Online auto insurance and credit scoring

Insurance is always supposed to be about who you are and how good a driver you are. That why insurers are so interested in your background, how many miles a year you drive and where you live. So why should they care if you have a good credit score? This has nothing obvious to do with how well you drive. Yet almost without exception, all insurance companies will look at your credit history before deciding whether to accept you as a policyholder. It starts with the more general question of whether you’re likely to be able to keep up the installment payments. There are administrative costs if you start a policy and then the insurer has to keep chasing you to make each payment when due. Indeed, the majority of insurers will cancel the policy if your payment record is too bad. So if you have a poor track record in meeting other regular payments, you may find your application refused or renewal declined.

Once we get past this legitimate use of your credit history, we’re then into murky waters. Suppose you’re short of money, do you spend as much on the maintenance and repair of your vehicle? If not, you may drive on bald tires or with worn brake pads, and have more accidents. Should you be really desperate for money, you might be more likely to report your vehicle stolen to get some cash. Most states have laws to control the way in which this information can or cannot be used.

For example, Wisconsin’s laws depend on the idea of unfair discrimination. If you suspect an insurer is guilty of discrimination, you’re entitled to ask for a copy of all the credit reports the insurer relied on when making the decision. These must be supplied to you without any charge. If you find the information is wrong, you can have it corrected and ask the insurer to review the decision. This is all part of the federal rights represented by the Fair Credit Reporting Act and the Fair and Accurate Transactions Act. These entitle you to one free copy of your credit history a year from each of the major reporting bureaus including Equifax, Experian and TransUnion. If you find any inaccuracies, you’re entitled to have corrections made. Remember, this is not your credit score. It’s the information used by lenders and others to create a score for their own purposes. The way insurers use this information does not create a standard score. Once you’re sure all the information is correct, you’re entitled to ask your insurer to review the premium rates. If the changes are significant, the insurer is likely to reduce the rates. The most honorable will reduce the rates from the time the error was made (assuming you’ve had the policy that long).

All auto insurance quotes are estimates of the risk you will have an accident and claim. The more you can do to convince the insurer you’re a safe driver, the lower your rates will be. If this means showing more financial responsibility by keeping all your payments up-to-date and avoiding defaults, then that self-discipline is going to benefit you in other parts of your life. It’s worth doing anyway. Let online auto insurance be the incentive to prove you’re trustworthy.

Online auto insurance quotes higher thanks to fraud

Let’s just recap on how insurance works. The insurers estimate how much we’ll claim, add enough to cover their costs and produce a profit, and divide that total among all us policyholders. Assuming the actuaries have done their jobs properly, the income will match the payouts and everyone will be happy. Unfortunately, there an increasing amount of fraud both in applications and claims. This costs the insurers hundreds of millions extra and, when they start running out of money, they increase the premium rates. Yes, that’s right. We end up paying higher rates because of all the fraud. So how does this work?

One of the standard ways of cheating is to describe your vehicle as being for farm use. For example, Californian insurers offer discounts of up to 20% for all vehicles used on farms. The reasoning is simple. When the only real risks are hitting a tree or unexpectedly dropping the front wheels into a gully, comprehensive and collision cover can safely be sold at lower rates. In a recent survey where investigators looked at some 80,000 vehicles claimed as for farm use, nearly 6,400 proved to be high-performance sports and saloon cars. In many cases, this was saving the vehicle owners several hundred dollars per year. The Californian insurers estimated their total losses were around $150 million last year. The same problem affects many of the other declarations made when people complete their applications. Discounts are often awarded purely on the word of the applicant and without any follow-up checks. Before you all start dishonestly claiming discounts, there’s one thing you should know. The lawmakers long ago recognized the risk to the insurance industry so, as soon as the insurer realizes the misrepresentation, it can cancel the policy and, if it has suffered any losses, it can sue you to recover whatever it has lost, e.g. paid out on one of your claims. In other words, the policy is void from the outset.

At the other end, there’s an increasing interest from criminal gangs to stage accidents and claim for the personal injuries sustained by the passengers. To make this possible, there are fake clinics established to write the medical reports and sometimes less than honest attorneys or paralegals prepared to push the claims. This type of fraud is most common in the no-fault insurance states where parties claim on their own insurance rather from each other. The aim of this type of insurance is excellent. When everyone is honest, removing the dispute as to who’s at fault saves at lot of money. In other countries, no-fault insurance programs produce lower insurance rates. Unfortunately, we’re more inclined to be dishonest so there are billions of losses from staged accidents. All these losses are, of course, passed on to the rest of us as higher premium rates.

So when the next auto insurance quotes come and you find they have all risen, go to your PC and send an angry email to your member of Congress and local state representatives. More money should be allocated to fight this type of fraud. Unless more law enforcement officers cooperate with the insurance companies and routinely prosecute everyone who falsely claims discounts or makes false claims, all the online auto insurance quotes from now on will be higher.

Auto insurance and those summer trips

Come the fall, the retired and monied folk who live in the northern regions look up in the sky and see birds getting ready to fly south. Like these snowbirds, they also seek leisure time where it’s warmer and drive or fly down to Arizona, Southern California, Florida and Texas. The same lifestyle itch affects most people as the summer months come along. This is also the time to hit the road and find somewhere by sea or lake, mountain or valley for a little rest and relaxation. But, before you set off, there are a few basic precautions to take. It starts with the vehicles. Hopefully, you had everything ready for the winter. You prepared for freezing weather with carburetor settings and the addition of antifreeze to the cooling system. Now comes the time to change the set-up for summer driving. As the temperature rises, there’s more of a chance of leaks so check the clips and hoses, make sure the belts are tight and the fluid levels are topped up. How are the tires? If you’re suddenly going to take off down the interstate at higher speed than usual, you want to avoid a blow-out. With the cost of gas still edging up toward the $4 per gallon, you want the engine running lean and change your own driving styles to a more even tempo. Less aggressive acceleration and braking saves gallons over longer distances.

More tips on this website

Now let’s come to the insurance policy. You can plan your road trip for months but, if things go wrong, there can be a mass of unexpected bills to pay. The first step is to make sure your policy covers you for out-of-state driving. Now assume you are stuck. What might you need? It could be something simple like a helpful mechanic to jump start the vehicle when the battery has run down or to deliver fluids to temporarily solve a problem of overheating. Even more annoying, suppose you locked yourself out of the vehicle. Solving any one of these problems involves a basic callout fee plus expenses plus an hourly rate plus the cost of any materials supplied. Then what do you do while waiting for essential repairs. Did you budget for overnight accommodation? Can you afford a rental replacement while the repairs are done?

There are a range of additions to the standard auto insurance policy that cover interruptions to your journey. But be careful what you buy. Some policies require you to be at least one-hundred miles from home or have other conditions to fulfill before you can claim. Then look at the amount of the cover. Most pay expenses up to $1,000 for the cost of essential repairs, accommodation and food. Are you feeling unlucky? More importantly, watch out for the anti-fraud conditions. Some policies ask whether the problem is one you should have fixed before you set out. It’s not unknown for dishonest drivers to try claiming the cost of routine maintenance as emergency repairs while on holiday.

Just as your vehicle could do with a tune-up before you set off, so your online auto insurance policy should be reviewed to ensure you have the right terms and reasonable limits on the amount you can claim.

more information on this website