If you are a driver in California (or anywhere for that matter), you know how complicated and confusing it can be to file a car accident claim, switch car insurance companies or simply add a person on to your policy. To help make things easier when dealing with your auto insurance company, we have listed some helpful tips for California car insurance customers below. Understanding these items can not only save you a lot of time and money on your California auto insurance, but it will also help you be better prepared in the event of a car accident.
1. How your California car insurance company determines your car's value after it has been declared a "total loss".
When totaling your car, your insurance company's goal is to help you find a new car within the same market. To do this, car insurance companies use three different methods for determining the value of the car declared a total loss, such as:
If the car insurance company is unable to find a car from within your area, they may have to find a replacement car outside your zip code, which can dramatically affect your car's true value. For instance, if you reside in a big city within California, such as San Francisco, Los Angeles or San Diego then the cost of replacing your car will likely be more expensive then if you lived in a suburb or more rural part of California.
2. California car insurance companies are not required to pay for sales tax and registration fees for a vehicle declared a total loss.
There are 29 states that require that car insurance companies pay for sales tax when you replace a vehicle declared a total loss. California is not one of them. But that doesn't mean you should not request it. The insurance company policy states that they are required to make you "whole", which means that they will return you to where you were before the car accident occurred.
It should be noted that the tax is calculated based on the pre-accident value of your car. If you buy a higher priced vehicle as the replacement, your car insurance company will still go off the price of your original vehicle.
3. Making a car insurance claim could increase your rates.
Typically, insurance companies raise your car insurance rate by 40 percent in the event of an accident. However, some insurance companies will only increase your personal rate as opposed to your entire rate, but that is at the discretion of the insurance company.
If you are a good driver that does not have any driving violations, then you will want to consider going with a car insurance company that offers an "accident forgiveness" or "forgive the first accident" policy. This will help keep your insurance premium from fluctuating in the event that you file a car insurance claim.
4. Your credit history may determine your insurance premium.
In the State of California, the use of your credit history to determine your insurance premium is permissible. It may be used to determine your payment options, no matter if it is monthly, quarterly, or having to pay the entire premium at once. Your history may also be used by insurance companies to create an "insurance risk score." This score is used as a factor in determining your auto insurance rates.
Pay your bills on time and try to improve your score if it is less than ideal. In doing so, you are helping to improve your credit history in the long run and potentially save money on your car insurance premium.
5. Your credit score does more than affect your credit, it can also affect your car insurance rate.
That's right; your credit score can impact how much you will pay for car insurance! Think it is not fair; well many insurance companies tend to disagree! Studies show that there is a direct correlation between your insurance risk score and the likelihood that you will file a car insurance claim. Your insurance score is used to evaluate your stability as a driver. So if you pay your bills on time, are in good standing and have a long standing credit history with lenders, then you will likely be considered a dependable person. However, if you tend to pay your bills late, open and close credit frequently and are in poor standing with creditors, then you will likely be considered an unstable person and a potential threat on the road.
You can improve this "poor standing" by starting to pay your bills on time and establishing a good history with lenders. One way to start down this path is by contacting a free credit counseling service for guidance such as Consolidated Credit Counseling Services, Inc.
6. When switching car insurance companies, you must cancel your insurance policy first.
Though it is possible to cancel your coverage at anytime, it is important to note that many insurance companies require a written statement, including the date of termination, in order to officially close your car insurance policy. If you do not do this, and you receive and ignore the next bill, your policy will be canceled automatically by the insurance agency for delinquency of payment. The negative of this automatic cancellation is that it will show up on your credit record, which could potentially impact your credit score!
The safest thing to do when switching car insurance companies is to call your company and let them know that you are canceling your policy. The company will send you a cancellation request that needs to be filled out and sent back in.
7. Adding a teen to your car insurance policy.
Most insurance companies do not require you to add your teen to your car insurance policy when they are a certain age, just when they receive their license. If you are in a high-risk pool, you may be required to add them when they receive their driver's permit. If you forget to add your licensed teen, and they are involved in a car accident, they will be covered, but your insurance company may charge you back premiums from the date your teen received a license.
8. Paying in installments may increase your car insurance.
"Fractional premium" fees are usually charged when you divide your car insurance annual premium into installments. Six month, quarterly or monthly are the typical breakdowns for most insurance companies. Generally, the more you break down your installments, the higher the administrative/fractional premium fee. Always ask when applying for a new car insurance policy, and see exactly what the fees are for each payment you break down. Make sure to also ask your insurance provider if they offer an alternative way to make payments, such as Automatic Clearing House (ACH) processing, which withdrawals the funds right from your checking account. This may help eliminate processing fees while helping you stick to your budget.
9. You could be eligible for cheaper car insurance in California.
In an effort to make sure that everyone has and can afford car insurance in the state of California, state officials have launched a Low Cost Auto Insurance program. This program offers cheap car insurance to California drivers that are in good standing, live in an approved California county and whose household gross annual income is 250% or less than the federal poverty level. In addition to these requirements, eligible residents' vehicles must not exceed $20,000. To find out if you are eligible for this low cost auto insurance program contact the California Auto Assigned Risk Program at 1-800-622-0954.
Even though most states typically have similar laws in place for car insurance, they do not typically have similar car insurance rates. That because California car insurance rates are influenced by California geographic location and its' state laws. With that being said, it is always a good idea to shop around and compare the rates of various auto insurance companies. To assist you in the processes Insurance.com offers an auto insurance comparison application. Here, you will be able to evaluate multiple rates from best-in-class insurance providers - helping you find the cheapest auto insurance coverage for your budget.