How Your Credit Report Affects Your Car Insurance Rate
Your credit doesn’t affect your driving skills, and there are plenty of drivers with the worst credit ever who are also the best drivers around. However, if you want to get cheap car insurance, then having a lot of negative accounts on your credit report might prove an obstacle. Although the car insurance company does not look at your report the same way as, say, a car dealership does, bad is bad and if one thinks your credit report isn’t so great, the other will as well.
Using credit reports to affect your car insurance rates is no longer an occasional thing. Almost all (upward of 90%) car insurance companies check credit before they give out a policy, and the same goes for companies who do home owner’s insurance coverage. When they check your credit report, they will gather the information into what they call an insurance risk score. Over fifty percent of the companies in the above ninety percent in turn take that insurance risk score and use it to decide if you will have a insurance premium or an expensive one.
According to Fair, Isaacs, and Co., a company which comes up with insurance risk scores which are in use by over three hundred car insurance companies all over the country, while both credit scores and insurance scores use the same information to come to their result, they are not exactly the same.
As a matter of fact, car insurance companies look at the report in a different way when they weigh the score. In the end, the scores of credit and insurance can end up having a difference of as much as ten percent.
When you get a credit score, normally they are looking at how stable your accounts are, whether you are constantly opening and closing new ones and so on. It’s also important to your FICO credit score how much you owe on certain things. With insurance scores, they just want to know that you pay, and pay regularly.
What Is Comprehensive Car Insurance?
Reader question:
What is comprehensive car insurance coverage?
Greg
Great question, Greg.
Like collision coverage, if you are buying a new car then in most cases you will be required to add comprehensive to your cheap California auto insurance coverage. It is also required to be on your policy before you can buy gap insurance coverage. Many of the same basic rules that apply to collision coverage also apply to comprehensive coverage:
- If you’re not making payments anymore but you have a somewhat new car, you probably need it.
- If your car is worth less than $1000, you definitely don’t need it.
The comprehensive part of your cheap California auto insurance policy is there to cover several types of incidents. These incidents are:
- When your vehicle is stolen.
- When your vehicle is vandalized.
- When insured parts of your vehicle (i.e. air bags) are stolen, even if the vehicle itself remains.
- Hit and runs.
- Natural distasters, covering damages such as fire damage, flood damage, and more.
Many drivers do not need to add comprehensive coverage to their cheap California auto insurance policy because they are not at high risk. For example, if you have a relatively new vehicle and you live in an area that often floods, then it would be a good idea for you to pay for comprensive car insurance coverage, although you may have to pay slightly more than usual. If you own a high performance car, which is a type of car that is at an unusual risk for theft, then you also probably want to consider it, again at a higher price.
However, even if your car is not the newest or the most expensive, that doesn’t mean that it is not under the risk of theft. Many old cars are sold for good money to underground chop shops, while the new, most popular cars are sold for other reasons. On the list of the most often stolen cars every year, several of the vehicles are somewhat homely and a few years old.
In order to get a better price for comprhensive on your cheap California auto insurance policy, you need to add some anti theft devices. This will get you a discount. Most insurance companies require some kind of anti theft device before they even sell you comprehensive coverage, but if you get an active disabling device it will be cheaper for you. You should also consider raising your deductible.
Cheers,
Fashun Guadarrama.
Types of California Car Insurance – Which is Best?
There are several types of car insurance that you will need in California, an at-fault, tort car insurance law state. While not all are necessary, in order to abide by California car insurance law, you must have at least the three basic types of liability coverage, which can be bought either at the state minimum or at a number above this. California car insurance law requires you to have a minimum of five thousand dollars of property damage liability for when you get into an at fault accident. It isn’t much, and most California car insurance companies suggest that you get at least fifty thousand to prevent problems with being underinsured.
What is California car insurance property damage liability?
