How Your Credit Affects Your Car Insurance—and What You Can Do about It

Gas can make summer road trips expensive, but the right credit card can earn some of that spending back.

Insurance is not a one-size-fits-all product. If you’ve ever talked to an insurance agent or requested a quote online, you know you have to answer a bunch of questions before you receive your quote. This is because insurance is all about risk, and insurance companies use your answers to determine how likely you are to file a claim (and thus cost them money).

Does Credit Impact Your Car Insurance?

Insurance companies use countless factors to determine your risk and set your rates. Many of these are obvious, such as where you live, your driving record, and what kind of car you drive. But there are also a few factors that are less intuitive, like your credit score.

Credit is considered a rating factor for nearly all US drivers. Insurance underwriting (that is, how insurance companies assess and price your individual risk) is all about statistics, and insurance companies have found that people with lower credit scores statistically file more claims than those with higher scores.

In fact, a Federal Trade Commission study found that drivers with low credit scores are more likely to file a claim than drivers with higher credit scores. It also found that claims filed by drivers with low credit scores cost nearly twice the dollar amount as those filed by higher-credit drivers.

How Much Your Credit Score Affects Your Rates

Insurance companies in California, Massachusetts, and Hawaii are not legally allowed to use credit scores as rating factors per state regulations. In the rest of the country, however, credit can have a very real impact on your auto insurance rates.

A report from The Zebra explored how your credit rating affects what you pay for car insurance:

  • Drivers with poor credit (scores of 524 or below) pay more than twice as much for car insurance as those with excellent credit (scores of 823 or above).
  • Drivers can increase their credit scores by one tier (e.g., from poor to fair) to save an average of 17% on their annual auto insurance premiums.
  • Improving your credit score from poor to excellent would yield 53% savings (an average of $1,281 per year).

Is your low credit score costing you on car insurance? There are behaviors you can change to improve your rates in the future. Here are a few steps to help get you back on track.

  1. Know Your Credit Health

The first step to healthier credit is understanding what your credit score currently is. Experts recommend checking your credit report once every four to six months. Regularly review what your credit score is and why. (You can check your credit report for free at Credit.com.) Once you know where you are, you can make goals to improve your overall credit health.

  1. Practice Financially Smart Behavior

Now that you understand your overall credit health, you can take specific steps to improve it. Keep in mind that no matter what your credit score is, you need to practice financially smart behavior. This means developing a savings plan, managing your debt, and monitoring your credit. Review Credit.com’s Personal Finance Learning Center for more tips on developing and maintaining financially smart behavior. 

  1. Check Your Insurance Rates

Many factors can impact your insurance rate, and these factors can change relatively often—so check your rates regularly. Coverage lapses, violations, claims on your driving record, and even your age can have a big impact on your rates. Compare auto insurance rates at least every six months to make sure you have the right coverage and you’re paying the best rate for it.

Keep an eye on your credit report, your financial habits, and your insurance rates for the best deals.

Image: monkeybusinessimages 

The post How Your Credit Affects Your Car Insurance—and What You Can Do about It appeared first on Credit.com.

7 Things to Know About Giving (or Getting) a Car for Graduation

If you're planning to buy a car for the new grad in your life, here's some advice on making the right choice.

Behind every diploma bestowed at high school and college graduations is a lot of hard work. And for some lucky grads, that hard work gets rewarded with a milestone gift: their own car. If you’re planning to buy a car for the new grad in your life, we’ve got some advice on making the right choice. And if you’re the recipient, we’ll share a few tips to help you drive into the future with confidence.

What to Consider If You’re Giving a Car to a New Grad

You’re so proud of your new grad for all their hard work that you’ve decided to shell out for a set of wheels to carry them on to their next adventures. Whether you’re getting your grad started with a well-loved (read: used) older car you bought from a neighbor or you’re splurging for a brand-new ride with all the bells and whistles, it’s important for you, the buyer, to take a moment to consider the realities of this major purchase — and of the needs of its soon-to-be owner.

1. Consider Total Cost of Ownership When Choosing a Car

First, let’s talk money. The car you buy should fit into your own budget, of course. But you also have to consider the total cost — including ongoing costs — of the car. Here are some things to think about.

Gas: If, for example, your child will be driving the car back and forth between home and an out-of-state university, would they (or you, if you’re footing the gas bill) be burdened by the costs of a gas-guzzling vehicle? If so, a fuel-efficient car might be a better option.

Insurance: This is the most expensive consideration after the vehicle itself. Neil Richardson, licensed insurance agent and adviser for The Zebra, says to keep insurance in mind right from the start as you shop for cars. If insurance is an afterthought when you’ve already purchased the car, you could be in for some unpleasant surprises. Further, the car you select will affect your insurance premium if your grad will be on your insurance policy (more on this below).

Maintenance: Consider the expenses related to repairing or replacing parts on the vehicle if it’s damaged in some way. Foreign car repairs may be much more expensive than domestic, but that’s not a hard-and-fast rule. Further, new cars may include manufacturer warranties or maintenance as part of your package, but if your grad is savvy with tools or has an interest in cars, they can take care of plenty of at-home car maintenance issues.

2. Prioritize Safety & Utility

When car shopping, safety should stay top of mind. The Insurance Institute for Highway Safety ranks the safest cars in different categories, from minis to large pickup trucks.

Also think about where and how much your recipient will be driving. If they’re headed for college or a new job in a crowded city, they’ll need a car that fits cramped streets and narrow parking spaces. A new college grad with a quick commute will appreciate a different kind of car than one whose new job requires them to be a road warrior.

3. Insure it

If your gift recipient is a high school grad who lives at your residence, they may get lower premiums if they stay on your policy, but whether that’s possible depends on your situation. If they’re headed to an in-state college or university, they can stay on your insurance policy as long as their primary residence is still your home address, Richardson says. Students leaving the state for college, though, may have to get coverage on their own, as rates are dependent on where the driver lives and “garages” the vehicle.

Remember that if your new grad is on your insurance policy, you could be held liable for damage they cause in an accident. For this reason, Richardson says it’s generally a good idea to go beyond the state-required minimums in liability coverage.

