Things that affect vehicle cover costs
The cost of auto insurance is something that helps drivers to determine which plan and provider to choose, as most people are keen to save money and get the most competitively priced policy possible. Most people cannot afford to pay over the odds for their cover in the current financial climate and in some cases they end up reducing the level of cover that they take out simply to bring the price down, which can end up being a false economy as it can end up costing you more in the long run in the event of an accident or incident involving your vehicle.
It can help for you to have a background knowledge into the types of things that can affect the cost of your auto insurance, as this will enable you to see why you may be paying a higher price for your cover or whether there is anything that you may be able to do in order to bring the cost of your cover down. Many of the things that affect the cost of insurance cover will apply as standard across the insurance industry. For example, age is one of the factors that can affect the cost of cover and this is something that is taken into consideration across the board by all insurance firms when calculating your quote.
Some of the things that will or may affect the cost of your auto insurance cover include:
- Your age and gender (younger drivers, and in particular younger male drivers, are often seen as higher risk by insurance firms)
- The nature of your job can affect the cost of your cover
- The amount of miles you plan to cover per year can impact on the cost of cover
Premium rates rising fast
There’s an increasing disconnect between what the TV ads are saying about the rates for insuring your vehicle and the quotes floating into your inbox. The marketers would have you believe there’s no problem in finding really cheap insurance (but only with their company, of course). Yet the insurance industry itself funds the Insurance Information Institute as a research body. It regularly publishes studies. Mostly, they are uncontroversial. So it came as a surprise when it revealed a steady rise of some 10% in the premium rates between 2008 and 2010. The latest straws in the wind are also suggesting a further rise of some 4% this year. When you consider the rate of inflation has been zero – there has been a recession, after all, and many prices actually fell – it’s a disgrace the insurance industry has been pushing up its prices.
Yet, when a talking head does appear above the parapet to talk for the industry, the message is always the same. The rates are going up because the repair and medical costs have been rising faster than inflation. Indeed, when you look at all the evidence on medical costs, you can believe what these insurance apologists are saying. Then you have to ask yourself about the value of the US dollar. It’s been falling steadily over the last three years. So the cost of all those imported spare parts from foreign manufacturers has also been rising. If these same insurance companies were not announcing increased profits to their stockholders, you would almost feel sorry for them.
How much cover to buy
The insurance industry funds a number of different “independent” organizations that collect data and analyze them for publication. Think of them as being a type of PR operation, largely promoting the idea of insurance or explaining some of the recent trends. The Insurance Information Institute has recently conducted a survey into how people approach the task of insuring their homes. Sadly, slightly more than half those surveyed believed the proper basis for valuing their home was the resale value. Almost one-third reported reducing the current amount of cover to save money on the monthly premium installments.
This demonstrates a continuing misunderstanding as to the purpose of insuring the home. In fact, the resale price your home would fetch on the open market has nothing to do with this form of insurance. Taking it step by step. You are not insuring the land itself although some policies do include trees and plants growing in your yard. The purpose of the insurance is to give you enough money to repair or, if the damage is substantial, to completely rebuild the home from the ground up. To ensure you have enough cover, you should approach at least two local builders and get formal quotations of the likely cost of a full rebuild. Remember the cost of labor and of all the materials needed to recreate your home has been rising steadily over the last five years. Curiously, the recession has not slowed the rise in costs. This produces the irony that it would often be cheaper to buy a replacement home than to rebuild your original home.
Men and women get different rates
If you have been dealing with vehicle insurance for quite some time now and asked your friends about their rates you’ve probably observed that different groups of customers may have different rates even if they drive identical cars. That’s due to the fact that insurance companies use both age and gender as one of the main factors when calculating rates for each client. And if age is something that changes gradually, gender is a factor that you cannot change (without the help of a professional surgeon) and will have to live with it. What’s the problem, you might ask?
Well, some people find it unfair that female drivers usually have lower premiums that their male counterparts even when driving identical cars, living in the same area, having same credit ratings and driving records. And despite the fact that it may look quite discriminatory there’s a set of reasons for this to take place in the insurance industry.
First of all, female drivers tend to file far less claims then men. Some
Home insurance rates rise while cover falls
The Insurance Commissioners have noted a national trend. It seems the insurance companies are increasing the premium rates for insuring your home while reducing the extent of the cover. It’s good to have someone in an official capacity confirm what we’ve all known for years. When challenged, the insurers get all defensive. The poor things. It seems their costs are rising, so the only way they can maintain their profits is to hike the charges to us customers. More realistically, the reason for the squeeze is that, in many states, insurers can gouge the policyholders without serious penalty. Yes, yet again, we’re caught between the rock and the hard place. Let’s start off with the rock.
The majority of owners have a mortgage or some other loan secured on their homes. Without exception, the lenders insist we borrowers all hold an approved insurance policy. Even if it burns to the ground, the home can be rebuilt. This maintains the home as collateral. Indeed, there’s another standard term in loan agreements that empowers lenders to put their own insurance in place and send us the bill. Needless to say, the lenders have no interest in searching out the cheapest policies. All they want is a good night’s sleep, confident their capital is safe. So, if you find you cannot afford to renew the insurance, the lender will send you a bill. When you fail to pay that bill, the premium gets added to the loan and the repayments increase. If you default, the lender forecloses. . . The hard place is the lack of sympathy in the insurance industry. Decision-makers don’t care whether we can afford to pay or the policies are good value-for-money. All they care about is hitting their profit target and picking up their annual bonus.