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    Insurance | 4 min read

    Say What?! 10 Things You May Not Know About Auto Insurance

    When it comes to selecting auto insurance, sometimes it’s just easiest to go with the company your parents use, a friend’s recommendation, or the company with the catchy commercial jingle. However, since insurance companies have different rates and coverage options, these really aren’t the best ways to decide what carrier and coverage are best for you. Shopping around is essential to getting the proper coverage and service you need at a price that fits your budget. Since not every insurance agent will give you in-depth information on their available coverage options, it’s important to be aware of these little-known facts prior to purchasing an auto policy.

    1. Good credit can get you a discount.

    It is becoming a common practice for a carrier to pull one’s credit score as part of the evaluation process for giving a quote. Auto insurance companies then use the information from your credit reports to come up with your "insurance risk score." The idea is that a person with a low credit rating is more likely to file a claim than one with a good rating. Insurers can conclude that if you pay your bills on time and you’ve had the same credit accounts for a long time, then you’re generally more stable and far less likely to pay your premiums late or miss payments.

    2. Higher deductibles can lower your premiums.

    Auto insurance premiums are largely based on how much money the insurance carrier believes it could have to pay should you get into an accident or experience vehicle theft. If you agree to pay for a larger portion of your own damages by raising your deductible, your auto insurance company automatically knows they won't have to pay as much on your potential claims. Because of this, they will usually give you a lower monthly or annual premium. If you decide to raise your deductible to save money on insurance, be sure you can afford to pay the deductible in the event you have to file a claim.

    3. If you let your policy lapse, you’ll pay more in the long run.

    Most insurance companies view drivers who are licensed but don't have insurance as risky or irresponsible. Because of this, if you let your policy lapse, you'll probably pay more when you finally go to buy auto insurance. If you are planning to let your policy expire because you want to switch auto insurance companies, make sure to purchase auto insurance before your current policy is canceled.

    4. Personal items lost due to vehicle theft are not covered by your auto insurance policy.

    While personal items lost due to vehicle theft are not covered by your auto insurance policy, your homeowners insurance policy will cover these items instead. If you regularly have expensive items in your vehicle such as laptops, sports equipment, a GPS device, etc., you should seriously consider carrying a rider, which is an add-on provision to a basic insurance policy that provides additional benefits at an additional cost to cover those expensive items. To make the claims process easier, ensure you have photographs on file of any expensive items you carry in your vehicle.

    Related reading: Save Money on Your Teenage Driver's Auto Insurance

    5. The option to pay in installments may come with a charge.

    The annual premium on auto insurance can be a substantial amount for many consumers to pay all at once, so many prefer to pay in smaller installments. However, many insurance carriers will only provide this option if the consumer pays an installment or "convenience" fee. While this fee may not be substantial when paid monthly, over the course of a year, it can add up. Neither option is necessarily wrong, and ultimately, the choice to pay your premium in one annual payment or via installments is up to you and what fits best with your budget.

    6. You can ask for insurance discounts.

    Most insurance companies offer auto insurance discounts for things like a safe driving record, car safety features, anti-theft devices, electronic payments, payment in full, and more. Make sure you're getting rewarded for being a safe driver and for having a safe car by shopping around for auto insurance that appreciates your record.

    7. Certain occupations can get a discount.

    Some insurance carriers offer discounts to engineers, teachers, and military personnel. For example, if you are an active-duty serviceperson and you can submit papers that prove your rank and details of your enlistment, an insurance company may consider giving you a discount. Some companies are also known to provide discounts to veterans.

    8. The color of your car does not affect how much you pay for insurance.

    The idea of the color of your car increasing your insurance rate is common, but ultimately false. In fact, when insurance companies get the information for your car, it's typically through the VIN, or Vehicle Identification Number. The VIN tells the insurance company the make, model, and year of your car, along with where your car was manufactured, but it doesn't include the color of your car.

    9. Affiliation with AAA and other professional organizations could lower your auto insurance rates.

    AAA offers member-only discounts on auto insurance and 24/7 roadside assistance, along with other benefits, depending on your level of membership. Also, check with your employer to see if they offer any group insurance rates, and always ask your insurance representative if they are affiliated with any groups or organizations that could lower your auto insurance rates.

    10. Auto insurance is tax deductible if you use your vehicle for business purposes.

    If your vehicle is used commercially, your auto insurance could be tax deductible. Simply determine the amount of time that you use your automobile solely for business purposes and you could be eligible for a tax break. For example, if you have a part-time landscaping business and you use your truck 30% of the year specifically for your business, then 30% of the cost of your auto insurance policy may be deductible. However, it could be to your best advantage to take the flat per-mile reimbursement instead, so make sure you consult with your tax professional to find the best option. 

    All of these car-related factors can raise or lower the auto insurance quotes you receive, so it makes sense to keep insurance top-of-mind when purchasing a car. Of course, some cost factors are beyond your control, but there’s still plenty you can do to cut your premiums and get the best auto coverage for you.

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    Jacki Cameron

    Jacki Cameron is the Personal Lines Manager for SWBC Insurance Services. She specializes in all personal insurance product lines and has significant experience working with clients who often have varied, unique asset protection requirements. Known for her knowledge and for developing outstanding customer relationships, Jackie has more than 20 years in the insurance business and is a key expert in the industry.

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