Photo Credit: Spekulator

Car insurance companies are in the business of making money, which means there’s information that they likely won’t tell you in hopes of maximizing their profits. Of course, you want to get the most bang for your buck, so take a look at 15 things your car insurance company doesn’t want you to know.

1. Sports cars and SUVs have higher premiums. Depending on the model, year and type of car you drive, you could end up paying hundreds or even thousands more for coverage over a policy term. In general, sports cars, luxury vehicles and SUVs have the highest premiums. To avoid paying an arm and a leg for coverage, obtain coverage quotes before even purchasing a car.

2. Live in a dangerous neighborhood? You might pay more. Insurance companies are known for charging higher rates to customers who live in dangerous neighborhoods because they feel vehicles have a greater risk of being stolen, so don’t be surprised if your rates jump at renewal time after moving to a unpleasant neighborhood.

3. Bad credit affects your insurance rate. Many customers don’t realize that car insurance rates are determined partially by their credit scores. The lower the score, the higher the premium, so if you have bad credit, get ready to pay more for your coverage, even if you have a clean driving record.

4. You’re not locked into your policy. When you sign on the dotted line for your policy, you might think you’re actually locked into a six-month or one-year contact. But in actuality, you have the right to cancel your policy at any time. Even better? If you’ve prepaid with your current insurance company, it’s obligated to issue a refund.

5. Rates are not set in stone. Insurance rates go up and down all the time, partially due to industry changes, but largely due to personal changes like an improved driving record or credit score. If you want to lower your score, tell your company you’re thinking of switching in the middle of your policy term. They might surprise you by re-estimating your policy and giving you a lower rate.

6. Paying in full is best. It’s likely that an insurance company will offer you some type of discount if you break your payments up over six months. But many customers don’t realize that if they pay their policies in full, they save even more since they’re avoiding administrative fees.

7. You must officially cancel a policy if you switch companies. If you choose to switch insurance companies, your company will not cancel your policy for you (unless stated otherwise). So if choose to switch, be sure to call and cancel your policy to avoid paying for two at the same time.

8. Your insurance can cancel your policy during the binding period. Many insurance companies don’t tell you about their “binding period” cancellation secret, which is that the company can review your account in the first 30 and 60 days (depending on the policy). If they don’t like how you handle your policy, they have the right to cancel your coverage for any reason they decide.

9. The “stay with us” perks aren’t always so perky. In order to keep you as a customer, your insurer will offer perks like elevating you to a Gold or Platinum status. While the title may sound amazing, you may find that you’re the oh-so-big “perk” is just free towing for the first 3 miles if your car breaks down. In the meantime, your coverage increases above rates offered by the competition.

10. At-fault accidents cost big. It is industry standard for an insurer to increase your premium by 40 percent of its base rate after an at-fault accident. So if your six-month premium was sitting pretty at $500, you could expect to see a $200 increase after your accident unless your company offers an accident-forgiveness clause, which guarantees your premium won’t increase after an accident.

11. Insurers don’t work with all body shops. Some insurance companies like to work with a select few body repair shops. So if you wreck your car and think you’ll be visiting your family mechanic, you may be shocked to learn that you’ll have to visit Mechanic Joe’s or another body shop the company chooses; that is, unless you want to pay for the repairs out of your own pocket.

12. A totaled car doesn’t guarantee full payment. Just because your car has been totaled out doesn’t mean that you’ll get the total value of your car. Depending on the collision policy and the company you work with, you may get complete reimbursement and you may not.

13. An insurance adjuster’s job is to negotiate down. When an insurance company’s adjuster tries to offer you money for your claim, he’s thinking about saving the company money. Period. You’ll hear phrases like “that’s my best offer,” or “you’ll receive even less than this if you work with an attorney,” but your best bet is to keep negotiating (or contact an attorney) until you get a fair payment.

14. Your insurer may be responsible for your replacement car’s sales tax. Twenty-eight states currently require insurance companies to pay sales tax when a totaled vehicle is replaced by a new or used car. Don’t automatically pay the sales tax without finding out if your state has this requirement. Also, don’t assume the company will automatically pay. Asking questions is key in this situation.

15. Comparing quotes is a good…no, great thing! When your policy term ends, your insurer may automatically renew your policy, which puts a little pressure on your to stick around. If this happens, your best bet is to compare quotes with other companies anyway. You may just find that you could pay a lot less by switching companies.