When you get to into a car accident that is caused by your own negligence or intent, most of the time this accident will involve someone else. Unless you get into the accident on your own driveway, your California car insurance company will probably have to pay out a property damage liability claim. What this type of coverage takes care of is the damage done to whatever you hit–be it a house, a mailbox, or even, most commonly, another car entirely. There is a separate type of coverage for injuries to another person.
What property damage California car insurance coverage does not take care of is any damage inflicted on your vehicle, even if you crash your vehicle into some part of your own property, such as another vehicle of yours. If this happens, you will have to depend on collision car insurance.
Do You Have Enough California Car Insurance Coverage?
There are a lot of people on the road who either don’t have insurance at all (over five million in California) or who don’t have enough insurance to cover the injuries of the other driver should their negligence lead to a car accident. The limits for required California car insurance are fairly low, so it is important, taking these two things in mind, to consider adding on a couple of extra types of car insurance coverage, although it may raise your California car insurance quote.
- Underinsured motorist coverage.
This is for if the other driver’s insurance does not cover damage in the case of an accident. For example, if the damages caused to you and your vehicle are in a total of $40,000, but the insured only has $35,000 of car insurance coverage, then your underinsured motorist coverage will kick in to take care of the rest.
There are two different ways that this will work out. In some cases, the underinsured driver’s coverage amount will be added together with your own underinsured motorist coverage, and in other cases it will be subtracted.
- Uninsured motorist coverage.
Whenever you go to get your car insurance policy, the company must inquire whether or not you want to get uninsured motorist coverage. If you choose not to get this type of coverage, then you have to sign a waiver stating that you have declined, and then they can give you your California car insurance quote.
Uninsured motorist coverage takes care of your damages when get into an accident in which the other person does not have any car insurance.
Optional California Car Insurance Coverage You Might Want To Have?
In addition to the other types of car insurance coverage already listed, your California car insurance company should also offer other types of coverage. These types of coverage are not related to paying for damages or replacing stolen objects, or even for helping with injuries, but instead are mostly focused on making your claims and driving experience better and easier for you. If your California car insurance company does not offer these types of coverage, you might want to think about going with someone else.
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Rental reimbursement coverage.
This is an extremely useful type of coverage that practically every California car insurance company will offer. It provides for you to rent a vehicle while your own is getting repaired or replaced, usually for up to thirty days. The rental will be billed to your California car insurance company, and all you will have to pay is the security deposit, which will be returned to you at the same time as you return the car.
This insurance is a no brainer if you consider the regular costs of renting a car. The amount that you will pay on your California car insurance company policy for a year will still be less than what you would have paid for a rental car for only one day.
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Roadside assistance.
Towing a vehicle costs a lot of money. I had never had a car towed until recently when I bought a new car, and we needed our broken down trade in towed to the dealership. I didn’t think it would cost more than a hundred dollars, but as it turned out it would cost over $300 to tow this vehicle to a location only forty minutes away. This is why rosadside assistance is so useful. If you break down on the side of the road or get into a car accident, then your California car insurance company will cover the costs.
Who Offers Cheap Southern California Auto Insurance?
After I wrote a few blog posts ago about the cheap southern California auto insurance program, I got some feedback from a couple of readers who were complaining about the fact that they would not qualify for the program because they were ‘bad drivers’, and yet at the same time they could not afford to get a southern Califronia auto insurance policy. So, in the end, they were just stuck in the middle. There was a program out there for low income drivers, but they couldn’t take advantage of it, and the program for high risk drivers was too expensive.
Well, the first thing that I want to suggest to them in this post is that they thoroughly read this site to see if they can’t, applying all of the other discounts and ways to get a better price on southern California auto insurance, find a way to afford their car insurance coverage.
If that doesn’t work, though, and you absolutely have no choice whatsoever other than to drive uninsured, I’d like to suggest a bit of activism. Contact your state legislature.
For some people, that seems a little extreme, but think about it. These people are the ones that made the southern California auto insurance laws in the first place. If there are people who cannot follow those laws, and not for lack of trying, then they should do something about it. After all, car insurance laws are not the same kind of law as no theft, which requires no effort whatsoever. Many people who live below the poverty level, and even many who live above it and right on, find that they cannot perform this required payout.
