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How Your Credit Score Impacts Your Car Insurance Rates

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By The Lambert Agency | Austin, Texas

When many people think about what influences their car insurance rates, they’ll often picture things such as their driving history, age, or the type of car they drive. One fact which may often surprise drivers is how much their credit score may end up influencing the price of their premiums.

Here at The Lambert Agency, we always believe in transparency, first and foremost. In this post, we’ll be breaking down exactly how your credit score may play a role in your car insurance rates, why it matters in the state of Texas, and what you can do to keep your premium costs as low as possible.

Why Insurance Companies Look at Credit Scores

Insurance companies do not actually check your credit report the same way lenders will check your credit report. Instead, insurance companies will utilize what’s known as an insurance-based credit score.

The specific score helps insurance companies predict how likely you may be to file a claim. Research has shown that people with higher credit scores will tend to file fewer insurance claims. When those people with higher credit scores do file a claim, it’s often less costly than those with lower than average credit scores.

Through these methods, insurers will use credit profile information as one of several factors to set their car insurance premium rates fairly and pre-determine overall risk profiles.

How Your Credit Score May Impact Your Auto Insurance Premium

In most cases, the better your credit score, the lower your car insurance premiums will be. Here’s a simplified breakdown of what that may end up looking like:

  • Excellent credit (750+): You may receive the best available rates
  • Good credit (700–749): You’ll still qualify for favorable rates with many carriers
  • Fair credit (650–699): Your premium may be moderately higher, depending on included factors as well
  • Poor credit (<650): You may end up paying significantly more over time, sometimes hundreds of additional dollars per year

This difference in premium costs can certainly add up quickly, especially for families with multiple vehicles under the same insurance policy.

Is It Legal in Texas to Use Credit Scores for Insurance?

Yes. Texas is one of many states which allows insurers to use credit-based insurance scores as a factor in calculating the rate of premium. With this being said, insurers cannot use credit scores as the only reason to deny, cancel, or non-renew your auto insurance policy.

Insurers must also consider other key factors such as your driving record, insurance claims history, vehicle type, and how many miles per year you drive on average.

How to Improve Your Credit Score, and Lower Your Rates

The good news? You do have control over your credit score. Even the smallest of improvements can end up resulting in better insurance rates over time. 

Here are a few ways to begin improving your credit score and subsequently lowering your auto insurance rates:

  • Pay your bills on time: Late payments will likely have a large impact on your credit score
  • Keep balances low: Try to use less than 30% of your available credit at any given time to demonstrate to creditors you’re not overextending yourself financially
  • Limit hard inquiries: Avoid applying for multiple new credit accounts, as this could end up temporarily lowering your score; as multiple hard inquiries are viewed as a possible risky credit profile
  • Check your credit report: Review your credit report regularly for any errors which could be hurting your score
  • Build consistency: Credit improvement does take time, yet insurers reward consistency and stability when it comes to improving your credit score

If your credit has actually improved since your last policy issuance, it’s certainly worth exploring new policy adjustments and also having your agent review your rates. You very well could be eligible for lower car insurance premiums.

Other Factors May Influence Car Insurance Costs

While credit definitely plays an important role in calculating insurance costs, it’s only one piece when factoring the equation. Insurers will also consider:

  • Driving record and accident history
  • Age and experience behind the wheel
  • Type of vehicle and repair costs
  • Coverage limits and deductibles
  • Where you reside (urban vs. rural ZIP codes in Texas)

Here at The Lambert Agency, we work with a large array of carriers to compare and contrast these factors side-by-side, and determine the best overall value for your unique situation.

Let Us Help You Receive a Better Auto Insurance Rate Today

Your credit score is not exclusively related to borrowing power, it’s also an important part of your overall financial picture; including your car insurance costs. Through gaining a greater understanding of how your credit score is used and taking the right steps to improve it, you may be able to save hundreds or thousands of dollars per year.

If you’re curious about how your credit score may end up impacting your current premium or you would like to explore better coverage options, you’ll want to reach out to us at The Lambert Agency. We’re here to help!

Get a Free Auto Insurance Quote in Austin, TX

You do not have to pay more than you have to. By contacting The Lambert Agency today, you can request your free, no-obligation quote. We’ll thoroughly review your auto insurance policy, check for any and all discounts, and help you find the right level of coverage which fits into your needs, and your budget.

