Your driving record isn’t the only thing that matters when buying car insurance.
Where you park your car, how far you drive, which car you buy, who you live with ... so many factors enter the calculation, one imagines an actuary calculating the formulas in a cold, dark room somewhere surrounded by white boards. All this work to calculate your car insurance.
“We literally at this point have thousands of different things to look at,” says Allstate spokeswoman Shelley Beeler.
Arizonans pay some pretty high premiums (an average of $1,907 according to the Insurance.com 2007 Mid-Year Auto Insurance Pricing Report). Insurers throw some factors beyond a driver’s control into the calculation: insurance fraud (almost $200 is added to premiums annually to cover this); the rising cost of paying claims (which includes paying legal fees, rising cost of replacing cars); auto theft (Arizona is fourth in the nation); population density.
But drivers do have some control over their insurance destiny. Mesa resident Christina Higginbotham, 26, got tired of the “1-800 phone number, press 1, press 2” attitude of her former insurer and decided to switch companies. The hairstylist and mother of two was paying $250 a month for two cars. A speeding ticket from her single days had dropped off her record. As a married homeowner with good credit, she became an insurer’s dream.
“In my situation it has saved me money because they also look at (the fact that) I’m a responsible adult, I have two children, a home and a good credit score,” says Higginbotham. “They look at me and say, ‘She’s not going to be a high-risk driver.’”
Driving carefully isn’t the only thing drivers can do to lower their rates.
Even the insurance companies want drivers to comparison shop. Several hundred auto insurers do business in this state.
“It’s important for consumers to understand as much as they can about what they’re buying,” says Erin Klug, spokeswoman for the Arizona Department of Insurance.
A little effort can go a long way. Consider the following scenario: A Mesa husband and wife, both 42, with average credit, a clean driving record and driving a 2005 Ford Explorer and a 2007 Ford Taurus SEL could pay anywhere from $647 to $4,094 for a six-month premium.
CONSIDER YOUR CAR
Contrary to popular belief, a red car doesn’t immediately garner a higher insurance premium. But the car’s design, safety features and desirability among thieves will factor into your insurance rate. So will the value of replacing your car, should it be wrecked or stolen.
“When (drivers) buy cars, they don’t comparative shop to see how much the insurance is going to cost,” says Phyllis Rowe, vice president of the Arizona Consumer Council and an insurance agent for 27 years. “Particularly when they buy cars for kids. I had a father who bought a Stingray for his kid come in, and then he was appalled at how high the insurance was.”
Before buying a car, check with Consumer Reports — available at any public library or online at www.consumer reports.org — and find your car’s safety rating. Allstate.com features a tool that allows you to check the relative cost (described as lower than average, middle of the road or higher than average) to cover a particular vehicle.
BUY WHAT YOU NEED AND DON’T SCRIMP
Check with your agent to see if you really need extras such as rental car reimbursement and glass coverage. Also, consider increasing your deductible. Being willing to pay more out-of-pocket might decrease your rates by 15 percent to 30 percent, according to the Insurance Information Institute.
The money you save might be better spent on increasing liability coverage, which is $15,000 minimum in Arizona — especially if you have assets to protect.
“If you totaled out a person’s car, $15,000 isn’t going to cover their bumper,” says Higginbotham, who increased her liability coverage. “Now that I have a home, it’s a little scary to be undercovered.”
BE FINANCIALLY RESPONSIBLE
Good credit often equals good insurance rates. Insurance insiders often quote studies saying that credit history is a “powerful predictor” of future losses. It isn’t necessarily the credit score, but the credit characteristics (paying bills on time, the number of accounts, and balances) that interest insurers.
“If the credit history shows that you don’t pay your bills on time, it may be a sign to the insurance company that this person may stage an accident to collect insurance. So there is a risk there,” says Rowe.
ASK FOR DISCOUNTS
All insurers offer discounts for good behavior. Determining what discounts you’re eligible for should be a part of shopping around. Being a good driver, buying multiple policies, insuring more than one car in the household with the same company, completing driver education — all can help reduce your premiums. —
Get it cheaper
All insurance companies offer discounts for various reasons. Here’s a sampling of discounts from three of the largest insurers in Arizona:
Allstate: Accident Forgiveness means insurance rates won’t go up even if it’s your fault.
State Farm: Steer Clear Safe Driving rewards drivers under age 25 who complete an educational course consisting of a DVD and log book might be eligible for a 15 percent discount.
Progressive: Buy online and you’re immediately eligible for a discount.
Sources Consumer Reports, www.consumerreports.org
Arizona Department of Insurance, 2910 N. 44th St., Suite 210, Phoenix. (602) 364-4457 or www.id.state.az.us. The department’s Web site contains a rate comparison published twice a year.
Cars that rank worse than average to insure
• Ford Focus
• Hyundai Accent
• Mazda 3
• Honda Civic
Cars that rank better than average to insure
• Chevrolet Suburban
• Ford Explorer Sport Trac
• GMC Yukon