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    Many of us know the feeling of getting our car insurance bill and thinking, "Again!? Didn't I just pay this!?" Car insurance is one of those unavoidable (in most states) expenses. AOL Autos wanted to find out from an insider exactly what goes into those prices and what we can do to keep our car insurance costs down. We talked to Patrick Lawson, a 25-year veteran auto insurance agent.

    The Bottom Line: Premiums

    Have you ever wondered how they come up with these numbers? Lawson mentioned the common factors like age, sex, car type and driving record but also noted a new, little known factor. "Companies are now, of all things, checking credit because people with poor credit, statistically, can be susceptible to more claims," he said. He explained that some people in these cases are more apt to file a claim instead of settling it themselves because they might not have the means to handle it any other way.

    "Insurance is nothing but numbers, and that's all the industry has to go on is how they make these number come out. And the numbers suggest that people with less-than-perfect credit, sometimes, have a higher probability of claims," says Lawson.

    Regardless of good credit or bad credit, he always recommends that people shop around for car insurance, "Even if you have pristine credit, some companies put more of a value on credit than others," he said. "You can't make a blanket statement, but what you can say is it pays for everybody to shop around a little bit because it's well worth it."

    He said that some car insurance companies have bad experiences with drivers and some have more positive experiences so, "You as a consumer, have the job to find the ones that are having the good experiences."

    Once you find a car insurance company that provides the services you're looking for, keep in mind that the prices themselves are fixed by the insurance company, so haggling with your agent is out of the question. "Whatever the price is, it is," he said.

    Some Things to Avoid

    Many of us have let someone else borrow our car for a short time. Maybe we're hurt and can't drive, a friend needs a car for the day, or we simply just don't feel like driving. Lawson told AOL Autos that lending your car to the wrong person can be a big mistake.

    "You should always be careful who you let drive your vehicle. You just don't arbitrarily say, 'Hey take the keys and go' because you don't know what that person is doing, you don't know their driving record, you may not even know if they have a license," says Lawson.

    He explained that if you lend your car to an unauthorized person and they get into an accident, your car insurance company might do everything it can to get out of settling the claim. This is especially important for parents who have their kids named on their policy as drivers. Sometimes their kids let their friends drive the vehicle as well. "As a rule of thumb, only the names of insured persons should ever give permission and only in extenuating circumstances, don't use it as carte blanche," Lawson said.

    Speaking of things to avoid, we asked him if buying a red sports car was out of the question. "Here's a real misnomer about auto insurance, people say if you get a red sports car, that's like the kiss of death. Color has absolutely nothing to do with whether you get a speeding ticket or you don't," he said. If two cars are going 85 mph in a 65 mph zone, the police are not more likely to pull one over and issue a ticket because that car is red, Lawson said. When Lawson was studying to become a car insurance agent, he said the instructors made it a point to tell students that the red car theory is a falsehood.

    The real problem with speeding tickets has to do with the drivers themselves, not the color of the car. "Some insurance companies are only equipped to deal with you if you get two tickets in a three year period. If you pick up three, you've gotten out of their underwriting mode where they're not going to renew you," he said. If your tickets (or accidents) build up, some companies will drop you because you're a risk.

    In some cases, drivers just don't have any control over what happens when they get into their vehicles. Hitting a deer one too many times or being rear-ended on more than one occasion, can also affect your car insurance rate. "You hate to say it but that's almost the case," Lawson said. "Being at the wrong place at the wrong time can come back to bite you." Lawson acknowledged that it may not be fair that insurance companies handle certain people this way. Even if there's no real reason why some people get into more accidents than others, the fact is their claims cause companies to lose money.

    Another thing to avoid is lying to your auto insurance agent. If you think he doesn't know about your tickets and accidents, think again. He's had a few people tell him their driving record, minus a few small details. He'll look up their record on the computer and, "They'll watch it print," he said, "and I've had a couple people just get up and gather their belongings and just walk out because they know they're dead in the water."

    The Serious Side of Auto Insurance

    With 25 years under his belt, Lawson has seen a lot. He talked about a family who came into his office wanting to purchase motorcycle insurance for a first-time bike owner, their 16-year-old son. They showed him a picture of the bike they were purchasing, a bike he described as, "A crotch rocket that does 0-60 as fast as you can sneeze."

    He told the mother that it was a mistake, but she emphasized how safe her son was going to be. He told her, "Ma'am, I don't want to be inappropriate or hurt anyone's feelings, but this is a death claim waiting to happen. When you take a fast motorcycle on an inexperienced operator, you're begging for problems."

    The first weekend the kid was on the bike, he lost control on a rural road, became airborne and totaled the bike. He spent some time in the hospital and later recovered. The mom called Lawson after the accident. "They called me up and the lady was crying and said, 'Why in the world did we not listen to you?' What do you say to something like that," Lawson asked, "You can't say anything except, 'I'm sorry it happened,' and ask 'how is he?'"