4. Get Your Paperwork in Order

Getting close to a decision? Before you seal the deal, prepare for some extra paperwork. Whether you’re heading to the dealer or buying a car privately, you’ll need to be prepared with the right documentation, such as the recipient’s driver’s license and current insurance, an IRS cash-reporting form and a security report. (Questions? Read more details about each of these documents.)

If You’re a New Grad Who’s Been Gifted a Car

So now you’re the proud owner of a new diploma and a car. Sweet! Take a moment to savor the payoffs for your hard work and generosity of your gift giver.

Once you’ve posted lots of photos of your new ride, you might be thinking about all the new freedom your car gives you or how you’re going to upgrade the stereo system. But there are some other things you need to keep in mind when it comes to how this car will affect your life. Nail down these details and you’ll be well on your way to acing this whole “#adulting” thing.

1. Know the Impact on Your Wallet

Even if you aren’t making payments on your new vehicle, a car can still have a huge impact on your wallet. (Here’s how car insurance affects your credit.) How much will you need to budget for gas, parking, insurance, registration and regular maintenance? Your folks or your generous benefactor may be picking up some of these expenses for you, at least in the short term. Be sure to establish clearly with others about who’s paying what and check in regularly to make sure necessary expenses related to your car are taken care of.

2. Your Insurance History Starts Now

We know that dealing with auto insurance for the first time is complicated, so it’s extra important to be clear on how your policy works, whether it’s in your name or you are on your parents’ policy for now. If you’re a registered driver of a registered vehicle, your insurance history starts now (even if you’re not paying for it), and a clean driving record and demonstrated history of continuous insurance coverage will mean huge savings on your insurance in the future.

If you’re in college, you can start building your insurance record by staying on your parents’ or legal guardians’ policies if they OK it. According to Richardson, as long as the parents’ address is still the primary residence of the student, on-campus housing is considered temporary since students have to leave at the end of each semester, so students can still be covered on their parents’ policy. Once they move off campus to a more permanent situation, i.e., a house or apartment, then they will need their own coverage. (Here are the states where your credit score really matters for car insurance coverage. No matter where you live, it’s a good idea to know where your credit stands — you can find out for free on Credit.com.)

If you’re not in college and you’ve moved away from your parents or guardians altogether and no longer share an address, you’ll have to have your own policy.

3. Keep That Car in Tip-Top Shape

Finally, regular preventive car maintenance will probably be the last thing on your mind as you adjust to college life or settle into a new job. So go ahead and set some reminders in your calendar to take care of oil changes, wiper fluid and other routine maintenance for your car. You’ll prolong the life of the car and make it less likely that problems will pop up just when you don’t need them — like on your Spring Break trip or on the way to a job interview.

Car not in your budget for a graduation gift? Consider these eight graduation gifts your kids will actually use. 

Image: kali9

The post 7 Things to Know About Giving (or Getting) a Car for Graduation appeared first on Credit.com.

6 Reasons to Leave Your Car Insurance Company

Here are six signs it's time to break up with your auto insurance company.

You might be familiar with a few scenarios that could make your auto insurance rates change: You bought a new car, moved, got in a car accident, or even got married or graduated from school. In all these cases, it’s important to shop around for car insurance to ensure you’re getting adequate coverage — at the right rate — to meet your needs.

Even if you’re happy with your car insurance company, simply checking out the competition on a regular basis (we recommend every six months) can help keep your current rate low because it indicates to your insurance company that you’re on the lookout for better deals, and your insurer will, therefore, be motivated to keep you.

Insurance rates and policy details vary widely by insurer and by person. If you get a quote from a dozen insurance companies, many of the quotes might look quite similar, while others might show your premium varying by hundreds of dollars.

Even if your rates and coverage were equal among a handful of insurance companies, we remind you: It’s not all about price.

Insurance is intended to protect you when you need it — legally, medically, financially. You want to make sure you choose the company and service that meets your needs and has your back. If you’re not getting that support, you might consider changing insurance companies.

The Zebra’s licensed insurance agent and adviser Neil Richardson offers his expert advice on when it’s time to leave your insurance company:

1. Your Rates Increase (And It’s Not Your Fault)

As we’ve discussed, countless factors impact your auto insurance rates, including where you live, what kind of car you drive, your driving record and insurance history, and your personal information such as age, gender, marital status, credit score and more in many states. (You can view two of your credit scores for free on Credit.com.)

When any of these factors change, your rates may change, too. Sometimes it’s for the better (the older you get, the lower your rates drop — until about age 60, that is), and sometimes for the worse (if you cause a collision, your rates could rise nearly 50%!). Long story short: It shouldn’t be a huge surprise.

Because auto insurance companies are businesses that must make money to stay afloat, they may raise premiums for their customers, likely following a high claims payout period in which they incurred hefty losses. You may or may not be able to find lower rates elsewhere (for example, if a violent storm caused damage in a certain geographical area, other insurance companies could be suffering the same losses from big claims payouts), but it’s worth shopping around.

2. Your Insurance Agent Is Inflexible About Your Policy

A big part of the insurance company choice comes down to customer service, and if you aren’t getting the results you expect, within reason, you might consider other options. You should expect a certain degree of flexibility from your insurance company, and if you speak with someone who isn’t flexible with your insurance requests, keep in mind that there are plenty of companies that would like to try to keep your business.

“Changes like updating coverage or adding or removing a vehicle are simple requests, so if you hit a roadblock with an agent, it can be a sign that you need a new insurer,” said Richardson.

You should have full access to your policy and the ability to make adjustments, even mid-cycle, so if you’re told it’s not an option, begin shopping around.

It’s also important to note that you should be realistic about rates. Every time you make an adjustment to your policy, whether you’re adding or removing drivers or vehicles, your rate will change. So, if your rate goes up a little in one of these instances, it likely doesn’t mean you’re being treated unfairly. Here are some things that may impact your car insurance.

And/Or a Member of the Company Is Rude to You

It goes without saying that if any member of the customer service team or an agent is rude to you, you should consider taking your business elsewhere.

“There are just too many insurance options out there for you to stick with a company that doesn’t value your business,” Richardson said.

There are certain issues outside a representative’s control, but you can always ask to speak with a supervisor to voice your concerns. And if you end up switching companies because of a customer-service issue that isn’t resolved to your satisfaction, mention the incident to your new insurer to avoid going through the same headache.

