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Problem Solvers: Tips for locking in a low insurance premium for your car

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KANSAS CITY, Mo. -- Here’s something to think about the next time you go car shopping. A brand new sedan will cost you about $130 less in insurance premiums than a three-year-old sedan.

Yes, that’s right. You will save money by buying a new car. It’s just one of the surprising findings the personal finance website, www.wallethub.com, discovered while preparing a car insurance cost analysis for the state of California.

Wallet Hub CEO Odysseas Papadimitriou said insurance is less on a new car than an older one because insurance companies know the new car doesn't have repair issues. The brakes should work on a new car, whereas with an older car, it all depends on how well it’s been maintained.

It also pays to be a nerd when you’re buying car insurance. Engineers and scientists pay among the lowest car insurance premiums. That’s because insurance claims and accident data prove they are among the safest drivers. By contrast, students, construction workers and plumbers pay among the highest rates.

If you are looking to save money on insurance, avoid buying a sports car or a truck. They are among the most expensive to insure. Data shows that people tend to drive those types of vehicles more recklessly, probably because they don’t have their kids with them. Sedans tend to have the most affordable insurance.

If you want to drive in luxury and save money, here’s a tip: Insurance premiums for expensive cars vary widely among insurance companies. Wallethub found that the premiums could as much as double from company to company, so shop around.

Comparison shopping is apparently less important if you drive a mid-market or economy car where insurance rates only had slight variations.

And reminder a single accident will cause your insurance premiums to jump 36 percent on average. Two accidents could result in your premiums more than doubling. So start thinking of your car as a giant piggy bank. The safer you drive, the more you’ll save.

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5 comments

  • DC

    It’s always a good idea to shop for auto insurance, but be aware that every time you do they run a credit check and that will bring down your [credit] score. And, depending on your credit you will end up paying more if you have a lower score.

    This law should never have been enacted. If you can’t pay for auto insurance, they cancel you and turn your info over to the state. IMO, that is enough.

    Wonder if this will be a preview of what will happen will eventually happen to healthcare insurance…

  • bzirk

    Many companies offer coverage without a credit hit. Insurance companies run a ‘soft’ hit on the credit and it has NO impact on the credit score. In Kansas, insurance companies do NOT turn you over to the state if your insurance lapses. In other states that happens. As for running credit, everything in insurance is based on statistics (risk management). People with bad credit are more likely to have a claim, have more expensive claims, more frequent claims, and tend to favor expensive electronics over insurance protection. They get insurance to get tags and then drop the policy. This creates a huge expense for the insurance company. The risk is 100 percent on the insurance company for the first several years of the policy. Learning about health insurance will be a very steep learning curve for you if you base your decisions on this kind of mis-information.

    • DC

      I do not know of ANY auto insurance company/agency that does not run a credit check. If you do, please state them.

      I changed insurance company/agency 2 years ago and I received a letter from the state asking who was insuring my vehicles. Had to copy my insurance info and send in.

      I was just stating my opinion of what will be coming next for health insurance. To use your words, it goes to statistics…

  • bzirk

    I own an insurance agency. I offer three companies which don’t hit credit. They are generally for the higher risk category of folks who do not maintain continuous insurance, have several tickets and/or accidents/alcohol related incidents. Many States on the East Coast do report to the State DMV/dept. of revenue about lapses, cancellations and terminations. Midwestern States don’t do that. The credit hit is actually an advantage for most people. It keeps people with similar credit ratings in the same pool rather than group them with very poor credit risks. Credit is generally not a stand-alone rating piece and is combined with other behaviors – young drivers in the home, incidents on the driving record, etc. to aggregate a risk. Age and zip code are also rating factors as is single/married/divorced. Every single element in insurance is based on statistics and experience. You are charged a rate commensurate with your particular risk. Being grouped in with others who have dissimilar risk is how it used to be done and it was not fair for drivers with good credit, good driving records and no other risky elements.

  • insurance Schengen

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