September 18, 2009

Limits On Auto Insurance Charges: How Much Can They Charge

In tough economic times, Americans look to cut out any excessive costs that they can. In these instances, it seems auto insurance premiums are certainly a large priority for drivers. High-risk drivers, especially, may find that their auto insurance rates skyrocket in a recession, and they accept the charges as legitimate. However, there are limits to what an auto insurance company can charge, and drivers with high premiums should be aware of how some companies operate before they agree to high fees.

It’s important to avoid companies that advertise extremely cheap auto insurance premiums through television and magazine ads. These companies will often give a low rate, then raise your premiums several months in – occasionally claiming that the initial low premium was due to an accounting error.’ This is standard practice for companies that are less than reputable. In many states this ‘low-balling’ practice is illegal. Do not sign contracts that lock you into coverage. Also make sure that in the event you cancel your auto insurance plan, you’ll get back any money you’ve paid towards the premium for a policy that isn’t entirely used. Auto insurance laws vary quite a bit from state to state, but usually a company is legally obligated to return the unused portion of your premium. Remember, the best way to avoid scams is to do a bit of research on the company you’re considering after getting your auto insurance quote to make sure their customer satisfaction level is high and they are established.

Federally, there aren’t a lot of laws on how auto insurance companies operate, but state to state there are quite a few. Unfortunately, it’s hard to spell out how these laws operate, as different states have different mandated minimum coverage and may even have entirely different systems of insurance. For example, Michigan and 11 other states use ‘no fault’ auto insurance systems that can be very complex. Research your state’s laws to find out if you’re paying too much for your auto coverage.

Even if you’re dealing with a reputable company that charges relatively fairly, if auto insurance premiums are high, there are still ways to decrease your own to make them more manageable. All drivers should consider calling around to different companies to get auto insurance quotes. This information can be a valuable tool to negotiate a better rate with your current insurers. If you’ve got a fairly safe driving record and you’ve been with your current insurer for a long period of time, you can often talk them into decreasing your auto insurance premiums by significant amounts.

In this economy, it’s severely important that any unexpected rise in your premiums should result in swift contact with your insurer.