3. You Notice Changes to Your Monthly Bill That You Weren’t Informed About

If you’re billed monthly for your policy, the price should be consistent each billing cycle.

If you notice a change in your bill for which you were not contacted, it can be a sign that something’s amiss with your insurer.

“Sometimes policy updates get sent to your email spam, and sometimes phone calls or mailings are missed, but if you notice a change in your rate, you should look into it immediately,” said Richardson.

If you don’t feel you were adequately informed, shop around for a new company that meets your customer-service needs.

4. You Want 24/7 Agent Access

Many local insurance agencies aren’t available to customers at night or on the weekends, and while often this works just fine, if you’re the type of person who needs more access, you might consider a switch.

For instance: If you buy or lease a new car on a weekend and your insurer doesn’t have weekend availability, you might not be able to take your car home right away. Many dealers require proof of insurance (especially if you’re leasing or financing) before they allow customers to drive off the lot.

Plenty of big national insurance companies have 24/7 agent access, which can be a plus if you’re the type of person (or family) who regularly changes vehicles. Keep in mind, your local agent might be willing to make an off-hours exception for your insurance needs if you give them advance notice.

5. You Want to Conduct Insurance Business Online

Some of us are more comfortable conducting business online, and that’s OK. If you want to add or remove drivers or vehicles without speaking to someone on the phone, you’ll need an insurer who can meet your needs.

Insurers offering online access tend to be larger national brands, but every company is different, so check out all the options in your area. Most insurers spend a lot of money to allow customers online access, so if you want to know about an insurer’s online policies, just ask, and they’ll usually be happy to help you navigate.

If online access is important to you, remember that it’s just one piece of the insurance puzzle. You should always consider the importance of adequate coverage, as well as service and rates.

6. You Want to Add Drivers to Your Policy

When you have a new spouse, a newly licensed teen driver or a new roommate, you might consider adding them to your own auto insurance policy. Adding extra coverage or drivers to your policy often shifts both your needs and the discounts you qualify for enough that you might find you fit better — and save money — with another company.

Life changes — big or small — could put you in a new risk category, which might mean you’re a better fit with a different insurance company,” Richardson said. “There’s not an advertised rate for life-event changes, so you’ll need to shop around to see if you can get better coverage prices and discounts from other companies.”

If you’ve been with a company for a while, particularly a local one you know, the idea of changing companies might feel uncomfortable and make you feel a little guilty. But when it comes to insurance, you need to do what’s best for you.

Image: Mixmike

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Are Fast Cars More Expensive to Insure?

Are fast cars more expensive to insure? Not quite, and here's why.

Even just a decade ago, cars weren’t nearly as fast as they are today. In fact, 300 horsepower was expected only from V-8 engines, writes Forbes. But because of “direct fuel injection, turbocharging and other advances in engine technology and design, power and speed can be bought in a range of body styles, vehicle sizes and powertrain configurations.”

Speed — as measured by quickness of acceleration and pure engine power, and not top speed, which only matters on race tracks — is now more accessible than ever, and as Tesla just proved, as cars move to electric power, we might see faster and faster cars on the road. Tesla’s Model S is now the third fastest car in the world, writes The Verge (behind just the Ferrari LaFerrari and the Porsche 918 Spyder — both million-dollar hypercars). Upgrades to the battery allow the Model S to go from 0 to 60 mph in 2.5 seconds, making us wonder: Do the fastest cars cost more to insure?

We looked at cars people might actually drive (we’ll save concept cars and supercars for another list and another day) and calculated insurance premiums based on a standard profile: a 30-year-old single man living in Austin, Texas (ZIP: 78702), who rents his home, owns his car, has a good driving history, a good credit score, and has had consistent insurance coverage for a basic level of insurance with a national carrier. (You can view two of your credit scores, with helpful updates every two weeks, for free on Credit.com.)

Keep in mind, the time it takes for a car to accelerate from 0 to 60 mph can vary widely based on each driver’s skill, so results may vary. In no particular order (because their specs and model years differ), here are 10 of the fastest cars on the road and their stats.

1. 2017 Chevrolet Camaro
MSRP: $37,900
Engine Details: 6.2-liter V8, 455 horsepower
Acceleration Speed: 0-60 in 4.0 seconds
Average Yearly Insurance Premium for a Chevy Camaro: $1,620

2. 2016 Jaguar XJR
MSRP: $118,000
Engine Details: 5.0 Liter V8 550 HP Supercharged
Acceleration Speed: 0-60 in 4.4 seconds
Average Insurance Premium: $2,148

3. 2017 Cadillac CTS-V
MSRP: $85,995
Engine Details: 6.2-liter V, 640 horsepower
Acceleration Speed: 0-60, 3.7 seconds
Average Yearly Insurance Premium: $2,112

4. 2016 BMW M5
MSRP: $94,100
Engine Details: 4.4-liter V8 TwinPower Turbo, 560 horsepower
Acceleration Speed: 0-60 in 4.2 seconds
Average Yearly Insurance Premium: $2,112

5. 2016 Dodge Charger SRT Hellcat
MSRP: $67,645
Engine Details: 6.2-liter supercharged Hemi V8, 707 horsepower
Acceleration Speed: 0-60 in 3.7 seconds
Average Yearly Insurance Premium: $1,512

6. 2017 Audi RS 7
Engine Details: 4.0-liter V8 with two turbochargers, 560 horsepower
MSRP: $110,700
Acceleration Speed: 0-60 in 3.7 seconds
Average Yearly Insurance Premium: $2,268

7. 2017 Volkswagen Golf R
MSRP: $39,375
Engine Details: 4-cylinder turbo, 292 horsepower
Acceleration Speed: 0-60 in 4.5 seconds
Average Yearly Insurance Premium: $1,560

8. 2017 Ford Mustang GT Fastback
MSRP: $33,195
Engine Details: 5.0-liter V8, 435 horsepower
Acceleration Speed: 0-60 in the mid-4 second range
Average Yearly Insurance Premium: $1,512

9. 2016 Dodge Challenger R/T Scat Pack
MSRP: $39,995
Engine Details: 6.4-liter V8, 485 horsepower
Acceleration Speed: 0-60 in the low-4 second range
Average Yearly Insurance Premium: $1,608

10) 2017 Volvo S60 Polestar
MSRP: $60,000
Engine Details: 3.0-liter Turbocharged inline 6-cylinder 345 horsepower
Acceleration Speed: 0-60 in 4.7 seconds
Average Yearly Insurance Premium: $1,428

Compare these insurance prices with the prices of the five most popular sedans for 2017, based on our new State of Auto Insurance Report, for the same insurance customer profile.

