Find the Right Car Insurance

While most people know whether they have liability, collision and/or comprehensive coverage, few people pay much attention to their insurance coverage until after they’ve been in an accident. In this article, we’ll go over car insurance coverage and give you some tips to help you get the most for your money.

The Basic Types of Coverage

Protecting your assets and your health are two of the primary benefits of car insurance. The following are the main types of car insurance coverage:

  • Liability Insurance: This coverage pays for third-party personal injury and death-related claims, as well as any damage to another person’s property that occurs as a result of your automobile accident. Liability coverage is required in all but a few states.
  • Collision Insurance: This coverage pays to repair your car after an accident. It is required if you have a loan against your vehicle because the car isn’t really yours in this case—it belongs to the bank, which wants to avoid getting stuck with a wrecked car.
  • Comprehensive Insurance: This coverage pays for damage incurred as a result of theft, vandalism, fire, water, etc. If you paid cash for your car or paid off your car loan, you may not need collision or comprehensive coverage, particularly if the blue book value of your car is less than $5,000.

Additional Car Insurance Coverage

In addition to the coverage listed above, other optional coverage types include the following:

  • Full Tort/Limited Tort: You can reduce your insurance bill by a few dollars if you give up your right to sue in the event of an accident. However, giving up your rights is rarely a smart financial move.
  • Medical Payments/Personal Injury Protection: Personal injury protection pays the cost of medical bills for the policyholder and passengers. If you have good health insurance coverage, this may not be necessary.
  • Uninsured/Underinsured Motorist Coverage: This option provides for medical and property damage coverage if you are involved in an accident with an uninsured or underinsured motorist.
  • Towing: Towing coverage pays for a tow if your vehicle cannot be driven after an accident. If you are a member of an automobile service, or if your vehicle comes with roadside assistance provided by the manufacturer, this coverage is unnecessary.
  • Glass Breakage: Some companies do not cover broken glass under their collision or comprehensive policies. In general, this coverage is not worth the long-term cost.
  • Rental: This insurance option covers the cost of a rental car, but rental cars are so inexpensive that it may not be worth paying for this coverage.
  • Gap: If you demolish that $35,000 sport utility vehicle 10 minutes after you drive it off the lot, the amount the insurance company pays is likely to leave you with no vehicle and a big bill. The same thing applies if your new set of wheels gets stolen. Gap insurance pays the difference between the blue book value of a vehicle and the amount of money still owed on the car. If you are leasing a vehicle or purchasing a vehicle with a low, or no, down payment, gap insurance is a great idea.

Factors That Impact Your Rates

In addition to the specific coverage options that you select, other factors that affect your auto insurance rates include the following:

  • Your deductible: This is the amount of money that you pay out of your own pocket if you get in an accident. The higher your deductible, the lower your insurance bill. In general, a deductible of at least $500 is worth considering, as damage to your vehicle that comes in at less than $500 can often be paid without filing an insurance claim.
  • Age: Younger, less experienced drivers have higher insurance rates.
  • Gender: Men have higher rates than women.
  • Demographics: Though actual risk is determined by the zip code you live in, city residents statistically have more accidents, which drives their premiums higher than those who live in rural areas. Additionally, more people living in an area means more claims, which is reflected in the higher premium prices in such places. If you’ve recently taken up residence in New Mexico, Alabama, Oklahoma or Florida, expect to pay higher premiums. According to the Insurance Research Council, these states have the greatest concentrations of uninsured motorists, which ultimately seeps into insured drivers’ premiums.
  • Claims: Accident-prone drivers pay more. If you want to keep your rates low, keep the number of claims that you file to a minimum.
  • Moving Violations: Speeding and other moving violations all have a negative impact on your insurance bill. Obey the law to help keep your rates from rising.
  • Vehicle Choice: Sports cars cost more to insure than sedans, and expensive cars cost more to insure than cheap ones do. Looking into the cost of insurance before you purchase that new car could help you save a bundle on your car insurance.
  • Driving Habits: The number of miles that you drive, whether or not you use your car for work, and the distance between your home and work all play a role in determining your rates.
  • Theft Deterrent Systems: If you have an alarm on your car, you’ll pay less to insure your vehicle.
  • Safety Devices: Airbags and anti-lock brakes both work in your favor by keeping you safer and lowering your insurance bill.
  • Accident Prevention Training: Some companies offer discounts if you take a driver’s education training course.
  • Multiple Policies: If you have more than one car and/or also have homeowner or renter’s insurance, keep in mind that many insurance companies offer discounts based on the number of policies that you have with them.
  • Payment Plan: Some insurance companies offer discounts based on your payment plan. Paying your entire yearly bill at one time, instead of in installments, may lead to a discount.
  • Credit Score: Good credit lowers your car insurance rates. Bad credit increases them.
  • Not having auto insurance: If you ditched your auto insurance in an effort to save some money, you’ve committed a classic case of being “penny smart and pound foolish.” Not having any auto insurance, even for just over 30 days, will cause your premiums to jump.

