Out of all my monthly bills, I have always looked at auto insurance as the biggest rip-off with the least amount of value. I have never made a claim, and always set my coverage and deductibles to where it was unlikely I ever would unless I was the cause of a major accident that people were injured in.
Auto insurance is a necessary evil, but I have made several mistakes on top of normal circumstances that have kept my insurance payments sky high, even when I do everything possible to make them lower. Here are five reasons I go broke paying for a mandated service that I have never used.
My Credit Score
After my last renewal, my rates had raised almost $100 per month. I could account for $50 of the additional cost, but the rest was a total mystery; at least it was until I received a disclosure related to the Fair Credit Reporting Act. Information supplied by a credit reporting agency had increased my rates substantially. The factors that were listed as having the most influence on my quote were insufficient length of credit history, delinquency, proportion of revolving credit balances to revolving credit limits too high and presence of collection accounts. I cannot understand how bad credit is affecting my premium rates since I pay the bill before I get any service, but there is no doubt a correlation between people who have good credit and likelihood of filing an accident claim.
Criminal charges
A hotel room only costs $70 per night. The DUI I got for driving home from a hotel bar cost approximately $2,000 for lawyer fees, court costs and special traffic schools. It cost me lost wages, and stained my record for the next five years. The most permanent cost is the extra $50 per month my insurance rates went up after reporting it. A DUI is wiped clean from your record in five years but my insurance company suggests I will have higher rates for at least ten years. If that is true, then I am looking at an extra $6,000 paid for insurance I will likely never use.
My residence
The simple act of changing my zip code cost me a raise of $25 per month. The customer care representative with my agency explained that the area I now live is notorious for insurance fraud, and that it is based more on the number of claims than the crime in the area. My friends have reported a drop in yearly premiums of up to $700 after moving out of rural Eastern Kentucky to more populated cities.
The times I don’t carry insurance
If I get the chance, I will drop my coverage in favor of using another vehicle or riding to work with a friend. In the last 3 years I have only had coverage for 30 percent of the time. After a period of six months without coverage you can expect to pay a higher premium for the same insurance. If I cannot find cheaper coverage or find a way to park my car completely, the insurance companies will quickly recoup any savings I had while not driving.