5 Unexpected Ways to Drive Up Car Insurance
August 1, 2010 · Tagged with Insurance
3. Adding a Teen to Your Policy
Teen drivers are more likely than other age groups to get into accidents and file claims. So, adding a newly licensed 16-year-old to your car insurance could cause your rate to climb, says Luedke.
With some research, policyholders can take steps to help make that rate increase as reasonable as possible, says Joel Ohman, a Certified Financial Planner in Tampa, Fla., and founder of CarInsuranceComparison.com.
He suggests that policyholders shop around for an insurer that offers lower premiums for young drivers.
“Owners can also encourage their children to qualify for good-student discounts,” he says.
4. Missing Credit Card Payments
Policyholders may think their credit history has nothing to do with their car insurance costs. However, many insurers have determined that certain characteristics in a driver’s credit report could increase the likelihood that the person would need to file an auto insurance claim, says Luedke.
That data is combined with other driver information to create the client’s insurance score, which influences the size of the premium, he says.
“We don’t look at the same credit characteristics as a bank, but we do look at enough to measure insurance risk,” Luedke says.
If a driver has a low credit score but a good driving record, he may be able to find a better rate with a provider that doesn’t put as much emphasis on the credit score, says Ohman.
5. Paying Car Insurance in Installments
Choosing monthly, quarterly or semiannual options to pay your car insurance bill may seem convenient, but the choice can cost you more money because of installment fees, Ohman says.
Many consumers don’t view the expense as a fee. Auto insurance companies list the charge as the norm while offering a “discount” to payers who pay everything upfront, says Ohman.
“It’s a bit tricky to think of it as an extra charge when you pay by installments, but the fact is, if you aren’t able to prepay your premium, you will probably end up paying more over the term,” he says.
According to Luedke, there are administrative costs involved when car insurance companies receive several smaller payments. The costs are passed on to the policyholder as an installment fee.
The charge is typically less than $5 per installment. However, under a monthly plan, when the consumer pays the installment fee 12 times per year, the extra charges can add up, says Ohman.