Thursday, December 27, 2012

Tips for Saving Money with Teenage Drivers

By Matt Fleming

Your kid has finally reached the age where they can start driving and you are excited because you won’t have to drive them to soccer practice, take them to a friend’s house, or pick them up from school anymore. What you are probably dreading is that you have to add them to your auto insurance policy and your rates are going up.. a lot (double). Have no fear, there are several things you can do to keep your premiums low and still afford insurance for the kids to drive.

Good Grades

Make sure Junior has at least a 3.0 GPA or “B” average in school. Most insurance companies offer a “Good Student Discount” which is a huge discount on your premium. This can also be a motivation for your kids to keep their grades up in order for them to have driving privileges, “if you don’t have a 3.0 GPA or better you don’t drive”. 

Driver’s Training

If they take driver’s education in school or any other training where they received a certificate of completion then this can also result in a discount. If they were not offered driver’s ED in school then send them to a driving school or have them complete an online course, it’s fast, easy, and cheap. Any school (online or classroom) will work as long as you get a Certificate of Completion as proof for the insurance company. There's also an interesting study published by the Arizona DOT that discusses the effects of driver education on traffic crashes and violations (.pdf download).

Should I Buy Them Their Own Vehicle?

I don’t want to stop you from buying your teenager a vehicle if you need an extra one or you don’t want them to use yours. Unfortunately, if you have the same ratio of vehicles to drivers and one of those drivers is a youthful driver then that vehicle will probably be the most expensive vehicle on the policy. Even if it’s liability only on a 1986 Volvo 740SLE (baby blue) which is what I drove in high school and the parents have nicer cars with full coverage. If there are 3 drivers and two cars then the insurance company will have the kid listed as an occasional driver or a non principal driver which will keep costs down. I’ve seen companies rate policies that have the same ratio of cars to drivers rate the youngest driver on the highest rated vehicle. Example, you have a 2007 BMW 528i, 2007 Toyota Camry, and a 91 Honda Civic. They will rate Junior on the BMW which is the highest rated car. So if you are contemplating buying them a car because you don’t want them driving your car and it will save you money because they will be on the “junker” think again.

Tuesday, June 26, 2012

Quote of the Day: Insurance with a DUI

Today's Quote of the Day comes from a client in Gilbert, Arizona and highlights the benefits of sticking with an independent agent that looks out for your best interests.

 "Susan" became a client about three years ago when her policy with Farmers was non-renewed or cancelled because of a DUI conviction. I was able to find her a company willing to insure her three vehicles - a 2006 Hyundai Santa Fe, 2006 Chevy Cavalier, and a 2008 Nissan Altima but, as you can imagine, it wasn't cheap. So we shopped every year at renewal time to make sure she was still getting the best available rate. This month, the DUI became three years old. We shopped it again and found a policy that was 50% lower than what she had been paying. She was psyched not only to be paying a lot less, but it also meant she was putting this further into the past and getting her life back to normal.

Many of you researching insurance prices for your vehicles may have been convicted of DUI. Many, many more of you have been issued a photo ticket for speeding or something else. If you're one of the lucky ones that hasn't had a ticket in years - don't worry, it's coming. When your record is marred and have to deal with the stress of having your premiums increase or facing a policy cancellation, that's when you will really value my services. Having an agent you know that looks out for your best interests can relieve a large burden off your shoulders when it counts the most (and save you a lot of money!). I've been happy to help Susan and I would be happy to help you.

Call or email me anytime. If you have been refused by other providers because of a DUI conviction or multiple tickets, I may be able to help.

Saturday, June 23, 2012

Why Does My Renewal Go Up?

Why Does My Insurance Renewal Go Up?
Photo by Jerry Bunkers.

If your auto (or homeowner's) insurance renewal goes up it’s not necessarily what you did or didn’t do, it’s probably just a statewide (or nationwide) rate increase by the insurance company. Insurance companies are not in the business to lose their shorts, they are in the business to be profitable and, at the minimum, to cover their losses. If their losses ratio is up then they are not bringing in enough premium to cover their losses so they will increase premiums across the board.

Traditionally, insurance companies have made their money by collecting premiums and then investing it in the stock market and other ways to make a return, which would add to profits and cover overhead and losses. We all know how the stock market is doing, so lately they haven’t made the kind of return they would like. Insurance losses are at the same levels, if not higher, and they need to be covered. To stay in business, a company has to be profitable and sometimes the answer is to raise premiums on you and me. 

Let me also say that when the economy is bad and everyone is hurting for money, insurance fraud rises. (Here's some stats from the Coalition Against Insurance Fraud.) When the insurance companies spend tons of money on fraud, everyone’s premiums increase.

Of course, there is a chance your renewal may also be going up if you are considered more risky to insure. It's important to know that insurance companies will rate you on your driving record, accidents or claims record, and your insurance score. Your insurance score is made of a lot of different factors, but it usually corresponds to your credit. If you have great credit, chances are you will have a great insurance score which will result in lower premiums - and vice-versa. I have heard former executives say that out of the three reports, if they were to choose just one of those reports to look at and be profitable in choosing your rate, it would be the insurance score. Statistically, I was told, if you have great credit chances are you are responsible, which means in turn that you are a safe driver, less likely to file claims, commit fraud, etc. In other words, you are less likely to add to their losses. It may seem unfair, but that's the reality of the insurance business. These guys are in it to make money and the more of a financial risk you are to them, the more you will have to pay to be insured. 

“What does my credit have to do with my insurance premiums?” is a question I get asked a lot. Now you know. During an insurance quote, I ask about your credit. I don’t see your credit score or your credit report. I don’t know how many credit cards you have and what the balances are, nor do I want to know. I'm just trying to get an idea or what to expect when we start running numbers and checking out providers. 

The good news in all this, is that the insurance business is highly competitive. There's lots of companies out there, some you may never even have heard of before, fighting for your business. Instead of going from site to site filling out free quote forms, call me. I know who gives what deals on what types of cars, how you can combine policies for the biggest discounts, and when the best time will be to renew or re-shop your policy. Best of all, it doesn't cost you anything extra and only takes a few minutes.