The Biggest Mistake Consumers Make After Finding a Car Insurer They Trust
Misconceptions Insurance-Buying Consumers Have
It’s all about human nature and the promise of the message in insurance ads that your agent and the policy you hold are there for you, reassuring you that you are in good hands when things go wrong.
And this is understandable. We want to feel a level of trust and reassurance when we are dependent upon someone else to be there for us when we need them. Which is one of the main reasons why we hang onto particular doctors, dentists, and trusted mechanics for so long---our lives are literally in their reassuring hands.
However, applying this same level of trust and comfort in your car insurance provider is a mistake.
According to Consumer Reports analysts, one of the mistakes many consumers make after finding a car insurer they trust is hanging onto the agent and the policy for too long, mistakenly believing that they will be rewarded for sticking with their insurer. The misconception many consumers have is that by proving themselves to be loyal to their policy provider, they will be rewarded with lower rates over time than they would get if they switched to another car insurance provider.
In fact, this misconception is wrong as Consumer Reports actually recommends that consumers should not just shop around for their car insurance policy when buying a car, but that car owners should periodically always be on the lookout afterwards for the best deals possible such as advice given by MarketWatch with this recently publicized 5 cheapest car insurance companies in 2021.
The Basis of Insurance Quotes
So, if your policy’s rates do not factor in loyalty and longevity with an insurance provider, what really does?
Basically, it comes down to just a few factors as pointed out by both Consumer Reports and MarketWatch:
• The Driver Profile---your age, driving experience and accident history.
• The Car Type---the more expensive an insured car is, the higher the costs of repair; and therefore, the higher your premiums. Furthermore, high-performance cars are also associated as being a higher risk factor.
Related article: Tesla Insurance To Offer 70% Discount Based On Driving Data
• The Location---based on where the insured resides with respect to compative analysis of regions experiencing relatively higher incidences of weather-related claims and/or accident-prone regions, state insurance regulators can allow for higher than average ($1,636 2021 figures) rates.
Insurance Quote Influences
However, there is another factor that plays heavily on what you pay; your credit score. According to Consumer Reports, the worse your credit history, the more you will pay for insurance. While some states have laws against this, most do not.
Analysts with ValuePenguin point to research that shows that having a poor credit rating translates into a major jump in the price of your insurance; whereas, good credit can lead to significant savings. And, that the difference is substantial:
Poor credit raised rates 61% as compared to having average credit, based on our analysis of national rate data. Very good credit saved drivers more than 17% per year.
Furthermore, a second heavy hitting factor is your accident record: ValuePenguin research also showed that car owners with a traffic violation, ticket or accident could see an average premium increase of 117% on average per their 2021 data analysis.
The Take-Home Message
The take-home message is that you should not equate your car insurance coverage with the same feelings of loyalty that you may have with your doctor or dentist...and that honest mechanic who saves you thousands in repair bills. Auto insurance decision making is based on statistics and not so much the human factor, although it does bend human error to its advantage.
As both Consumer Reports and MarketWatch recommend when it comes to being a smart shopper, do your research at least yearly to ensure that you are still getting a good deal with what you pay for your coverage to ensure that you are protecting your vehicle...and your wallet at the same time.
For additional articles about car insurance, be sure to check out how Tesla Insurance Will Disrupt All Auto Insurance.
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Timothy Boyer is Torque News automotive reporter based in Cincinnati. Experienced with early car restorations, he regularly restores older vehicles with engine modifications for improved performance. Follow Tim on Twitter at @TimBoyerWrites for daily new and used vehicle news.
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