Confessions of an Auto Insurance Agent

Many of us know the feeling of getting our car insurance bill and thinking, "Again!? Didn't I just pay this!?" Car insurance is one of those unavoidable (in most states) expenses. AOL Autos wanted to find out from an insider exactly what goes into those prices and what we can do to keep our car insurance costs down. We talked to Patrick Lawson, a 25-year veteran auto insurance agent.

The Bottom Line: Premiums

Have you ever wondered how they come up with these numbers? Lawson mentioned the common factors like age, sex, car type and driving record but also noted a new, little known factor. "Companies are now, of all things, checking credit because people with poor credit, statistically, can be susceptible to more claims," he said. He explained that some people in these cases are more apt to file a claim instead of settling it themselves because they might not have the means to handle it any other way.

"Insurance is nothing but numbers, and that's all the industry has to go on is how they make these number come out. And the numbers suggest that people with less-than-perfect credit, sometimes, have a higher probability of claims," says Lawson.

Regardless of good credit or bad credit, he always recommends that people shop around for car insurance, "Even if you have pristine credit, some companies put more of a value on credit than others," he said. "You can't make a blanket statement, but what you can say is it pays for everybody to shop around a little bit because it's well worth it."

He said that some car insurance companies have bad experiences with drivers and some have more positive experiences so, "You as a consumer, have the job to find the ones that are having the good experiences."

Once you find a car insurance company that provides the services you're looking for, keep in mind that the prices themselves are fixed by the insurance company, so haggling with your agent is out of the question. "Whatever the price is, it is," he said.

Some Things to Avoid

Many of us have let someone else borrow our car for a short time. Maybe we're hurt and can't drive, a friend needs a car for the day, or we simply just don't feel like driving. Lawson told AOL Autos that lending your car to the wrong person can be a big mistake.

"You should always be careful who you let drive your vehicle. You just don't arbitrarily say, 'Hey take the keys and go' because you don't know what that person is doing, you don't know their driving record, you may not even know if they have a license," says Lawson.

He explained that if you lend your car to an unauthorized person and they get into an accident, your car insurance company might do everything it can to get out of settling the claim. This is especially important for parents who have their kids named on their policy as drivers. Sometimes their kids let their friends drive the vehicle as well. "As a rule of thumb, only the names of insured persons should ever give permission and only in extenuating circumstances, don't use it as carte blanche," Lawson said.

Speaking of things to avoid, we asked him if buying a red sports car was out of the question. "Here's a real misnomer about auto insurance, people say if you get a red sports car, that's like the kiss of death. Color has absolutely nothing to do with whether you get a speeding ticket or you don't," he said. If two cars are going 85 mph in a 65 mph zone, the police are not more likely to pull one over and issue a ticket because that car is red, Lawson said. When Lawson was studying to become a car insurance agent, he said the instructors made it a point to tell students that the red car theory is a falsehood.

The real problem with speeding tickets has to do with the drivers themselves, not the color of the car. "Some insurance companies are only equipped to deal with you if you get two tickets in a three year period. If you pick up three, you've gotten out of their underwriting mode where they're not going to renew you," he said. If your tickets (or accidents) build up, some companies will drop you because you're a risk.

In some cases, drivers just don't have any control over what happens when they get into their vehicles. Hitting a deer one too many times or being rear-ended on more than one occasion, can also affect your car insurance rate. "You hate to say it but that's almost the case," Lawson said. "Being at the wrong place at the wrong time can come back to bite you." Lawson acknowledged that it may not be fair that insurance companies handle certain people this way. Even if there's no real reason why some people get into more accidents than others, the fact is their claims cause companies to lose money.

Another thing to avoid is lying to your auto insurance agent. If you think he doesn't know about your tickets and accidents, think again. He's had a few people tell him their driving record, minus a few small details. He'll look up their record on the computer and, "They'll watch it print," he said, "and I've had a couple people just get up and gather their belongings and just walk out because they know they're dead in the water."

The Serious Side of Auto Insurance

With 25 years under his belt, Lawson has seen a lot. He talked about a family who came into his office wanting to purchase motorcycle insurance for a first-time bike owner, their 16-year-old son. They showed him a picture of the bike they were purchasing, a bike he described as, "A crotch rocket that does 0-60 as fast as you can sneeze."

He told the mother that it was a mistake, but she emphasized how safe her son was going to be. He told her, "Ma'am, I don't want to be inappropriate or hurt anyone's feelings, but this is a death claim waiting to happen. When you take a fast motorcycle on an inexperienced operator, you're begging for problems."

The first weekend the kid was on the bike, he lost control on a rural road, became airborne and totaled the bike. He spent some time in the hospital and later recovered. The mom called Lawson after the accident. "They called me up and the lady was crying and said, 'Why in the world did we not listen to you?' What do you say to something like that," Lawson asked, "You can't say anything except, 'I'm sorry it happened,' and ask 'how is he?'"

Motorcycles aren't the only dangerous thing on the roads though. Drivers who talk on their cell phones and send text messages cause accidents as well. Lawson knows firsthand the dangers of these distractions. A close friend of his was permanently disabled when a woman dropped her cell phone on the passenger floor and swerved into his lane when she tried to pick it up. The woman didn't have adequate insurance and his friend ended up being bankrupt by the medical bills.

"I think all the states should raise the minimum liability limits and require that all states make auto insurance mandatory," he said.

Chances are, most of us live in a state where car insurance is mandatory. By keeping your credit score in check (or working to improve it), shopping around for a car insurance company that fits your needs and avoiding mishaps like speeding tickets and accidents, you'll be able to keep the cost of your car insurance down. Also make sure to know what your current car insurance policy covers. You may have coverage that you don't need like windshield replacement or tow truck coverage. Adjust your coverage to get the car insurance that you need, with the price that matches your budget.