Bad insurance decisions such as letting your credit score slide, racking up points against your license, letting an excluded driver drive, having your coverage lapse, or forgetting to
switch your coverage after selling, will likely see your car insurance rates increase.
There are plenty of factors that insurance companies use to calculate your
car insurance rates, and some you will have more control over than others. To avoid bad insurance decisions, keep in mind these five common mistakes, and you are likely to save on your insurance costs in the long run.
The car insurance comparison and broker app
Jerry has put together what you need to know about five decisions to avoid to get the best insurance rates.
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Infractions or points against your license
If it is your first at-fault accident or minor infraction in a while, your insurance company might overlook the points against your license. However, if it is at least your second time around, you can expect to see your
insurance rates rise.
Minor infractions like speeding tickets and traffic fines will usually come with slight deductions on your license—and likewise for at-fault accidents.
Different providers may put more or less emphasis on your driving history, but you can expect to see your rates go up for a few years. Major infractions like
DUIs/DWIs are likely to have an even more serious impact on your car insurance rates. If this is the case, you might have to pay a fee to file an
FR-44 form to get your license reinstated as well.
Key Takeaway Racking up infractions and points against your license can cause your insurance rates to skyrocket.
Letting your credit score slide
Depending on the state that you live in, insurance companies may take your
credit score into account when determining your insurance rates. If you live in California, Hawaii, Massachusetts, or Michigan, insurance companies are prohibited from using your credit report to influence your insurance rates.
Oregon and Utah can't cancel your policy or refuse to renew it because of your credit score, but it can still influence your rates. Similarly, Maryland cannot refuse service, deny an initial application, cancel your insurance or refuse to renew or increase your premium during renewal based on credit.
If you live in any other state, you could be facing insurance rate hikes if you let your credit slide.
If you anticipate that you might be having difficulty making your payments, reach out to your lender before you miss a payment. They might be willing to renegotiate the terms of your loan. You could also consider refinancing your loan as well. You might even consider
trading your car in for a more affordable model.
Key Takeaway If you credit score is negatively affecting your insurance rates Jerry can help you find a better deal.
Selling your car but not transferring the title
If you fail to
transfer the title and remove the car from your auto insurance policy, you could end up in hot water if the new owner gets into an accident.
Since the vehicle is under your name you will be responsible for any damages they may cause for an at-fault accident. Even worse, your insurance might not cover you in this situation.
If you decide to sell your car, be sure to follow the proper procedures for transferring your title according to your state. You can avoid this unpleasant scenario as long as you legally transfer the title and cancel the insurance policy right after you do.
Lending your car to an excluded driver
Insurance companies often dole out steep insurance rate increases for drivers who have serious infractions like DUIs, license suspensions or multiple accidents.
If somebody with a bad driving record would otherwise be included on your policy, you might save money on your insurance by excluding them.
However, the insurance company will take
exclusions seriously. If somebody is excluded from your policy, they should never drive your car.
If they do get in an accident while driving there is a high probability that your insurance company will deny your claim—no matter how comprehensive your insurance coverage is.
Letting your car insurance coverage lapse
Don’t be tempted to let your
car insurance coverage lapse to save money. There is a good chance you will actually end up spending more on your insurance in the long run.
Insurance companies view people who
let their coverage lapse as unreliable, and will often charge a hefty premium to resume your coverage.
In addition, if you want to park your car without insurance, you will also have to hand in your plates and cancel your registration.
You will also have to jump through hoops to reinstate everything after you start driving again—and you could face some hefty fines if you miss a step along the way.
Also, let’s not forget that a lot can happen to a car even when it is parked. If you don’t plan on driving for a while or are storing your car, opting for a comprehensive-only insurance policy could save you money while keeping your car protected.
Alternatively, you could shop around to find a more affordable policy so that you aren’t forced to let your coverage lapse.
If you are shopping car for cheap car insurance the
Jerry app is a good place to start. As a
licensed broker, Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and buying new car insurance. Jerry will even cancel your old policy for you.
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price.
Frequently asked questions
What constitutes a bad faith claim?
Justia, bad faith for first-party insurance is when an insurer does not give a proper investigation or explanation for why they will not pay a claim. When an insurer does not pay the defense costs for the parts of a lawsuit that are not covered by a policy, this is known as bad faith for third-party insurance.
How do you prove bad faith?
Merlin Law Group, highlights that if you can show with evidence that your insurer did not follow the proper steps or act in a reasonable amount of time, you can prove bad faith.