Stop Paying Too Much for Insurance

Value of a Car

Have you checked your vehicle's value in the Kelley Blue Book lately? This crucial piece of research can help you determine how much your car is worth. Not only that, it can also help you make many important decisions related to your ownership of a vehicle. It may even help you determine how to structure your auto insurance coverage.

Many drivers wonder how their vehicle's value affects their auto insurance rates. If you've wondered about this question, you might find the Blue Book a helpful resource.

What is the Kelley Blue Book?

The Kelley Blue Book company is a research group that reports on various trends in the auto industry. The automotive industry, vehicle sellers, governments and individuals use the Blue Book for various reasons. Kelley Blue Book is well renowned as a consumer research and vehicle valuation service.

Over time, the value of a vehicle depreciates. For example, a new car may be worth $35,000. However, as it ages, this value steadily declines. In fact, the car may only be worth $3,000 about a decade after purchase.

Vehicles tend to depreciate based on a variety of market trends. The Kelley Blue Book tracks how market forces will affect the rate at which a car depreciates.

Auto Insurance and the Blue Book

Many drivers ask if their car's Blue Book value will affect the price they pay for auto insurance. The value of a vehicle often does have an impact on how much you pay for your car insurance coverage.

Let's look at insurance prices in the context of our earlier example. By insuring a $35,000 car, your auto insurer assumes a higher risk than they likely would by insuring your $3,000 car. If you file a claim on a car valued at $35,000, it will likely cost the insurer more.

You will also likely have more insurance coverage on a car valued at $35,000, as you hope to protect your investment. So, your insurer is inclined to charge you more in these circumstances. This is why most auto insurers use a car's value as one factor to help them determine auto rates.

Nonetheless, the simple Blue Book value may not be the final determinant in how much you pay for coverage.

How Insurers Determine Rates

Many auto insurers use the Blue Book value as only one point in how they determine insurance rates. Your insurer will also likely ask you about many other factors related to your driving. These may include:

  • Location: Different locations pose different risks to drivers. For example, some places have higher accident or theft risks. This may mean insurers will charge more for the higher risks in this area.
  • Driving Record: Your driving history may make you risky to insure. For example, if you've had multiple accidents, you are could be classified as a high-risk driver. Insurance companies may charge you more this situation.
  • Usage: If you use your vehicle very little, you may pay less for car insurance. How much and how far you drive may cause your insurer to deem you more or less of a risk.
  • Vehicle History: Anything that happens to your vehicle during its lifetime may affect its value and risks. For example, if your specific vehicle has a manufacturer defect, it may pose a higher safety risk. This could lead to higher insurance costs.
  • Vehicle Safety Features: Insurers often deem vehicles with a safety rating or built-in safety features as less risky than others. You might qualify for lower insurance rates if you own one of these vehicles.

These are just a few of the ways auto insurers might determine auto insurance prices. Nonetheless, no two insurers are alike. Insurance companies use different formulas to determine how much you will pay for your coverage.

Remember, you and your vehicle are each unique. That’s why you need unique, specially-tailored insurance.

Using the Blue Book to Your Advantage

It's important to carry appropriate levels of auto insurance coverage. During the enrollment process, you will choose dollar values for your coverage levels.

Coverage levels will set limits on how much financial assistance your insurer will provide. Should you make a car insurance claim, your insurer may pay up to the maximum limit as allowed by your policy. There are ways you can use the Blue Book to make informed decisions about how much coverage you need.

The Blue Book recommends that you carry comprehensive and collision coverage worth around 10 percent of the value of an older vehicle. As your car depreciates, you might be able to reduce the coverage levels on your policy. This may help you reduce how much you pay for coverage.

Nonetheless, don't use your vehicle's Blue Book value as reason to drop your insurance coverage too low. For example, new vehicles may need much more coverage than the recommended 10 percent. Conduct a careful analysis of your personal risks as well as your financial needs. Your independent insurance agent can help you determine how best to set up your coverage.

Auto Insurance Discounters has answers to your questions on coverage. Contact us today to learn more.

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
Change the CAPTCHA codeSpeak the CAPTCHA code
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014

View Mobile Version
  • Hartford
  • Traders
  • Progressive
  • Travelers
  • Key Insurance
  • Cornerstone Group
  • GuideOne
  • Nationwide