Helping you protect what you've worked so hard to obtain.

How is My Arizona Car Insurance Premium Determined?

ImageThat’s a great question and one that can save you a lot of money if you take the time to understand the factors used by insurance companies to derive your rate.

  • Your Driving Profile.  The items of information that comprise your driving profile include your MVR record of accidents and tickets, as well as how many miles you drive annually.  If you drive five miles per day to work, your premium will likely be less than someone who commutes 50 miles per day.  And, obviously, if you’ve had several at-fault accidents or speeding tickets within the past 36 months or a DUI within the past five years, your rates will be higher – as the insurance company considers you a higher claims risk.
  • Your Personal Information as it Relates to Actuarial Tables.  The insurance companies spend a lot of time and money evaluating data and compiling it into actuarial tables.  They have a pretty good idea of the claims likelihood of someone in your age rage, with your occupation, living in your area.  They have created detailed statistics regarding trends for accidents and auto thefts in your area, as well as the average costs for car repair and healthcare for your city.
  • Your Credit Score.  According to the Insurance Information Institute, how a person handles their finances is an accurate reflection of the frequency and size of their insurance claim history.  With the economy the way it is right now, many people who once had great credit are being turned down or surcharged for standard insurance because their credit rating has taken a hit.  Go Time Insurance specializes in offering nonstandard insurance (click the link to read our article explaining the difference).  Most of the carriers we use don’t use credit scoring, but rather use “insurance scoring,” which evaluates your insurance history and stability when determining your rate.  We even have a few carriers we offer who don’t look at either credit or insurance scoring.  These are a great match for our clients who have issues with both credit and insurance history (like previous cancellation for non-payment, or cancellation and reinstatement with lapses).
  • The Car You Drive.  While it’s pretty obvious that a high-end sports car would probably cost more to insure than a modest four-door compact, there are other factors that are not so obvious that go into determining the cost to insure your car.  I recommend you give us a call and tell us the make and model for any cars you’re considering purchasing.  Knowing the insurance rate can be a deciding factor in helping you determine which car would be the best choice for you.
  • Amount of Coverage.  It’s important to have an adequate amount of coverage to protect your assets, but it’s equally important that you don’t purchase more coverage than you actually need.  If you own a home with a lot of equity in it (don’t laugh – it’s just an example), you would want to make sure that your coverage limits are at least equal to the amount of equity in your home.  Otherwise, if someone makes a claim against you for an at-fault accident and your auto policy limits are inadequate to cover the claim, your personal assets could be exposed.  Of course, your homeowners policy would be next in line for any claims.  So, it’s important to reduce liability exposure by coordinating your auto and homeowners policies to insure adequate coverage.
  • The Deductible You Select.  Regarding deductibles, the higher your deductible is, the lower your premium will be.  Keep in mind that you should always select a deductible amount that you can live with.  If it would be difficult for you to come up with $1,000 to make up your part of any physical damage repair to your car, then perhaps drop it down to $500 or even $250.  However, if you could live with a $1,000 deductible, you’d be looking at as much as 40% reduction in the comprehensive and collision portion of your premium.
  • To “Full Coverage” or Not to “Full Coverage.”  Removing the comprehensive and collision portion of your coverage sometimes makes sense when you’re driving an older car.  The statistics on comp and collision claims are that those who carry it make a claim an average of once every 11 years.  And, even so, a total loss only occurs about once every 50 years.  If you multiply your premium for comp and collision by 10 and arrive at a number that is more than what your car is worth, you might consider dropping the comp and collision portion of your coverage and putting that amount into savings instead.  It all depends on your comfort level for doing so, though.  Everyone involved – you and your carrier – are both making calculated decisions regarding risk, and everyone is hoping to come out financially ahead regarding their decision.

I hope this has helped you to understand a little bit more about how your rate is determined.  If you decide to shop around for auto insurance quotes, make sure you are comparing apples to apples in terms of coverage, deductible, and financial rating for the insurance companies you’re considering.

If you live in the Phoenix area and need any assistance reviewing your coverage, please feel free to contact us anytime for a no-obligation, no pressure review.  We’d love to assist you with any information you need.

