The realm of car insurance is one that few people are comfortable with. It is a subject matter that is complicated and the processes that govern it are antiquated. In fact, it is one of the most unchanging industries in any market. While car insurance is a measure that is meant to help protect your investment, the fact that it is a complicated subject can cause a lot of policyholders to spend money unnecessarily. And as you may already know, this is far from the intended purpose of car insurance.
But Can We Really Blame Insurance Providers?
The quick answer is that no, we can’t really blame the system, especially when all that insurance providers do is to provide coverage for your vehicle. They are bound by what you’re willing to pay and what package you want to take.
More often than not, a car insurance policy only becomes counterproductive when the policyholder does not thoroughly understand the concepts related to car insurance. This article seeks to pierce the veil of confusion in order to help readers get the most out of their insurance policy. So, what are the mistakes that we make that cause car insurance premiums to increase unnecessarily?
At-Fault Accidents
The most important factor that affects your insurance premiums is your risk level. Typically, drivers that have a higher level of risk are going to be charged higher premiums because they are also more likely to figure in an accident. If you cause an accident and a claim is filed against you, you can expect that your insurance premiums are going to increase following the claim.
Insurance Coverage Lapses
While it may seem trivial, a single day that you drive your car without an active insurance policy in place can severely affect your insurance premium. This is deemed to be a high risk factor because it would be treated as a sign of your inability to pay for the insurance coverage.
Some companies accord their clients a grace period while others do not. It’s important to do your research on a certain company’s policies. A reliable and established company like Allstate will always provide customers with sufficient information on their website.
Moving To A Major Metro Area
Major metro areas have a higher number of instances of claims being filed. With this in mind, it also follows that cars are more likely to get involved in accidents in these areas. While the reasons vary, the thing that doesn’t is the fact that insurance companies will perceive this as a risk factor and will raise your premiums to make up for the added risk.
A Drop In Your Credit Score
Again, taking into account the fact that a drop in your credit score affects the way you are perceived by your insurer, a drop in your credit is an indication that you could be a higher-risk client. As you may have already guessed, they’re going to have to try to mitigate the blow on their end by charging you more.
So, as you can already tell, the things that happen with the other aspects of your life can also affect the insurance premium you pay. With that in mind, it’s important to be careful with what you do if it negatively affects you financially. You wouldn’t want to be spending money unnecessarily.