Tips for Lower Car Insurance

1. Compare Rates for Various Cars

If you are shopping for a new car, call your current insurance (or a new insurance company) to compare premiums for the cars. Car insurance costs vary because of the safety record, repair costs and likelihood of theft as well as the price of the car.

2. Avoid Gaps in Coverage

If you are switching policies, make sure you are completely covered at all times. If you let your insurance coverage lapse by forgetting to make the premium payments, your rates are likely to be increased.

3.Claim all Your Discounts

If your car has extra anti-theft or safety features such as anti-lock brakes, most insurance companies will give you a discount on your premiums. You may also be eligible for a discount if you have taken a defensive driving class or, if you are a student, you have good grades

Car Insurance Shopping Tips

Before you buy a policy, research your policy provider—regardless of who it is. Numerous firms rate the financial health of insurance companies, and your state also has an insurance website that rates firms based on the number of complaints they have received. (For a comprehensive list of state insurance regulators, visit the Federal Citizen Information Center.)

Be a smart buyer: do your homework and check out what a company’s policy does and does not cover before purchasing it. Make sure the policy you pick covers the vehicle at all times. Many small insurance companies offer low rates compared to the big ones because of their lower overhead costs. But, when there is an accident, and an insurance claim is filed, these small companies can sometimes be a pain. They may try to wash their hands and say, “it’s not covered under your policy.” That’s not what you want to hear when you really need them after paying your premiums for months. Also, don’t go with a local insurance company that doesn’t cover out-of-state accidents.

When considering any company, big or small, whose costs are lower, also consider their customer service. Further, it’s a good idea to investigate the company’s financial strength (which directly impacts their ability to pay your claims) through a rating service such as A.M. Best.

Also keep in mind that a company offering a discount on the first month or two of premiums will probably make up for that discount with higher rates in the following months. Overall, you want to find the middle ground between price and quality.

Don’t Overdo It

When you talk to any insurance agent or service provider, they are going to try to sell you more coverage so they can make more money. In general, you don’t need a high amount of coverage unless you own an expensive vehicle, drive extensively or don’t have adequate health insurance. Many insurance companies are able to make easy money off of uneducated buyers who don’t know what they want. By using the tips from this article, you won’t have to let a smooth-talking agent steal money from your pocket.

Having ample and reliable insurance coverage is a very important component of auto ownership: you don’t want to experience money problems when you are already going through the trauma of an accident. Be a smart buyer, do the proper research, compare quotes and create a package that suits both your coverage needs and your budget.

Top Car Insurance Providers for Retirees

The following car insurance providers offer great resources for senior drivers such as driver improvement courses and provide discounts on car insurance for seniors:

  • AARP (formerly known as the American Association of Retired Persons)
  • The American Automobile Association (AAA)
  • Geico (in select states)
  • Allstate

 

Get Better Car Insurance

Do you have the right car insurance? Do you have enough coverage? While most people know whether they have liability, collision and/or comprehensive coverage, few people pay much attention to their insurance coverage until after they’ve been in an accident. Shopping for car insurance is a financial planning topic that is often overlooked, since most teenagers are added to mom and dad’s insurance policy when they first get behind the wheel, and then later shop for the least expensive policy when they have to the pay the bill on their own. In this article, we’ll go over car insurance coverage and give you some tips to help you get the most for your money.

The Basic Types of Coverage

Protecting your assets and your health are two of the primary benefits of car insurance. Getting the proper coverage is the first step in the process. These are the basic types of coverage with which most people are familiar:

  • Liability: This coverage pays for third-party personal injury and death-related claims, as well as any damage to another person’s property that occurs as a result of your automobile accident. Liability coverage is required in all but a few states.
  • Collision: This coverage pays to repair your car after an accident. It is required if you have a loan against your vehicle because the car isn’t really yours — it belongs to the bank, which wants to avoid getting stuck with a wrecked car.
  • Comprehensive: This coverage pays for damage incurred as a result of theft, vandalism, fire, water, etc. If you paid cash for your car or paid off your car loan, you may not need collision or comprehensive coverage, particularly if the blue book value of your car is less than $5,000.(For additional reading, see: Pros And Cons Of Leasing Vs Buying A Vehicle.)

