Insurance World

Did you know your credit history and score could have a tremendous impact on your ability to obtain insurance and how much you pay for it? Many consumers are not aware of this link and because of it they are often in for quite a surprise when the time comes to take out a new insurance policy.

Insurance carriers are becomingly increasingly aware that a tendency to pay other bills late may mean that you will pay your insurance premiums late as well. As a result, more and more carriers are opting to run your credit history before providing a quote. In some cases, a poor credit rating may mean you pay more for your insurance while in other cases it could mean you may not be able to obtain insurance at all.

Just how bad does your credit have to be to interfere with your ability to obtain insurance? It really depends on the guidelines used by that individual insurance company; however, in some cases, missing just as few as two credit card payments could mean you might have problems. In some instances, missing just two payments could mean you premium might be doubled.

You are not necessarily exempt from this type of problem even if you’ve been with the company for a long period of time or if you’ve had a good history in terms of losses, either. Some consumers have been rudely surprised to learn their policy has been cancelled due to credit score problems even though they had previously had a long relationship with their insurance carrier.

How can insurance companies do this, you might ask. As previously stated one reason is that many companies feel that you may have an increased tendency to pay your premiums late. Other companies justify the practice on the basis that if you’re irresponsible with money you may also be irresponsible with other aspects of your life. Some statistics serve to back up this theory, indicating the thought that individuals with poor money management skills also handle other areas of their life with less responsibility, such as driving or even taking care of their home.

Of course this doesn’t take into consideration the number of people who have a poor credit score due to the fact they have experienced financial difficulties rather than possess poor money management skills.

Is there anything you can do about this practice? Not really. If you have been with the company for a long period of time, you could try protesting it, but your chances of winning aren’t very good.

Ideally, it’s best to try to get your credit score in shape by running it yourself and making sure there are no errors on there to drag down your score. Then concentrate on raising it by paying down other debts and paying your bills on time. You may have to live with a higher premium for awhile but the good news is that when your credit score starts to rise your insurance premiums should go down.

Let’s face it an auto insurance company is a business that is created to make a profit and if we are not careful we might end up paying super high premium rates when we could have paid much lower premiums if we only did some research.

Here is a list that I hope will help car owners in lowering their premium rates:

• Safety devices against car thieves

Who would ever think that theft devices are valuable not only in guarding your car against thieves, but also in lowering your premium? Theft devices come in various types. Some are automatic while some need to be manually operated. All these theft devices provide extra premium discounts. In some states window sketching may also be a source of additional premium discounts.

• Multiple car discount

Let us say that you have two cars (for the sake of the illustration) that you want to insure with an auto insurance company. Usually you have to pay separate premiums but did you know that you could actually save a great deal on the premium that you will be paying for your second car? How? Consult your insurance agent to help you.

• Choose Yearly Renewable Auto Insurance Policies

Purchasing a yearly auto insurance policy will provide you with greater savings since the premium rate is fixed for one year compared to buying a six-month policy which changes rates every six months. If you purchase a six-month policy the premium you paid on your first semi-annual premium will not be the same as your second annual premium payment. So instead of saving, you tend to pay more for the same amount of benefits.

• Comprehensive storage coverage

The comprehensive storage coverage is ideal if you are thinking of storing your car for a period of time. It is a great savings idea to keep only the comprehensive coverage during the time you store your car since other coverage will not be required. A car in the garage is unlikely to get into a collision thus it will not require liability coverage.

• Mileage

The mileage that your car travels everyday has a significant effect on the premium rate that you are to pay since the mileage will determine the particular class in which your car belongs. Each class has a different premium rate.

• Organization affiliation

There are many auto insurance companies that offer a discount for being affiliated with certain organizations. These organizations may range from credit unions, college sororities and fraternities, or just having a certain credit card may also earn you a considerable discount on your premium. To be sure, call your service center and ask them for a list of the organization affiliations that they accredit, the same goes with the credit cards.

• Defensive driving course

Some auto insurance companies provide considerable discounts simply by attending defensive driving courses. For more details just check with your state insurance commissioner or you insurance company to see if you qualify and also to inquire on their accredited driving centers.