Loyalty not a Good Thing in Auto Insurance


Back in 2002, analysts predict that auto insurance cost would rise by only 3.5 percent the next year. They say vehicle producers have generally paid more attention on safety features and have chosen less costly but more durable materials so accident costs would decrease. All things being equal, this would have reduced premium rates in that year, the first time a decreased would have happened since 1999.But as 2004 ended, statistics revealed that the increase in cost was at 7.8 percent. The reason: crime statistics have risen as well as medical costs which backed insurers’ claim that coverage will be more costly. Increase is almost imminent each year, prompting advocacy groups to launch education campaigns aimed at helping consumers save on auto insurance costs.

Loyalty not a Good Thing in Auto InsuranceExperts note that many vehicle owners spend unnecessarily on high premium rates because they stick to one insurer. This could be good in some cases since there are insurers who give loyalty discounts but specialists say people could save more if they shop around before purchasing a new policy. They add that insurance industry in the United States is very competitive so motorists can always find better offers. Consumers are advised to compare price with coverage in determining the quality of a policy offer. Once they find the best vehicle insurer, motorists are encouraged to purchase multiple policies so they can avail additional discount.

Advocates also emphasize the importance of good credit, since many providers use credit-based insurance scores. This scoring method is a way of determining a person’s likelihood of filing for claims based on his debt standing. Experts say insurers believe that a person who is having troubles with debts is more likely to engage in an accident.

The National Association of Insurance Commissioners (NAIC) tells motorists to invest on safety gadgets since they do not only save lives, but cut insurance costs as well. The Federal Motor Vehicle Safety Standards and Regulations, which sets guidelines for road safety, says airbags, well-treaded pneumatic tires, and reflective devices are important crash avoidance and passenger safety. Experts add that anti-theft protection could also reduce vehicle premium rates.

Meanwhile, consumers who live in flood-prone states are encouraged to purchase flood insurance. Specialists say cold season run from September to May so now is the right time in assessing one’s vehicle safety and coverage. They explained that motorists will be spending more if they choose not to purchase necessary coverage. Advocates tell policyholders to seek help from their local insurance department if they need additional information.