Four Signs of the Times Seen in Car Insurance Trends

The tough economy of the past few years has led to shifts in the way many consumers approach their car insurance coverage. People are looking to cut down on their personal costs until the economy turns around, and quite a few of the choices they are making have a direct impact on their insurance costs. The life changes that come along with a poor economy are related to the factors that insurance companies use to determine a person’s premium. Changing jobs, moving to a different home, driving an older car, or enduring a drop in your credit rating are all things that could change your insurance rates.

Drivers are Keeping Cars Longer and Buying Used

Research shows that many drivers are keeping their new cars longer than they would have before the recession. Others are choosing to purchase cars that are a few years old instead of brand new cars. Driving an older car can cut your insurance costs because the car’s value is lower than the value of a new car. The repair and replacement value of a car that is a few years old is far less expensive than the repair and replacement of a brand new car, which means that even a full comprehensive coverage policy would cost less for the older car.

More People Downgrading Insurance Coverage

Another trend in car insurance is people dropping some of the more expensive coverage. Some drivers are saving money by switching from full comprehensive policies to simple liability and personal injury policies. In some cases, the switch away from comprehensive coverage is practical, especially if the insured is driving an older car. When the value of the car is less than the potential cost of repairs, there is no reason to continue carrying comprehensive policies.

Poor Credit Making Insurance More Expensive for Some

Larger numbers of Americans are having trouble keeping their credit ratings solid during this economic downturn. A poor credit rating can cause car insurance rates to rise. It may seem odd for insurance companies to charge more when a person is obviously having financial troubles, but the insurance companies rely on credit ratings to determine the potential risks of a person filing a claim. Statistics show that people with poor credit ratings have a higher accident rate than those with good credit ratings. One reason for the difference in risk may be that drivers who have trouble paying their bills might also have trouble paying for regular maintenance on their vehicles.

Smart Drivers Increasing Uninsured and Underinsured Coverage

Of course, some drivers are choosing to drop their car insurance altogether in order to save money. All of these trends toward reducing car insurance coverage or dropping it completely put insured drivers at a higher risk of being involved in an accident with someone who is uninsured or underinsured. It is a good move in this economic climate to increase the amount of uninsured or underinsured motorist coverage on your car insurance policy to protect yourself from the high costs of being in a collision with someone who is not carrying enough car insurance. The slight increase in your premiums will be less expensive than the bills that would follow such a collision.

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