Additional Coverage

In addition to the coverage listed above, other optional coverage types include the following:

  • Full Tort/Limited Tort: You can reduce your insurance bill by a few dollars if you give up your right to sue in the event of an accident. However, giving up your rights is rarely a smart financial move.
  • Medical Payments/Personal Injury Protection: Personal injury protection pays the cost of medical bills for the policyholder and passengers. If you have good health insurance coverage, this may not be necessary. (For additional reading, check out Fighting The High Costs Of Healthcare.)
  • Uninsured/Underinsured Motorist Coverage: This option provides for medical and property damage coverage if you are involved in an accident with an uninsured or underinsured motorist.
  • Towing: Towing coverage pays for a tow if your vehicle cannot be driven after an accident. If you are a member of an automobile service, or if your vehicle comes with roadside assistance provided by the manufacturer, this coverage is unnecessary.
  • Glass Breakage: Some companies do not cover broken glass under their collision or comprehensive policies. In general, this coverage is not worth the long-term cost.
  • Rental: This insurance option covers the cost of a rental car, but rental cars are so inexpensive that it may not be worth paying for this coverage.
  • Gap: If you demolish that $35,000 sport utility vehicle 10 minutes after you drive it off the lot, the amount the insurance company pays is likely to leave you with no vehicle and a big bill. The same thing applies if your new set of wheels gets stolen. Gap insurance pays the difference between the blue book value of a vehicle and the amount of money still owed on the car. If you are leasing a vehicle or purchasing a vehicle with a low, or no, down payment, gap insurance is an excellent idea.

Factors That Impact Your Rates

In addition to the specific coverage options that you select, other factors that affect your auto insurance rates include the following:

  • Deductible: This is the amount of money that you pay out of your own pocket if you get in an accident. The higher your deductible, the lower your insurance bill. In general, a deductible of at least $500 is worth considering, as damage to your vehicle that comes in at less than $500 can often be paid without filing an insurance claim.
  • Age: Younger, less experienced drivers have higher insurance rates.
  • Gender: Men have higher rates than women.
  • Demographics: People living in high-crime areas pay more than those living in low-crime areas.
  • Claims: Accident-prone drivers pay more. If you want to keep your rates low, keep the number of claims that you file to a minimum.
  • Moving Violations: Speeding and other moving violations all have a negative impact on your insurance bill. Obey the law to help keep your rates from rising.
  • Vehicle Choice: Sports cars cost more to insure than sedans, and expensive cars cost more to insure than cheap ones do. Looking into the cost of insurance before you purchase that new car could help you save a bundle on your car insurance.
  • Driving Habits: The number of miles that you drive, whether or not you use your car for work, and the distance between your home and work all play a role in determining your rates.
  • Theft Deterrent Systems: If you have an alarm on your car, you’ll pay less to insure your vehicle.
  • Safety Devices: Air bags and anti-lock brakes both work in your favor by keeping you safer and lowering your insurance bill.
  • Accident Prevention Training: Some companies offer discounts if you take a driver’s education training course.
  • Multiple Policies: If you have more than one car and/or also have homeowner or renter’s insurance, keep in mind that many insurance companies offer discounts based on the number of policies that you have with them.
  • Payment Plan: Some insurance companies offer discounts based on your payment plan. Paying your entire yearly bill at one time, instead of in installments, may lead to a discount.
  • Credit Score: Good credit lowers your car insurance rates. Bad credit increases them. (To learn more about this process, see Insight Into Insurance Scoring and The Importance Of Your Credit Rating.)

Shopping Tips

When you’re in the market for car insurance, careful shopping is a must. Prices, features, and benefits vary widely from company to company. Minimum coverage requirements vary too. In Florida, for instance, the minimum coverage requirements are $10,000 for personal injury protection and $10,000 for property damage.

In the personal injury department, $10,000 doesn’t buy much in the way of medical services should an operation or prolonged stay in the hospital be required. The same is true when it comes to personal property, as there are many sport utility vehicles and luxury cars that are priced well above $30,000. Therefore, protecting your financial assets in the event of an accident is likely to require far more coverage.

Comparison shopping is always a smart thing to do, and there are many websites designed to help consumers compare insurance policy prices. Insurance agents can help too. Independent agents often offer policies from multiple carriers and can help you find the policy best suited to your needs. Before you eschew an agent in favor of an online provider, think carefully about who you are going to call after you have an accident. Your agent has an incentive, in the form of your repeat business, to provide good service, while an online service may come up short.

Before you buy a policy, research your policy provider – regardless of who it is. Numerous firms rate the financial health of insurance companies, and your state also has an insurance website that rates firms based on the number of complaints they have received.

