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Economic Recession and Auto Insurance

Written by Joe Taylor on February 3, 2010 & Posted in Auto Insurance

Even in tight times, Americans rely on their vehicles for work and leisure. In fact, with more Americans driving instead of flying to save money, quality auto insurance has become even more important. Professional service and fast claims processing after an accident are even more vital when money's tight. By understanding the factors that influence auto insurance pricing, you can find cheap car insurance quotes that help get you on the road to savings.

Auto Insurance's Unexpected Economic Connections
Losing your job during a recession is bad enough. Paying higher auto insurance premiums when a provider learns of your unemployment just adds insult to injury. Some insurance companies rely on credit reports that reduce your rating if you become unemployed. Dipping into a lower-ranked credit score may cause your auto insurance premium to rise. Likewise, a new job that adds more miles to the odometer can make some companies nervous. Parking in a zip code with high theft or accident percentages can also wreck your monthly premium.

Other tacked-on expenses can hide behind otherwise cheap car insurance quotes. Some states, desperate to replace lost revenue, have hiked the fees and taxes paid on auto insurance policies. Insurance companies have little choice but to pass these new expenses on to policyholders, either immediately or upon renewal of a policy. Processing and service fees, such as surcharges on credit card payments, can also rob you of potential savings. Reviewing your policy statement carefully helps reveal line items that can be cut from future agreements.

Finding Cheap Car Insurance Quotes
Despite all of the events that can make your monthly premiums rise, many other factors have put enough downward pressure on auto insurance rates that you can find bargains. Driving a newer car or truck saves money in two ways. Not only do newer vehicles offer better safety features, they can usually be repaired less expensively. Living in an area with many older drivers can also result in cheap car insurance quotes, since older drivers hit the road less often than younger drivers.

Leveraging relationships might also lower car insurance quotes. Bundling auto insurance with homeowners' or renters' insurance can save a significant amount of money each year. By handling both policies through a single company, your provider may pass along the savings of managing only a single account. In addition, many employers, alumni associations, and professional organizations maintain discount relationships with insurance companies. Some companies even allow you to stack multiple discounts, saving you even more money. Servicing your account online and enabling automatic payments from your credit card or bank account reduces maintenance fees and qualifies you for still deeper discounts.

Getting the Right Auto Insurance Coverage
Saving money on monthly premiums requires getting the best deal for your dollar. Check with your state's Department of Motor Vehicles to learn about the minimum required auto insurance and about any maximum claims enforced in your area. By selecting a policy that fits your personal comfort zone but leans toward the minimum coverage, you can save hundreds of dollars every year.

Assuming more risk for potential damages can also reduce your monthly payments. For instance, many savvy drivers select a deductible of $1,000 instead of opting for full coverage. If you deposit the money you save into a high yield savings account that you can tap in the event of an accident, this can be a non-issue. If you make it through a year without incident, you get to keep the money!

Understanding how companies generate cheap auto insurance quotes can also help you choose the right policy. Highly automated companies can quickly generate quotes online, while traditional agencies may use higher rates to cover their overhead. Likewise, agents equipped with efficient tools can save you money by leveraging their expertise. Spending a few minutes each year shopping for multiple car insurance quotes with all of the above factors in mind can help keep cash where it belongs: in your wallet.

Sources
Arizona Republic, Insurance: Too little, too much, by Russ Wiles
Clark Howard, Auto insurance rates are going down!
Kiplinger, Paying Too Much for Car Insurance?, by Erin Burt
The State, What to do after an accident

About the Author

Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a bachelor of science in communications from Ithaca College.

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