Chevrolet Cruze
MSRP: $16,975
Acceleration Speed: 0-60 in 7.6 seconds
Average Yearly Insurance Premium: $1,056

Honda Accord
MSRP: $22,455
Acceleration Speed: 0-60 in 6.1 seconds
Average Yearly Insurance Premium: $1,176

Hyundai Elantra SE
MSRP: $17,150
Acceleration Speed: 0-60 in 8 seconds
Average Yearly Insurance Premium: $1,344

Nissan Altima
MSRP: $22,500
Acceleration Speed: 0-60 in 7.7 seconds
Average Yearly Insurance Premium: $1,260

Toyota Camry
MSRP: $23,070
Acceleration Speed: 0-60 in 8 seconds
Average Yearly Insurance Premium: $1,236

Final Word: Do Fast Cars Cost More to Insure?

Our assessment: We can’t say for sure whether or not all cars with more powerful engines that can accelerate faster always cost more to insure than their slower counterparts, but all of the faster cars above come with more expensive insurance premiums than all of the slower cars we looked at.

Another potential insurance price factor: All of the faster cars also cost more (in some cases, a lot more) than all of the slower cars. We know that price has something – though not everything – to do with insurance pricing (which is still somewhat of a mystery, even to us).

As we’ve seen, equating insurance rates with one definable feature is tough: Insurance rates weren’t strictly correlated with safety rating, either. But while we might not be able to say with absolute certainty that faster cars will mean more on your monthly premium, we do have proof that using that speed illegally is practically guaranteed to cost you.

The Insurance Consequences of Speeding Convictions

If you drive a certifiably fast car, always remember to follow the rules of the road, not only because it’s safer for you and everyone driving near you, but because beyond any traffic citations you might receive for speeding, speeding also has some pretty detrimental effects on insurance rates.

In 2016, if you were convicted of speeding, your insurance rates went up by the following percentages (national U.S. averages from The Zebra’s State of Auto Insurance Report):

  • Speeding in a School Zone: 18%
  • Speeding 6-10 MPH over the limit: 17%
  • Speeding 11-15 MPH over the limit: 18%
  • Speeding 16-20 MPH over the limit: 19%
  • Speeding 21-25 MPH over the limit: 20%
  • Speeding In 65 MPH Zone: 23%

That means if we’re looking at the national average premium of $1,323, a single speeding ticket could raise your rates from $225 to $304. (And that continues for three years after the violation occurs.)

Fast cars with great handling make for excellent driving – but stay safe (and under the speed limit!) – or you could pay in more ways than one.

Image: mevans

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Here’s How Much the Most Expensive Traffic Violation in Your State Will Raise Your Auto Insurance

Expensive-tickets

If a cop hands you a ticket for speeding, swerving in and out of lanes, or causing a crash, you’re already paying up. However, drivers need to keep in mind that those tickets can also mean big increases to their car insurance premiums.

For example, if you’re caught racing in North Carolina or driving drunk or recklessly in California, that single incident will cost you nearly $3,000 on your annual auto insurance premium. (For North Carolina, that’s a 350% rate increase.) And that’s not including the ticket itself or any court fees or other expenses.

Although each state regulates insurance differently, every state’s most costly violation will earn the driver a car insurance rate increase of at least 40%, according to The Zebra’s new State of Auto Insurance Report.

To determine what violation was most costly in each state, The Zebra analyzed auto insurance pricing data from its quote engine. The analysis includes annual auto insurance premium data across all U.S. zip codes for a base driver profile of a 30-year-old single male driving a 2012 Honda Accord EX.

Below are the most expensive traffic violations by state and how much each could wind up raising your insurance.

1. Alabama

Most Costly Violation: Driving Under the Influence (DUI)
Dollar Increase on Premium: $716

2. Alaska

Mostly Costly Violation: DUI
Dollar Increase on Premium: $568

3. Arizona

Mostly Costly Violation: Racing
Dollar Increase on Premium: $1,574

4. Arkansas

Mostly Costly Violation: DUI
Dollar Increase on Premium: $850

5. California

Mostly Costly Violation: Reckless Driving, DUI
Dollar Increase on Premium: $2,869

6. Colorado

Mostly Costly Violation: Racing
Dollar Increase on Premium: $842

7. Connecticut

Mostly Costly Violation: Racing
Dollar Increase on Premium: $1,790

8. Delaware

Mostly Costly Violation: Racing
Dollar Increase on Premium: $2,125

9. District of Columbia

Mostly Costly Violation: DUI
Dollar Increase on Premium: $1,016

10. Florida

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $1,735

11. Georgia

‘Mostly Costly Violation: DUI
Dollar Increase on Premium: $812

12. Hawaii

Mostly Costly Violation: Racing
Dollar Increase on Premium: $2,396

13. Idaho

Mostly Costly Violation: DUI
Dollar Increase on Premium: $594

14. Illinois

Mostly Costly Violation: Reckless Driving, Racing
Dollar Increase on Premium: $1,619

