Consider Increasing Your Auto Insurance Coverage When..

Auto insurance is a major cost of owning a car, and rates have been rising in recent years. While the amount of coverage you need depends on your financial situation, it's important to have enough liability insurance to protect your assets in the event of an accident. In addition to liability insurance, there are several other types of coverage to consider, including collision and comprehensive insurance, which cover damage to your vehicle. You may also want to increase your auto liability limits if you have a lot of assets that could be at risk in the event of a lawsuit. Other factors that can impact your auto insurance rates include your driving record, the type of car you drive, and your demographics. Ultimately, the best way to estimate your costs is to request a quote from multiple providers and compare rates.

When you have a lot of assets

If you have a lot of assets, you'll want to increase your auto liability insurance limits to protect yourself in the event of a lawsuit. The more assets you own, the more you have to lose if you are sued for an amount that exceeds your liability coverage limits. For example, if you are found at fault for an accident and the medical bills exceed your bodily injury coverage limits, the victim can sue you for the remaining amount. If the lawsuit is successful, you may be at risk of losing your home or savings.

To determine how much liability insurance you need, consider your net worth, which includes your assets (such as your home, savings, and other valuable possessions) and any debt you owe. Try to purchase coverage equal to your net worth to ensure that your policy can cover the full cost of an accident without putting your assets at risk.

The cost of auto liability insurance will depend on several factors, including the coverage limits you choose, your driving history, and your location. On average, auto liability-only coverage costs about $450 per year, with monthly costs ranging from $30 to $70.

When you have a poor driving record

If you have a poor driving record, you will likely be deemed a high-risk driver by insurance companies. This means that you will be considered more likely to cause an accident and will, therefore, face higher insurance premiums.

The severity of your driving record will impact the increase in your insurance costs. For example, a speeding conviction can result in thousands of dollars more in premiums, while reckless driving violations could potentially double your premium. The most serious charge is usually a conviction for driving under the influence (DUI), which can cause your rates to double and remain on your record for up to a decade or more.

If you have a poor driving record, you may need to purchase a high-risk auto insurance policy. These policies are reserved for drivers with less-than-stellar driving records and are not offered by all insurance companies. You may need to shop around and compare quotes from different insurers to find the best rate for your situation.

• Compare insurance quotes: It is important to compare quotes from multiple insurance companies, as rates can vary significantly. You can use online tools to get free insurance quotes and find the most affordable option for your needs.
• Improve your driving habits: Work on obeying traffic rules and maintaining your vehicle in good working order. Over time, as your driving record improves, you may qualify for lower insurance rates.
• Take advantage of discounts: Many insurance companies offer discounts that can help lower your premium, even with a poor driving record. For example, you can take a state-approved defensive driving course to demonstrate your commitment to safer driving and potentially lower your rate.
• Maintain continuous coverage: Avoid gaps in your insurance coverage, as these can lead to higher premiums. Even if you don't currently own a vehicle, consider maintaining a non-owner policy to show insurers that you are responsible and committed to maintaining coverage.
• Trade in your vehicle: If you have a newer or more expensive vehicle, consider trading it in for a less expensive model with better safety features. This can help lower your insurance premiums and maintenance costs.
• Raise your deductible: Increasing your deductible can help keep your insurance premium low, even with a poor driving record. Just make sure you can afford to pay more out of pocket in the event of an accident.
• Improve your credit score: Insurance companies consider drivers with poor credit to be riskier, leading to higher insurance costs. Improving your credit score can help lower your auto insurance premiums.

Remember, while a poor driving record will impact your insurance costs, it is still possible to find affordable coverage by comparing rates, taking advantage of discounts, and improving your driving habits over time.

When you live in an area with high insurance costs

Location and Demographics: The location where you live plays a significant role in insurance costs. Some states mandate higher levels of car insurance coverage, which leads to increased premiums. Additionally, areas with higher repair costs, higher likelihood of theft or vandalism, and locations prone to severe weather conditions, such as flooding or hail, tend to have elevated insurance rates. Urban areas, particularly large cities with higher traffic density and higher rates of vandalism or theft, also contribute to higher insurance costs.

Age and Gender: Age and gender are factors that can influence insurance rates, although not all states allow gender to be considered. Younger and less experienced drivers often pay higher rates due to their increased risk of accidents. Men generally face higher rates than women because of their higher propensity for risky driving behaviours. Insurance rates tend to decrease as individuals get older, but they may rise again after the age of 65.

