Five Facts about Car Insurance

Understanding the basics of car insurance can be difficult. Below, we've outlined some important insurance facts, so you're "in-the-know" when you're on-the-go.

Fact #1: Your credit impacts your insurance rates.

Believe it or not, your credit may impact your insurance rates. Insurance providers have found that certain credit characteristics for an individual are useful to predict how likely it is that the individual will file an insurance claim. These characteristics are not the same ones that a bank uses to measure lending risk. Insurers may use creditbased insurance scores in conjunction with other variables such as age, driving record, claims history, place of residence, the type of car and the average miles driven, to assess the likelihood of a claim submission.

Fact #2: Stopping payment? You'll pay in the long run.

If you think switching car insurance companies is as easy as stopping payment, think again. Sure, your policy will cancel, but your existing insurance company could report you to the credit bureaus for non-payment, damaging your credit score in the process.

What's more, your insurance history will reflect a cancellation which may cause a new provider to decline your application or charge you higher premiums in the future. Instead, be sure to complete the necessary paperwork with your existing provider, such as a policy cancellation form. Time it right by starting your new policy on the date your old policy ends.

Fact #3: Your car insurance company can cancel or non-renew at any time.

Your insurance company can cancel your policy at any time if you violate one or more of its guidelines during your policy period. Same goes for nonrenewal. Things such as failing to pay your premium on time, losing your driver's license due to suspension or revocation, submitting too many at-fault claims, or misrepresenting your driving history or past insurance claims could all be reasons for cancellation or non-renewal.

Fact #4: You could save money by paying your car insurance premium in hill.

You might be surprised to learn most car insurance companies charge an administrative fee to break your premium payments up into installments, such as paying every six months, every three months or every month. The more you divvy up your payments in installments, the more these "convenience fees" add up.

Fact #5: Brand loyalty can cost you.

If your mindset about automobile insurance is "set it and forget it," you might want to reconsider. Years ago, insurance companies evaluated a short list of factors when calculating your premiums. Today, that list has grown to a confusing labyrinth of criteria causing insurance rates to differ dramatically from provider to provider.

Instead of allowing your policy to automatically renew, comparison shop once a year to ensure you're getting the best auto insurance rates.

For additional information, please call the VFW Member Benefits Department at 1-800-821-2606, option 1 or go to www.vfw.org/MemberBenefits and select Financial Services.