Read the latest news from Davidson Insurance Limited. Our independent family insurance brokerage is focused on helping individuals and businesses in the South Shore secure coverage in a professional and personalized manner. We invite you to read the article below from Paula Levy of the Progress Bulletin that features our company. The story was originally published in October of 2012.
Brokers Help Navigate through Complex Insurance Rates
When it comes to sifting through the complex world of getting a good deal on auto insurance, you need a knowledgeable broker on your side.
In the past, brokers could thumb through a book to quote a rate within minutes, but the insurance industry has become so complex and takes into account so many variables, there is a long list of situations that will affect the cost and each insurance company sets its own rates.
Brad Davidson of Davidson Insurance of Pleasantville said driving experience, multi-policies and loyalty can all add up to savings on your premium, whereas at-fault accidents and convictions result in higher rates. Foreign versus domestic cars and even the type of vehicle all will affect insurance rates.
“Everything to do with insurance … is linked to risk. The higher the relative risk, the higher your costs will be,” said Mr. Davidson. “Experience makes sense. The more experience, the less the cost. The vehicles, the more costly it is to repair them, the higher the collision costs will be. That may be not because it’s an expensive car, it may be that it’s more costly to repair that car.”
Mr. Davidson said in the past, the magic age for the best rate on insurance was 25 years old. Once a driver turned 25, no matter how long he or she was driving, the rate would stabilize. Now, it takes nine years’ experience, no matter when you start driving, for the rate to flat line. He noted that each year in the first nine years the insurance rate drops. Newly licensed males have higher rates than newly licensed females.
“Girls continue to prove themselves as better drivers,” said Mr. Davidson. “It’s almost double the cost than females.”
But newly licenced drivers do get a break when it comes to getting insured for the first time. Mr. Davidson said newly licenced drivers qualify for a clean-start discount. The discount can add up to as high as 50% without driver’s education and 60% with driver’s education. But all bets are off if you get any sort of driving infraction at all. A seatbelt infraction or a single speeding ticket will mean you will lose your discount. On your next renewal, you will begin paying 100% of the costs for insurance.
“You will lose that massive discount. For newly licensed drivers, it’s hundreds of dollars,” said Mr. Davidson. “Kids are in general lax about it, but if they knew that hundreds of dollars are on the line, not only would it prevent a few accidents, it would save a whole lot of money.”
The clean-start discount decreases each year and at year 4 or 5, it no longer has an impact on the rate. But once you have been driving for nine years, you begin qualifying for experience discounts.
After you reach the nine-year mark, one speeding ticket may not affect your rate at all and two speeding tickets can have a small impact on your insurance rates. But if you’ve had your driver’s license suspended because of a result of accumulating points, be prepared to pay a higher rate for insurance. The increase would be the same as having your first at-fault accident. And it takes six years for your driving record to be cleared. It could mean paying close to $1,000 more for insurance over the six years.
But those rates are not nearly as high as drivers with criminal code convictions. Any criminal code conviction automatically increases your rates and your regular insurance company may even drop you as a client. Insurance companies are not required to insure everyone who applies so those with criminal code convictions can be refused. As a result of people with criminal code convictions not being able to get any insurance, a group called The Facility was created in the 1970s. Their rates are higher in general plus there is a 100% surcharge because of the convictions.
Insurance companies tend to compete through their discounts. For instance, having your home and auto insurance with the same company may qualify you for a 10 to 15% multi-policy discount. The same discount may be applied for a multi-vehicle insurance policy with the same company. If you’ve been with the same company for a long time, you may qualify for a 5 to 10% loyalty discount. If you have not had a claim, you may also qualify for a claim-free discount which can vary depending on the company. Experience discounts are typically around 2% but can add up over your lifetime.
The long list of questions that brokers ask when trying to quote you a good rate for insurance is likely for your benefit. He or she is trying to get your insurance with the company that offers you the most discounts.