Car insurance: 8 things you need to know
Most people see car insurance as a necessary evil and who can blame them? The good news is that with a little bit of research you can make sense of car insurance and save money.
Here are eight things you need to know.
1. Keep a good driving record
The single best way to keep your premium low is to build a good driving history. Accidents and convictions stay on your driving record for years. It’s the number one thing insurance companies use to determine your rate.
2. Shop around
Many people think all insurance companies charge about the same for the same coverage and driving profile. Not so. Rates vary significantly.
This is primarily because insurance companies assess risk independently. They all consider such things as where you live, the type of car you drive, how long you have been licensed and your driving record to build a risk profile. But each company has different claims and loss experience and so rates can vary significantly from one company to the next for the same car and driver for the same level of coverage.
3. How brokers work
You may also think that your broker is able to shop the entire market for the lowest rate available, but he or she isn’t. He or she is limited to providing quotes from the limited number of insurance companies he or she represents, typically no more than four or five. An insurance company agent can’t shop the market at all and is only able to provide you with the rate available from the single insurance company he or she represents.
Since there are many companies selling car insurance in Hong Kong, the only way to be sure you are getting the best rate is to get competitive quotes from as broad a sample as possible. There are a number of online sources that can help including, DirectAsia.com
4. Consider increasing your deductible
A deductible is the amount you must pay before your insurance company will cover any expenses related to a claim. Generally, higher deductibles translate to lower premiums. This means increasing your deductible can be an effective way to lower your rate. However, it’s important to realize you must be comfortable paying the higher out-of-pocket cost if something happens to your car and you need to make a claim.
5. Review your coverage
Depending on the value of your vehicle, you may want to speak to your broker or insurance agent about the type of coverage you require. For example, if you drive an older model, you may want to consider removing or opting out of collision and comprehensive coverage which typically represents a significant portion of your premium.
6. The Porsche factor
The type of car you drive is another important factor used to set your rate. Generally speaking, new cars cost more to insure than older cars, sports cars more than family sedans and insurance companies look at statistics on theft, safety ratings, and claims history of each when setting their rates.
7. Ask for discounts
The worst thing that can happen is the insurance company can say no. Some of the more common discounts are for bringing all your insurance needs to the same insurer, maintaining a clean driving record and installing an anti-theft device.
8. Accident forgiveness coverage/ Claim Protector Coverage
Accident forgiveness coverage protects your driving record and rate increases in the event of an “at-fault” loss. Costs for this coverage can vary from one company to the next, but it could save you hundreds of dollars on your next renewal.
Check if this coverage is offered by your insurance company and consider the additional cost as a way of buying “insurance” on your driving record.