    Motorcycles aren't the only dangerous thing on the roads though. Drivers who talk on their cell phones and send text messages cause accidents as well. Lawson knows firsthand the dangers of these distractions. A close friend of his was permanently disabled when a woman dropped her cell phone on the passenger floor and swerved into his lane when she tried to pick it up. The woman didn't have adequate insurance and his friend ended up being bankrupt by the medical bills.

    "I think all the states should raise the minimum liability limits and require that all states make auto insurance mandatory," he said.

    Chances are, most of us live in a state where car insurance is mandatory. By keeping your credit score in check (or working to improve it), shopping around for a car insurance company that fits your needs and avoiding mishaps like speeding tickets and accidents, you'll be able to keep the cost of your car insurance down. Also make sure to know what your current car insurance policy covers. You may have coverage that you don't need like windshield replacement or tow truck coverage. Adjust your coverage to get the car insurance that you need, with the price that matches your budget.

    Read More:

    - Take A Class, Save On Your Car Insurance
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    1 - 20 of 44 Comments
    petpater Jun 22, 2010 7:51 PM
    I pay my car insurance premiums twice a year, I would pay one a year, if they would let me, but because I became disabled and lost my mobile grooming business and defaulted on credit cards I used to fund my business, my credit rating is in the toilet. My car insurance company says they can not offer me a better rate because of my credit rating, which I will never be able to change as I am still disabled and am living on social security. As I am not asking the insurance company to extend me credit by paying monthly, I feel my credit score should not affect my rate ,only my driving record, which has been spotless for more than a quarter century.
    Report This
    ramonabrunswick Jun 01, 2010 1:38 AM
    DEED!?! I have never heard of such thing and I have 20 yrs experience. Your insurance agent should be able to give you an explanation for why it is needed???
    Report This
    rerry926 May 06, 2010 10:32 PM
    DID ANYONE EVER HEAR OF GIVING YOUR DEED(house) TO AN AUTO INSURANCE COMPANY? . I do not have home owners insurance with this company. I have to add my daughter to the policy, who was not insured while having her license and did not drive. The insurance co. wants the deed to my home. Can someone explain this to me because I don't understand. THANKS FOR YOUR COMMENTS. RERRY926
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    lmartin828 Apr 24, 2010 1:20 AM
    gdkinsurance said it best. Your best bet is to do business with an INDEPENDENT AGENT. They have the flexibility of shopping your insurance with multiple companies because they represent more than ONE company, unlike State Farm, Country Companies, etc...If your rate gets too high, ask your independent agent to shop your insurance for you. An independent agent differs greatly from that of a captive (State Farm) agent. An independent agent works for YOU, because they are not "loyal" to one company. They represent many companies, therefore, YOU are who they are loyal to. YOU are their customer. Also - DO NOT buy your insurance online - for a couple reasons: 1. You most likely will not know what you are doing and have no idea what coverage you have. 2. You will probably end up with state minimum liabilty limits (which is particularly not good if you own a house or have a job), and you could lose any assets you own if your policy does not cover enough for any damages or injury you might cause to someone else. 3. When you have a claim - be prepared to do all the work YOURSELF....since you bought online all by YOURSELF, you will be taking care of a claim all by YOURSELF!! Now, unless you are experienced in the auto claims field, you are setting yourself up for disaster while trying to protect one of your most valuable assets...your car! Not a smart move....take the time and get an INDEPENDENT agent to go to work for you. It will pay dividends in the end!! These same principals apply to homeowners insurance also!! Good luck everyone!
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    nscontent Apr 18, 2010 4:04 PM
    Get more high-auto insurance tips from http://members.tixnix.com
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    shopsmart99 Apr 08, 2010 2:56 AM
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    shopsmart99 Apr 08, 2010 1:34 AM
    I found a great Auto Insurance Website where you can Save 80% on your Auto Insurance! : ------ http://bit.ly/b51Vaa ------- It really works! I am now paying $200 per year for my auto Insurance!
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    DevAutos Mar 09, 2010 10:00 PM
    Great Share! I have been struggling to find good affordable car insurance for a while. My friend told me about a site where i can compare car insurance quotes. I found a great deal on car insurance now! I thought i would help everyone and share it, here it is: http://cli.gs/affordable-auto-insurance
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    trudy405 Jan 16, 2010 2:01 PM
    I agree with everything said here... but what irritated me the most is the line that says... I quote "He explained that some people in these cases are more apt to file a claim instead of settling it themselves because they might not have the means to handle it any other way" unquote.... Isn't that why we pay insurance, so they handle any claim situations for us regardless of our credit, race, sex, or whatever else they might invent? Am I missing something here? Why aren't people doing something about this? Why is everyone letting things get out of hands? Get involve, call or write your state representatives, even send emails to the White House, if necessary, but do something.... that's why it says in our Constitution.... "We The People"... Let's not forget that!!! Things are this way because we haven't cared for the longest time... It's time to take control back.... It is literally in our hands.
    Report This
    kfkinchsr Jan 16, 2010 2:00 PM
    Thie is for linjim115 Why don't you stick with the SUBJECT instead of advertising your STUFF You should boy your own web site if you want to keep on with this crap
