What Auto Insurance Companies Don’t Want You to Know

March 28, 2018

Auto insurance, you are not meant to drive without it and could even get a ticket or worse if you are not properly covered.  That is the story that we all know but what about the things that insurance companies don’t want us to learn?

This article will explore many of the hidden secrets to car insurance coverage in the U.S.  While this is not meant to paint a broad stroke on the industry, this knowledge should help you get a better rate when your policy comes up for renewal. Without further introduction, here is what auto insurance companies don’t want you to know.

Ladies First

While we have been shocked by stories of rampant discrimination over the past year, one area where women have an advantage is auto insurance. In fact, some studies indicate that on average women pay more than 10 percent less than men when it comes to car insurance.

Research further indicates that this is because men tend to be more aggressive drivers than women and as such, they are in more accidents.  For example, in 2009 nearly 12,000 male drivers died in the U.S.  This is compared to less than 5,000 female drivers in the same year.  To put it another way, every 100 million miles driven by men resulted in 2.5 deaths compared to 1.7 deaths for women over the same distance.

As you can see women really are safer drivers and this is a big reason why their car insurance rates tend to be cheaper than men.

Knowledge is Power

In fact, some researchers have found that auto insurance companies tend to give preferential rates to those who have achieved advanced degrees.  While some have claimed this practice is discriminatory, this sort of pricing has withstood multiple legal challenges.

The differences tend to be incremental as someone with a bachelor’s degree will only pay slightly less than someone who graduated high school and so on.  Therefore, one must ask why insurance companies do this?  In fact, there is little hard evidence to prove that more educated people are better drivers.

One possible explanation is that those with less education tend to drive more.  However, these drivers – many with commercial driving licenses – are well-trained and should be safer on the roads.  As such, another explanation is that those with advanced degrees tend to earn more and this means they are more likely to use other forms of insurance so the reason for the discount is that insurance companies want to encourage these drivers to purchase additional policies through them.

Give Them Credit

It seems like no one can escape their credit score.  This is especially true when it comes to auto insurance as more and more insurers are relying on algorithms which consider your credit score giving quotes.

In fact, many companies use this as one of the biggest factors to determining insurance rates.  This means that those with a spotty credit history should expect that they will need to pay for more insurance than those with a clean history.

The reasoning behind this approach is straightforward as many insurers believe that those with bad credit are more likely to make riskier decisions when operating their vehicles.  As such, these drivers carry more risk and should be expected to pay higher rates.

While this might seem unfair, it is the way the insurance system works these days, so your best bet when searching for a new policy is to check out the reviews of various insurance companies such these Mercury insurance reviews to find out what other drivers had to say about the company.

Insurance Companies Need Your Money

You might think that insurance companies are in the business of providing coverage for risk.  While this is partly correct, the real reason why these companies are in business is to make money from your money.

The real money in insurance is not in the policy payments, rather it is in the funds that these payments create and which can be invested to generate massive returns.  Many people might not know this but it was insurance companies who regularly invest in McDonalds.

Knowing this can give you power as the insurance companies need your money if they want to make any serious money.  As such, look for those companies who are most likely give in when it comes to negotiating policy rates.

Age Matters

Insurance companies really do get you when you are coming and when you are going.  This is because the youngest, and the oldest, drivers tend to be the biggest risks.  However, you can fight back by looking for companies that offer safe-driver discounts, or those who will reduce your rate if they put a tracking device in your car.

 

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