The following is a guest post by Eric Kossian of Leavenworth Insurance.
Renters pay more for auto insurance then homeowner's in several instances:
1. Your overall risk classification:
Most renters are typically receiving a quote from a insurance carrier's that typically sell mostly to medium and higher risk clientele. You will be quoted in a higher risk carrier (with a higher price) if your credit score is bad or fair but not good or excellent. Or if you have more than 2 tickets or accidents or if you have had a lapse in insurance coverage for more than 30 days. All of these reasons make you a higher risk for future claims. Of these, credit score is the single biggest determinate of future claim activity and therefore a high credit score can cut your rates dramatically! (This is a huge reason why renters pay more for auto insurance.)
2. Your living situation:
The reality is there a lot of different types of renters out there and a good percentage of renters share homes or apartments with others who may on occasion have access to the car. This additional unknown exposure drives up claims. So be careful as some carriers even exclude all drivers under the age of 25 who are not specifically listed on the policy! Most companies will therefore want to knowwho else lives in the household, what their names, dates of birth and lic #s are and documentation of their own insurance. And yes, you must answer accurately - as that is a material fact in your application and the carrier can rightfully deny the claim if you answered incorrectly. Carriers are trying to keep your rates down by correctly assessing the risk of someone with a bad driving record having occasional access to your car. (and yes, if you give permission to someone to drive your car and they get in an accident, then you will have an accident surcharge on your policy for at least 3 years.
3. Not buying renters insurance along with your auto policy from the same carrier:
If you are getting a quote form a preferred insurance carrier that caters to people with good to excellent credit scores and good driving records, many of these carriers do not charge more to renters unless the client is not purchasing a renters insurance policy. Less than half of renters buy renters insurance to protect their belongings in case of theft, fire, etc. Those that do purchase renters insurance can typically do so for a very low cost ($10 - 40 mo. depending on location and amount of belonging) because of the multi-policy discount provided on the auto policy.
Many renters live in neighborhoods that have a higher risk of vehicle theft and accidents than a suburban neighborhood fill largely with home's that are owned. Location really counts, so before renting that great apartment, get a quote for what the address change will do to your auto premium! (Again, your garaging address is a material fact on your application, so if that is not accurate the carrier could deny the claim! Try finding a job with an insurance fraud felony on your record!)
5. You didn't shop:
Many people go to one carrier only to shop for their insurance. Why? Over half of the marketplace is made up of "direct carriers" (800# carriers) and "captive agents" that work for only one company (State Farm, Farmer's, Allstate etc.), so in both these cases you won't get a variety of quotes! If you contact an independent agency, they typically write policies through 4 or more higher risk carriers and an additional 6 or more preferred carriers, so they will shop your insurance for you with good insurance companies that are generally not spending literally billions a year on advertising; so they can keep your rates lower. And by the way, they will also save you a lot on your life insurance premiums too.
Eric Kossian was an Underwriting Specialist and agent with State Farm before starting an independent insurance agency in 1997 at www.InsurePro.info