Auto Insurance Company

Reader’s Question:

Do automotive insurance companies still insure high risk drivers?

Tom

San Francisco CA

First, what do automotive insurance companies consider as high risk drivers? A person who has been involved in accidents or received tickets for violations can be considered as high risk. Persons who have been convicted at least once for DUI or driving under the influence of alcohol are also considered as high risk drivers. Wrongdoings aren’t the only criteria though. Young drivers and inexperienced ones can also be grouped into high risk. Even those who own sporty or flashy cars.

If you have been labeled as a high risk driver, then you know how frustrating it is to get the policy that you want for you auto insurance. It is frustrating to say the least. What’s more frustrating is if you’re looking for a new insurance or renewing one. There are ways though on how you can still get good insurance despite being called a high risk driver.

The easiest way I could think of is to go to companies that specialize in these type of drivers. If you risk going to a regular company, then be prepared to pay for a very high premium. Even the cheapest insurance for high risk drivers will still be higher than that of the average driver. But why would automotive insurance companies agree to insure high risk drivers? Simple because they know there is a market for it. Although statistics say otherwise, some companies also know and are hopeful that high risk drivers will hesitate to file a claim.

Another way to get cheap insurance is to lower the risks. Yes it will take some time and could require a lot of patience. But the reward is very satisfying. So how does one lower the risk? If you have received tickets for violations, pay all the necessary fines. Call the DMV and ask if you still have any unpaid violations. Prompt payment of fines also helps.

After paying of those fines, be sure not to get into new violations. Follow the required speed limit as well as the traffic rules and regulations. If you’re going out to a party, don’t drink and drive. Of course, buy a modest vehicle. If the car that you buy looks like it can really go fast, chances are you will be tempted to drive it even faster. So avoid cars that seem to encourage speeding or reckless behavior.

There are automotive insurance companies that will still insure high risk drivers. This doesn’t mean that you do nothing. Lower those risks. Or if you already are, maintain it.

Reader’s Question:

I’m planning to get a car for myself. I know that getting a vehicle insurance in Utah is a must so I’m now looking for insurance providers. Can you give me some points on where I could get recommendations for good vehicle insurance companies?

Megan

Salem UT

You are taking a good step by planning on your vehicle insurance before buying the car. You can save a lot when you consider the insurance cost of the car you will get. It’s not really practical to get a car which will cost you a lot with insurance premiums. You might end up giving up the car.

But in getting a car insurance in Utah, you do not only take into account the insurance cost because cheap insurance does not necessarily mean an advantage. You might able to get a very cheap insurance but then if the provider is dishonest, aside from getting nothing, you’d also end up with unnecessary stress which is not worth the savings you get from being cheap. So you are very right to check the insurance providers’ credibility. Therefore, we can define good vehicle insurance companies as insurance providers who can not only give affordable premiums but, also, they will truly honor your policy coverage.

To find good vehicle insurance companies in Utah, you can start with the car industry itself. You can ask from the car dealers while shopping for your car. You will be shooting two birds with one stone – you get to ask about insurance companies while shopping for vehicles. For an insurance company to be recommended by car dealers can say a lot about their reputation. Also, there are car dealers who will offer to give you a free vehicle insurance coverage for a length of time if you get your car from them.

Find people who own the cars in your preference list. It’s good to learn about people’s first-hand experience with the insurance companies. You will learn about the strengths and weaknesses of insurance companies from the policy holder’s point of view.

You can also check online for information on vehicle insurance companies. There are websites that posted state auto insurance company reviews. You can also check rating agencies regarding insurance companies’ financial strength. Example of rating agency is A.M. Best Company. You can also check insurance companies websites and brokers websites to check their insurance products. Then, you can contact them if you need further details for a certain product.

From all the information gathered, there will probably be 3 or 5 insurance providers that keep popping up as good in the industry. So you can go and check them out.

Reader’s Question:

I have been looking around for car insurance companies and getting quotes just to see if car insurance is an option for me. The cheapest car insurance company I found seemed to be a good place to get a good deal, almost too good. I noticed though that they do not look very professional, is there anything I should look out for in this scenario?

Clay

Frankfort, KY

Well it looks like you are on the right track, but let us look at how car insurance systems work before you judge your situation for yourself. Often there is a reason why that is the cheapest car insurance company you found.

If you ever wondered how car insurance companies make money the answer lies behind 2 variables: the chances of your car getting damaged and the length of time it will take for your car to get damaged.

Why these 2 variables? Well you get insurance because you expect that there is a chance youre car can be damaged or can cause damage in the future. So you pay for a relatively small amount that insurance coverage for certain accidents that can happen to you. For as long as no accidents happen to your car the insurance company will not be liable to pay for anything regardless of the length of time.

Let us say you paid $500 for a policy that covers you from hail storms. If no hail storm happens for the next 3 years then the insurance company can consider your $500 as profit and may invest it to increase its value. By the time that you get your car into an accident they would have more than enough to pay for repairs.

Now consider the cheapest car insurance company you visited. Do you think they have been investing wisely?

Reader’s Question:

I was making a list of quotes from insurance companies, and then my dad picks up the word “state.” He asked me if we had a state auto insurance company here in the US. So… do we have one? If we do, what’s the difference between a private and state auto insurance company?

Jose G. O.

Santa Fe, NM

Perhaps your dad heard the name of a privately-owned company (State Auto Insurance Company) rather than a state-owned insurance company. In any case: no, we don’t have a state-owned auto insurance company here in the US. What we do have, though, is an insurance agency in each state that monitors the progress and operations of the insurance companies in their respective states. That’s for your first question.

With regard to your second question, the broad answer is relatively simple: a state auto insurance company is owned by the government, while a private auto insurance company is owned by an individual or group of entrepreneurs who are profit-oriented. That’s the simplest possible answer without getting too technical in the discussion.

The government doesn’t find it practical to maintain a state-owned auto insurance company, since there are many privately owned insurance companies who are perfectly able to do the job for them. In addition, the quality of services and the prices of policies are controlled by the innate competition that exists in a free market. In a way, you could say that privately-owned companies are the expression of the fundamental principles of the US federal government.