Car Insurance

Learn What Actually Lowers Your Premium – and What Doesn’t

Auto insurance is there to protect you in the event you get in an accident, but when you are shopping for it there isn’t a lot of transparency to protect you from overpaying. The Investment Dude car insurance hub will help you find out how to get lower premiums, plus teach give you tips and tricks for cutting out distracted driving and avoiding insurance scams. The Investment Dude car insurance hub can also help you learn exactly what your state requires for your car insurance, teaching you the best ways to protect yourself, your family, and your community.

Myths vs. Reality:
Insurance Company Methods to Setting Your Rates

Funny mishaps and comedic buffoonery have given Geico, Allstate, Progressive, and basically every other insurance provider lots of material for advertising their product. Insurance companies make insurance feel fun and set consumer minds at ease with their fun-loving but comforting mascots. Whether it’s the Geico gecko, perky Flo, or the deep-voiced reassuring Allstate man, everyone has seen one of these friendly reminders to buy auto insurance.

Despite the fun-loving antics of many of these iconic characters, insurance is rarely a bundle of laughs, and the process of determining your rates is a lot more involved than one might think. While many people believe it is their driving history that most impacts their policy, many are surprised to learn that that is just the tip of the iceberg. Read on to learn more.

Personal profile

Your personal profile is made up of basic statistics, like your age, gender, marital status, and other facts involved in determining your rates. In one study, wives whose husbands had recently passed away were charged 20% more than those women whose husbands were still alive. This practice was dubbed the “widow’s penalty” and is considered an unfair practice, but offers an excellent example of how personal profile can affect rates. Another study from the Consumer Federation of America found that blue-collar workers and drivers without college degrees pay higher premiums than their more-educated peers, even if their driving record is better.


Beyond your personal information, insurers will look at the rest of your household. Having teenage drivers in your household, for example, could cause your policy to double, and in some cases triple. Based on data from Quadrant, MoneyGeek found that the median cost of an annual premium for a 50-year-old couple with one 16-year-old driver in Florida was as high as $4,356. The same couple would pay an annual rate of only $1,784 without the 16-year-old.

Becoming a renter

Recent findings by the Consumer Federation of America found that insurance providers discriminate against renters, charging them up to 47% more for basic liability insurance than their home-owning peers. Even those with perfect driving records were found to be charged these excessive rates. Further investigation by the CFA found that average premiums across the country for 30-year-old safe drivers who rent were being charged about $112 more per year than homeowners. Geico is the sole provider that does not take home ownership into account when setting rates.

Driving history

Drivers who have long commutes or rack up a lot of miles may be subject to higher rates. Similarly, drivers with poor driving records (i.e. many accidents or speeding tickets) will often be charged higher auto insurance rates than drivers with good driving records.

The area you live in

When determining your rate, your insurance provider will also determine your risk of theft or vandalism, based on where you live. According to the Consumer Federation of America, insurance providers charge higher rates to customers in predominantly African-American neighborhoods than they do customers in predominantly white neighborhoods. Regardless of education, affluence, or economic position, African-Americans are often charged up to 112% more than their white peers.

The vehicle you drive

In addition to where you live and who you are, the type of car you drive will impact your insurance rates. Come cars require foreign parts, more expensive repair, are commonly associated with speeding or crime, or suggest a higher possibility for poor driving. An example of this last point would be teens who drive sports cars or SUVs: Sports cars and SUVs are associated with speeding, crashes, rollover incidents, and poor driving records.  

Teens are already subject to higher rates due to their inexperience. Parents concerned about higher insurance rates should consider family-style cars for their teen drivers to keep costs down.

Social media posts

Though social media started as a way to share your life with your friends, it has grown into something much bigger. Insurance companies like Contego Services Group have teams or employees dedicated solely to social media investigations. Social media investigation involves companies looking through your Facebook, Twitter, Instagram, etc. to determine your coverage risk. Posting photos from the bar? You may end up paying higher rates. Avoid being charged more by setting your social media profiles to private.


