Commissioner’s Corner: Save now but don’t increase cost down the road
by admin on Jul.17, 2011, under Car insurance
Financial challenges have forced many Kansans to make lifestyle changes to adapt to the current economy. From changing jobs to moving to a different house to downsizing vehicles, they have made decisions that impact unexpected areas of their lives – like car insurance.
Choices such as driving less, switching jobs, or even paying off a vehicle can save — or cost — on your car insurance.
Some changes will save in unexpected ways, while others may increase your cost down the road. Below are five examples.
You moved — Whether by choice or necessity, many consumers relocated over the past year.
If you downsized homes, took advantage of record low interest rates, or were forced to move due to foreclosure, a change in Zip code may affect your auto insurance premium.
You changed cars — Car ownership can be a hefty expense. Whether you chose to purchase a less expensive car, pay off a current vehicle, or purchase a “starter” car for a teenage driver, expect car insurance rate changes.
The make and model of your car also affects your premium. Be sure to get quotes from your insurance company before signing the paperwork.
A car with a lower resale value is usually cheaper to insure because you will pay less for collision and comprehensive coverage, which protects against vandalism, hail, fire or animal accidents.
If you pay off a current vehicle, you may be able to select a higher deductible or eliminate your collision coverage.
If you have added a car, be sure to ask about a multi-car discount.
You changed jobs — With Kansas unemployment more than six percent, many consumers have been impacted by a job loss and the need to find a new job. This can have an impact on car insurance costs.
Some consumers now have a longer or shorter commute after finding a new job.
Since your car insurance premium is partially based on annual mileage, driving less equals paying less.
Others chose to stop payment or cancel car insurance because of a job loss. Causing an accident without adequate insurance protection could have devastating financial consequences for you and your family. And, this decision could result in higher costs if insurance is reinstated in the future because you also lose renewal/continuous coverage discounts. Then, if you choose to reinstate the policy, the insurer may consider you a higher risk.
You drive less —According to a recent national survey by the National Association of Insurance Commissioners (NAIC), almost 40 percent of consumers drove less in the past year, choosing instead to carpool, walk or take public transportation more frequently. If you have changed your driving habits, check with your insurance carrier to see if you can get a low mileage discount.
Your credit score is damaged — Whether consumers have fallen behind on bills or made purchases they could not afford later, their financial decisions that affect credit-based insurance scores may impact insurance rates.
Having a poor credit-based insurance score can result in higher premiums or, in some cases, the inability to secure insurance through some carriers.
The NAIC survey found more than one-third of consumers did not realize their credit-based insurance score can be used to determine auto insurance premiums.
I urge you to check with our Consumer Assistance representatives at the Kansas Insurance Department before making key vehicle insurance decisions. Call them toll-free (in Kansas) at 800-432-2484.
For more tips on how to lower car insurance costs or additional information about the choices in auto insurance coverage, you can also visit our website, www.ksinsurance.org, where you can order or print our vehicle insurance publications, or go to the NAIC site, www.Auto.InsureUonline.org.
Sandy Praeger is the Kansas Insurance Commissioner.
Copyright 2011 Leavenworth Times. Some rights reserved
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