Car Insurance

You typically get a 30% discount after one year of claim-free driving, rising to 65% after four or five years. But companies vary. Some go up to a 70% maximum while others specialising in younger drivers will give higher discounts at an earlier stage.

Many insurers now offer the opportunity to pay a bit more to protect your no claims bonus. The rules vary but you may be able to make two claims in three years, for example, before your bonus is affected. Protecting your bonus will not stop your insurer from hiking up the premium at renewal following a claim. But at least you won’t lose your no claims bonus on top.

Making a claim does not automatically mean you lose your discount. It depends whether the claim is a ‘fault’ or ‘not fault’ claim.

This is not just a question of whether or not you were to blame for the accident, but depends on whether your insurer can recover all its costs from someone else.

For example, if you skid on black ice and hit a wall, your claim would be classed as ‘Fault’, even though you were not to blame, simply because your insurer can’t recoup the cost of fixing your car from anyone else.

Where another driver is involved, unless it can be proved beyond doubt that the other driver was to blame, the two insurers will often settle a claim on a 50:50 or 80:20 basis. This means both drivers will lose some of their no claims bonus. With most insurance companies, you will lose two years of no claims bonus if you have a fault claim.

Your age, sex and address all affect the price you are quoted. Young male drivers generally are charged the most, while women in their 50s pay the least. And you will usually pay more if you live in a city rather than in a rural area. Parking your car on the street overnight, rather than in a garage, will also mean higher premiums.

Some insurers might class you as higher risk if you are a sports professional, entertainer, barman, chef or builder, among other occupations. But you may be able to avoid having your premium loaded by shopping around. Some insurers specialise in covering people traditionally regarded as higher risk, or non-standard. Even if you can’t avoid having your premium loaded, the extra you are charged is now typically in the region of 10%-15%, down from 30% or 40%.

If you suffer from a health condition that could affect your ability to drive, including epilepsy, vision impairment, certain heart conditions or sleeping disorders, or if you are taking any medication that could do the same, you must inform the DVLA. If you don’t, you could be charged with a criminal offence.

BY NOW everyone has seen the ads about the Massachusetts auto insurance system. Both sides sound compelling. But what’s best for consumers? And who is paying for those ads? To answer the second question first: The advertisements on both sides of the debate are written and paid for by auto insurance companies.

The big national insurers and most local companies favor Governor Romney’s plan to ”deregulate” auto insurance rates. Why? Because he would allow them to charge more than they can under the current system.

Three local insurers oppose the plan, presumably because they do not want to lose market share to the big national companies.

So, it’s obvious why the insurance companies are facing off — they have lots of money to gain or lose. For the rest of us, the more important question is the first one: Is Romney’s plan good for consumers?

The answer is no. The state’s consumer groups — Masspirg, the Center for Insurance Research, the Massachusetts Consumers’ Coalition, and the National Consumer Law Center — oppose the Romney plan because it will result in significantly higher premiums for many experienced drivers with good driving records, would allow insurers to use discriminatory pricing practices, and, most worrisome, would fail to address the key factor responsible for our high premiums.

Consider this: If you are a typical experienced driver with a six-year clean driving record and you live in, say, Brockton, Charlestown, Chelsea, Dorchester, East Boston, Everett, Hyde Park, Jamaica Plain, Lawrence, Lynn, Randolph, Revere, Roslindale, Roxbury, or Springfield, your already high rates will almost certainly rise when Romney’s plan takes effect.

The reason so many good drivers will be punished is that Romney wants to attract out-of-state insurers with the lure of ”competition” — which, in the auto insurance game, is simply a code word for ”unfair discrimination.” Instead of basing our rates primarily on driving records, as state law currently requires, insurers will be free to do what they do in other states, which is to price by stereotype.

Your insurance company will use personal information — such as your credit score, your marital status, your occupation, your education level, whether you own or rent your home — to raise or lower your insurance rates, and will heavily penalize people who live in ”undesirable” neighborhoods.

