Your Auto Insurer Knows Plenty about You

Your auto insurance company probably has a lot of your personal information, and that`s not necessarily a bad thing. For instance, auto insurers get a hold of your driving record, credit history, and other info to use in making decisions such as whether to cover your vehicles and how much to charge you for coverage.

Many insurers use credit information to determine your insurance risk score. You`ll likely pay less for car insurance if you have a good credit score, a history of paying bills on time and no bad debt. Insurers see a direct relationship between your insurance risk score and the chances of you filing a claim. Conversely, an insurance applicant who has a history of being late on bill payments and who often opens and closes savings or credit accounts wouldn`t be as good an insurance risk.

You won`t be able to obtain your insurance risk score, but you can assume that it`s comparable to your credit score.

Providing insights on credit scoring/rating are insurance industry experts Carolyn Gorman, Dick Luedke, Nichole Mahrt and Dave Snyder. Your credit rating may affect what you pay for auto insurance, so keep tabs on it, recommends Gorman, vice president of the New York-based Insurance Information Institute. Gorman believes that credit makes auto insurance rates more accurate, fair and objective. The use of insurance scoring varies from state to state and company to company, says Gorman, but the insurance industry believes that drivers with long, stable credit records have fewer accidents than drivers who don't.

Gorman says that there are various Internet services that permit consumers to check their credit rating and offer suggestions on how to improve their scores.

"Motor vehicle records are invaluable to a company in the assessment of auto insurance risk, and to the extent they are not accurate, we are unable to assess that risk as well as we might otherwise be able to," says State Farm spokesperson Dick Luedke.

Credit scoring is another tool that enables insurers to estimate risk, according to Nicole Mahrt, western regional public affairs director for the American Insurance Association. "It helps them accurately price the product for you so that you pay a premium that reflects your individual risk characteristics."

Mahrt`s AIA colleague, Dave Snyder traveled a different road on the topic. "Because driving experience is so important as a predictor of insurance risk, insurers try to gather as much pertinent information as they can about the drivers, and that would include state motor vehicle records and related data from other sources."

Word of warning from insurance trade group executive Daniel Kummer. "You could end up with legal difficulties or get in trouble with your auto insurer by leaving citations or convictions off an insurance application. Doing that could make you vulnerable to fraud charges. And misrepresenting your driving record on your insurance application by leaving out reference to citations for DUI or other moving violations could give the insurance company grounds to cancel your policy," warns Kummer, director of auto insurance for the Property Casualty Insurers Association of America in Des Plaines, Ill. "And if you make such an omission in your application, you might get caught by the insurer, and it`s likely your rates will go up as a result."

Shopping for Affordable Auto Isurance

Many insurance companies issue automobile insurance, so there should be little trouble finding a good one. There are many shopping options when looking for insurance:

1.) Shop online to compare multiple companies and rates at once. You’ll save time and probably money as well, if you take the time to shop around.

2.) Contact a local insurance agent. You may want to look for an independent agent who can explain coverage and give you quotes from several companies. The best way to find a good agent is by asking for recommendations from people you know.

3.) You can also purchase insurance from a company that sells directly to consumers rather than through agents.

Remember that your profile will be a good fit for some companies but possibly not for others. This can result in quite a big variance in rate quotes. Shopping around will help you find the policy that’s right for you.

Compare premiums offered by various companies and look for high customer service standards and financial strength. The ability to pay a claim promptly will be important if you're ever involved in an accident. Resources for researching insurance companies include state insurance bureaus and consumer reference guides.

Finally, you should ask about discounts. You may benefit from multi-car and/or multi-driver discounts. You may receive a multiple policy discount if you purchase your auto insurance coverage through the same insurer that covers your homeowners or renters insurance. An insurer may also offer you a discount if you have a safe driving record or have completed a driver's education course.

Take the time to compare multiple companies and rates to make the decision that’s right for you.

Top 10 Most Frequent Auto Repairs

Every car owner dreads it. The call from your mechanic telling you that your regularly scheduled tune-up has uncovered a major repair problem--and it's going to cost you. Aside from your car payment, your monthly insurance premium may be your second-largest car-related expense According to MotorService, an auto industry trade magazine, the most frequent auto repairs include:

1.) Brake system
2.) Lube/oil change/filters
3.) Cooling/heating (radiator)
4.) Ignition/electronic control
5.) Steering/suspension
6.) Carburetor/fuel system
7.) Electrical
8.) Transmission/clutch/rear axle
9.) Auto air conditioning
10.) Exhaust system

In addition to auto repair services, there are many other costs associated with owning a car, including car payments, commuting expenses (e.g. gas, tolls, parking), and insurance premiums. Here are some tips that can help car owners save money.

Keep your repair costs in check
One of the most important things you can do to avoid costly auto repairs is preventive maintenance. Regularly scheduled trips to your mechanic can save you money in the long run. Either follow your car manufacturer's maintenance schedule, or ask your repair shop if they have their own schedule.

When bringing your car in for repairs, be sure to ask for a written estimate ahead of time. You'll also want to make sure that the repair shop will get your approval to perform any work that exceeds a certain amount.

Lower your commuting expenses
Many car owners overlook the cost of commuting when determining their monthly car expenses. In addition to gas and toll charges, you may need to factor in fees to park your car. Car pooling, either with coworkers or through a car pooling service, and taking advantage of public transportation (e.g. train, bus) in your area can greatly reduce your commuting expenses.

Lower your insurance premiums
Aside from your car payment, your monthly insurance premium may be your second-largest car-related expense. If you're looking to save money on your premiums, follow these simple steps:

• Shop around--in most states, premiums vary widely from company to company, so it often pays to compare policies
• Increase your deductible--typically, increasing your deductible will result in a lower premium
• If you drive an older car, consider dropping collision and/or other-than-collision (also known as comprehensive) coverage
• Take advantage of discounts--ask your insurer what types of discounts they offer (e.g. low mileage, antitheft devices, air bags, antilock brakes, safe driver)