Does anyone have any general recommendations on how to not get ripped off when getting insurance? Since my state capital is the second insurance capital of the U.S., it’s no surprise that insurance is required by law.
I apparently have four big strikes against me: I got a speeding ticket in the last three years, I’m male, I’m 20, and the car isn’t completely shit (an '89 Beretta GT with almost 200K miles). I called around getting quotes, and they varied from $380-$550 per six months, for just liability.
I signed up for the policy quoted at $380 after a big hassle (I have somehow generated serious negative karma). I got the bill yesterday for $239.32… the first payment on my $718 (!) policy. I haven’t signed anything yet, so I’ll be taking this up with the agent on Monday, but I was hoping to get some pointers from the forum first.
Until now I was on my parent’s policy, so this is my first foray into the world of legalized blackmail. Any pointers are appreciated.
I’m shelling out $220 a month over here. 2 tickets and an accident in the last 5 years. Meanwhile, a girl I work with (she’s 22, btw) has been in 5 accidents in a year and a half and is paying less than I am.
Not really legalized blackmail. You’ve admitted to a speeding ticket. You’re 20 years old, male. That sounds pretty high for liability only, though. What else is hanging in your closet?
Your insurance rate starts with a minimum base charge with modifiers depending on your: 1) age & number of years driving 2) gender 3) zip code 4) marital status 5) claims history 6) yearly mileage 7) type of vehicle, 8) drivig record, and 9) credit history.
Unfortunately there’s not much you can do about being a 20-year old male with a history of speeding. Yes, you got one ticket, but that probably wasn’t the first time you were speeding, was it? In a few years the speeding ticket will not be a factor. Until then, you’re going to pay through the nose. It’s a lucrative deal between the local governments and the insurance companies. That’s why it’s especially important to talk the cop down on your mph at the time the ticket is written or fight it in court. Sure it may be easier to pay $150 than spend a day in court, but you’ll probably pay more than 10 times as much in insurance over the next few years.
There are a some things you (and any others that may be reading) can do to reduce your premium.
You live in a capital city? It probably has the highest rates in the state. Move to a suburb or a smaller city.
Buy a car that’s only a few years old, but not a flashy one. Even though your Beretta is old, it is in a high risk category. Get a sedan with a neutral color. Check the insurance rate before you buy it. Most people don’t factor this cost into their car buying budget. Expensive cars or sports cars carry the most risk.
Get a job closer to home to reduce your yearly mileage (or move closer to your job)
If you don’t drive your car to work, insure it as a recreational vehicle at a reduced rate.
Increase your deductible. Don’t let them talk you into a $100 ded when $500 will do. This is probably the single best thing you can do right now to reduce your rate. Be prepared to pay if you get into an accident.
Get at least the minimum recommended coverage for your state. This may be far less than what you would realistically need in the event of a serious accident, though, so be careful. You should NOT skimp on coverage, but a few thousand here and there can reduce your premium.
Eliminate duplicate or unnecessary riders on your policy. Some have riders for 24-hr roadside assistance, rental fees, medical coverage. You may or may not need these.
If you or your parents belong to a union or are a teacher or civil employee there are special insurance companies just for these folks. The rates are phenomenal.
Ask about special discounts. If you are a good student or have taken a recent drivers ed course, this will help a little.
Add security and safety features to your car. Find out how much this will save you before doing the work. It probably won’t help you on a 13-year old car that doesn’t have airbags, though.
Buy direct. There’s no reason to buy auto insurance through an agent if you know what you want. Ten percent of that premium is probably going to the agent.
Pay in a lump sum. Don’t agree to extra fees to pay your premium in installments. It’s not worth it.
Drive responsibly. If you think your rates are bad now, get another ticket.
Get a copy of your driving record and make sure that it is accurate. Court clerks make a lot of mistakes. As gov’t employees, they get paid whether they’re accurate or not.
Settle down. Get married. Live in the same place and work in the same job for a few years. Once you settle down, the cost will be easier to bear. Easier said than done, I know.
Get a copy of your credit report and make sure it’s accurate. Paying your bills on time will help, too. Insurance companies can and do run these checks.
Run a few quotes through various online insurance companies to see where you stand before talking to an agent. If the agent gives you numbers that are too high or too low, question it. You might be the next victim of an insurance scam.
