While working for a large insurance company people would call for rates and have a clean driving and vehicle history but the moment we did a check on prior insurance and the customer did not have any prior insurance where there was a need for one then their rates went up double if not more. Why is having prior insurance so important? It shows insurance companies that you follow the rules and are always protecting yourself and others around you. Most companies will discount rates after you’ve had insurance for 6 consecutive months after not have insurance when there is a need. After a year it will decrease again. If you don’t have prior insurance you may have to start with an “insurance mill” type of company that insures anyone. You may have to sacrifice a little bit of coverage but it’s worth it in the long run to get insurance and keep it.
Having a clean driving record is also important. An accident stays on your record for at least 3 years. Traffic tickets cause premiums to go up also. The insurance companies pass the cost onto you because people who are involved in accidents are more likely to get into another accident or receive another traffic ticket.
Another way insurance companies charge more is by automatically setting their rates higher than the state minimum. In the state of Texas the minimum a person has to have is 20/40/15. The insurance company will cover up to $20,000 per person, no more than $40,000 for everyone involved and up to $15,000 for the vehicle and property damage. Some companies have their own minimums such as 25/50/25. It doesn’t seem that much of a raise in coverage but it raised the premium an average of $25 per premium period. It’s important to keep in mind that most cars on the road are worth more than $15,000 and if the damage to the other vehicle totals out the car or is more than $15,000 worth of damage then you will be responsible for the rest. It’s your call to lower that coverage but the state’s minimum should be okay for most people.
Another way to reduce the cost is through your uninsured/underinsured motorist coverage. This is what is paid if you are in a wreck with someone who doesn’t have any coverage. If you know your car is worth $15,000 or less then there is no reason to pay for coverage where you’ll get $25,000 in coverage when the insurance company won’t ever pay you that much because your car, even if totaled, will not be worth that amount.
Be sure to ask the insurance salesman on the other end of the line what you can possibly cut without having to cut major coverage and protection. Most salesmen will try to offer you road side assistance and rental coverage. Yes, it is nice to have peace of mind and know that if you are in an accident to have a paid rental, or if you’ve run out of gas you can have help sent your way but if you live within a bus ride or a friend can pick you up then opt out of rental coverage. Rental can range anywhere from $30 to $60 per six months. Road side assistance is also nice to have but if you think you have a friend or relative close enough to offer assistance then opt out of this coverage as well. The price for road side assistance can vary from $15 to $50 per 6 month premium period.
Bottom line is to ask questions and shop around.