How Do Auto Insurance Companies In California Calculate Their Rates?
Reader’s Question:
How do car insurance companies calculate the rate they charge in California?
Imogene
Good Question Imogene.
The insurance premium you pay to your car insurance are either set by the state or determined by the insurance company that you have depending on your jurisdiction.
Insurance companies combine a number of different factors to determine the individuals premium. Each insurance companies have different ways of looking at things that is the reason why this will produce different variations in prices.
Here are some of the elements that insurance companies consider that affects your final insurance rates:
The kind of car you drive
Car insurance companies have different claim experiences of the makes and models of the car to produce the insurance rate of an individual. They check on the repair cost and the risk of the car being stolen and then price it accordingly. One of the factor would be the current value of your car in the market.
where you live
Insurance rates are generally higher in the metropolitan area. There is a higher likelihood that accidents, theft or vandalism may happen in cities with higher density of traffic and people.
your driving record
One of the major factors that affects your insurance rate is the number of years that you have been licensed to drive and your previous insurance records. If you have a clean driving record, your premiums will be much lower than with those that had convictions or accidents.
how your vehicle is being used
The more you use your vehicle , the higher the odds of you getting involve in an accident. People who do not do much driving will have a lower insurance premium than those who always use the vehicle or those that use extensive amount of driving. If you have inexperienced drivers in the household, your insurance premium will likely to be higher.
These are just some of the factors that affects your premiums. That is why it is best to get several quotes and compare all the prices to make sure you will get the best car insurance that will get you fully covered and saves a lot of money in the long run.
Goodluck!
MariCAR
How Location Affects Car Insurance Rates in California
Reader’s Question:
Why did my car insurance premiums go up when I moved just ten miles east from San Diego California?
Mike
Good question Mike.
It seems like your zip code had changed and must have put you to a risk factor location according to your insurance company’s underwriting calculations.
There is an established guidelines, according to California Proposition 103, that was established in 1988, that determines your California auto insurance rates. He are the primary factors:
1. Your driving safety record
2. The number of miles driven annually
3. the number of years driving experience
There are other factors that can be used by the nsurance company to determine the individual’s premium.
The secondary factors are marital status, frequesncy, claims history, geographic area where your car is garaged, gender, type of the vehicle, etc.
Until now, insurance companies set rates for premiums based primarily on the zip code rather than the mandatory factors which is driving record, miles driven annually and the driving experience.
Make sure that you maintain a clean driving record within the next two years since this may change so that your rates will be based more upon your driving record than your zip code.
Goodluck!
MariCAR
Low Cost California Auto Insurance For Women Drivers
Across the big pond, in the United Kingdom, many companies have begun catering only to women. This takes what those who are in the auto insurance business already know one step further. However, as it turns out, this supposedly positive singling out might not be as great as most women over here think it is.
In California auto insurance as will as in British auto insurance, women have been found to get into fewer accidents and, therefore, file fewer claims. As a result, they are considered to be of lower risk. In auto insurance, the gap between the car insurance rates for males and females is at its greatest when the policy holders in question are younger than twenty five, but it continues with a smaller gap throughout the older ages.
In the UK, any companies have become women’s car insurance companies, claiming to offer better rates to women.
However, according to a British website that covers issues with auto insurance over there, looking at the quotes for women from these women only car insurance companies, the quotes from the women only companies tended to be seventy nine pounds, or around a hundred and sixty one dollars, more than the same women would be quoted with a regular car insurance provider.
It seems that having women get even more auto insurance is not all it’s cracked up to be, at least not the way their doing it in the UK. It also looks like women having more auto insurance than men may be a thing of the past. Statistics in recent years show the gap closing in terms of auto accidents, with men getting in fewer and women getting in more. Be careful what you wish for.
Car Insurance Companies Give Discounts For Defensive Driving Class
As most car insurance policy holders are aware of, the drivers around here are crazy. Aggressive and swerving little devils, it takes effort to not ram into them, on accident or on purpose (road rage). What many people who have been in accidents realize is that being able to compensate for the stupid driving habits of your fellows on the road can prevent a lot of pain, and not the least a insurance claim.
