Reader’s Question:

Does having a credit card affect car insurance?

Jenny

Chicago IL

One of the factors that insurance companies would base to assess risk level of an individual would be their credit score. So when a driver was not approved due to bad credit history, the Fair Credit Reporting Act (FCRA) would allow him to have a free copy of his credit report and as stated in the FCRA, “promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies.”

Fixing your credit to qualify for credit based on car insurance can be very tiresome. So upon obtaining the report, the driver can then find the companies where he got a negative mark on. He then needs to start one step at a time. Temporary unemployment is usually one of the reasons why companies would mark him negative on his credit score, so it would be necessary for him to explain his situation and hopefully the negative comment be removed from his credit report.

Typically for some companies, bringing your account current will be considered to remove the negative report. So it would be highly suggested that you start contacting your banks, credit card companies, or other companies that placed marks on your report.

Reader’s Question:

I am a new owner to a used car from my grandfather. This is my first time to have a car under my name which totally thrills me that I forgot to get an insurance first. What coverage should I consider including in my used car insurance policy?

Keith

Atlanta GA

Used car is still a car so you still need a car insurance for you to legally drive it. State law’s minimum requirement for insurance coverage is the same for used car and brand new car. This means you need to include bodily injury liability and property damage liability in your used car insurance policy. If you reside in the state that require Physical Injury Protection (PIP), then you should also add this to your policy.

Regarding including comprehensive and collision coverage in your used car insurance policy, it is something you should think about. If your used car’s value is no longer that high, then maybe you can skip comprehensive and collision coverage, as the repair might cost more than the car’s value. Which, in this case, it is more practical to buy another used car or a new car. Without comprehensive and collision coverage, you can get a cheaper premium.

But if your used car is a classic or a collector’s item, then it might be a good choice to have comprehensive and collision coverage in your used car insurance policy. But note that, this will increase your car insurance rate.

Since this is your first time to buy a car insurance, you might seek the help of people who have experience buying it. You can ask a friend who has a car to walk you through the process. Or, you can ask the advice of your parents.

You can also ask referrals for a good car insurance broker. The broker can provide you with information for different insurance companies. He can also provide you with insurance quotes from various insurance providers which you can choose from. Some would say, getting car insurance from broker is expensive but then value of help you get and convenience is just worth the extra money you pay.

Reader’s Question:

I have had a couple of points on my license. Will it affect the way my premiums are determined? Will it impede the availability of cheap car insurances for me?

Martha

Chicago, IL

Having a couple of violations and points on your license would certainly give insurance companies enough reason why you should not be given low insurance rates. Having had multiple driving violations would lessen your ability to acquire cheap car insurances. Companies can assume that these points are due to lack of driving skills and acquired discipline. This classifies you as greater risk and makes them hesitant to offer you lower rates. Violations on record with the DMV would prove to be a better scoring basis for your premiums. The higher your score, the worse your records, thus higher premiums follow as record from DMV. This will be used as basis for your premiums. But still, insurance rates vary widely from company to company. You can hope that the assessment of your driving record would vary from each company and would not have that much impact in your ability to acquire cheaper rates.

Driving records aside, insurance companies take their own measurements and recording. They have their own method of gathering data which will then later be used for scoring. Each company sets and records their own point values for each specific applicant; these points are referred to as “insurance points.” If you score higher on this point system, you will then get higher premiums. Insurance points are determined by varying factors such as gender, driving record, marital status, age, and type and class of vehicle you are driving. It would be wise to keep track of these records in order to know if you can get cheap car insurances or if your policy needed modifications. From time to time, many of these factors will change and so it helps to keep an updated version of your policy.

Reader’s Question:

How do I turn a teenager’s expensive car insurance to cheaper car insurance?

Logan

New Orleans, LA

If turning any expensive car insurance policy to cheaper car insurance may already seem like a great challenge, what more if you try doing this for teenage drivers’ car insurance? The task at hand may appear to be really tricky, but it is not impossible. Almost every car insurance policy is priced at an amount that is still open to some negotiations. You just need to be totally informed on how to work your way into getting cheaper car insurance for your teenage driver.

First, you could make sure that the teenage driver maintain a good driving record. A single speeding ticket may sky-rocket his car insurance premium to a very high amount. And also, even if the driver is not at-fault but always gets into accidents, his or her car insurance premium may be affected. This is because it is suggestive of a pattern of recklessness on the part of the teenager. And I think that it is also
automatic to know that the teenager should not drink and drive.

Second, you could avail of discounts that are offered by the company. There are some that could be applicable to your teenager, such as good student discounts, safe driver discounts (especially if he or she has finished driving courses, female driver discounts (if the teenager is a female), safe vehicle discounts (for having a vehicle packed with safety features), etcetera. It is just up to you which ones to choose depending on which is applicable. You shall have to talk to a broker or agent to know which ones.

