The Secrets on How to Lower Your Auto Insurance Premiums

By: beverly

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Finding an excellent deal on car insurance is hard enough already. If you are trying to find the most affordable car insurance it can feel like playing a game where the rule maker refuses to tell you the rules.

Here are some secrets of the auto insurance industry and some tips on how to save a lot of money:

If you have good credit records, you are more likely to get cheap auto insurance. Almost all insurance companies pull your credit report. This is because studies have shown a direct relationship between your credit score and the probability that you will file a claim. Insurance companies also know that if you pay your bills on time and have had the same credit accounts for a long time, you are more stable than someone who has overdue bills and frequently opens and closes accounts. They use this to create your car insurance risk score, one of the major factors that affects your car insurance rate.

Unfortunately, your insurance risk score will not be shown to you, but it may be very similar to your credit score. If your credit history is poor, clean it up as soon as you can.

Your car model also affects your premium. The auto companies have a rating system for every car make and model. Most use a system devised by the Insurance Services Office, which starts with the cost of the vehicle and then factors in safety and theft data. Cars are given a rating from 1 to 27, and the higher the number, the higher your premium.

Pay in full to avoid installment fees. "Fractional premium" fees are usually charged when you pay your annual premium in installments rather all at once. Payments usually are offered on a six-month, quarterly or monthly basis, but almost every insurance company charges an administrative fee for breaking up the payments. The more you break it down, the more those fees add up. Ask about fees for paying in installments. If the fees are small enough, it may be worth it. Remember that insurance companies can cancel your policy for late payment, many times with the least notification, so make sure you won't miss a payment. If you can pay the premium up front, you will find that you will simplify the process and save you a lot of money.

You can wait to add your teenagers to your policy until they are licensed. You are not required to add your teenage drivers to your policy just because they have reached driving age. You can definitely wait until the have a license -- or, if you're in a high-risk insurance pool, at least a permit.

You'll pay for your bad driving. Your auto insurance premiums are most likely to go up after your first accident. Although not all auto insurance premiums follow this rule, the majority of cases still dictate that your rates will go up. Some insurance companies have a "forgive the first accident" policy. The qualifying variables are wide-ranging, so ask your company if it has a forgiveness policy and how to qualify.

You'll pay for your friend's bad driving, too. If your friend borrows your car and crashes it, you'll have to file a claim with your insurance company. You'll have to pay any deductible that applies, and your rates will probably go up as a result of your claim.

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