This is how programs like the low cost southern California auto insurance program come about. If you really want an option for low income, high risk drivers and you can’t do it the usual way, then you need to bring your legislators’ attention to it. It’s in their best interest to decrease the amount of uninsured drivers on the road, so it couldn’t hurt to try.
Best Car Insurance Rates in California?
Okay, California has some pretty high rates of theft among cars, so if you want to get the best car insurance policy, you need to be careful with your vehicle. One, because if you aren’t, then you are at much higher risk for having to make a comprehensive car insurance claim, and two, because if you aren’t then you will probably have to pay more on your best car insurance coverage premium. Some people think that these measures only need to be taken when you have comprehensive coverage, but this is a situation that you want to avoid all around. Here is some advice.
- But my car is already protected!
A lot of people buy a new vehicle, which comes installed with some kind of anti theft device, and they think they are good to go from there. However, these manufacturer installed devices are the most common, and thus the car thieves who have some experience know them like the backs of their hands. If you want to get lower prices on your best car insurance premium, then you need to think further than the club (also easily overcome) and perhaps get some aftermarket parts.
- Nobody would want to steal my car.
Yeah, that’s what you think. One point is that often, car thieves are not after the car itself, but they want to sell it for parts. And your car doesn’t have to be nice and new and pretty to get parts of it stolen. Air bags are stolen at a rate of seventy thousand a year, and my ex boyfriend’s ugly, junky stereo was stolen out of his fifteen year old car, and the window broken. Car thieves are out to get more than just the obvious expensive cars.
If you want a rule to go by, then older cars are pretty much of equal likelihood to be stolen, because their parts often aren’t made anymore. As for new cars, normally the ones that hit the top of popularity lists are stolen. If you want some hard numbers, check out the website of the National Insurance Crime Bureau.
What Kind of Auto Parts Is Your Insurance Company Going To Put On Your Car?
Car accidents bring a lot of headache. Whenever you get into a serious collision, there will most likely be the necessity for doctor visits, numerous calls with your car insurance company, and many people don’t have CA car insurance coverage for rental cars, so of course you’ll have to be doing all of this in someone else’s back seat. Think your done? You’re not. There’s one more thing to worry about, and you probably thought it was all taken care of.
You have to figure out whether you want OEM (original equipment manufacturer) parts to be used to repair your car, or aftermarket parts.
Is there any difference?
Car insurance companies and others who use the aftermarket parts claim that there isn’t much of one. It’s no wonder that they do such a job of promoting the good of aftermarket parts, considering that non-OEM parts are a lot cheaper than the OEM parts. As a matter of fact, they’re about half the price. Car insurance companies can play dirty about this, and often do. Normally, if you want to get OEM parts on your car, you have to pay the additional price. So if the aftermarket part costs $400, and the OEM part costs $800, you have to pay $400 of that OEM price. It can come out to a considerable chunk of change.
If you’re with a car insurance company that is considered to be on the expensive side, then you might not have any problem, nay, be encouraged to get OEM parts. However, most car insurance companies will give you trouble.
One of the big reasons to avoid aftermarket parts when you make a car insurance repair claim is that they make your vehicle’s value go down because you are putting parts that are not made for that exact vehicle into it. When you repair a BMW with a part that isn’t from BMW, it cheapens it. Therefore, if you want to sell it or trade it in, you’ll get less money, since dealers and even buyers often look into the background of the vehicle they are purchasing to see what parts it was repaired with.
The big problem is if you have a rental car. If you get a rental car repaired with aftermarket parts, you might lose most or even all of your security deposit. The reason for this is that with aftermarket parts it is considered to not be in the same condition as the one it went out in.