15. Indiana

Mostly Costly Violation: Racing
Dollar Increase on Premium: $462

16. Iowa

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $622

17. Kansas

Mostly Costly Violation: DUI
Dollar Increase on Premium: $512

18. Kentucky

Mostly Costly Violation: DUI
Dollar Increase on Premium: $1,435

19. Louisiana

Mostly Costly Violation: At-Fault Accident
Dollar Increase on Premium: $791

20. Maine

Mostly Costly Violation: Racing
Dollar Increase on Premium: $623

21. Maryland

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $666

22. Massachusetts

Mostly Costly Violation: DUI
Dollar Increase on Premium: $961

23. Michigan

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $2,312

24. Minnesota

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $1,019

25. Mississippi

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $790

26. Missouri

Mostly Costly Violation: Racing
Dollar Increase on Premium: $529

27. Montana

Mostly Costly Violation: Racing
Dollar Increase on Premium: $640

28. Nebraska

Mostly Costly Violation: Racing
Dollar Increase on Premium: $755

29. Nevada

Mostly Costly Violation: Racing
Dollar Increase on Premium: $945

30. New Hampshire

Mostly Costly Violation: Racing
Dollar Increase on Premium: $759

31. New Jersey

Mostly Costly Violation: At-Fault Accident
Dollar Increase on Premium: $1,229

32. New Mexico

Mostly Costly Violation: Racing
Dollar Increase on Premium: $896

33. New York

Mostly Costly Violation: DUI
Dollar Increase on Premium: $1,150

34. North Carolina

Mostly Costly Violation: Racing
Dollar Increase on Premium: $2,888

35. North Dakota

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $761

36. Ohio

Mostly Costly Violation: Racing
Dollar Increase on Premium: $607

37. Oklahoma

Mostly Costly Violation: Racing
Dollar Increase on Premium: $1,187

38. Oregon

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $1,079

39. Pennsylvania

Mostly Costly Violation: Racing
Dollar Increase on Premium: $1,032

40. Rhode Island

Mostly Costly Violation: Racing
Dollar Increase on Premium: $1,473

41. South Carolina

Mostly Costly Violation: DUI
Dollar Increase on Premium: $793

42. South Dakota

Mostly Costly Violation: DUI
Dollar Increase on Premium: $1,009

43. Tennessee

Mostly Costly Violation: DUI
Dollar Increase on Premium: $743

44. Texas

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $1,268

45. Utah

Mostly Costly Violation: Reckless Driving
Dollar Increase on Premium: $606

46. Vermont

Mostly Costly Violation: DUI
Dollar Increase on Premium: $892

47. Virginia

Mostly Costly Violation: DUI
Dollar Increase on Premium: $722

48. Washington

Mostly Costly Violation: Reckless Driving, Racing
Dollar Increase on Premium: $736

49. West Virginia

Mostly Costly Violation: Racing
Dollar Increase on Premium: $1,057

50. Wisconsin

Mostly Costly Violation: Racing
Dollar Increase on Premium: $550

51. Wyoming

Mostly Costly Violation: DUI
Dollar Increase on Premium: $709

Why Are There Variations by State?

So many things about insurance pricing vary by state and situation, and violations are no exception. Just as marital status, gender, and homeowner status affect your rate differently depending on your state, the same can be said for traffic tickets.

The risks associated with accidents are statistically different for each state, so what insurance companies consider the “worst” (and thus costliest) ticket in each state will come down to the ticket which leads to the greatest amount of risk caused by drivers in that particular state. For example, certain states (even certain zip codes) have higher frequencies of DUIs that lead to collisions than others, so insurance companies factor the likelihood of someone getting into a collision based on those statistics.

What Can Drivers Do to Keep Their Car Insurance Rates Low?

  1. Drivers should consider shopping around every six months or every year for new rates. Insurance companies may increase their rates due to various factors, so you might be paying a higher rate if you stay. Be honest about your driving history when you compare quotes to truly see the lowest rates for your coverage needs.
  2. Maintain continuous coverage. Insurance companies will raise your rates if they see gaps in time when you didn’t have an active insurance policy.
  3. Consider sharing or combining policies with a family or household member if you aren’t able to afford a policy on your own. Combining policies can make you eligible for additional discounts that you might not qualify for on your own, such as a homeowner discount or multiple vehicle discount.
  4. Bundle your auto policy with a renter’s or homeowner’s policy if you like the insurance company and can get the coverage you need. You could earn a substantial discount.
  5. And, of course, maintain a clean driving record. As we’ve seen above, a driving violation nearly always raises your rates – and can sometimes double or triple your annual premium – so stay focused on the road when driving and watch that speed limit.

[Editor’s note: Your credit score can also influence your car insurance rates. You can view two of your scores for free, updated every two weeks, on Credit.com.]

Image: Halfpoint

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What Does Halloween Have to Do With Insurance Deductibles?

halloween-prank-insurance-claim

During the Halloween season, pranks like an egged car or a broken window from a smashed pumpkin often become more common. If any of these, or another damaging prank, happens to you, you may want to consider whether or not to make a claim on your auto or homeowner’s insurance policy if your home or car suffers some damage due to Halloween tricks. Here’s a guide to help you decide.

Know How Your Deductible Applies to Halloween Prank Damage

Every homeowner’s insurance and car insurance policy comes with a range of deductible amounts from a few hundred dollars to well over $1,000. That deductible is the portion of the cost of the repair or replacement of your damages you must pay before your insurance policy pays the remainder of any claim (and deductibles generally do not apply to the liability portions of your policies), according to the Insurance Information Institute, an industry-funded consumer education organization. A deductible applies each time you file a claim and is “deducted” from your claim amount so you don’t have actually pay the deductible to the insurance company.

“Because of the way deductibles work, it makes sense to be aware of your deductible amounts for each policy,” Michael Barry, vice president of media relations for the Insurance Information Institute, said. “Then, if you experience damages on Halloween, weigh the cost to repair or replace any damage against that deductible amount you’d need to pay out of pocket and whether that would cause your household financial distress.”

Should You File a Claim?

Even though policies generally cover your home and car for accidents, vandalism and theft damages (the category many Halloween pranks fall under), Barry said if you can financially absorb that amount, it’s usually not worth it to make a claim.

Damages to your home or car that may occur on or near Halloween — like toilet-papered trees or smashed pumpkins — can be more of a messy inconvenience than expensive to repair. When it comes to these smaller damages that may cost less than or slightly above the deductible amount to repair, Barry suggested keeping an emergency savings fund to cover these smaller repair costs yourself instead of making a claim on your insurance policy.

Keeping that insurance deductible amount in an emergency fund can help protect you from resorting to a credit card to cover any out-of-pocket damages and from making small claims that could cause premium rate hikes.

But if the damage is much greater than your deductible — such as a Jack O’ Lantern that causes a house fire, eggs on your car that destroy the paint or a serious burglary — that’s when you may want to resort to your insurance to help you with the repair and replacement costs.