Marital Status: Married individuals often benefit from lower insurance rates compared to those who are single, separated, divorced, or widowed. This is because insurers perceive married couples as posing a lower insurance risk.

Education and Occupation: In some cases, insurance companies quote higher rates to individuals with lower educational levels or lower-paying jobs. Insurers argue that there is a correlation between these factors and the likelihood of filing insurance claims. However, the use of education levels in setting insurance prices has been controversial, and some states are moving away from this practice.

Credit Score: In many states, insurance companies take into account credit-based insurance scores, which are similar to traditional credit scores, when determining insurance rates. Individuals with poor credit scores may face higher insurance costs since insurers consider them more likely to file claims.

Homeownership: Homeowners may receive lower insurance rates compared to those who rent or lease their homes. Additionally, bundling homeowners and auto insurance policies with the same provider can often result in discounts.

Local Claims and Crime Rates: Theft, vandalism, and the frequency of insurance claims in your area can significantly impact insurance costs. If your neighbourhood or ZIP code has a high rate of theft, accidents, or weather-related claims, insurance companies may view it as a riskier area to insure, leading to higher premiums.

Safety Features and Vehicle Type: The type of car you drive, including its safety features and trim levels, can also affect insurance rates. Vehicles with premium trim levels and advanced safety features tend to have higher repair costs, resulting in higher insurance rates. Additionally, certain makes and models of vehicles may be more expensive to insure due to their history of claims and the cost of repairs.

When you have a high net worth

High net worth individuals have different auto insurance needs compared to those with a lower net worth. This is mainly because they have more assets to protect in the event of an accident, natural disaster, or lawsuit.

High net worth individuals should consider the following when increasing their auto insurance coverage:

Higher Liability Limits

High net worth individuals may need liability limits of up to $5 million or higher, depending on their wealth. This is to ensure they have sufficient coverage in the event of a costly accident or lawsuit.

Umbrella Coverage

Umbrella coverage can provide additional liability protection beyond standard auto insurance policies. It can add millions of dollars to liability coverage, offering greater peace of mind.

Higher Rental Car Reimbursement

High net worth individuals may prefer higher rental car reimbursement coverage to ensure they can rent a vehicle comparable to their own in the event their car is in the shop.

Stated Value Clauses

Some high-end auto insurance policies include stated value clauses, where the insurer and the policyholder agree on the value of the vehicle. In the event of a total loss, the insurance company pays this agreed-upon amount instead of the current market value, which may be lower.

Special Auto Insurance Policies

Special auto insurance policies may be available to high net worth individuals, offering benefits such as agreed value on high-end vehicles, original equipment requirements, choice of repair shop, worldwide rental car coverage, high limits, and additional perks like roadside assistance and pet coverage.

Kidnap and Ransom Insurance

While unpleasant to consider, kidnap and ransom insurance is a necessary protection for high net worth individuals. These policies often include access to a crisis management team of professionals with experience in this field.

Yacht Insurance

For those with yachts, specialised insurance can cover the risk associated with ownership. This includes insurance for the crew, full replacement cost, high-end construction, and personal property. Coverage can also be added if the yacht is leased to others.

In summary, high net worth individuals should consider increasing their auto insurance coverage to protect their assets adequately. This can be achieved through higher liability limits, umbrella coverage, and specialised insurance policies that cater to their unique needs and exposure to risk.

When you have an expensive car

If you have an expensive car, you will likely need to increase your auto insurance coverage. The make, model, and age of your vehicle are all factors that influence insurance rates. Newer, more expensive vehicles with advanced technology and safety features typically cost more to insure as they are more costly to repair or replace. Additionally, sports cars are considered higher risk due to their association with racing.

When insuring an expensive car, it is important to consider the brand as well. According to Quadrant Information Services, Dodge has the highest car insurance costs on average, while Mazda has the lowest.

The likelihood of theft also plays a role in insurance rates. Luxury cars, sports cars, and full-size pickup trucks are among the most expensive vehicles to insure due to their high theft rates.

If you have an expensive car, it is advisable to review your insurance coverage regularly and compare rates from different providers to ensure you are getting the best rate possible. You may also want to consider increasing your deductible to lower your premium, but make sure you have enough money set aside to cover the deductible in case of an accident or claim.

Frequently asked questions