A Simple Straightforward Guide to Make Sure You Are Getting the Best Price For Car Insurance Year After Year
We all get bombarded with ads seemingly everywhere from the insurance companies claiming they can save us untold amounts of money by switching to them. You call them up or go online to get a quote and come to find out they are twice as much as what you currently pay! What gives?! As a former insurance agent, I spoke to literally thousands of people who (At least on the surface) wanted to save money on their car insurance. Often their rates were being increased due to a ticket or accident which would usually come up later in the conversation or after I ran their driving record. Generally speaking, if someone likes the price for their insurance they are only prompted to shop when there is a relatively substantial increase in their rates. This is one of the biggest mistakes people make (More on that later). Insurance is one of the most complicated products we purchase. As such, it is very specific to our own personal situation. The majority of insurance companies follow the doctrine of “The Law of Large Numbers” Without getting too far into the weeds it basically deals in probability and the risk associated with that probability. For example, a person who gets into a car accident (whether it is their fault or not) is more likely to get into another car accident. So when you see companies offering gimmicks like “Accident Forgiveness” there is some fine print associated with it. Usually, you have to have gone five years without a claim or an accident to qualify for accident forgiveness. Why is that? Well, it’s simple, people who go at least five years without an accident or claim are much less likely to have an accident or file a claim in the future than someone who has had one within the past five years. Remember that Law of Large Numbers? Another example is a person who lets their insurance lapse is likely to let it lapse again and exhibits a much higher level of irresponsibly and is among the riskiest drivers out there. Are you starting to see the trend yet? While most people think their driving record is the biggest factor in the price of their car insurance, it is not. Your Insurance Based Score is, here’s the catch with an insurance-based score. It is roughly 70-80% based on your credit score. While pulling your insurance score is not a hard inquiry on your credit it is a soft inquiry and does not affect your credit score. Another major impact on your score (Often more of an impact than your driving record) is what the insurance companies call a “Rating Factor.” These are things like your level of education, whether you rent or own your home, your sex all are rating factors and can have a significant impact. This is the point in the conversation where peoples eyes begin to glaze over so we will move on.
Do Your Homework And Don’t Lie!
Before you make a single call or hop online to get a quote the first thing you need to do is get your Clue report. Clue stands for Comprehensive Loss Underwriting Exchange. You can get find out how to get one here https://personalreports.lexisnexis.com/fact_act_disclosure.jsp It is free to get your Clue report. The Clue report provides a seven-year history of any insurance losses (Claims.) You will want to get your driving history from your local motor vehicle division to see what if, any tickets you may have. Once you have both of those items you will want to check them for accuracy. If you find there is something inaccurate it means your current or former insurance provider reported the information incorrectly. You will need to contact that insurance carrier and get what is called a “Letter of Experience” stating the correct information. You can also dispute it directly with Lexus Nexus here https://personalreports.lexisnexis.com/dispute.jsp but the quickest way is to get the LOE from the insurance carrier. Once you have fixed any errors and know exactly what is on your clue report/driving record you are ready to go! There is just one thing you must remember and promise to do…… Don’t lie, fib, misstate, omit or give anything less than the 100% correct information when giving your quote! There are a few reasons for this. First, you are wasting yours’ and the insurance companies time when you don’t give a full and accurate accounting of your driving record and claims history. The insurance companies have to pay a fee to obtain your Clue report and driving record so the majority of them do not run reports until the last possible second which is usually when you give the green light to start the coverage. I cannot tell you how many times someone was so excited about the price I had for them, then I would run their record and find a rap sheet full of tickets, accidents, claims, etc. Obviously, there is going to be a serious adjustment in the price when this happens but there is something else that affects the price. Many of the insurance companies have what we in the business use to call “The Liar Surcharge.” Remember that pesky Law of Large Numbers? Well, one of the things it says is people who lie or omit information about their driving record or claims history (Even if it was an honest mistake) are less responsible and riskier to insure. As a result, you get hit with a double whammy on the price of your insurance quote in the form hefty surcharge that would not have been there had you divulged the information while getting the quote.
Shop, Shop, Shop, Then Shop Some More
I once gave a woman a quote when I was still new to insurance who had been with the same insurance company for over 10 years. She was the kind of customer an insurance company wanted. She was married, had a master’s degree, a homeowner and had a high insurance score (All of those things can get you a significant discount on your insurance) I came back with our price and we had a 55% savings over her current rate; my mind was blown. It also taught me a valuable lesson, one that I would impart to my customers whenever I could. You need to shop around for your insurance! This is even more important if you are under 25, have any tickets, or accidents falling off your record (Usually 3-5 years depending on the insurance carriers own underwriting guidelines) or had a lapse and are now insured. Someone who has established insurance without a lapse of coverage and does not have claims or accidents in the last five years needs to shop once a year around renewal time. You need to shop a minimum of 10 companies! Before you freak out there are brokers and companies that can shop multiple companies for you at once (More on that later). If you are in the former group you need to shop for insurance every 6 months. Keeping insurance without a lapse is similar to building credit with insurance companies. The longer you are insured (With any company) without a lapse the more responsible you are looked upon by the insurance companies. This is a time where the Law of Large Numbers can help us! Once you have gotten quotes from a minimum of 10 companies you will either save money or find out that your current company has the best price. This has happened to me multiple times so I often stay with my current company for several years. With that said we have a saying in my family. “You never leave money on the table” If you are not shopping for car insurance at least once a year you are potentially leaving hundreds of dollars “On the table.”
So How Exactly Do I Get Paid For Shopping For Insurance?
If you have made it this far in the post I want to thank you for soldiering on through! Here is your reward. There are two ways you can get paid to shop for car insurance that I have personally done. The first is through a company called Root Car Insurance. Their schtick is they use a technology called telematics to give you a quote on car insurance that is based primarily on your driving habits and not all just on the Law of Large Numbers. You download the app on your phone, drive around like normal for a couple of weeks and they give you $25 just for getting a quote through them even if you don’t sign up for insurance with them! You can do that with this link https://r.joinroot.com/?code=p:K9HZ6J&t=1514492118 Full disclosure I get a $25 referral if you sign up using my link.
Remember earlier I mentioned there are companies out there who will shop multiple car insurance companies out there for you? Well, Gabi is one of them. You use your login credentials or manually upload your policy declaration page along with other information then they shop upwards of 20 insurance carries for you! They are not limited to auto either. They shop home, renters, and umbrella insurance as well. You can do that using my referral link here (Yes I would get a referral bonus if you sign up using my link) https://gabi.com/X5HZ4 If you sign up for insurance through them using the link provided you get a $100 Amazon gift card! Not bad for about five minutes of effort! If you take anything away from this article it should be that you NEED to shop around for a regular basis. Even if you feel like you are getting a good rate, there may be a company out there with a better rate for you.
*UPDATE* Gabi recently updated their policy. They will now give you a $25 Amazon gift card if you get a quote with them. You do not need to purchase car insurance with them but you do have to go through the entire quote process which includes adding payment information. THEY WILL NOT CHARGE YOU when you add your payment information they just require it to run your insurance records. Insurance companies have to pay to run records and want to make sure you are serious about getting insurance coverage before they take on the expense of pulling driving records and insurance claims history.