Do not Judge the book by its cover is a phrase that suggested when we face something new. People like Bill Gates as an example long years ago, no one can give prediction about The Richest Man in the world today is him. Appearance is also cannot be the only point in judging somebody. Even nowadays differentiate the rich and the middle class is not easy if a car used as a parameter.
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The boring answer to this old riddle is, of course, a red sports car with one of those mufflers that rattles windows at one hundred yards when you rev the engine. Now we’ve all heard those myths, the stories that people who drive red cars are more likely to get speeding tickets. As you all know, it’s because red cars are actually faster than any other car on the road and, until you get used to that hair-trigger gas pedal, you’re likely to be burning up the blacktop by accident.
Well, it’s a good story but it does beg the question, “What do auto insurance agents think about people who buy these go-faster cars?” The answer you’ll get from every traffic cop with a radar gun in his or her hand, and every underwriter ready to set your rates, is that color is irrelevant. And, you’ll be pleased to know, there’s no evidence to prove either of them wrong. Accident statistics and court records don’t show any great risk of fender bending or offenses from those driving red vehicles of any shape or size. There’s a more simple cause and effect at work. People who drive at or near the speed limit tend to be safer and less likely to get a ticket than those who have heavy weights glued to their boots.
Yet the myths persist. Some colors like blue are “cool” and “safe”, others like red are extravert, dynamic and sexy. Supposedly, people are attracted to buy the colors closest to their psychological type. Whether it’s true or not, the car insurance companies don’t factor color into their calculations. Check out the online questionnaire you have to fill in to get a quote. There’s no question about the color of your car and, unless the company asks you, there’s no way it would know. Make and model, yes. Color, no!
So what’s the basis of the car insurance company’s calculations? Well, all companies employ these math geeks called actuaries who find every last detail of accidents endlessly fascinating. These guys get all fired up by the year of manufacture, the body type and size of engine. They profile the drivers involved by age and gender. And they all exchange their data to produce national statistics that help them predict whether you’re a good risk or not in that car (regardless of color). So buy whatever type of car works for you (and drive it safely to avoid tickets and accidents, and keep your rate low).
[tags]Vehicle insurance, Automobile, Insurance, Company, Speed limit, Financial Services, Road, Business[/tags]
This is a good year for drivers in California. Way back when in 1988, Proposition 103 received more than enough support from voters to pass. Basically, voters wanted car insurers to set rates based on the driver’s record and the number of miles driven. Three years ago, the Commissioner for Insurance introduced new rules prohibiting the use of ZIP codes as the primary factor for determining car insurance rates . These rules came into force July 14. This is one battle won for consumers’ rights. The war goes on. Zip codes remain a dominant factor in other states. Similarly, insurers also check out your credit score. Almost every company seems to think that people with low credit score make bad drivers.
So what’s going on? Well, it’s all about how to define risk. All the factors go into the melting pot. How old you are, where you work, where you live, whether you own or rent your home, whether you own the car outright or have a car loan, what make and model of car, and so on. This personal information is included in your credit history. It gives the companies a snapshot of who you are. Is it fair to look at this information? Unfortunately, yes. Just as a loan company wants to know more about you before making the offer of a loan, car insurance companies want a better idea of whether you take care of your financial affairs before agreeing to pay out if you get in a traffic accident.
The first step in setting the auto insurance rate is whether you qualify for any discounts. For example, most companies offer discounts if you can pay an annual premium rather than by monthly or half-yearly installments. Then comes the math work. There are statistical methods to determine the risk of you getting in an accident. If you’re a late payer who gets into trouble with liens and mortgages on your property, if you rent rather than own, you may not take as much care of your property as others. Add in lack of consistency in employment and multiple lines of credit getting close their the maximums, and you’re considered a higher risk driver. It may not feel fair. It probably isn’t completely fair. But that’s the way insurance credit scoring works.
So, before you go online for your next car insurance quotes , check out your credit score and, if necessary, repair the score. The Fair Credit Reporting Act gives you the right to get free copies of your credit reports. Use that right and get your credit score into shape before getting quotes.
[tags]Insurance, Vehicle insurance, Car accident, California, Company, Credit score, Financial Services, Business[/tags]