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What Every Homeowner Needs to Know About Ordinance or Law Insurance Coverage

As a homeowner, having proper coverage for your home is essential.  Most homeowners believe that having adequate limits will protect them in the case of a catastrophic loss.  They’ve educated themselves regarding the difference between an ACV policy versus a replacement cost policy and they sleep pretty good at night with the belief that if the unthinkable happens they’ll be okay.

Let’s walk that scenario out in real life for a moment…

You bought an older home ten years ago.  You’ve spent your weekends restoring it to pristine condition.  Everyone comments on how gorgeous it looks.  Suddenly, the worst case scenario becomes your reality.  A kitchen fire goes out-of-control and ravages your home – destroying 40% of the living space.

Naturally, you’re devastated, but you take solace in the fact that you have enough insurance to rebuild what’s been lost.

Step One:  You call your insurance company and make a claim.  They send out an adjustor to verify the damage.  “Yep,” they say, “you’ve got damage for a covered risk (fire) and we’ll issue a check for replacement cost” (because you were prudent enough to purchase replacement cost coverage).

Step Two:  Before the rebuilding can commence, the Fire Marshall has to come out to inspect the site and issue a building permit.  That’s when the bomb drops.

Many building codes and ordinances have changed since your home was built.  Your replacement cost insurance policy will replace exactly what was lost; however, without having additional coverage (called “Ordinance or Law Coverage) any additional expense required to bring your home up to current code will not be covered by your policy.

Some code/ordinance changes can be simple and not impact the cost to rebuild too greatly; whereas, other changes can have a significant impact on rebuilding costs.  For instance, in some cases even though your entire home isn’t destroyed by the fire, new building codes won’t permit you to rebuild a home with over 50% damage.  So, if this were to happen – your insurance company would pay for the damaged portion of the debris removal and rebuild – YOU would be responsible for the debris removal and rebuild for the undamaged portion of your home that the city requires to be rebuilt due to code changes.

Having Ordinance or Law Insurance coverage on your homeowner’s policy will cover any additional expenses required to rebuild your home due to any new or changed building codes, ordinances, or requirements since your home was built.

But, be careful with the fine print of this type of coverage, as well.  Some policies are written to cover laws and ordinances that are on the books at the time of loss.  Keep in mind that catastrophes are often the catalyst for code and ordinance changes.  So, let’s say you had a loss on January 1st that was something catastrophic, affecting many other homeowners in your area.  This event may prompt changes in the code that take effect on February 1st.  Let’s say you have Ordinance or Law Coverage that is limited to the codes in effect on the date of loss, you won’t be covered for any changes made subsequent to the event.  So, even though you have Ordinance or Law coverage, it won’t cover changes made after the date of loss if your policy has this type of limitation.

Get your policy out of your file cabinet, dust it off, and check to see if you’ve got this coverage.  It could make a huge difference.

Do you have an insurance agent you can trust to walk you through the maze of various policy subtleties?  If not, we’d love the opportunity to discuss your current coverage with you and offer solutions for any gaps we find.  Give us a call at 602-938-1515 to schedule an appointment.

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The Emotional Impact of a Home Burglary

Our home was burglarized last week and I’m having a wide range of emotional reactions to it.  The most prevalent one seems to be distrust.  I look at everyone in my neighborhood now with distrust – wondering if any of them were involved.  I don’t like that feeling, as I’m pretty friendly with the neighbors and I don’t want that to change.

I also feel scared when I go home and initially enter the house.  I wonder if someone’s in there and what would happen if I walked in on another burglary.  I’m not normally a fearful person, so I don’t like this new development at all.

Once the feelings of powerlessness leave, then the waves of anger come in.  Part of me wants to be like a big-city TV detective and start shaking down people until somebody talks.  There’s a hidden thug inside me who wants answers and wants them now!

Once the anger subsides, I find myself just being grateful that no one was hurt.  It could have been so much worse.

Having insurance is, obviously, important and gives you a sense of peace in these types of situations.  But, it certainly doesn’t solve the emotional issues that accompany such a violation.  I guess like most painful things we experience in life — it will take time for things to get back to normal again.

Until next time …

Tavisha, Go Time Insurance