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Six Things You Should Know About Your Auto Insurance

by Amy Walters

Most people think that a spotless driving record and a car with no performance aspirations are enough to secure automobile insurance at an attractive rate. However, there are other factors taken into consideration by insurance companies that many people are unaware of. There are also myths about insuring a vehicle that have been repeated so often that people accept them as fact.

six things you should know about your auto insurance

Credit scores are important

Virtually all auto insurance companies look at credit scores before quoting rates. This may seem odd, but it actually makes a lot of sense. Most insurance premiums are paid in installments, and it’s a prudent step for a company to look into an applicant’s payment history. Credit scores are also used to give an indication of a person’s character. Good credit is a sign of maturity and responsibility, and these are things that an insurance company looks for.

Auto insurance is not a lucrative business

Many people moan about the cost of insuring their car or truck, and they believe that their insurance company is making a good profit on their policy. However, this is rarely true. Many insurance companies look at auto insurance as a break even proposition at best. They offer it mainly as a way of developing a relationship with a client that they hope will later buy homeowners and term life policies.

Red cars do not cost more to insure

Most people will swear that red cars cost more to insure simply because they have heard it said so many times. However, there is no evidence to back this up. There is no data showing that red cars get more tickets or cost more to insure, but there is evidence that easily seen colors, such as red or white, are involved in fewer accidents.

Elderly people pay more for auto insurance

Most people are aware that young drivers pay a premium for car insurance, but few realize that drivers over the age of 75 also pay higher rates. However, older drivers can sometimes get their rates back down as they drive less and can take advantage of policies that consider this.

Insurance violations can be costly

Driving without insurance coverage can lead to a suspended driver’s license and auto registration. It can also lead to higher insurance premiums. An individual can also fall foul of these rules if they do not own the car and had no idea that it was uninsured. Having no insurance violations is a good first step towards getting car insurance at a reasonable rate.

Education matters

People with a college degree will generally pay less for auto insurance, and a master’s degree is better still. Many have claimed that this is unfair, but the practice has withstood challenges in court. This is yet another reason to stay in school.

Driving a car is a privilege and not a right. All drivers have a responsibility to other road users, and maintaining adequate auto insurance is a prudent, and necessary, first step. The best way to keep rates low is to maintain a good driving record and understand how the system works.

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