Why Did My Auto Insurance Go Up?
A normal consequence of purchasing a new car is “new” insurance. Although many people don’t consult their insurance agent about a new car purchase- it may help.
We all know that the actual driver is the major factor in determining car insurance. However, the cars themselves receive ratings and these rating scales can vary between different versions of the same model car. If the vehicle has a high safety rating there is a lower chance that the insurance company will need to pay for medical bills (from an accident) – therefore, your rate will be lower. Unfortunately, the opposite is also true.
A friend of mine traded in his 2013 Honda Civic and recently purchased a 2015 Honda CRV. After the purchase he called his insurance agent to let them know he had a new set of wheels- and much to his surprise and delight his insurance costs went down. The insurance company sent him a check for $235! The insurance rating on the 2015 CRV was better than the 2013 Civic! If he knew that upon making the purchase he could have gotten a nice set of mud flaps!
Another factor that insurance companies use to determine your premium is your Credit-Based Insurance Score (CBIS). It is not exactly your credit score, the CBIS uses some, but not all, factors in your credit history. And believe it or not- there is a relation. A study performed by the University of Texas found that the lower the CBIS the more likely you are to incur more car insurance losses and higher payouts- a greater risk to auto insurers. With that evidence for over 20 years most auto insurers have been using various calculations of CBIS to predict risk and therefore determine a driver’s rate.
So the next time you are thinking of buying a car beef up your credit score and consult your insurance agent.
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Rick Coyne, CPA 609-520-1188 [email protected] View Experience |
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