    Report This
    gr8bsn Jan 16, 2010 1:09 PM
    "What you should know about car insurance" says the title of this article. I'll tell you what you should know: They're all government supported crooks and thugs! Own a car? You have no choice but to pay them for their "services" and trust me, the insurance companies know this. They will rip you off for anything and everything. I am a safe driver but I got laid off last year. The resulting domino effect caused my credit score to go down, so when my policy renewed, my monthly bill went UP by $50! Never mind the fact that I am a save driver, never get in accidents or tickets, and always manage to pay my bill on time! These insurance crooks also try to hijack your bank accounts with forced automatic payment. I had that set up with one company, but when I changed providers after finding a lower premium (a full week in advance), they hit my account anyway, costing me more than $350 in overdraft fees! Fortunately, my bank cleared that up for me and I reported that old agent to the BBB. Car insurance companies are thugs who aren't worth the sh*t that they're full of! They're 1000 times worse than banks. Now, if you think this is bad, just wait until the government forces you to buy health insurance...
    Report This
    aissedei Jan 16, 2010 1:07 PM
    It's about time the government step in a do some regulating of the insurance industry. Seriously if they're going to mess with the credit card companies and try to get them under some control they may as well work on the insurance companies too. Their practices of discrimination based on sex, marital status, age, and now credit (or essentially economic status) wouldn’t be allowed in any other type of business. It should be purely based on years driving and past driving history. I’m surprised they haven’t yet determined which race has more claims and started charging higher rates based on your skin color, but give it time I’m sure they will. I’ve paid insurance for the last 18 years and only made one claim maybe 15 or 16 years ago when I hit a deer. Up till I was 25 I paid almost as much in insurance as I did in car payments. Sadly if I were to have a major accident that was my fault they would probably sky rocket my rates or drop me altogether. It’s about the most corrupt unfair practices possible.
    Report This
    italopal Jan 16, 2010 1:00 PM
    In New Jersey you will be arrested if you donot have, your registertion or car insurance cards on you and you will be towed away.
    Report This
    sheidt4 Jan 16, 2010 12:55 PM
    They're not allowed to check your credit in California.
    Report This
    bearno5 Jan 16, 2010 12:51 PM
    Not every insurance company penalizes customers who have less than perfect credit and the ones who do are usually companies who charge higher premiums to all customers. Insurance even through the same company vary drastically depending on the state and sometimes even city where you live. The same company may be able to offer a discount for something (such as your work field) in one state but are not allowed to give the same discount in another state.
    Report This
    wolfmann4u Jan 16, 2010 12:48 PM
    Insurance companys and agents are all crooks as they still work on inflated commisions. Just look at the housing market reality business the more they sell you the biger commisions.
    Report This
    wpianoman99 Jan 16, 2010 12:44 PM
    I feel it is unfair to use people's credit score as a reason for charging them higher insurance rates....utterly ridiculous! How can you charge someone for what they "might" do when they have a record 20, 30, or 40 years old showing them to be a safe insurance risk? I have good credit now but a few years ago, I didn't, and **** like this just makes it all the harder to climb out of that bad credit vicious cycle some of us have been in. Everyone uses it as a reason to charge you more for everything you buy and need. Some rich insurance lobbyist came up with this idea and once again, poor, struggling Americans are being taken advantage of in the process. They have all the information they need to determine what type of risk you are. If this is the way they want to do business, why not just charge the ones who "actually" file more claims?....at least, then , everyone is not being forced to pay higher premiums because of a few deadbeats.................... Greedy ass folks in this country!
    Report This
    flcadam77 Jan 16, 2010 12:39 PM
    I think this article proves what most people already suspect: insurance is a complete scam.
    Report This
    dvh489 Jan 16, 2010 12:37 PM
    So, let me get this straight, I don't file any claims and have had only 1 ticket in the 22 years I have been driving and because I have poor credit, I have to pay more for my car insurance. Not all people who have not so great credit are going to file claims. Car insurance should be based on driving, not credit. Your credit card companies don't issue credit based on your driving record. So, although I have a clean driving history and have not filed any claims on my insurance, I am ranked high risk because of my credit score and end up with the possibility of paying the same amount as someone who has a terrible driving record and files claims, but the have a good credit history... Can anyone in the insurance business see how this is discriminatory and stereotyping??? This is not right and someone should challenge this. My opinion, car insurance premiums should stay based on driving records, not credit history (scores). By the way, even though I don't have the best credit score, my car insurance premium is paid every month...
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    scg35 Jan 16, 2010 12:34 PM
    Unfortunately, I know this too well. I have been with State Farm insurance for several years. Again unfortunately, I have suffered a disabling injury and typical, Workman's comp does not like to pay medical bills and delays as long as possible to pay them. I recently received a letter from my insurance company that my rates will increase due to my credit score. My rate increase $27 per month. Ridiculous! Times are hard enough right now without having to deal with this.
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    1 - 20 of 44 Comments
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