Lastly, you should get in touch with people who are knowledgeable on how the industry works. You do not know when you could get bright ideas that could really help you with your money-saving schemes.

Reader’s Question:

Is there even such a thing as a cheap car insurance quote?

Henry

Baltimore, MD

Cheap car insurance may seem like a contradiction in terms, but getting a cheap car insurance quote is not such a remote possibility. There are generally three things that affect how high or low a quote is. First, there is the amount of risk you as a policyholder may be to the provider. Second is how much cost the provider incurs to operate its business. Finally there is the estimated amount of losses from claims that the provider expects may happen within a year of doing business. A cheap car insurance quote will then be a matter of getting the right combination of all three factors.

Among the three, the first one is probably what you can most actively influence. You can get closer to achieving that cheap car insurance quote by maintaining a clean motor vehicle record and making sure your car has standard safety features. The second and third factors are largely external. A cheap car insurance quote is more likely to come from a small company with a small overhead. It is also more likely if you reside in a less populated area where the traffic situation and crime rate is not as dramatic as metropolitan areas.

Reader’s Question:

My insurance policy is about to expire. Can you tell me how to find cheaper car insurance, so that I wouldn’t have to pay as much as my current insurance policy premium?

Ron

Chicago, IL

First of all, you should know that by looking for another insurance carrier even before your current insurance policy expires, you are already avoiding a possibility of an increase in your current rate. Car insurance companies don’t like it when a policy owner lets his policy lapse. They think that a person must be responsible for making sure that the policy is always up-to-date and that no damage were made to the vehicle during the time that policy was no longer active.

The best way to find a cheaper car insurance policy is by insurance shopping. Car insurance companies regularly change their rates. That’s why you also need to regularly check updates on the activities of these companies to make sure that you don’t miss out the chance of getting a policy when a certain company offers a rate at its lowest. When you do your car insurance shopping, the best way to check on the activities of insurance companies is by checking their websites and their ads in the newspaper. These companies always announce any marketing activities they have. I’m sure you won’t miss it if you check the internet or the newspaper for their ads.

Another way is to look for a car insurance company that offers not only low rates but discounts, as well. Discounts are always reliable when it comes to pulling your premiums down. However, not all discounts are applicable to you. So you need to double check with the company if you could use this discount. Otherwise, it’s just useless.

Reader’s Question:

I have two sons in college who wants to have their own cars. How and where can we buy cheap car insurance for young drivers?

Jim

Seattle WA

The most obvious way for you to save on insurance is to convince your children to share a car if they are going to the same school. However, if they’re not attending the same college or insist on driving their own cars, there are some ways you can lower the costs of car insurance for young drivers.

One of the most important considerations that insurance companies make when computing for car insurance for young drivers is the type and model of vehicle. Get your children cars that do not have big engines or are not too fast. Understandably, boys prefer to drive fast, but be firm on this area as it could mean hundreds of dollars in savings for you. Tell them to compromise on this aspect. The cars should also not be modified or fitted with additions, like spoilers and rims. It’s better for the cars to remain unadorned. Also, insurance companies offer discounts if you insure more than one car. In this regard, go to an insurance company that will offer you the highest discount for insuring two cars. Insurance companies look on favorably on students that maintain at least a B average. So, if your sons are getting that average or above that, then, premium for car insurance for young drivers can further be lowered.

Reader’s Question:

I’m thinking of trading my old car for a new one. Naturally, I would be applying for new insurance. Any tips on how to get really cheap car insurance?

Jasper

Springfield, MO

There is car insurance, and there is really cheap car insurance. You just need to know how to find them. I suggest that you shop around first. Call several car insurance companies or go online. Compare their quotes, and see which one would offer you the lowest premium. Apply for any discount you could be eligible for. If you have a clean driving record, meaning you haven’t been in an accident or wasn’t given any ticket or suspension for the last 3 years, then you could probably avail of the “safe driver” discount. Consider raising your deductible to lower your car insurance rate. Just make sure you could cover the cash-out if you figure in an accident. When filling an application form, be sure to give the shortest distance covered when going to work. You are charged higher car insurance premiums if you drive farther.

Before you trade your old car, consider first the insurance cost if you get a new one. From experience, you would know that newer models and sports cars command higher premium. Choose one that your budget could cover. Should you opt for a low-cost vehicle, you could also consider dropping collision if you could afford the loss. Any savings you make from dropping collision coverage would probably cover for the loss.
Finding really cheap car insurance could be overwhelming, but if you apply these easy tips, you could drastically lower your car insurance costs.