Companies Change Prices Regularly, So You Should Shop Regularly

You should have a general understanding that rates vary considerably from company to company and why. It provides an opportunity for you to save a lot of money, even if you are getting a great rate on your insurance today — if shop your auto insurance on a regular basis.

It’s recommended that you shop your insurance annually, to verify that you have a good rate, or find a better rate and save money. There are two reasons to do this:

Your situation will change. Whether you do something to change your situation (get married, move, buy a home) or something happens to you (you get older, your credit improves, you don’t move), your situation has changed. Therefore, the rating factors impacting the premium you are paying for, change, and there may be a better rate available to you.

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Companies typically change their rates and/or program at least once per year

Insurance is highly competitive, and as companies gain or lose market share, they will be adjusting their programs and rates to try and attract more stable customers. In an insurance conference a few years ago, one of the speakers told all the company executives in attendance that if they did not overhaul their programs annually, they would be falling behind their competitor’s advancements.

Companies have built large Research & Development departments that are continually looking for more sophisticated methods for segmenting risks to attract the best customer and charge the “right” rate. This could almost be considered a cottage industry because consultants and third-party vendors have built large business to support and advise companies in developing more advance pricing models. This means that for example, the rate that gave the last year may be higher than the one they’ll give you now. If not, there’s always another company.

Insiders Tip

According to Young America Insurance, you might assume that at renewal your policy premium , will change to reflect your improved stability or the company’s latest and greatest rating plan, but the truth is that this isn’t always the case. Most insurance companies do not want your rate to change. If you are happy with your current rate (and they assume that you are since you bought the policy in the first place), they don’t want to lower it.

Insurance companies have devised many ways to separate renewal business from new business so that rates for renewal customers don’t change much. This varies by state, as some states prohibit or limit the companies’ abilities to have different rate plans for new and renewal business, but companies have created very sophisticated ways of separating things. This can work both ways, where renewal premiums may be lower than new business premiums, so it can work to your advantage. The point is, you will not know unless you shop and find out for yourself if you are getting the best deal.

Bottom-line:  Shop your insurance policy once per year because it is easy, and you can save money

Confucius says… car insurance is too Confusing

Yes, insurance can be confusing. However, if you’ll hang in there for one more minute, you will see how simple it can be. You will learn why the insurance industry makes it difficult for you to shop for insurance.

As you read this article, it’s suggested that you refer to your current declarations page (Dec Page) which describes the limits and deductibles on your policy today. The Dec Page send to you by the company shortly after you purchased the policy or renewed it.

Coverages Explained

This is what you are actually buying – coverage to protect you, your loved ones, and your car in different situations. Most people glaze over when they talk about insurance coverage – and many people assume that their auto insurance policy covers them in all situations. Unfortunately, this isn’t the case.

There are certain coverages that are required, legally by the state, and there are other coverages that the bank or finance company will require you to maintain. Since the coverage is what will determine how well you are protected it is important for you to understand what you are buying, why you may need it, and how much to purchase.

The next section deals with what each type of coverage protects you against and pays for in the event of a claim. In addition, we’ll deal with “limits” and “deductibles” and I’ll give you some practical advice on what level of limit or deductible you may want to consider buying based on your personal situation.

Legal Disclaimer

For accurate and specific coverage definitions please refer to your policy contract and declarations page that was provided by your insurance carrier. While most coverages are the same for all companies, there may be slight variations. Some companies — primarily Non-standard or high-risk carriers— will have more exclusions than Standard or Preferred carriers. Common exclusions are for things like War, Nuclear Incidents, and Misrepresentation. “Misrep” means the company can deny coverage if you lie to them on the application or misrepresent a material (meaningful) fact.

Typically, the company is looking for big lies – youthful drivers in the household, cars that you own but did not disclose, or providing them a garaging address that is different from where you really live (e.g. you live in Chicago but give the company your parents address in Springfield). These are some of the reasons why car insurance companies will attempt to apply the Misrepresentation clause after you have had a claim. In short, do your best to provide the company with the most accurate information possible and then shop your insurance to get the best rate.