Shop around. Rates are based on a company’s loss history. The large national insurance companies have a huge pool of drivers, so their rates are similar. Call a few smaller local companies to see if they can offer competitive rates. Ask about their A.M. Best Rating and call the BBB if they’re not a nationally known company. This will help you determine their reliability i.e. whether they have a history of paying off claims in a timely manner.
I hope that helps.
It’s so late, I forgot to address the original purpose for your post. You got low-balled. Seedy insuraance companies do this all the time. They know what the realistic rates are, but the agent throws out a really low rate to reel you in and later informs you that due to a “background check” or a “rate error” your premium is hundreds of dollars more than the quote. I would drop this company at the earliest opportunity. They’re out to screw you.
Thank you for all the help, this is very useful. I have questions on a couple items, though:
I understand the reasoning for all of them except credit history. I’d think that would only come in if I wanted to pay in monthly installments (which I do, but I could pay lump if I must).**
No, I had a few previously, but the two most recent were 3/12/1999 and Nov 2001. The 1999 one passed beyond three years, so it wasn’t supposed to be a factor.**
I would have fought the ticket, but I got it while rushing to meet someone in Minneapolis, while on vacation. I couldn’t make a 6 hour trip to fight the ticket.**
I can’t do anything about 1-10, but thanks for these tips. How do I go about buying direct? Aren’t there a whole bunch of companies? I hought that was the point of the agent, to find the lowest rate with different compaines. I may be wrong, like I said I’ve been able to avoid insurance so far…**
I’ll do that.**
Very much so. It’s hard to go from zero to married, especially when I have no idea of what my future is, or have any local friends, or have any prospectives.**
I’m about to do this; under the credit laws I’m allowed to get a free copy of all three credit reports at the moment. I just need to send off the letters.
Why does my credit affect my insurance? I’m an recently ex-teenager who had bad experiences with credi cards and college loans… I’ve gotten rid of all my credit card debt (and all my credit cards) and I pay my student loans on time, but I don’t know how to fix my credit. Perhaps that should be another thread.**
What really sucks is that this is a local company in a small town, the type of situation where they all know me by name. I hope it was a mistake of some sort, but experience has taught me to never have any hope in this sort of situation.
Once again, thanks for all the help. How did you become so knowledgable in this field?
The agent or the guy at the insurance company screwed up, so my rate is back down to $390. I’m still planning on getting my credit reports and all that other stuff.
Insurance companies claim that there is a connection between credit rating and behavior behind the wheel. They claim it is a good barometer of what kind of risks you take while driving.
I’m not sure I believe it and it is under debate in the industry and with the state regulators.
A few minor corrections. The states gain nothing out of mandating you have coverage. For the most part the insurance companies do not reap huge rewards from insuring those who only buy insurance because they are forced to. As a general class or group these folks tend to be high-risk drivers. Premiums are high, limits are low and accidents or damage to the vehicles are frequent. Insurance companies make their money off middle-aged safe drivers who don’t have accidents.
Buying direct can save you some money, but not much. An independent agent should search around for the best rates for you. If your agent doesn’t give you at least three options for placing your coverage, they haven’t done enough work to get your business.
I’m an insurance agent in NY, Upstate, not anywhere near the city, I did a quick quote for you and came up with $684.00 for 6 months.
Make sure you are getting a discount for having prior insurance (you must have been listed as a driver on your parent’s policy). Most companies give a discount if you have had continuous insurance coverage for at least 6 months prior to starting a new policy.
I am in the process of trying to help out my 18 year old stepson find a car/insurance. He has no history of accidents nor tickets. For minimum, shitty liability only, he is currently paying $708 per six months on a 235,000 mile 1990 Honda.
We were looking at low end new cars, like Saturns and Cavaliers and the price for not-very-good full coverage (required for a loan) is $1710 per six months!!! This is under a parents policy. I, with trembling voice, asked how much if he was on his own and the answer was $960 per six months for crappy liability. I didn’t even ask about full coverage on a low-end new car.
My freaking God! That kid won’t be able to have a decent car till he’s 25. Maybe that’s a good thing.
In a few years the speeding ticket will not be a factor. Until then, you’re going to pay through the nose. It’s a lucrative deal between the local governments and the insurance companies. That’s why it’s especially important to talk the cop down on your mph at the time the ticket is written or fight it in court. Sure it may be easier to pay $150 than spend a day in court, but you’ll probably pay more than 10 times as much in insurance over the next few years.