Did you ever heard about credit life insurance? Many people confuse credit life insurance with standard or whole life term insurance policy, but credit life insurance is slightly different from general policies. It’s a life insurance policy designed to waive off a borrower’s loan if the borrower dies. In a simpler term, your life insurance policy will protect your family after your death while in credit life insurance your family is secured from loan repayment or EMIs to be paid after borrower’s death. (more…)
Ever wonder how insurance companies calculate premium? Is there some specific formula or some mystery that you are unaware of? Do you know insurance score? We leave all such queries to our agent, don’t we? One must know in and out about the type of insurance they’re opting for and science involved in it. Do you know with little tricks you can save big money on your car insurance premium? Not to worry, we have bought you few unsaid, untold mystery and concept behind car insurance premium and how they are actually calculated. Grab your notepad, you might need them.
IDV- Insured Declared Value
Your car has some value at some point of time. When you suffer total loss in a car accident, the amount is compensated under a motor insurance coverage related to your vehicle value at that point in time. If your car is new just driven out of a store, the value is fairly more than four-year old car. The premium is calculated as per the Insured Declared Value. Insured Declared Value- IDV is your car worth estimated by insurance company at the time when you apply for auto insurance.
Car insurance policies are protection (indemnity) policies—you are compensated for amount up to financial loss that you’ve suffered on the insured vehicle. Insured Declared Value is the maximum amount you can claim under a policy to reimburse for loss due to accident or theft.
For e.g. if you suffer loss in a mishap of your four-year old vehicle worth $5,000 at the period of accident, you will be paid off for more than $5,000.
For newly-purchased car insurance, the IDV is evaluated on the price of the new vehicle i.e. the showroom price. For renewing insurance, the IDV is calculated considering the complete wear and tear that car has experienced. Technically, the IDV is adjusted as per the depreciation that vehicle has undergone.
What about your car accessories installed? In such case, the value of accessories like special system, speakers, music system or anything additional to the car price is added to the IDV. If you are car is more than 5 years old, the premium and IDV is decided adjusting the depreciation schedule.
Car has an engine space, which is calculated as car’s cubic capacity. The engine size does affect the insurance premium included in third-party insurance claim. The premium value is the same for new or old car, because premium deals with the function of engine size not with the age. Vehicle with higher engine CC are likely to pay higher premiums.
Your car engine CC is mentioned on the registration papers. There might be slight change in amount due to different factors such as brand, market value, engine or age of the vehicle.
An insurance cover is basically a rating used to find the possibility that a customer will report for an insurance claim. This score is based on consumer’s credit rating and the calculation method differs from one insurer to other. While many insurance firms use proprietary formula to measure scores- the factors used are outstanding debt, credit history, payment details and history, revolving credit, loans, monthly account balance, and available credit.
Insurance companies cleverly show a positive relation between insurance claims and credit scores. It does make sense. At time of minor car accidents, persons with poor credit are more expected to file claims as compared to those with higher credit scores. Insurance scoring is profitable, because not many qualify for the lower pricing. Insurance premiums are a revenue stream which is recurring for insurance companies, and scores just add up to higher premiums.
How to save money-
- Maintain a good credit report. For instance, flawed driving history but good credit record pay less whereas good driving history but bad credit report end you paying more.
- There are many factors that determine your insurance premium, make sure you ask your insurance company on all other factors.
- To keep your score high, ensure that you pay all bills and limit credit cards usage to avoid debt. Your insurance score is highly impacted by monthly credit cards expenses. It would be difficult to stop using it but there are always ways to cut down.
Don’t always opt for any insurance because it’s an recurring expense hence always compare policies before getting one for you. Credit score is here to stay, you must take care of it wisely. Know your financial spending patterns and how does it affect your premium.
Do you think “covered” really help you in insurance? If you own a car, you ought to have car insurance. Getting car insurance isn’t a rocket science but choosing the right quote and company is a great deal. Your auto insurance cost depends on various factors including marital status, age, driving habits and where you live in. When it comes to car insurance policy, you need to understand the tidbits about your car and few untold truths that save you money. Many people scan through the insurance document once the properties get damaged or, after an accident, worst happens. The truth is many people are not aware of issues surrounding car insurance, which can have a significant impact on the insurance claims. Here are five misconceptions that every car owners should be aware of before they opt for any insurance policy. (more…)