The way to find out how to avoid these crazy people is to sign up for a defensive driving course. Not only will you learn in one of these courses how to protect yourself on the road, but you will also avoid filing a car insurance claim, as well as being eligible for a insurance discount. Most car insurance companies do give discounts, both for defensive driving courses as well as regular introductory driver’s education courses.
Why take one?
- The National Insurance Safety Council says that almost eighty percent of car insurance accidents happen because the driver messed up in some way. If you learn how to drive defensively and responsibly, you can avoid being part of this statistic.
- If you have a speeding ticket, then you can go to defensive driving class and get it taken off of your driving record. That’s two drops in your Norwalk CA car insurance rates right there.
- The discounts on your Norwalk CA car insurance rates can be pretty high, ranging from five to ten percent. Normally, though, in order to get a discount, you have to take the class voluntarily.
Where do you take one?
- Classes for defensive driving are all over the place, but your Norwalk CA car insurance company will not recognize all of them. To find out which defensive driving school will get you a discount, ask your Norwalk CA car insurance agent or company representative.
- Make sure that the school you go to is authorized by the National Safety Council. You can check their website to make sure that your course is included.
Taking a defensive driving class can even be fun, and if you get your whole family involved, you should see how fast your Norwalk CA car insurance rates will dwindle.
Getting Car Insurance In California
Almost all of your California car insurance necessities have been digitalized, and you could do everything except drive the car itself without ever leaving your living room. For example, for all of the needs that you have with your car in terms of the department of motor vehicles, registration, and so on, you can get most of those done online. Think of it! Not having to go to the department of motor vehicles in California is the dream of any car insurance policy holder. No lines, no rude employees, just a flat screen.
- Get your license plate.
When you go to the California Department of Motor Vehicles website, there is an array of license plate designs from which you can choose, purchase, and have mailed to you without lifting hardly a finger.
- Call ahead.
If you are not interested in the internet method of getting what you need, then make sure you don’t commit the mistake of just walking into the car insurance department. You need to give a call ahead of time to make sure that you have an appointment and don’t have to wait in the terribly long lines.
- Renewals.
So long as you have already provided the requirements, such as your proof of car insurance and a smog test, if necessary, you can renew things such as your car registration and your driver’s license online at the California Department of Motor Vehicles website. All you need is a working credit card to pay your way.
- Make sure it’s right.
You can also find out if the state of California has the right car insurance information for you. If you are listed as uninsured, then that could cause problems with tickets even if you are insured after all. To avoid problems, you can request that your information be corrected, and you might need to send proof of your current car insurance.
- Learn where to learn.
You can also get information about schools or driving classes in your area. These are a good idea if you want to get better premium rates on your car insurance. Consider taking defensive driving or just a regular introductory driving class.
- Pay your tickets.
Not only can you see what tickets you have out online, but you can pay them as well with your credit or debit card, and find out ways to wipe them off of your record. Getting your traffic tickets taken care of is a good way to get good car insurance rates.
Get Cheap California Student Car Insurance Rates
Are you a starving college student? I understand, and so do many California car insurance companies. Students pay more for car insurance, and so they do what they can to attract these students by offering car insurance discounts to them that will allow them to pay less for their car insurance policy. The catch is that while they may pay less than they would normally pay as drivers under the age of twenty five, they’re often still paying far more than older drivers with similar discounts. This is something you just have to get used to, but the more discounts you take advantage of, the further you close the gap.
A couple of discounts you should consider while in college:
- Good student discount: allows up to a 15% discount from most companies if you have a 3.5 grade point average or above, as well as a B average or above
- Low mileage discount: offers a discount of up to 10% from most companies if you have under forty miles a day or under five thousand a year. You can get this by taking advantage of public transportation or carpooling with friends
There’s another discount that you will have available to you while you lose that first discount, but still haven’t quite recovered from the starving student lifestyle. That’s right, a discount once you’ve finished college. Sentry Insurance will give you a discount if you’ve graduated from college up until the age of thirty. However, 21st Century takes the cake by offering the best car insurance discount for former students. It’s for graduates who have a bachelor’s degree in one of the following fields:
- Physics
- Mathematics
- Aerospace engineering
- Electrical engineering
- Chemistry
- Structural engineering
- Astronomy
- Chemical engineering
- Cybernetics
- Geophysics
- Nuclear engineering
- Planetary systems
- Petroleum engineering
- Meteorology
- Geology
- Civil engineering
- Biochemistry
- Aeronautical engineering
The car insurance discount can be from ten percent to thirty percent if you have any of the above degrees.
