Your credit affects your auto insurance rates greatly. Here are six steps that can help you lower your auto insurance rates even if you have damaged credit.
Ask Your Agent About Credit Scoring
With many companies today, your credit score is the main factor in determining your auto insurance rates. There are still companies out there that do not check credit or use it to determine their rates. They will not have the most competitive rates, but you may be surprised. Look for an independent agent in your area. When you call for a quote, ask them if they use any auto insurance companies who do not do credit scoring. You are likely to get a better rate from one of those companies if your credit score is on the lower side.
Do Not Let Your Insurance Lapse
Having prior insurance with no lapses in coverage can give you a huge discount on your auto insurance. You usually see the first break after you have had coverage for six months. You might see another break at twelve months. Insurance companies use credit scoring to set their rates because statistically those with good credit scores are more likely to keep a policy in force for a long time and not be late on their payments. When you get a quote, it helps if you can show them that with your prior insurance company you had no trouble paying your monthly premium.
Raise Your Liability Limits
Many insurance companies divide their rates into tiers. For example, tier 1 clients may have great rates, while tier 10 clients pay a higher premium. Credit is a big factor in the deciding which tier you will be assigned to when your quote is issued. Statistically speaking, those with higher liability limits tend to be better, long-term clients with fewer insurance claims and lapses in coverage. For that reason, those with liability limits higher than the state minimum will usually be assigned to a better tier, even if they have damaged credit. Even those with great credit may not be assigned to a better tier if they have the minimum liability limits that their state allows. Raise your liability limits to at least one level higher than your state minimum. It may cost you a little more the first six months or so, but you are likely to be re-tiered into a better level when your policy renews if you show that you are a responsible person by purchasing more than the minimum level of liability coverage in your state.
Check Your Car’s Symbol
Every car is given a symbol based on factors such as cost of repairs, characteristics of the typical driver for this type of vehicle, etc. The higher the symbol, the higher the price will be. Before purchasing a new vehicle, talk to your agent and ask which cars are given the lowest symbols by your insurance company. This alone could save you hundreds of dollars per year.
Keep Your Driving Record Clean
Some companies are looking back up to five years to see how many tickets and accidents you have had. Avoid tickets and accidents, and you will have better rates.
Stay Claim Free
Do not turn in small claims. Some companies give big discounts for being claim free for the past 3-5 years. So if you turn in a claim for $50 to repair a chip in your windshield, you may lose that discount that is saving you hundreds of dollars per year. If it is a small claim, just pay for it. It will save you money over time.
Any one of the items above could save you money each year on your auto insurance. Imagine how much you could save if you put them all into practice.