In addition to inviting the problems of rate spikes and unfair discrimination, the Romney proposal ignores the real cause of our high insurance rates. Massachusetts has the dubious distinction of having the highest accident rate in the country, by far — an astounding 40 percent higher than the rate in second-place Rhode Island, according to claims data reported by the Insurance Research Council.

The debate over how rates are set is important to the insurance companies but largely irrelevant to consumers. We need to focus on lowering our costs. It doesn’t make for as good a headline as ”deregulation” or ”Romney vs. Reilly,” but if we pursued a comprehensive cost-containment effort that improved our worst-in-the-nation accident rate to just second-worst and attacked fraud, as we did in the city of Lawrence, we could cut insurance premiums by at least 30 percent, or more than $300 on average per car per year.

Instead of addressing the difficult problems of dangerous intersections, aggressive driving, inconsistent traffic enforcement, and rampant fraud, we’re treated to a televised fusillade of misleading advertisements claiming that all drivers pay one rate. (Let’s just clear up that canard: Drivers with poor records who live in, for example, Jamaica Plain, Worcester, or Springfield now pay about $6,000 annually to insure a 5-year-old Camry, or roughly four times as much as the best drivers in those areas pay for the standard package.)

At a recent State House hearing on his bill, Romney stated that he asked the big national insurers what they wanted from him in order to sell car insurance in Massachusetts. Their answers are found in his ”reform” plan.

Evidently, the governor never asked consumers what we wanted. Here it is: We want lower rates; we want to be treated fairly; and we want our rates to be based on our own driving record and not on whether we are married, went to college, or missed a credit card payment.

Could you have overlooked a few things that could dramatically cut down on your car insurance premiums? Could there be a thing or two that you’ve missed?

Did you know for instance that driving less than a certain number of miles or kilometers every year could get you a discount on premiums from some insurance companies? This is popularly known as low mileage or distance discount rating. Have you ever heard of something like this? Sometimes this discount can be pegged on certain distances driven to and from work. Ask your insurance company if they have such an arrangement.

Many people do not take car insurance into consideration when they move yet it is important that they do. The right neighborhood (in the eyes of the car insurance company) can save you plenty of cash on your premiums.

Another thing that most people do not know is that two different models from the same manufacturer can be rated differently which could make a difference in the amount of car insurance premium to be paid. In fact even the difference between two and four doors in the same car model can affect your premiums considerably.

There are quite a number of small details which are frequently overlooked or ignored yet they can make all the difference when it comes to the cost of insurance premiums and one should critically study an auto insurance package before opting to go for it.

The golden rule when seeking car insurance cover should be are you doing all that you can do to keep your car insurance costs down? Could there be some things that you have not considered that could save you even a couple of dollars?

Late premium payments can, and might, result in policy cancellation – even if you are only one day late! The truth is, unlike homeowners policies which generally allow for a “30 day grace period” to make premium payments, most insurers can cancel auto policies immediately for lack of payment if allowed by state law. Check the law in your state to see what grace periods are allowed. The National Association of Insurance Commissioner’s (NAIC) website (http://www.naic.org/state_web_map.htm) provides links to state insurance departments. Look under consumer information to see whether your state provides a grace period.

But will they? The good news is that most insurers won’t cancel your policy for non-payment if it is a one-time occurrence because they want your business. However, if you are chronically late, your insurer may take advantage of your non-payment and cancel your policy – especially if you’ve become a bad risk. It is also important to realize that many insurers may require you to pay your entire term balance before reinstating your coverage if you’ve passed the cancellation date on your policy.

Avoid bad credit scores! Being cancelled for non-payment of premiums may also earn you a bad credit score and cost you more on future policies with other insurers. Most insurers use credit scores (your overall credit history) to assess their risk. The lower your credit score, the more you will pay for insurance. If you don’t have the money to pay your premium, contact your insurer immediately and see if you can work out a payment schedule. A bad credit score will follow you from insurer to insurer and could leave you without insurance altogether!

Take advantage of new resources. Many insurers, such as Geico and State Farm, now allow for online payments that can be automatically deducted from your checking and savings accounts. If you are a chronic late payer, take advantage of these new resources to avoid bad credit scores.