Personal auto insurance pricing has changed a lot in the past five years. Credit and claims history now factor into premium rates in a big way. The best rates are reserved for individuals with a very stable credit record, a history of no late payments, and no claims. Quite a few of our carriers now base new-business rates on a five-year claim history. In some cases towing and glass repair claims, not-at-fault accidents, other comprehensive losses and claims that are closed without payment, are considered in determining rates for new auto policies.
Some folks think that only “chargeable accidents” affect rates. That may be true if you are renewing with the same carrier, but not for the rate you are quoted by a new company for a new policy.
What do these rating changes mean to you? Many clients have told us “That’s what insurance is for” when they are reporting claims for unfortunate incidents outside of their control. In view of the new-business rating changes, that is no longer true. If you want to qualify for the best rate for a new auto policy, you should refrain from making any claims. This means you should drop towing coverage, and not make claims for glass, glass repair, or comprehensive claims, and not report accidents to your company if you can recover for the damage from the other vehicle owner’s insurance policy.
In addition to dropping towing coverage, you should consider high deductibles for both comprehensive and collision coverage and dropping these coverages for older vehicles. All of our companies offer a $1,000 deductible, but some offer higher deductibles of $1,500, $2,000, $2,500 or more.
You should consider arranging your auto insurance to self-insure as many claims as possible. This will provide you with more flexibility and options if you are shopping for the best rate for a new policy.
Here is another note about claim reporting. Always report claims to your agent first. Companies promote 800 numbers with 24/7 service for reporting claims. No matter what the company says, report claims to the agency. We will assess the situation and advise you on how to proceed. In many cases this means not reporting the claim at all or reporting it only under the negligent vehicle owner’s insurance policy. Rating factors do vary by company and not all companies charge for all claims. We are committed to helping you to keep your personal auto insurance affordable. Give us a call to answer questions.