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The Truth About “Full Coverage” Auto Insurance

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By The Lambert Agency | Austin, Texas

If you have ever shopped for car insurance, you’ve most likely heard the phrase “full coverage”. It’s one of the most commonly used terms in the auto insurance industry, yet it’s also one of the most misunderstood terms in the car insurance industry. Many Texas drivers will assume “full coverage” means they’re absolutely protected from any and all incidents which may occur on the roadways. This is not exactly true.

Here at The Lambert Agency in Austin, Texas, we believe every driver should know exactly what they’re paying for, so let’s explore what “full coverage” actually means, and what it does not mean as well.

There’s No Such Thing as “Full Coverage”

Despite how often the term “full coverage” may be used in the auto insurance industry, it’s not a specific type of auto insurance policy. It’s quite simply a way of referring to a combination of coverages which will go beyond the state imposed minimum requirements.

In the state of Texas, the law really only requires you to carry liability insurance, which is what covers other people’s property and medical expenses if you are the one deemed to be at fault in an accident. “Full coverage” will usually refer to a policy which also includes: 

  • Collision coverage: This level of coverage will protect your car after an accident, regardless of who is at fault.
  • Comprehensive coverage: This level of coverage will protect against theft, vandalism, storms, floods, fires, or striking an animal with your vehicle.

These two types of coverages, when combined, are what most people are referring to when they mention “full coverage”.

What “Full Coverage” Doesn’t Cover

Many drivers will be caught off guard when they hear “full coverage”, as full coverage does not protect you from each and every possible loss. Depending on your policy, you may still end up missing out on key protections such as:

  • Uninsured/Underinsured Motorist (UM/UIM): This protection offers coverage if another driver causes an accident, but is either underinsured or has no insurance coverage at all.
  • Personal Injury Protection (PIP): This protection will help pay for medical bills and lost wages, regardless of who is deemed at fault with the accident.
  • Roadside Assistance: This protection assists with towing, lockouts, or flat tires.
  • Rental Reimbursement: This protection will cover the cost of a rental car as your vehicle is being repaired.

If your end goal is true financial protection, you’ll want to add these optional coverages for complete peace of mind.

Why “Full Coverage” Means Different Things to Different People

What one person may call full coverage may not match another person’s definition. A driver with a newer vehicle may include gap insurance and rental car coverage, whereas someone with an older vehicle may only end up carrying liability and comprehensive coverage.

The key to this process is, “full coverage” should mean full protection for your unique situation. The right auto coverage policy is one which matches your car’s value, your budget, and your tolerance for risk, not just a simple label on a piece of paper.

Do You Need Full Coverage in Texas?

Texas law does require liability coverage, yet if you’re financing or leasing your vehicle, your auto financing group will nearly always require collision and comprehensive coverage.

Even if you own your car outright, you should consider the cost to replace the vehicle to an equivalent value of the car. If you would actually struggle to pay for major repairs or a total loss, full coverage is worth the investment itself. On the other hand, if your car’s value has dropped significantly, it may make more sense to drop collision coverage and save on your premiums.

A licensed insurance agent, such as The Lambert Agency, can help you run the numbers before making that decision.

How to Find the Right Level of Coverage

Here at The Lambert Agency, we don’t believe in a “one-size-fits-all” insurance policy. Instead, what we do is take the time to fully understand your vehicle, your lifestyle, and your financial goals. From there, we build a policy which will actually work for you, not just what is out-of-the-box and typical. Here’s what you can do right now:

Review your current policy: Verify what’s actually included under “Comprehensive” and “Collision” coverages

Look for gaps: Verify if you have uninsured motorist or PIP coverage

Get a professional review: Our team at The Lambert Agency can compare quotes from multiple top-rated carriers to ensure you’re receiving the best possible rate and protection.

The Bottom Line When It Comes to “Full Coverage” Auto Insurance

The phrase “full coverage” is certainly a convenient phrase, yet it’s not always a guarantee you’re fully protected. True coverage consists of knowing what’s actually included, what is not included. Here at The Lambert Agency, we’re helping Austin drivers navigate through the sometimes complicated pathways of auto insurance coverage. We want to educate and inform our clients of the best options available to them and build auto insurance plans which actually protect what matters most.

Get a Free Auto Insurance Review in Austin, TX Today!

Do not settle for vague promises of “full coverage” when it’s not actually full coverage. Allow us at The Lambert Agency to help you better understand how your policy works and let us uncover hidden savings embedded within your existing policy to strengthen your overall protection. We look forward to hearing from you soon and we’re eager to begin helping you with your auto insurance coverage in Austin, Texas.