When Making a Claim Can Cause a Rate Hike

According to the Department of Motor Vehicles, car insurance rates can go up after you file a claim, although many insurance companies offer “accident forgiveness” as an additional perk so this doesn’t happen because of one accident. Rate hikes are usually reserved for collision claims or claims involving dangerous behaviors (like drunk driving), according to Barry. Either way, you want to be sure it’s worth it to file a claim for damage to your car from Halloween pranks, as making several claims on your auto insurance policy can raise your risk profile. This is something insurers use when it comes time to set your premiums.

When it comes to homeowner’s insurance, Barry said it’s fairly similar to auto insurance. Homeowners who file more claims may be seen as riskier to insure, so it’s important to keep this in mind during your decision process.

“Several damage claims in a short time period such as a year or two could trigger a rate hike, depending on your risk profile, your insurance company and your claims history with the company,” he said.

If you’re considering switching providers, it’s important to know that your claims are only part of what they may look at to determine your rates. Some providers also review at a version of your credit reports, so it’s a good idea to know where yours stand before shopping around. You can see an overview of your free credit report, updated every 14 days, on Credit.com.

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27 Data-Based Tips for Saving on Car Insurance

tips-for-saving-on-car-insurance

The complexities of car insurance pricing, made even more complex by varying state coverage requirements, can make finding the right policy for you an incredibly frustrating ordeal for countless consumers. Oh yeah, and coverage can be pretty expensive.

As a licensed insurance agent, I know a few more tricks than the average consumer to help lower that auto insurance premium. So, in an attempt to help bring transparency to the world of car insurance, here are some data-verified savings tips, culled from The Zebra’s State of Auto Insurance Report.

1. Avoid Letting Your Insurance Coverage Lapse

Even after being insured for just one year, rates drop 7.7%. The discount for maintaining continuous insurance offered by most companies is also affected by the amount of liability coverage on your policy. The higher your limit of liability, the better your prior insurance discount will be.

2. Consider Bundling

Bundle your auto policy with homeowner’s insurance and you could save an average of $110 per year or bundle renter’s with auto to possibly save $72 per year.

3. Do Some Research

Take a few minutes to learn about which companies, minimum coverage requirements and other factors apply to your state.

4. Get Ahead of the Game

Purchase your policy at least 10 days before you need it activated for a better rate. This is especially helpful if you know your policy is coming up for renewal and you want to switch to a new company.

5. Pay in Full Up Front for Your Policy

Drivers save an average of $62 per year by paying in full rather than an installment plan.

6. Shop When You Move

If moving to a new state — or even a new ZIP code — make sure to shop for a new policy. The most expensive state for insurance (Michigan) is almost three times as expensive as the least (Ohio), so you could be in for huge savings depending on the state you’re leaving (or increases, so make sure you’re informed).

7. Boost Your Credit

Drivers who increase their credit score by one tier save an average of 17% off their annual premium. (You can see two of your credit scores for free, updated every 14 days, on Credit.com to find out where you stand.)

8. Buy an Older Car

A 5-year-old version of a certain model is nearly 13% less expensive to insure than its current model year version.

9. Provide Your VIN When Getting Quotes 

Most new vehicles come with factory alarms so giving your VIN might help you qualify for an anti-theft device discount.

10. Drive Safely

While this is a good idea for your own well-being and that of others around you, of course, you’ll also save yourself from a potential rate increase.

11. Remember: Not All Car Insurance Companies Are Created Equal

They have unique business models designed to serve certain types of drivers who pose different levels of risk. Make sure to find the right fit for your needs and behaviors.

12. Don’t Stop Looking

It’s a good idea to shop around every six months to see if a new insurance company or policy fits you better and compare car insurance quotes to make sure you’re considering all rating factors and companies applicable to your unique needs.

13. Go Paperless

Agreeing to go paperless and signing your policy documents electronically can lead to discounts with some providers, so consider opting in and providing your email address when buying a new policy.

14. Tout Your Education

Listing your highest level of education can lead to a lower rate because many companies use it as a rating factor and may even offer discounts for college grads. Check the answer to that question on your policy; you could be leaving money on the table.

15. Consider Usage-Based Insurance

If you live close to work and are a safe, low-mileage driver, you may want to consider adding a telematics device in your vehicle to share your driving behavior with your insurance company. Having this device on your car may be able to save you up to 30% on your coverage, based on your driving habits and other regulations.

16. Study Up On Insurance Lingo 

Spend some time researching and reading to help you understand what you’re buying and make sure it actually fits your needs. There is no one-size-fits-all car insurance policy.

17. Make it Automatic

Consider signing up for auto pay or electronic funds transfer (EFT) instead of receiving a bill. Many providers offer a discount for doing this, which can certainly add up over time.

18. Venture Out on Your Own

Have you been listed as a driver on someone else’s policy for at least six months? Most insurance companies will offer a discount on your own separate policy.

19. Share More Than Your Space

Do you share a residence with another driver? Consider combining policies to share the cost of your insurance for more savings.

20. Bump Up Your Deductible

Increasing your deductible from $500 to $1,000 could save you about $150 per year.

21. Budget for Auto Insurance

Always consider auto insurance as a significant portion of the total cost of ownership of your vehicle. In fact, in many cases, insurance can be the largest car-related expense after the car itself, so make sure you factor insurance into your budget and can afford your coverage.

22. Celebrate Your Age

Everyone knows that some birthdays are more monumental than others and it seems like car insurance companies feel the same. We found that drivers can see significantly lower rates after their 19th, 21st, and 25th birthdays, so consider shopping around at those times. It’s also important to note that, on the whole, rates drop each year drivers age until they turn 60 when rates typically level out.

23. Avoid Getting Left Out in the Rain

It’s a good idea to add coverage to your policy at least a week before a large storm hits your area (if you know it’s coming) to help you avoid being stuck paying for the damage yourself. Insurance companies may set binding restrictions that prohibit agents from selling policies for comprehensive and/or collision coverage as a storm nears — though you will still be able to get liability coverage (as it’s required by every state).

24. Be Aware of Local Traffic Laws

Tickets and violations can affect your insurance rate for three years from the date of the ticket. Accidents can affect your rates for up to five years from the date of the accident. In California, DUIs can hurt your rate for up to 10 years from the date of the incident.

