How to Determine a Good Car Insurance Rate

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Car insurance rates are always changing. Maybe you like your car insurance agent but do not know whether or not you have a good rate. How do you really know? Knowing whether or not your car insurance rate is good is important to your overall financial well-being. Understanding where improvements can be made could save you lots of money in future premiums.

Ask Your Insurance Agent

Assuming you trust your agent to give you a fair answer, he or she will be able to tell you what is affecting your insurance rate. Maybe you are in the best tier in every aspect regarding car insurance; however, most drivers have room for improvement. An insurance agent’s professional opinion can really help you pinpoint your insurance pitfalls. Some potential answers from your insurance agent might include:

  • Your insurance credit score is mid-range and could be improved to lower your overall car insurance costs. Someone with good financial standing is seen as a less risky person in every area of their life. Though it may not seem fair, improving your credit is an easy way to lower your rates.
  • A traffic violation is keeping your rates high. If it will be falling off at your next renewal because enough time has elapsed, you will see your monthly payment lowered. Make sure to ask about the timeframes, because they are often different lengths of time than the DMV uses.
  • We don’t currently insure your home; you could switch your home policy to us and save big on your car insurance premium with a multi-policy discount.
  • You are paying a $10 late fee every month. By moving your payment date to a date which works for you and combining the change with electronic withdrawal you could save even more.
  • You are currently doing everything right. You have a good driving record and are receiving a good student discount. The only thing holding you back still is your age. Once you hit 25, your rate will go down, making you a preferred driver. Stick it out a few more years and you’ll be in good shape.

Regardless of what your agent tells you about your car insurance rate, it should put things in perspective and give you a better understanding of what goes into determining your rate. Mindlessly paying out hundreds of dollars for car insurance without knowing why you pay the rate you do could mean you are overspending by thousands of dollars over your lifetime.

The chart below shows the average 6-month car insurance premiums, broken down by credit score.

Shop Around for Car Insurance Quotes

Of course, one thing your insurance provider won’t tell you is whether or not you could save money by switching to another car insurance provider

Determining whether your car insurance rate is good or not also depends on the insurance carrier you select. Rates can vary widely between insurance carriers. Insurance carriers base their rates upon what their target market is and claims paid out. Shopping around for a car insurance quote can help you determine if you are paying a competitive rate.

  • Always compare apples to apples. It is important to get insurance quotes which are as similar to your existing coverage as possible; otherwise, you will not be able to compare insurance carriers accurately.
  • Once you receive quotes from a couple of different carriers you can compare coverage and price. You should be able to immediately determine which carrier is offering the best car insurance rate.

Compare with Family and Friends

Normally it is not recommended to compare car insurance rates with family and friends because car insurance is comprised of so many variables. It is preferred to use family and friend comparisons to determine good service from a particular carrier instead of a good insurance rate. Also, it will give you a sense of stability from a particular carrier if a friend’s rate has been steady for years.

Determining whether your car insurance policy has a good rate should be a fairly simple process. It is the first step in making a decision to stay with your current insurance company or making a switch. Car insurance rates are important, but so is customer service. Don’t let the temptation of a great price make you settle for mediocre service.