Money Matters – Hidden Costs and Savings in Auto Insurance

Author – Tony Rajkowski

As automobile insurance consumers, as with most things in life, we crave stability.   It is truly deflating to open your insurance renewal and see that the price has increased significantly.   It becomes even more frustrating when you pull out the old policy, compare them side-by-side and cannot see any meaningful difference in coverage to explain the higher cost.   What’s driving the increase?

It probably has a lot to do with the hidden costs of auto insurance.  In this article, I will lift the veil on some of the items that can affect your auto insurance pricing and, since they aren’t always avoidable, help you prepare for them.  I will also highlight areas that can bring you savings to offset some of these increases.

Auto Insurance Pricing Factors

To understand why pricing can increase each renewal, it helps to understand two of the biggest factors driving pricing on insurance.

Young Drivers

Young drivers are perhaps the biggest driver of pricing on auto insurance.   Though most parents expect an increase when adding their child to a policy, they are rarely prepared the impact it can have.

Way to mitigate the financial impact:

• Have your child wait until 17 or 18 to get their license.
• Have your child drive your car as opposed to buying them a car and having them as principal driver on the car.
• If you do buy them a car, consider an older car that will only need liability coverage.

Claims and Violations

Another factor that drives auto pricing is claims and violations.  Everyone understands that, in general, claims and tickets impact pricing, but what impact they have can be a bit of a mystery.  A good rule of thumb is that all violations and all at fault accidents will increase your rates. Even not at fault accidents can impact rates because you may lose your loss free discounts, which can be significant.

Tapping into Hidden Savings

It’s not all doom and gloom as there are many ways to help reduce your auto insurance premiums.

• Consider bundling your auto insurance with your home insurance if you have not already. As awful as some of the commercials out there may be, they are absolutely correct when they say bundling can save you money.
• Look at a higher deductible. Many policies have very low deductibles which drive up the price.   Even a $100 increase in deductible could result in substantial savings.
• Consider a telematics (drive monitoring) program. Most companies have apps that you can download on your phone that track your driving for a certain time period.   If you drive well, you can qualify for big discounts (up to 30%).   With youthful operators, there are even more specific apps that will give you a detailed look at how and where your child is driving.
• If you are 55 or older, look into a defensive driving course. With an 8 hour class, you can receive a 10% discount on your auto insurance that is good for 3 years.   After that, simply take a 4 hour refresher course every 3 years to keep the discount in place.

Having an idea of what is driving costs on your auto insurance policy puts you in a better spot to minimize pricing increases.

You don’t have to go it alone.   At Dyste Williams, we put an emphasis on continued communication with our clients to help them make the best choices possible on their insurance plans and maximize their insurance dollars.   A few ounces of prevention can lead to several pounds of savings over the course of your policy!

Tony Rajkowski - Personal Insurance

Tony focuses on advising clients on their personal insurance needs including home, auto, umbrella liability, life, health and disability.  With over 16 years of experience, Tony ensures that his clients find the right protection.