Common Texas Car Insurance Questions

Common Texas Car Insurance Questions

• The color of your car helps determine the premium you pay.

False. However, the type of vehicle does. The Insurance Information Institute lists a vehicle’s make, model, engine size, age and current value among the factors that help determine premiums. Other factors include a vehicle’s cost to repair and likelihood of theft and, obviously, a motorist’s age and driving record.

Small cars aren’t necessarily the cheapest to insure, even though they tend to cost less. Premiums can be just as high or higher due to the possibility for worse injuries. Still, 40% of respondents in a survey by insure.com assumed premiums were lowest on small vehicles.

A general metaphor for car insurance, finance, sale, debt, expenses and costs.
A general metaphor for car insurance, finance, sale, debt, expenses and costs.

• Insurers don’t examine credit records to assess applicants.

That’s generally false. “Credit scoring is highly predictive of future loss activity,” said Fiske. “It’s actuarially sound and part of practically every insurance company’s methodology.”

The idea behind using credit scores to assess the risks posed by individuals reflects their responsibility, or lack thereof, in managing financial affairs. An insurer might deny coverage to applicants with low credit scores, but it also could reward others with reduced premiums.

Not all insurance companies evaluate credit the same. Some use proprietary models, and many  look to cover certain types of drivers or homeowners. “Some may target only those with the best scores, with no recent accidents or traffic violations, while others may seek out people with a less-than-perfect record,” said the Insurance Information Institute.

Credit scoring isn’t allowed for all policies in all states, including California.

• Self-driving autos will lead to lower auto-insurance premiums.

It might happen. Self-driving vehicles have proved highly reliable, especially when compared against human motorists who text, tailgate and speed.

However, real-world insurance-loss results aren’t in yet, so the question is still up in the air. “Even if (driver-less cars) were introduced  tomorrow, it will take 20-plus years” to have actuarially sound information,  Fiske said.

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