Save Money On Car Insurance

When you’re writing checks to pay your premium, car insurance can seem like an unnecessary expense, but there are many reasons why it’s a worthwhile investment.

Cars can be costly. According to information gathered by Kelley Blue Book, the average transaction price for light vehicles in the United States in 2015 was around $33,543. An auto insurance policy will reimburse you if your pricey new car is stolen or damaged.

There’s also the matter of accident protection. Data published by the National Highway Traffic Safety Administration reports that there were just over 6 million police-reported crashes in 2014. Car insurance will assist you in covering expenses after an accident, even if you’re at fault.

 

But perhaps the most compelling argument in favor of purchasing a policy is this: Car insurance is required by law in most states.

Car insurance is essential, but you shouldn’t have to wipe out your finances to pay for it. Here are some steps to follow that will help you save money when procuring insurance for your daily driver.

1: Plan ahead

The best time to start thinking about car insurance is before you’ve purchased or leased your car. The year, make and model of your ride will impact your premium, so it’s something to keep in mind when deciding which car you want to take home from the dealership.

 

One factor to consider is safety. Insurance provider State Farm reports that insurance companies offer lower rates and discounts to policyholders who drive vehicles widely deemed as being safe. On the other hand, if a car has a record of being easily damaged or of providing poor crash protection to occupants, this will often be reflected in higher insurance premiums.

Another factor that impacts insurance rates is susceptibility to theft. Some vehicles are unusually popular with car thieves, and this makes them more expensive to insure.

Repair cost also plays a role in how high or low your insurance premium will be. If a vehicle is expensive to repair, the insurance provider will transfer some of the cost to the policyholder by charging higher-than-normal premiums. For this reason, an expensive luxury model by BMW will likely command a higher premium than a bargain-priced Hyundai subcompact.

To make sure you get the lowest rates, do some research before leasing or purchasing a car. Ideally, you’ll want to choose a model that rates highly for safety and has average to low repair costs. You’ll also save the most on insurance by selecting a model that doesn’t have a high risk of theft. Insurance provider Esurance provides yearly lists of the top 10 most commonly stolen vehicles in the U.S., and you can use this data to guide your choices.

To make sure you get the lowest rates, do some research before leasing or purchasing a car. Ideally, you’ll want to choose a model that rates highly for safety and has average to low repair costs. You’ll also save the most on insurance by selecting a model that doesn’t have a high risk of theft. Insurance provider Esurance provides yearly lists of the top 10 most commonly stolen vehicles in the U.S., and you can use this data to guide your choices.

2: Know the rules of the game

Insurance providers look at various aspects of your personal history and living situation to determine your rates, and it can be helpful to know which factors will be taken under consideration. According to State Farm, the following variables play a big role in determining your car insurance premiums:

Your address. Certain neighborhoods have a higher incidence of theft and accidents, and if you live in such a community, your car insurance rates will be higher. Generally, urban areas have higher rates than rural communities.

Your mileage. The more mileage you put on your car, the more you can expect to pay in auto insurance. If you have a long commute to work or frequently take road trips, you’ll likely find yourself facing steeper-than-average car insurance premiums.

 

 

Your credit history. Believe it or not, certain credit data can be useful in predicting insurance claims. Those with excellent credit are less likely to lodge claims, and for this reason, these policyholders tend to get the best rates. It’s a good idea to obtain a copy of your credit report before purchasing car insurance so you can clean up errors, and know where you stand.

3: Determine how much coverage you need

Scary but true: Recent data shows that in 2012, 12.6 percent of U.S. drivers were uninsured, despite laws requiring coverage.

According to 21st Century Insurance, there are five primary types of car insurance. Below is a list detailing these insurance categories. We’ve also included some considerations to keep in mind when deciding how much coverage you want to purchase.

Liability insurance. If you cause an accident, liability insurance covers property damage and medical bills. It’s required by law in most states that drivers carry liability insurance, and various states have various minimums. Make sure your coverage meets the minimum required by your state, and this information is available on the website of your state’s insurance commission. It’s a good idea to get more coverage than just the bare minimum, since this will give you extra accident protection.

Collision coverage. Collision coverage pays for damage to your car if there’s an accident, and it will reimburse you for your car’s value if the vehicle is totaled. If you have a lease or a car loan, your lessor or lender will require collision coverage. If you own your car outright and it’s older and of low value, it might be in your best interest to skip collision coverage.

