Little Known Auto Insurance Coverage Secrets

When it comes to auto insurance coverage there are several things the insurance companies don’t want to make public. If you arm yourself with this information, you can save money on your premiums. Here are just a few of the secrets of auto insurance coverage.

Credit Scores

Your credit score will determine what kind of financing you can get on your car, and the interest rates on loans you choose to take out, but did you know it can also affect your insurance premiums? Almost all auto insurance companies will pull a credit report when it comes to giving you a quote for your premium. The better your credit, the lower your rates may be. The insurance companies justify this by saying its part of a risk assessment. If you have good credit they deem you as a lower risk. If you’re credit isn’t the best, expect to pay higher premiums.

Installment Payments

Most insurance companies will offer you the convenience of paying your premiums in monthly installments. What they may or may not tell you, there is almost always a convenience fee added to this option. In most cases it’s around $8 a month. That can increase your premium by almost $100 a year if you choose to pay over time. If you’re in a position to pay the premium in full you can save some money.

Totaled Car Worth

Your insurance company will usually not use the standard Blue Book value to determine the value of your car if it’s totaled. In fact, most insurance companies use their own formula to determine your cars worth. If you are making payments on the car and something happens, you may be stuck holding a bill for the gap left between the totaled value deemed by the insurance company and what’s left on the loan. If you are paying on a car it’s best to make sure you have GAP insurance to cover any of this should you need it.

Diminished Value

If your car has been in to an accident and repaired, the value of the car may be deemed as less than the exact same model that has not been wrecked. 14 states allow you to file claims with your insurance company for the lost value if your car has been wrecked and repaired. If you live in Florida, Georgia, Hawaii, Kansas, Louisiana, Maine, Maryland, Massachusetts, North Carolina, South Dakota, Texas, Virginia, Washington, or West Virginia you may be able to file a claim and receive a payment for the diminished value.

Canceling Your Policy

If you are switching insurance providers, you need to call and cancel the old policy. Just leaving a bill unpaid will not cancel it automatically as most people think. In fact, this can harm your credit since the insurance company can and usually will report the unpaid premium to a collection agency. Once you have your new insurance lined up, give the old company a call and officially cancel the policy.
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