Insurance History and Premiums-Cause and Effects

By Graham McKenzie

Your very first insurance premiums will very likely be higher than they will ever be again. That is, if you're careful. Like your first experience with buying on credit, you won't get as good a deal as you will once you show how reliable you are, whether in your bill-payments or your driving habits. You start out as an unknown quality to insurers, so they start you out at a price that lets them be sure not to lose money on "people like you."

This may seem arbitrary and unfair, but remember, you're asking them, up front and knowing nothing about you, to agree to pay the costs of any traffic accident you have! Once you prove to them that you are trustworthy and reliable, a safe driver who promptly pays the premiums, they'll be eager to keep you as a customer, and they'll offer you a significantly better deal.

Persons having previous lapsed policies, and are in need to find a new one with better quotes are generally not entertained. Even if it happens, the credit history is checked for timely payment of premiums for the previous policy, so that the new company has some points for consideration.

If you are a new driver, if you have a string of traffic tickets, if you have had traffic accidents, if you have submitted _insurance claims_ for accidents, if you've let policies lapse due to non-payment... any (or, you poor sap, _all_) of these things make you a high-risk customer. You can still find insurance, but you will definitely pay a price. You'll have a higher down payment, higher premiums, a higher deductible, and generally less coverage.

Those seeking the best rates are advised to continue paying their current policies throughout the originally prescribed term rather than cancelling them before they are due to expire. Shorter term policies may then be the way to bolster one's history. Doing so, in addition to maintaining a clean driving record, will improve the likelihood that the applicant will receive lower premiums in the future. In order to take advantage of their new "safe" status, drivers should solicit quotes from other insurance policies when they receive a renewal notice from their current provider. Even a brief, six-month period of consistent payments and safe driving can result in significant premium savings - to the tune of several hundred dollars potentially.

It never hurts to shop around for a better rate at policy renewal time. Your current insurance company would be happy to keep you on at last year's higher rate. It's up to you to have them review your policy. If you change jobs or change your address, you may have a shorter and/or safer drive to work. Changes like these can make you eligible for lower premiums, so review your policy when they happen. Now that you have a good history, other insurers will want your business, and they'll offer you lower rates to get it. Your current insurer, remember, will want to keep you, so they'll also make you a better offer.

Be street smart. Make sure you go around and hunt to get the best quotes from the Insurance companies which are ready to offer you their services before selecting your Insurance policies. Think twice before getting committed to a policy. A little amount of good behavior such as not allowing the policy to lapse, clean driving record or prompt payment of premiums on time can reward you with higher rates and get a better deal the next time you start hunting for the best cover. - 23211

About the Author:

Graham McKenzie is the content syndication coordinator for Carinsurancesa.co.za. South Arica?s leading car insurance portal.