Purchasing an auto insurance policy can be confusing if it’s your first time, or if you don’t have an agent guiding you through the process. Partner P.J. Miller spoke with The Simple Dollar to demystify car insurance and answer common questions about premiums, discounts and more.

How does your job impact your car insurance premium?

Do you use your vehicle to deliver people, products or services? If so, you’ll need to be specific about that usage added to your personal auto policy. Depending on the usage and your insurance company’s stipulations, you might need a business auto policy (also known as Commercial Auto insurance). Think pizza delivery, courier service, Uber-type or other transportation network ride-share arrangements. 

Why do insurers care about your zip code?

Insurance carriers are fine-tuning their sweet spots and that includes by location and that could be a good thing for you if claims are relatively low in your specific zip code. They’re also after such things as median income, home values (yes, even home values can impact auto insurance rates if a carrier wants to focus on high net worth prospects. Zip codes can sort out specific sections of a county or city, for example, and they can refine their pricing to target exactly who they want to insure. 

What are the auto insurance discounts everyone should know about?

Increase your deductible. For example, from $500 to $1,000. But be aware that you’ll need to cover these initial costs in the instance of a claim, so be sure to set aside money, just in case.

Combine your coverage: Bundle your auto coverage with your home or renters’ insurance policy. Showing your loyalty to one insurer could help you land a discount, especially if you have multiple policies. Renew your plan early, and you could get a discount.

Eliminate coverage when you don’t need it: Older cars might not need collision coverage. If you haven’t already removed the physical damage coverage (comprehensive or collision) to reduce your cost, it can be a consideration.

Slow down: Speeding tickets can dramatically impact your rates. Being a safe driver can lower your car insurance by approximately 5%. Just because there are fewer cars on the road right now, doesn’t mean you should speed or disregard traffic laws.

Maintain a good credit score: Most carriers use credit as a portion of the rate-setting process, where permitted by law. While it is supposed to be a “portion” of the rate calculation, most believe it plays a significant role in determining a price.

How much can someone really save by comparing rates?

It depends on how much “shopping” you want to do, as rates can differ by a few dollars to a few hundred – in some cases, it can be a thousand or more but that probably means you’re paying several thousand already. The bottom line is, you have to find the company that gives the biggest discounts for your situation, such as excellent credit, low mileage, “clean” driving records, possibly college degree(s) and a skilled or professional job.

How could a policy become more expensive over time?

Increased age of the driver(s) – many carriers are increasing the rate on senior citizens, including pricing changes to age bands, such as at 70, 80 and over. Loss of discounts that applied when the policy was written but have faded over time. Poor continued claim experience (losses) for a specific insurance company or companies, in a given territory, zip code, state, or town/city.

What is a deductible? How do you choose one?

When choosing your deductible amount, there are various considerations: the value of your vehicle, your risk for having a claim and others, but a priority is how much you’re willing to pay if you are in an accident. If you have a $1,000 deductible but can’t afford this in the instance of a claim, it’s not going to be helpful to you.

How have car insurance industries adapted to the coronavirus?

Many carriers are providing flexibility for payments, and have suspended cancellations and late fees for auto insurance premiums. For example, Nationwide, Progressive and Allstate have all offered some sort of relief in response to COVID-19. Typically, no action is required on the policyholder’s part to receive these discounts or policy adjustments, but it’s best to confirm with your carrier, so you’re aware of their terms, as they do vary.

What long-term implications do you think the coronavirus will have on the industry?

For the future of Virus coverage, it’s way too soon to tell what might happen, but suffice it to say, the exclusion will remain in the policies until the “pre-existing condition” of the preceding year wears off. Until then, this will cause a lag in any insurance companies testing the waters and daring to jump in — which begs the question, how much would it cost in premium dollars and how many property owners will actually buy the coverage? This isn’t the tornado that leaves the damage in its wake and then is gone; this is potentially a year-round disaster without an accurate projection of when it will go away – an insurance company’s nightmare.

Read the full article at The Simple Dollar.

Questions about auto insurance coverage? Contact Wallace & Turner at (937) 324-8492 in Springfield, (937) 652-8492 in Urbana, or info@wtins.com.