FOR IMMEDIATE RELEASE
FIVE ECONOMIC TRENDS THAT MAY IMPACT YOUR CAR
More than half of Americans made financial choices in the
that could inadvertently cost – or save – on car insurance
WASHINGTON, D.C. (June 7, 2011) — Financial challenges
have forced many consumers to make lifestyle changes to adapt to the
current economy. From changing jobs to moving to a different house to
downsizing vehicles, Americans have made decisions that impact unexpected
areas of their life – like car insurance. In fact, in the past year
53 percent of Americans have made an economic-driven change that could
impact the cost of their car insurance, according to an April 2011 survey released by the National Association of Insurance Commissioners (NAIC).
The survey found the most common car-related, money-saving lifestyle
changes consumers made in the last 12 months that could impact their
insurance costs were:
- Nearly 40 percent of
respondents are driving less overall and/or taking public
transportation more frequently.
- Close to 20 percent
of car owners traded in a vehicle for a lower-priced model or got rid
of a second vehicle entirely.
- Almost 20 percent of
drivers have reduced or cancelled their car insurance coverage for
immediate financial relief, some without realizing the effect this
decision could have on future premiums and the devastating economic
consequences if drivers are found to be at-fault in an accident while
“Choices such as driving less, switching jobs, or even paying off a
vehicle can save – or cost – on your car insurance,” says NAIC President
and Iowa Insurance Commissioner Susan E. Voss. “When determining where to
cut spending now, it’s important to consider the big picture. Some changes
will save in unexpected ways, while others may increase your cost down the
road. It’s important to understand what factors affect auto insurance
rates so you don’t overlook opportunities to save or accidentally make a
choice that provides only temporary savings.”
Economic-Driven Lifestyle Choices That Can Affect Auto Insurance
- YOU MOVED – Whether by choice or necessity, many
consumers relocated over the past year. If you downsized homes, took
advantage of record low interest rates, or were forced to move due to
foreclosure, a change in zip code may affect your auto insurance
- Where you live
could impact your premium, depending on crime statistics in the area.
Garage versus street parking can also impact your premium.
- Moving to another
state can affect costs as states vary in their minimum liability, and
perhaps no-fault, coverage requirements – some allow injured parties
to sue for damages and others are no-fault states.
- CHANGED CARS – Car ownership can be a hefty expense.
Whether you chose to purchase a less expensive car, pay off a current
vehicle, or if you purchased a “starter” car for a teenage driver,
expect car insurance rate changes.
- The make and model
of your car affects your premium. Whether trading in a higher-priced
vehicle, looking for a hybrid to save gas or making a purchase for a new
teenage driver, be sure to get quotes from your insurance company
before signing the paperwork.
- A car with a lower
resale value is usually cheaper to insure because you will pay less
for collision and comprehensive coverage, which protects against
vandalism, hail, fire or animal accidents.
- If you pay off a
current vehicle, you may be able to select a higher deductible or
eliminate your collision coverage.
- If you have added a
car to your household, be sure to ask about a multi-car discount.
- SWAPPED JOBS – With unemployment still hovering
around nine percent, many consumers have been impacted by a job
loss. Finding employment in the current economy has been
challenging, causing some consumers to create flexible work situations
or even to relocate for the right position. Others remain unemployed
and struggle to make ends meet. Each of these unique situations can
have an impact on car insurance costs:
- Some consumers now
have a longer or shorter commute after turning to occupations they
could do from home, or relocating for a job.
- Others chose to
stop payment or cancel car insurance. Causing an accident without adequate
insurance protection could have devastating financial consequences
for you and your family. If an insurer will not be compensating
accident victims, a court may order the sale of your house or other
assets to pay for the victim’s damages. Further, this decision will
likely result in higher costs if insurance is reinstated in the
future. When you allow coverage to lapse, you lose
renewal/continuous coverage discounts, and when you choose to
reinstate the policy the insurer may consider you a higher risk.
- DRIVING LESS – Since
your car insurance premium is partially based on annual mileage,
driving less equals paying less. According to the NAIC survey, almost
40 percent of consumers drove less in the past year choosing instead
to carpool, walk or take public transportation more frequently. Check
with your insurance carrier for a low mileage discount. Some companies
also offer pay-as-you drive pricing in certain states.
- DAMAGED CREDIT SCORE
– Whether consumers have fallen behind on bills or made a purchase
they could not afford later, financial decisions that affect
credit-based insurance scores may impact insurance rates. Most states
allow insurers to use certain elements of credit history as one of
several factors to predict the likelihood of future losses. Having a
poor credit-based insurance score can result in higher premiums or, in
some cases, the inability to secure insurance through some carriers.
- The NAIC
survey found more than one-third of consumers did not realize their
credit-based insurance score can be used to determine auto insurance
Checking with your state insurance commissioner before making key
financial decisions is an easy way to protect yourself and assure you have
the right coverage for your lifestyle. Click HERE to find your state
commissioner. For tips on how to lower
car insurance costs or additional information about the choices in auto
insurance coverage, visit
View April 2011 NAIC Omnibus Survey Executive Summary:
Economic Trends Impacting Auto Insurance
About the NAIC
Formed in 1871, the National Association of Insurance Commissioners
(NAIC) is a voluntary organization of the chief insurance regulatory
officials of the 50 states, the District of Columbia and five U.S.
territories. The NAIC has three offices: Executive Office, Washington,
D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office,
New York City. The NAIC serves the needs of consumers and the industry,
with an overriding objective of supporting state insurance regulators as
they protect consumers and maintain the financial stability of the
insurance marketplace. For more information, visit www.naic.org.
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