(PRWEB) September 20, 2012
We are all bombarded with media advertisements on a daily basis claiming substantial savings to be had on car insurance. However, there is little support provided as to why we may be paying too much on our existing auto insurance. One of the main reasons consumers end up spending more than necessary is they are not being properly educated. Car owners will benefit from lower pricing if they understand how car insurance is regulated and why insurers are able to get away with inflated pricing.
Pricing is Based on State Regulations
The foundation for car insurance pricing always starts with the rules and regulations placed by state insurance offices. Insurers must adhere to state guidelines if they want to sell insurance in a particular state. This is a vital point consumers should understand if they want to keep their insurance prices at the lowest levels. The problem individuals run into is most of the material available on the internet is a generalization that is not focused to a particular state.
Some examples can be seen in some of the larger states, although variations apply across all states. California, the most populated state, doesn’t allow insurers to use credit scoring. Much of the information we see on the internet proclaims how good credit will decrease pricing, which is true in most states, but not the case in California. The State of Florida requires insurers to provide discounts for drivers over the age of 55 for a 3 year period who take an accident prevention course. New York Insurers offers discounts for automobiles signing up for a Combat Auto Theft (CAT) Program aided with the support of the local police. Ohio and Illinois lead the nation in available usage based programs where savings can reach 50% by driving fewer miles. The above are just a few of the variations you will see as you move across different states.
Spending a few extra minutes understanding the primary pricing guidelines in the state you live in will go a long way in keeping car insurance prices down. One of the websites focusing on key state directives impacting rates is Best Car Coverage. An additional element coming from the state level is minimum coverage requirements. These limits frequently don’t provide enough protection for most car owners and it is wise to review full coverage auto insurance strategies to make sure all of your risk is fully protected.
Why Insurers Get Away with High Pricing
There are many reasons why car insurance prices tend to decrease over time. One is the value of the cars we drive is constantly dropping. It is estimated a new car loses as much as 20% of its value when it drives off the lot and up to 50% after 3 years. As the value of are vehicle drops shouldn’t the cost of insurance also go down? For younger drivers, gaining driving experience is an important element to decreasing insurance rates. Do most insurers automatically reward more experienced drivers with improved pricing? Many of us undergo changes in our driving habits. Possibly a family member no longer works or our spouse is working from home or driving fewer miles. The risk of getting in accident decreases as mileage drops. Do auto insurers always reflecting these changes in our pricing? As our car gets older, as we get more driving experience, as we drive fewer miles shouldn’t our insurance cost drop? Yes, absolutely!
Unfortunately, insurers are able to get away with higher pricing as consumers don’t have the time and information to push back. The best step to find the fairest pricing is get in the habit of shopping for car insurance on a regular basis and ask your agent if your pricing is in line with your current driving profile for the cars on your policy. Getting multiple quotes on the internet is an easy process that should go a long way to keep your pricing low and the pricing of your existing insurer honest.
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