainly hit your wallet when insurance payment time comes. Auto insurance companies offer lower rates on vehicles which are not built for speed and offer more protection in the event of an accident, such as family sedans, than on higher-risk vehicles such as sports cars. Even very compact cars can carry higher rates because they offer less in the way of protection in the event of an accident, and more expensive vehicles, which cost more to fix, will have higher rates.

Check on discounts for safety features

Just like adults, teens and youths can take advantage of discounts offered for on-board safety features, such as anti-lock brakes, airbags, and car alarm systems.

Avoid speeding tickets and accidents

This seems redundant, but many people do not think beforehand of what the consequences will be to their insurance if they speed or engage in risky behavior. It may be that having a talk with your teen beforehand about these issues may help to prevent some problems. You should also remind your teen never to loan his or her car to anyone else; any incidents which affect your insurance, even if they are covered by your policy, can result in an increase in rates.

Take advantage of courses offered by insurance companies

In order to help young drivers keep insurance affordable, some companies offer special training courses which, upon completion, result in lower rates for young drivers. You can find out about these courses by visiting your company’s web site or talking to your agent.

Your first priority is to keep your teen or youth safe. However, it also helps to shop around for your insurance; it is very possible you can save significantly simply by finding the right company to insure your young driver.

How much should auto insurance cost per month?

directautoinsurance — Thu, 22 Dec 2011 01:10:35 +0000

Most people would like a simple answer to the question, “How much should auto insurance cost per month?” Unfortunately, this is a question which is impossible to answer without considering individual factors, so a simple answer is not always possible.

Generally speaking, auto insurance should cost less for a more experienced driver with a good record than for a young driver or someone with a poor driving record. However, even within subsets such as these, there is tremendous variation in rates based on providers and other factors, such as credit scores.

Here is an overview of how your insurance rates are calculated:

Age, location, and other demographic information

Auto insurance companies use demographic information to create categories into which potential customers can be placed. Actuaries for insurance companies calculate statistics which show the risk factors for various age groups, locations, and genders and the cumulative score of all these variables determine rates. This does not mean that every driver which falls into various categories is the same, but that the risk is spread over the entire group and averaged for these drivers.

Your personal driving history

Within categories, your rates can fluctuate according to your driving record. If you have multiple violations and points on your license, you will pay more for insurance than someone with a clean record. The severity of your driving offenses also affects how much you pay for insurance.

Your credit report

It does not seem fair to many that your credit score should affect your auto insurance rates, but many companies use this information and many states allow it. The reason is that drivers with poor credit have been shown to have a higher degree of risk than those with good credit as a group. Much like age and location, this information can be quantified and averaged for a large group of people. However, unlike age and location, you may have some control over your credit report information.

The type of car you drive

Obviously, newer cars are more expensive to fix than older cars if they are wrecked, and more expensive cars cost more to fix than cheaper cars. The type of car you drive will have a direct impact on how much you pay for insurance.

The coverage you choose

Coverage with higher deductibles costs less than that with lower deductibles – sometimes significantly less. Adding many forms of coverage can great increase your final insurance bill, and some of these coverage forms you may not need. You should be sure to talk with your agent about exactly what types of insurance are right for you.

The company carrying your insurance

You may be very surprised to find that the same driver can get vastly different quotes for the same coverage from different companies. This is because each company has a distinct method for arriving at rate quotes, and companies often vary widely in how much importance they attach to one particular factor in your insurance rate calculation. The difference between one company and another can be hundreds of dollars in some cases.

Always Compare Auto Insurance Quotes

One of the most important things to remember when shopping for insurance is that companies do not all have the same rates, or apply them in the same way. This makes it smart to get several quotes from various companies and compare them. Be sure, of course, that you are comparing the same coverage from each company; some insurance carriers will advertise fantastically low rates, but they are not offering as much protection or as many features as other companies.

