Originally posted by: princess ida
What's the relationship between credit score and price of insurance? Is this different with different companies?
How do I lower my 18-yr-old son's car insurance?
Is there some place somewhere that will explain in terms that I understand, exactly what all those different parts of the car insurance coverage mean, and which ones I need high coverage, and which I can let slide?
We have found that better credit histories equate to better driving records and lower risk. We do NOT actually look at any credit report. What happens is that we give our criteria to an outside vendor, who creates an algorithm that takes your credit history and outputs a single number. All we get is a 1-5 based on bad-good credit. All companies check, but depending on the state we may or may not rate on it (California I believe we cannot rate on credit)
A few ways. Safe driving programs are the biggest. Most companies offer a program, or provide a discount for going through defensive driving courses. Secondly if he is going to school outside of the state you can get a discount generally as well (if it is far enough from the home garaging address of the vehicles). Good student discounts will help as well, but he has to have a 3.0 GPA+, top 20% state/countrywide for SAT/ACT, or Dean's list. Your agent should be able to give you some other discounts through your carrier. The best thing is just he has to keep a clean record.
Google is always an option, but your agent should be able to help as well. I will give some basic terms, and coverages for auto insurance:
Deductible= the amount you have to pay from a loss before insurance kicks in. Lower amounts mean a higher rate (a $250 deductible will be more expensive then $500, which is more expensive then $1000). Go with the highest you feel comfortable with if you get in an accident. Usually $250 or $500 is common.
Collision coverage=Anytime your vehicle hits another vehicle, property, structure, pothole, etc it will be a collision loss. This will affect your rates usually. This coverage is to repair YOUR vehicle from a loss.
Comp coverage=Anytime an "act of God" happens. Floods, falling trees, hitting animals (but not people), theft, etc it will be a comp loss. These do not usually affect rates (unless there are excessive amounts, but generally 1/year is the limit). This is also to repair YOUR vehicle from a loss. On this topic if you are about to hit an animal it is better to hit the animal then miss it and hit a tree/barrier/car. Hitting the animal won't affect rates most likely, but a tree/barrier/car will because its a collision loss.
Liability coverage= This is on all auto policies. This is what covers anything you hit and damage to their property.
I personally like to keep comp, coll, and liability because those are the majority of all losses. I would never advise family/friends to drop either comp or collision, but would advise to keep comp at all times. It's fairly cheap and will cover a lot of stuff if you are a safe driver.
If you have other terminology questions feel free to ask.