Keith Baxter: Hi again. If I compare auto insurance quote online and find that the rates given by an insurance company are very cheap, can I cancel my present auto insurance policy and get refund in full? 

Response: Keith, when you compare auto insurance quote online and find that the rate of auto insurance is very cheap as per the offer, before you cancel your present auto insurance policy please do the following:

1) Go to the General Conditions section of the policy and read the specific condition on the “Cancellation of your policy” . Please see if there is any penalty specified for cancellation of the policy and any time-line given there. The reason for asking you to do this is because at times insurance companies do keep a penalty for cancellation of the policy. Now, if the cost of cancellation of the policy is going to be higher than the savings you are presently getting on the new auto insurance quote, if would be advisable to continue with your present insurer.

2) Ring up your insurance agent or the present insurance company with whom you are insured and ask them the condition and the penalty for cancellation. When you speak to them, note down the customer service live agent name for future reference.

Once you are sure that the cancellation of the policy can be done without any loss of money, first insurer yourself with the other insurance company, connfirm your insurance policy and than cancel your policy. Here is an important tip, in case the cancellation of the policy is done and for some reason the other insurance company does not accept your risk, you will have to pay the penalty of driving a car without insurance. Secondly, your other insurer will consider that you are uninsured and your insurance is not in continuity and might charge you more for this.

Reader: What does my credit rating have to do with my auto insurance quote or rating?

Low auto insurance rates can be obtained with good credit.

Auto insurance quote credit rating

Response : One thing you need to remember when you review car insurance or compare auto insurance quote to get low auto insurance rate is that your credit score should be good. Normally one would think that there should be no relation between the car insurance rate and a credit score.

The credit score is generated from a person credit history. Credit history is the score of the time-line and the default in paying your bills like the telephone bills, loans or any outstanding bills. The insurance premium for any risk including the auto insurance is based on the probability of loss; the higher the probability of loss, the higher the risk and the higher the rating.

The actuarial department of the insurance company has analyzed the “insurance score” and based the auto insurance premium on this.  The “insurance score” is generated from a numerical rating of the person credit history. Based on the “insurance score” the underwriting of the auto insurance is done.  The insurance companies have found that if the credit score of a person is low than the risk is higher. Statistically it has been found that a person with a low score for credit history is more likely to place a claim or meet with an accident than one with a higher score. This may be the case since a person with poor credit has financial problems and is under stress.

So the next time you reveiw car insurance coverage or compare auto insurance quote, whether online or through an agent, please check your credit score. If it is good – you have a ticket to low auto insurance rates. The agent is not giving you low auto insurance rates – you are entitled to low auto insurance rates.