In some cases, you do not have as much choice about your insurance carrier. People who have DUIs on their record, or certain driving infractions, may be required to shop the “secondary market” for insurance. This insurance is much higher in cost and will often cover fewer situations than “primary” insurance. However, even a higher-cost, secondary policy is better than no insurance at all if you are stopped for a traffic violation or involved in an accident.

You can get quotes from a variety of insurance companies easily by using an internet search engine. Such search engines are offered on some companies’ websites and are also operated by independent companies. You can also visit an independent insurance agency, which will offer you quotes from several companies for comparison. Once you have quotes from several companies, you can talk to agents for those companies to find out if the company fits your needs and lifestyle. Some companies operate almost exclusively online, some through independent agents, and some through dedicated agents. Besides cost, this is probably the most important consideration in choosing the right insurance company for you.

How long do points stay on my drivers license?

directautoinsurance — Wed, 21 Dec 2011 23:50:12 +0000

Many states use a system of adding “points” to your driver’s license for traffic violations. While the exact system varies from state to state, points are generally added in increasing increments which correspond to the severity of the offense.

For example, many states employ a graduated system for points added to your license for a speeding violation based on the actual speed for which you were stopped: if you were traveling ten miles per hour or less over the speed limit, you might receive one point; eleven to twenty miles per hour over the speed limit would earn two points; and more than twenty miles per hour over the speed limit would mean three points added to your license. In many states, an accumulation of points over a period of time can lead to suspension of your driver’s license.

While the points system is very flexible and variable among the states, one thing that remains somewhat constant is the fact that auto insurance companies look at points on your license when they are determining your insurance rates. Therefore, it pays to know a bit about how points are assessed on your license and how long they have an impact on your car insurance rates.

How do auto insurance companies know how many points I have?

Most auto insurance companies only examine your driving record just before they renew your policy, generally once or twice a year. Therefore, points from recent traffic violations may not yet have an impact on your rates. However, your insurance company will find out about them soon enough, so it is sometimes helpful to research what your company’s policy is on points. Many insurance providers will operate with a type of “forgiveness” for first-time, low-point offenses. However, some companies immediately assess an increase in your rates.

Most companies correlate your rate increase with the number of points you receive and how many offenses you have in a short time period. In other words, one three-point offense in two years may affect your rates less than three one-point offenses in a short time. Auto insurance companies tend to equate multiple offenses with constant bad driving behavior, and this means you are a greater risk than someone who had one offense and drove well from then on.

How long do points stay on my drivers license?

While there is no hard-and-fast rule about how long points stay on your license, in most states the minimum is two years. This tends to be the figure used by insurance companies in assessing rate increases, as well. Insurance companies can and sometimes do keep rate increases in effect for the duration of the state’s point system, which is up to six years in some locations, but stiff competition for insurance business has resulted in an industry average of two years, no matter how long the points stay on a driver’s record. This means that it is possible to have points still on your driving record which are no longer affecting your insurance rates.

Are points more important than the type of ticket?

Certain types of offenses can raise your driving rates for much longer (regardless of how many points) and stay on your record for a longer period of time. An example of this is driving under the influence of alcohol or drugs. DUI offenses not only carry large numbers of points, but they tend to stay on your record longer than many other offenses, and many car insurance companies will not even consider you for coverage if you have a DUI on your record within a certain number of years. Not only do DUIs have a larger impact on your driving record and auto insurance rates, but subsequent DUIs stay on your record even longer, a fact which is not always true with lesser offenses such as speeding tickets.

In order to avoid excessive points on your license, you can sometimes negotiate with a judge to reduce points in exchange for signing a waiver and paying your speeding fine immediately. Although judges are not required to do this, many will make these exceptions for first-time offenders. It becomes more difficult to persuade judges to do this when you are a repeat offender, so if you get a speeding ticket, be careful to make sure it is your last.

Accumulating points on your license is an easy way to make sure your insurance rates go up and stay up. You are considered a higher risk, and will therefore have to pay more for your automobile insurance coverage. To avoid accumulating points, watch your speed and obey traffic laws. It is much easier to avoid getting points than to deal with them once you have them.