Insurance Reset

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Is there anything we can do about rising insurance costs?

#MoneyMonday

Have you noticed the cost to insure your vehicle lately? These premium increases cause nothing short of sticker shock! The suggested reason for increased prices is that during COVID-19, people drove less and therefore there were fewer accidents and insurers were able to charge less. However, post COVID-19, accident crash rates have been higher than pre -COVID-19, along with inflation, and supply chain shortages, of which increase the cost of parts and materials for repairs. If you’re feeling aggrieved like me, and have an anathema for being fleeced, I say it’s time to go vehicle insurance shopping and see what’s out there.

Background Information:

If your auto insurance is up for renewal, most carriers will auto renew your policy at a higher premium. You also need to consider if you are going to change carriers, you may need to provide a 30 day notice to your current carrier or may be subject to some kind of fee.

According to the executive editor of Carinsurance.com, the average customer who changes insurance carriers, saves approximately $658.00. That may be true in general, but I will shine a spotlight on one group a bit later in this article. How long should you wait before a shopping expedition? Experts say between three to five years since rates begin to increase if you remain with a carrier for longer than those periods. I think the smart move is to venture out into auto insurance shopping whenever you experience a life changing event. That’s to say, whenever you relocate, purchase a home, marry or divorce, welcome the birth of a child, or there’s a new driver in the house.

If you are concerned with customer loyalty, you can forget about it!  In the past, customer loyalty was grandfathered into your discount plan, but that is no longer the case. In this case, just look out for number one-you!

Next Steps:

Now that you are armed with some background information, the following are suggested steps:

  1. Call your current carrier and review your current policy, paying attention to policy limits and areas of liability coverage. This way, when you begin to shop for a new carrier, you are comparing apples to apples in terms of coverage and not apples to mangoes. While you’re comparison shopping, be sure that the coverage you are seeking is sensitive to inflation since the cost price and price to repair your Maserati has increased post COVID-19.
  2. Always ask about discounts and premium reduction factors such as, will paying electronically reduce the premium? will paying for a full year reduce my cost? How about going years without an accident or tickets–will that qualify you for a discount?
  3. For parents, the question may be if the college your child attends is 100 miles or more away from your home, do you qualify for a discount? Let’s say your child is not 100 miles away from college or school, does your child have the grades to qualify you for the good student discount? The good student discount is applicable for students who maintain a B  average or better, or are in the top 20% of their class.
  4. Another potential discount inquiry would be, does the carrier have a program that sets rates based upon your mileage?  Since the pandemic, insurance companies have launched new programs considering this factor in determining premiums.

Shopping Options:

You have one of two choices when it comes to finding insurance. You can either call or speak with an agent at a major carrier, known as a “captive agent” or shop with an independent agent.  A captive agent interacts with only one carrier while an independent agent will seek prices and options from several carriers all at once. In other words, the captive agent specializes in one company and their products; while the independent agent, “specializes in generalizing”.

Spot Light:

Perhaps up until this point you’re probably enjoying this article. But when I noted that the average customer saves $658.00 by switching carriers, I left out some factors. Research and reports from the Consumer Federation of America, have noted that black Americans pay more than white Americans for car insurance, which is mandated in each state. Just to illuminate- good drivers who live in white neighborhoods, pay significantly less than good drivers who live in black neighborhoods with the same driving records.  Drivers who live in African American communities receive premium quotes that are 70% higher than for drivers who live in white communities.

Insurance companies factor socio-economic factors in premium settings which are unrelated to a person’s driving history. These socio-economic factors are used to increase or reduce the rates. Here are some of the factors considered in setting premium rates: whether safe drivers rent or own their own homes, drivers with less education over those with more education, single drivers versus married drivers, blue collar workers versus white collar professionals and those with higher or lower credit scores.

I’ll end this section with this story. In 2014, the National Association of Mutual Insurance Companies sent a letter to the Federal Insurance Office suggesting that people of color could afford to pay more for auto insurance, because they spend money on alcohol, tobacco, recording equipment, toys and pets.

I’m just the messenger!

WHAT’S UP! Today’s what’s up is about vehicle mileage. In an analysis conducted by the website iSeeCars, they noted vehicles with the most mileage or greatest lifespan. While I don’t personally own any of these, six out of the top ten vehicles are Toyota’s. The top five are :Toyota Sequoia (296,509 ), Toyota Land Cruiser (280,236), Chevrolet Suburban (265,732), Toyota Tundra (256,022) and GMC Yukon XL (252,360). So if you are looking for more bang for your buck, you might want to give these vehicles some consideration. And that’s what’s up!

 

 

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