Hidden Secrets of Car Insurance Premiums

Do you ever wonder why your car insurance premium is higher or lower than someone else’s? The answer is actually more complex than you think. There are more Hidden Secrets of Car Insurance Premiums you have to know about .

If you’re looking for the best car insurance rates, a 40 percent discount for good students or a 25 percent discount for having more than one policy with the same insurer will probably catch your attention. But when you read the fine print, you may find limits on those eye-opening discounts.you can find out all Hidden Secrets of Car Insurance Premiums in this article .

Hidden Secrets of Car Insurance Premiums

Insurers tend to use such phrases as “save up to 25 percent,” but you may save far less on your car insurance premiums than you initially thought.

Using terms like “up to” and “could save” provide lots of leeway for insurance companies. “What does it actually mean for consumers?” asks John Breyault, a vice president at the National Consumers League.

Because the information is so vague, “it makes it very difficult to compare discounts from different insurance providers,” Breyault says.

“Insurance discounts aren’t like sale items at the department store, where items can be marked 50 percent off, but the original price might have been inflated to begin with,” says Lynne McChristian, Florida representative for the Car Insurance Information Institute. “Too deep of a discount to one driver would mean another driver would have to pay too much. That’s why individual driving behavior is the key factor affecting what people pay.”

5  Hidden Secrets of Car Insurance Premiums

1. Up to 20 percent’ may mean much less

Phrases like “up to 20 percent off” don’t mean you’ll get the entire discount. You might be eligible for a certain discount, but not the maximum available. And discounts can vary by state and by insurer, says Penny Gusner, consumer analyst for Insure.com. One insurer may offer a 25 percent discount, while another insurer may offer only a 10 percent discount for the same thing. “This gives insurers wiggle room so they don’t have to give out exact discount percentages,” says Gusner.

2. Discounts may apply only to a specific coverage

While car insurance companies advertise substantial discounts, they may not apply to your entire bill. For example, Geico offers big discounts for air bags — but that only applies to the medical payment or personal injury part of your auto insurance. Its anti-theft system discount applies to the comprehensive part of your premium — but many owners of older vehicles drop comp and collision coverage to reduce premiums.

3. Safety-feature discounts are outdated

You might be drawn to a vehicle with the latest safety technology, but your insurance company may not reward you for it. Discounts for devices such as air bags and anti-lock brakes are the norm. But you may not get a break for more advanced features, such as electronic stability control and blind spot monitoring systems, says Ratnesh Singh, a vice president at Quadrant Information Services, though he predicts they’re in the works. “As companies update their rating plans for new device systems, they’ll build in the discounts.”

4. Some discounts are mandated by state laws

Your insurance company might not tell you about mandated discounts, so do your own research. In New York, for instance, drivers who complete a DMV-approved, accident-prevention course receive a 10 percent reduction, for three years, off their liability and collision premiums. In California, state law mandates that drivers meeting certain safe driving criteria be charged at least 20 percent less than unqualified drivers at the same insurance company. Still other states require discounts for senior drivers who complete accident-prevention courses.

5. They giveth discounts, and taketh away

You might get one discount and lose another one. Singh says if you qualify for both a resident student discount — which typically means you live at least 100 miles from home — and a good student discount, which means your grade point average is above 3.0, you might only get the good student discount. With Progressive’s Snapshot, the company’s website says in some cases signing up for Snapshot “will slightly decrease” discounts for paying your bill in full or paying by electronic funds transfer.