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.
Is Your Bad Credit Keeping You From The Best Car Insurance Rates
If you have bad credit, you’re going to have a little trouble getting the best car insurance at a good rate. While there are several other things that you can do to achieve a decrease in your car insurance premium, the main thing that you need to concentrate on is improving your credit report. In order to improve your credit report, though, you’re going to need to save some money.
- Get your discounts.
First things first, as you begin on your path to a better credit report, you need to make sure you have the money to fix it. In order to save more money, you should try to get your current insurance premium down as much as possible. Take advantage of any discounts that you have available to you, raise your deductible, and cut your coverage if possible. If your own company does not give you the insurance quote, then thin about changing providers.
You also should try to cut your spending in other hours. Lose the coffee, if you know how to cook, then do so instead of eating out, and so on.
- Start big, or small?
My method has always been to pay off the smallest debts first, and then move up to the bigger ones. I like to pay things off in chunks, but this might not be as good for you. Remember that, while your credit report will improve while paying off, it will not be clear until the debt has been entirely cleared off. You have two plans of action here.
- Pay off the smallest debts first gradually working your way up.
- Pay off the debts with the highest interest first.
The second option is truly the best, because you would be keeping these debts from growing. Once you have a good credit report, you will be able to get the best car insurance rate.
Getting Cheap California Car Insurance Online
You might think you’ve subverted the norm and have gotten a pretty good deal on your California car insurance. Maybe you already have gotten discounts for having more than one type of insurance with a single company, or for owning a safe car, or for some other specific things. But of all the great car insurance discounts out there, there are several that are for simply doing something that you already do everyday anyway.
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Buy your California car insurance online.
I’ve already told you how you can research car insurance online, but did you know that if you buy it online, it is even cheaper than if you had bought it in an office or over the phone? The reason for this is that automating the system enables car insurance companies to save a lot of money and because of this they are able to pass the savings on to their customers.
Companies like Kemper Auto Insurance, a local company, will take fifty dollars off of your car insurance premium if you purchase it from their website. Other companies, like Esurance, say you can save ten percent from their website if you buy your insurance online.
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Get insured, get rewarded.
Most companies will reward with a discount for going a few years without any claims, but Sentry Insurance has taken this concept to a whole new level by offering policy holders cash for being claim free. The savings are amazing here. If you have gone for five years without claims, then every claim free year after the fifth, at the end of the year, you will get half og your yearly premium back.
What Is Tort Law?
Reader question:
What is tort law?
Abram
Thank you for asking, Abram.
Tort is related to lawsuits in the legal system, and when it comes to cheap California car insurance there are two different levels of tort that you can subscribe to. If you choose one level, you will get cheap California car insurance rates, and if you choose the higher level, then you will have to pay a little more.
The difference between the two choices is defined by when you are allowed to sue after you have gotten into a car accident which was not your fault.
- Full tort.
Cheap California car insurance will be a little more difficult to get with the full tort option. This option allows you allows you to sue for pain and suffering after you are injured in an accident which is the fault of the other driver. This option is the one that I would suggest, because if you don’t choose it, and you should end up with some very bad injury with no recourse, then the other driver’s car insurance often won’t take care of things such as wage loss or other types of pain and suffering.
- Limited tort.
This is the cheap California car insurance tort, but it might cost you more in the long run. Not in premium payments, but in losses if you get into a car accident. This option reduces your ability to file a lawsuit to very rare circumstances, such as:
- If your injury from the collision is permanent
- If someone dies
- If you are permanently disfigured
- If the other driver was DUI
- If the other driver comes from another state
Whether you choose full or limited tort is obviously your decision, and if you happen to never get into a serious accident, then you’ll probably wish you had gone with limited tort. However, many people get into a bad accident at least once in their lives, so it doesn’t hurt to be prepared.
Cheers,
Fashun Guadarrama.
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