Recently, “black box” technology additions to cars have allowed auto insurance providers to track driving habits and behavior. Theoretically, safe drivers who don’t mind being watched by Big Brother could be rewarded with lower rates. Unfortunately, this practice has privacy concerns with some insurance providers not disclosing the presence of tracking devices to customers. Recently, because of these concerns, some states have passed disclosure laws in order to protect consumer privacy rights.

If you are a bargain shopper or not

Believe it or not, insurance companies look into whether their customers switch service providers often, what they buy at the grocery store, and whether you use internet forums to complain. Customers that take advantage of bargains will likely be given better rates, and those that show they will stay despite price increases will get slapped with higher rates. This practice is known as price optimization and is illegal in some states with stronger consumer protection laws.

Credit history

Unless you live in Massachusetts, California, or Hawaii, your insurance company uses your credit score and history to determine your rate. In fact, 92% of insurance providers take credit score and history into account when determining insurance rates.

According to Consumer Reports, credit score can impact your insurance rate more than anything else; this is because poor credit history is interpreted as putting you at higher risk to file a claim. This practice is in line with the new industry trend of using social-economic factors to determine insurance rates rather than driving history and practices. The CFA has called for the end of this practice, but it continues to impact drivers and their insurance rates.

Using Your Car Insurance Coverage: Steps to Getting What You Need When Making a Claim

Unfortunately, many drivers don’t find out whether they have selected the best insurance company or not. In order to achieve the best results when filing a claim, Bob Hunter of the Consumer Federation of America says it is important to document and save all interactions with your insurer. Take notes on the date, time, topic, and any important details of the interaction. Recording the details of every interaction will help you down the line should you run into any problems. Bob Hunter also notes: “Don’t assume they are going to be bad to you, but don’t assume they are going to be good.”

These are some of the steps you should take to ensure you get what you need when making a claim:

Go through your policy

Before you contact your insurance provider, comb through your policy to see what your deductibles are. This includes checking for rental car reimbursement coverage, or other considerations should your car require extensive repairs and time in the shop.

Know you’ll have to give a statement

Once you have reported your claim, you can expect to hear from an adjuster. Prior to this, you should prepare a statement to be sure you include everything you want to say. Your statement will be recorded and used to determine the amount of your loss. When you give your statement, be sure to ascertain how this process will happen from your adjuster so you know what to expect.

Use original parts for repair

Aftermarket parts tend to be lower quality than original parts and can cause further car problems in the future. Insurance companies sometimes push the use of aftermarket parts in order to save themselves money. If your insurance company is trying to insist you use aftermarket parts to repair your car, insist they use original parts instead. This will save you money down the line.

Go up the chain of command

If you are unsatisfied with the way your adjuster is treating you, work your way up the chain of command. Asking to speak to someone up the ladder if you feel you are being denied coverage you are entitled to will likely get you the desired result.

Asking your adjuster to cite policy language as evidence of why you are not getting coverage can also help your case. Document what part of the policy they are referring to, and if it is ambiguous, say that you think it should be covered. Keep documentation of these interactions just as you would other interactions with your insurance provider.

Make your claim as soon as you can

The majority of claims are initiated via claims call centers or company websites that operate 24 hours a day. Though you won’t be contacting the agent who sold you your policy, be sure to note the name of your adjuster in your initial report. Be sure to get the claims office phone number, and ask when you can expect to hear from them.

Request to use your personal repair shop

Most insurance companies have relationships with specific local repair shops, and your adjuster will likely suggest you use one of those. By suggesting repair shops they have relationships with, insurance companies are able to control your repair costs. You should insist on using your own repair shop – this will give you a better chance of a fair price for your repairs. You have the right to use your own shop.

Get your adjuster to review your rental car coverage

When you speak with your adjuster, ask whether you are entitled to a rental car while yours is being repaired. In some cases, you may be able to have the rental company bill directly to your insurer, rather than having to jump through the extra hoop of being reimbursed.

See which forms you must fill out

Ask your adjuster which forms you will need to fill out, depending on the type of claim you are filing. A medical claim, for example, will require specific forms and copies of medical records and bills related to the treatment of your injury after an accident.

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