Comparing shopping can save you hundreds of dollars if you are alert and willing to do so.
Accidents happen all the time and nearly 100,000 occur every day. Insurance is what can save you from financial disaster. This is why most people are forced to accept high insurance premiums, even if they have a poor driving record.
We created a drama out of real life by finding people with driving experience from both a family and one person. Then we shopped around to see how much they could save. The results were shocking:
1. The highest biannual premium was quoted by the single man at $1,727. This was more than three times the amount required for the family to have the same coverage.
2. The maximum semiannual rate for family insurance was $2,100. It was twice as high as the minimum rate of $890.
3. Even the best family plans were not offered by all insurers. Single rates are often higher.
This demonstrates the need to rationalize car insurance. This can be attributed to the different formulae used for calculating premiums. These are confusing combinations of variables such as age and driving record, where you live, and what car you drive. It will pay off to spend some time researching the company/policy that best serves your and your family’s best interests.
Reality Check 1
One family had a teenage driver since the age of two, which clearly inflated the family’s insurance premium. He was also cited twice for speeding last year, and his mother was also arrested once for speeding. These incidents are quite common, but insurers perceive them as risky because of the aggregation.
Prior to this, the family was paying $1,061 each six months for insurance on their two cars, the 1990 Toyota Celica minivan and 1989 Mazda MPGV minivan. The policy covered:
1. Limitation on liability for bodily injuries and property damage – $100,000
2. $2,000. Per person, medical expenses coverage
3. Complete coverage up to $100
4. Collision coverage deductibles starting at $200
5. For coverage for motorists, uninsured and/or underinsured at $100,000
We began to search the background for the figures above and recommended that the family increase their liability coverage as follows:
2. $300,000 per accident
3. $50,000 for property damage
4. $100,000 per person and $300,000.00 per accident
5. $250 for deductibles
6. We have decided to end our medical coverage.
This resulted in a drastic drop in premiums for six months to $890, and almost $350 per year for more coverage.
Mazda has now assigned the teenager to Mazda. This confirms that teenagers can still be assigned to an older vehicle.
Reality Check 2
The person in the second case is a senior executive of 30+ years who lives in an exclusive area of San Francisco. He drives an Isuzu Rodeo 1993. Insurance companies are more creative than he is. His residential address has been used by insurers to increase car insurance premiums.
Companies arbitrarily determine premiums because someone is single and owns a house, but parks on the street side overnight. He drove six miles per day, which is to his credit.
We tried to find the same coverage as the family but increased our collision and comprehensive deductibles up to $500. For six months, the lowest quote was $533.
Keep Your Premium
It’s difficult to find a generalization for insurances or premiums. Ironically, the same insurer quoted us the highest premium for the entire family and the lowest price for one person. Higher premiums are required if there are accidents or you are caught violating traffic laws. What is not apparent is the process by which car insurance companies calculate premiums. However, your car insurance premium is determined by a complex process beginning much before you approach them and when you do, a company underwriter screens you and decides whether to insure you and where to place you.