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How to Lower Your Auto Insurance Premium Without Losing Coverage

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By The Lambert Agency | Austin, Texas

Auto insurance is one of the bills many people wish they could reduce, yet cutting corners on auto insurance coverage is not the answer. When you drop important protections, yes, it may save you a few dollars upfront in the present moment, but it could leave you financially exposed if a car accident were to occur.

Ready for the good news? You can lower your auto insurance premium without having to sacrifice the level of quality coverage. Here at The Lambert Agency, we help Austin, Texas-based drivers optimize their auto insurance coverage every day. Here are some of the best ways to keep your auto insurance rates low and your level of protection strong.

Bundle Your Policies

One of the simplest ways to reduce your auto insurance premium is to bundle your auto insurance with other types of insurance coverage. These types of coverages may consist of homeowners insurance, renters insurance, or life insurance coverage.

Many major carriers will offer multi-policy discounts which could save you up to 25% or more. Additionally, it keeps things simplified when you have all of your insurance policies under one roof with one insurance agent, one renewal date, and one trusted team (The Lambert Agency) to call on when you need assistance.

Raise Your Deductible with the Right Steps

Your deductible is the amount you will pay out of pocket prior to insurance kicking in to cover costs. Increasing your deductible from $500 to $1,000 may significantly lower your monthly premium costs. Always ensure you select a deductible which still fits comfortably within your emergency savings bandwidth. The goal is always to lower costs now without creating unexpected financial stress later on.

Improve Your Credit Score

In the state of Texas, your credit-based insurance score may end up affecting how much you pay for auto insurance. A strong credit history usually translates to lower rates than someone who has a poor credit score. Always try to pay your bills on time, reduce your debt load, and regularly check your credit report for any errors at least once per year. Even when you make a mild improvement to your credit score with best practices, it can result in a noticeable amount of savings when it comes time to renew your insurance policies.

Review (and Remove) Unnecessary Add-Ons

It’s easy to end up accumulating extra coverage options you may not need, such as roadside assistance when you already have AAA or built-in roadside assistance through your credit card. It’s always a good idea to review your policy line by line and determine if you’re actually paying for duplicate or outdated add-ons. Trimming the fat could lower your insurance premiums by a good amount without affecting your essential protection.

Take Advantage of Any & All Discounts Available to You

Insurance companies will often reward safe drivers who are loyal to their company with a variety of discounts. You may qualify for savings you were unaware of, including the following:

  • Safe driver or accident-free discount
  • Good student discount (for younger drivers)
  • Low-mileage or work-from-home discount
  • Anti-theft device or vehicle safety feature discount
  • Paperless billing or autopay discount

Here at The Lambert Agency, we ensure every eligible discount is applied to your policy; so you can save the most money possible while maintaining adequate levels of coverage.

Drive Safer & Keep a Clean Record

Your driving history is one of the most important factors in determining your auto insurance rate. Try your best to avoid tickets, at-fault accidents, and excessive amounts of claims over time; as these have a major impact on how much you’ll end up paying. If you have had a recent infraction, don’t worry too much, as many insurers who operate in Texas will reduce the potential surcharge after three years of clean driving patterns.

Review Your Coverage Annually

Life evolves, and your insurance coverage should too. Whether you’ve recently moved house, changed jobs, paid off your car, or started to work remotely; your risk profile will have shifted as well. Through reviewing your policy on an annual basis with a trusted local insurance agency like The Lambert Agency, you can better idnetify unnecessary coverages or missed discounts and keep your auto insurance premium best aligned with your actual needs.

Shop Around with an Independent Agency

Not every insurance carrier will choose to rate risk the same way. Some will favor newer cars, others may choose to reward experienced drivers with clean records. As an independent insurance agency, The Lambert Agency works with a wide array of highly-rated carriers, not just one insurer, so we’re able to best compare rates and find the most suitable match for you. This is how we help our clients save hundreds, if not thousands, each year.

Lowering your car insurance premium does not have to mean cutting corners and losing out on valuable protection. With a few properly planned adjustments and a proactive insurance partner (The Lambert Agency), you’re able to maintain strong levels of coverage while also saving money. Here at The Lambert Agency, we help drivers all across the greater Austin, Texas area.

Get a Free Auto Insurance Review Today from The Lambert Agency

Let’s see just how much you could be saving when you choose to work with The Lambert Agency. Contact us today for a free, no-obligation policy review and a truly personalized rate comparison. We look forward to hearing from you soon and we’re eager to begin saving you money while maintaining the best levels of protection.

Name
What type(s) of insurance are you interested in?
What type(s) of insurance do you currently have?
Are you willing to change your insurance agent?