25. Factor in More Than Just Price

It isn’t just about how much you’re paying. Getting the right coverage from a reliable insurance company can help keep you from paying big in the event of a collision or other incident.

26. Be Honest & Detailed

Insurance companies will run background checks on your driving record, address and (sometimes) your credit to price your rate, and any guessing could mean your quote and final premium differ substantially.

27. Baby Your Car

Filing an expensive claim not only costs you your deductible, it is one of the most surefire ways to raise your rates for several years to come. If possible, park your car in a garage to help keep it protected from potential damage caused by hail, windblown sand or debris, and other harmful objects. (You can find more ways to save on car insurance here.)

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6 Speeding Ticket Myths Debunked

speeding-ticket-myths

Speeding tickets: the source of stress and financial setbacks (fines, points, insurance increases), occasional bragging rights (ever gotten out of a speeding ticket… as the passenger?) and enduring myths. Here, we suss out the truth around some common speeding ticket assertions.

1. You Can’t Successfully Fight a Speeding Ticket in Court

Verdict: False

We’re not advocating lying about your speed. If you’re driving unsafely and are caught, you’ll likely still have to pay the price. However, there are occasions when you might be on the right side of the law, and in those scenarios, you have to be prepared with a defense.

Starting your preparations during the traffic stop is a good idea. Note how the officer clocked your speed (with a radar or lidar gun, a stopwatch, or with his or her own speedometer, for instance) and write it down if you can. Sometimes the device will be written on your citation, but you may have to call the police department afterward to follow up, writes The Free Thought Project. Some possibilities for your defense: questioning the functionality and calibration of the device, the officer’s training with the device, and whether there could have been any errors with the device’s speed reading.

Attorneys we spoke to emphasized the importance of having an attorney with you when you fight a ticket.

“When it comes to taking a speeding ticket to court, you are often at a disadvantage if you represent yourself because you’re defending yourself against the prosecuting attorney who is a professional,” explains defense attorney Dennis Chassaniol of Chassaniol & Marty, LLC in St. Louis, Missouri.

“Most people lose because they think that they have an excuse or a reason that the judge should dismiss the case,” explains attorney Justin Elsner of Elsner Law Firm, PLLC in Washington state. “Unfortunately, the court will believe the officer’s statement over the driver’s statement most of the time since they think that the driver has a reason to lie but the officer doesn’t.”

For example, if the driver says the officer must have pulled over the wrong person because they never speed, they’re almost guaranteed to lose, says Elsner.

2. Your Ticket Will Be Dropped if You Contest It & the Ticketing Officer Doesn’t Show Up in Court

Verdict: It depends.

Each state legislates its own traffic laws. So while some jurisdictions require a ticketing officer to show up to court for hearings involving tickets they’ve written, other states don’t require the officer’s presence. And even in states which require the officer to be present, judges can reschedule any case they choose. So, if your officer doesn’t show, the judge can always just reschedule.

An example: “In Washington state, the court can review the officer’s written report. If you subpoena the officer to appear at the hearing and they don’t appear, then the court will dismiss the case. But in many jurisdictions the officers get paid overtime to show up on their days off,” says Elsner, and many do. But if the hearing is scheduled during the officer’s shift, he or she might not be able to make it, so it’s really a gamble.

If you truly believe you’ve been ticketed unfairly (or in error), successfully contesting your ticket could have a lot of benefits.

“Successfully fighting a speeding ticket will keep you from having to pay for the violation and also keep your insurance rate from increasing, ” explains Neil Richardson, The Zebra’s insurance expert and licensed agent. According to the State of Auto Insurance Report, a speeding ticket will raise the national average annual auto insurance premium 20 to 30% depending on how fast and where the driver was speeding.

But don’t just contest the ticket hoping the officer won’t show up — you’ll waste a lot of time and money.

3. Red Cars Get Pulled Over More Than Cars of Other Colors

Verdict: False

That red cars get more tickets because they catch the eye of police officers might be one of the most enduring car myths out there. While many studies have been done exploring which colors, makes and models are ticketed most often, there is no evidence that red cars are ticketed more often.

Even when it comes to insurance, red cars get a bad rap.

“There is also a myth that red cars are more expensive to insure and that’s definitely not true,” explains Richardson. “Car insurance companies will ask for your vehicle identification number (VIN) to get info on the make, model and trim level to better determine the value of your car, but this does not include the color of your car.”

4. If You Get a Ticket Outside of Your Home State, You Don’t Have to Pay It

Verdict: False

Even though states control traffic laws, they do still communicate with one another.

“Most states have their licensing systems connected now, so if you don’t pay a ticket in one state, it could result in your license getting suspended in your home state,” explains Elsner.

Further, Richardson adds, not paying a ticket could result in license suspension. “This could result in higher rates, additional fees if an SR-22 or other type of filing is required by the state, and even being ineligible for insurance coverage with some companies,” he said. “Also, the ticket itself is likely to make your rate even higher since it will show up on your motor vehicle report (MVR).”

5. Cops Give Out More Tickets at the End of the Month to Meet Their Quotas

Verdict: False (or Maybe)

A definitive answer about how police officers handle traffic citations that covers the entire United States isn’t simple to nail down. Each police department sets its own standards and requirements for officers, and police departments are funded very differently throughout the U.S., but on a whole the idea of “quotas” isn’t accurate.

“Most officers that I have asked about quotas say they don’t exist,” explains Elsner. “They are expected to be productive during their work shift, however.” So, if an officer is assigned to traffic duty and only writes one ticket the whole shift, he could get in trouble with his supervisors, giving some credence to the idea that officers on traffic duty are looking to net a certain amount of tickets.

The “however”: In some places, for some reasons (grants, for instance), officers might be encouraged to write more tickets. Also, some departments are funded by state and local taxes, while others are at least partially funded by revenue they bring in (i.e., traffic tickets), and might therefore tend to write more tickets than other places.

6. Purposeful Clerical Mistakes, Like not Signing the Ticket or Spelling Something Wrong, Will Get You Out of It

Verdict: False

Each ticket (speeding or otherwise) has a place for you to sign. Your signature isn’t an admission of guilt, it’s just confirmation that you received it, but your ticket will still be processed without your John Hancock.