Some also claim that aftermarket parts aren’t safe. They say that these parts have not gone through the same safety crash tests as the OEM parts have, and thus cannot be trusted. However, the Insurance Institute for Highway Safety (IIHS), one of the big crash testers, debunks this myth, saying that there’s no reason to believe that aftermarket parts would perform any different in crashes than OEM parts.
At the end of the day, you choose what parts are used on your car. If you are worried about saling or trading in your car for a good price, you might want to go with OEM parts. However, if that doesn’t bother you so much and you’re a little strapped for cash, it isn’t such a bad thing to go with aftermarket parts. But if you do choose aftermarket, you should the Certified Automotive Parts Association to make sure that it is up to standard. And remember, most of all, that the repair shops will ask you what kind of part you want. You have to tell them, or you have no right to complain.
Understanding California Car Insurance Rules and Terminology
When you’re buying your California car insurance online, you will usually come across a lot more car insurance terms than you would if you were buying them in an office or with an agent over the phone. The good thing about having an agent is that they will be there to explain rules and terms to you. However, more and more people are realizing that they don’t need an agent, and can in fact get all of their car insurance online. As a result, more confusion can happen because the only person there to explain car insurance terms to you is you yourself. I’ve made a list of common terms that you will encounter while buying your car insurance online. Hopefully it will make the process much easier.
- Actual cash value: This is the amount that your car is worth, after depreciation, and is what you receive after your vehicle is totaled in a car accident.
- Benefit: this is what you get when you file a claim, paid by the car insurance online company.
- Bodily injury liability: this is for if you get into an accident that you cause, to take care of the medical coverage for the injured people in the other vehicle.
- Claim: when you get into a car accident and you ask to get money for your coverage based on damages.
- Collision: This is coverage for whenever you get into an at fault accident to cover the damages on your own property.
- Comprehensive: coverage for things such as vandalism, theft, and damages due to natural disaster.
- Deductible: the part of the expenses that you have to pay before your car insurance coverage kicks in.
- Exclusion: something that is not covered by the CA car insurance online policy.
- Full coverage: liability plus comprehensive and collision.
- Indemnity: a predetermined sum paid for loss.
- Limits: the highest the car insurance online company will pay for losses.
- No fault insurance: car insurance claims dealt with in each person’s own company. No blame involved or required.
- Personal injury protection: covers medical expenses for the at fault driver, including long term and wage loss for serious injuries.
- SR22 form that must be filed for three years or more as proof of insurance after DUI.
- Tort: when you sue someone for damages after a car insurance accident.
- Uninsured motorist coverage: when you get into an accident with an uninsured or underinsured motorist and they are at fault, then you will need this coverage for your own damages.
I Need Auto Insurance in California – Cheap!
Reader question:
What is way to get auto insurance in California other than getting it from a car insurance company?
Megan
Thanks for asking, Megan.
Getting your auto insurance in California with a licensed car insurance company or through some other Californian state auto insurance program are most certainly the easiest ways to get car insurance coverage in California, and most people wouldn’t have the money to do it any other way. However, California car insurance law does allow for more than one way, and one of the other ways is to get a surety bond. You can get this from a company that is licensed by the state, just as if you were getting your auto insurance in California from an actual insurance company.
These surety bonds are usually purchased by people who own a small business, not normally by those that are insuring a private car. Another option for small business owners is group commercial car insurance. Auto insurance in California law allows a surety bond to be purchased for at the least $35,000. This is equivalent to the minimum liability coverage, so if you want to have more coverage then you should purchase a larger bond.
Another way to get auto insurance in California without having to go through a car insurance company is to simply deposit the $35,000 minimum coverage with the department of motor vehicles for the state. Or, as another way, you could go the self insurance route. In order to do this you have to get a certificate from the department of motor vehicles showing that you are self insured. Remember, though, that whatever kind of insurance you get, you still have to be able to show proof of it when you are pulled over by a police officer or you get into a car accident. Proof can be your car insurance card, or your certificate of self insurance, your surety bond, whatever, so long as it is accepted proof by the department of motor vehicles.
Cheers,
Fashun Guadarrama.
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