Now, if the Department of Motor Vehicles makes a mistake (something which you obviously cannot control), you could get out of it on a technicality.

“If the ticket is written, then it will eventually go on your record unless there is an error when it is entered into the DMV database,” explains Richardson.

If the officer made a mistake, that’s a different story, and you might have a good case if you fight it in court.

“Defending your speeding ticket is about the technicalities,” explains Elsner. “If the officer doesn’t sign the ticket, then that could lead to a dismissal.”

Other issues that could result in a dismissal: a difference between the ticket number on the report and the actual ticket itself, the officer citing the wrong statute, or the officer filing the ticket in one county when the incident happened in a different county.

But minor mistakes don’t usually result in a dismissal. For example, if you have brown hair and the officer writes you have blonde hair, that won’t guarantee a dismissal.

We encourage you to avoid getting a speeding ticket in the first place (here’s some help!), not only because it’s the law (of course), or because you’ll save on auto insurance with fewer tickets (you will), but because it’s safer.

[Editor’s note: Remember, speeding tickets aren’t the only items that can affect your insurance rates. Many car insurance providers check your credit, so it can pay to brush your scores up before requesting a quote or policy. You can see where your credit currently stands by viewing your free credit report summary, updated every 14 days, on Credit.com.]

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The States Where You’re Most Likely to Hit a Deer

most-likely-to-hit-a-deer

Fall is deemed the season of sweaters and pumpkin spice everything. But, it turns out, October brings something else with it — auto accidents involving big game.

That’s right, a new study by insurance provider State Farm found that this time of year is prime time for this type of collision.

“We know there is an increased risk of collision with deer around dawn and dusk, and also during the October-December breeding season,” Chris Mullen, director of technology research at State Farm, said in a press release.

They also discovered that certain states are far more likely to have drivers run into these animals than others. These are the top five states where State Farm found a driver was most likely to file a claim after hitting a deer, elk or moose.

  1. West Virginia (1 in 41)
  2. Montana (1 in 58)
  3. Pennsylvania (1 in 67)
  4. Iowa (1 in 68)
  5. South Dakota (1 in 70)

Contrast these with states like Hawaii, where your odds are 1 in every 18,955 drivers, or even Arizona, with odds at 1 in every 1,175 drivers.

While these odds may be jarring, especially if you’re planning a drive through the mountains to enjoy the fall foliage, don’t be alarmed (or bugled, if you will). No matter your location, State Farm advised drivers to keep your eyes focused on the road and, if you do see the gleam of a big animal looking back at you, to break and avoid swerving if you can.

Methodology

To compile this list, State Farm looked at internal claims data as well as state-licensed driver counts provided by the Federal Highway Administration to determine the chance a single American motorist has of hitting a deer, elk or moose with their car. Data considered was from July 1, 2015 to June 30, 2016, and was reviewed from all 50 states, as well as the District of Columbia. It’s important to note that State Farm looked at comprehensive and collision claims only and did not include claims involving policyholders with liability insurance coverage only.

The Cost of Car Insurance

According to State Farm, the average cost of hitting a deer between 2015 and 2016 was $3,995.08. (Oh, deer — yes, I had to do it.) While this number is down from the previous year ($4,135), that’s no subtle amount and you likely don’t want to pass the buck (eh?) along to your credit card.

If you live in an area where you’re more likely to hit a deer with your car, it may be a good idea to talk with your insurance provider to see if damage caused by a collision with a deer is covered by your policy. You may also want to talk with them about different factors that are affecting the cost of your policy, which can include everything from your driving record and value of your car to your age and credit history.

While some states put more of an emphasis on your credit track record than others (in terms of determining your insurance policy rates), it can still be helpful to know where your credit stands if you’re shopping for insurance policies. You can view two of your credit scores for free, updated every 14 days, on Credit.com. If you find your scores aren’t quite where you’d like them to be, look for things that could be dragging them down, like errors on your report (you can read this guide to find out how to dispute these problems).

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The Cities With the Safest Drivers in America

safest-drivers-in-us

32,675.

That’s the number of traffic fatalities that occurred in the U.S. in 2014, according to the National Highway Traffic Safety Administration. And it isn’t surprising, not in the least. That’s because the average driver will experience a collision every 10 years, according to Allstate Insurance, and the majority of those accidents (94%) will be preventable.

With stats like these, what’s a good driver to do? Perhaps move to one of the cities that made Allstate’s America’s Best Driver’s Report, released this week.

Between 2013 and 2014, Allstate tabulated the property damage frequency of Allstate insured drivers by comparing the the 200 largest cities from the U.S. Census Bureau.  Suburban areas with less than 100 auto property claims reported between January 2013 and December 2014 were excluded.

To organize its data, Allstate scrutinized various details of customers’ claims, such as the average years between customers’ claims, the number of braking events per 1,000 miles, and its Best Drivers Report Ranking from last year. Some data was culled from AllState’s Drivewise app, which keeps track of a person’s driver behavior and rewards good practices.

Where the Safest Drivers Are 

Brownsville, Texas, topped the list, with an average 14.6 years between claims and the distinction of being the second-top city on Allstate’s Best Drivers Report Ranking in 2015. Here are the other U.S. cities that made the cut:

1. Brownsville, Texas

2. Kansas City, Kansas

3. Madison, Wisconsin

4. Cape Coral, Florida

5. Boise, Idaho

6. Huntsville, Alabama

7. Port St. Lucie, Florida

8. Wichita, Kansas

9. Olathe, Kansas

10. Reno, Nevada

Playing It Safe 

While it helps to live in one of the cities listed above where drivers are clearly more cautious, according to Allstate’s report, it doesn’t hurt to take some steps to play it safer yourself. For starters, you can invest in proper auto insurance, since driving around without coverage is against the law and could ravage your finances if you’re involved in a crash. Your credit plays a key role in determining your rate, so a good place to start would be to see where you stand. (You can view two of your scores, updated each month, for free on Credit.com.)

Also keep in mind the other factors that influence insurance, such as your history of car insurance — or lack thereof — why you drive and even whether you’re married. You can learn more about the factors that go into your insurance rate here.

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