Comprehensive coverage. Comprehensive coverage springs for vehicle damage or loss that isn’t caused by a collision with another vehicle. If your car suffers theft, weather damage or is damaged as a result of a run-in with an animal, comprehensive coverage will foot the bill. Comprehensive insurance is required if you owe money on your car loan or if you have a lease, but if you own an older car that’s not worth very much, consider foregoing this coverage.

Personal injury protection. This coverage pays your medical bills and those of your passengers if you’re injured in an accident. Medical expenses can quickly add up, so this is useful coverage to have.

Uninsured/underinsured motorist protection. Even though liability insurance coverage is required by law, a recent study by the Insurance Research Council indicates that in 2012, as many as 12.6 percent of all U.S. drivers were uninsured. If you get in an accident that’s caused by a driver who has no insurance or not enough coverage to cover the damage, uninsured/underinsured motorist protection will assist with your expenses. This coverage is worth getting, and it’s usually fairly inexpensive.

4. Set your deductible

According to Progressive Insurance, your deductible is the amount you’ll have to pay out of pocket if you file a car insurance claim. The higher your deductible is, the lower your premium will be. Figure out how much damage you can afford to pay for in an accident, and set your deductible accordingly.

5. Consider usage-based insurance

If you drive an older car, or you drive a classic car and put few miles on it, there are ways to save money on car insurance.

If your yearly mileage is lower than average, usage-based insurance might be a good bet. With traditional insurance, your rate is based on risk factors and actuarial studies regarding your demographic. With usage-based insurance, a smartphone app or device connected to your car’s diagnostic port is used to monitor your driving habits.

Laws in some states allow only mileage to be monitored, while other states allow the tracking of speed and braking habits. Data regarding your driving habits is used to determine your rates. Insurance rates are calculated based on a minimum mileage of 12,000 miles a year, and if your yearly mileage is less than this figure, you could save money by tapping usage-based insurance.

Still, there are privacy issues to consider, and some drivers may not be comfortable with the Big-Brother aspect of this approach.

6. Shop around

Next, you’ll need to pick an insurance provider. Here are some factors to consider:

Cost. Cost will obviously play a role in deciding which provider you choose, and rates can vary quite dramatically from company to company. You can get a sense of premium rates by requesting insurance quotes online. Keep in mind that cost shouldn’t be your only consideration. You want an insurance company you can count on to cover your losses, so client care should play a part in your decision.

Complaint ratio. An insurance provider’s complaint ratio will tell you how effective the company is at providing solid client care. A provider’s complaint ratio indicates how many complaints it has received per 1,000 claims filed. The lower the ratio, the better the company is at serving the needs of its clients. You can research insurance company complaint ratios by visiting your state’s department of insurance website.

J.D. Power rating. J.D. Power is perhaps best known for surveying car owners regarding the performance of their vehicles, but the company also surveys policyholders each year regarding their experiences with their car insurance providers.

The company conducts customer satisfaction studies across various regions in the U.S., looking at elements such as overall satisfaction, policy offerings, price, billing and payment, interaction and claims. An award is given to the insurance company with the highest score in each region. Use J.D. Power insurance company ratings to make an informed choice.

Bundling. You may qualify for lower rates if you get more than one type of insurance from the same provider. For example, if you get your home insurance and car insurance from the same company, this may enable you to benefit from lower rates. If you have existing coverage with a provider, find out if you will get a reduced rate by bundling auto insurance in with your coverage.

7. Claim your discounts

Various discounts are available to drivers who meet certain requirements. If you have a clean driving record, you’ll qualify for a good driver discount. Students with good grades and vehicle owners whose cars are equipped with certain safety devices also qualify for discounts. Ask your insurance provider for a full list of all available discounts, and peruse this list with your eligibility in mind.

8. Take a fresh look at your coverage each year

Your circumstances will likely change from year to year, and you may be able to exploit this to improve your insurance rates. For example, if you have a shorter commute to work than you did when you first bought your policy, you may qualify for lower rates when your policy is renewed.

Learn More About Car Insurance Claims are Paid

Since there is no set rule for how insurance companies process claims brought to them, the process can differ greatly amongst insurance companies. However, most insurance companies undertake the steps outlined below. Here is a general overview of what you can expect when you file a car insurance claim.

The Assessment

An insurance adjuster will meet with you, the policyholder, to assess the damage done to your car. Pictures will be taken, and an estimation of the cost of repairs will be given to you and the insurance company. It’s a good idea to have your own pictures beforehand to make sure there are no discrepancies between the damages the adjuster assesses and the ones you are accounting for.

Rentals

Depending on the insurance company, you may be offered a rental car to drive while your car is being repaired. It’s important to keep in mind when renting a car that the time between the assessment and receiving a check can typically take up to 30 days. During that time, you may or not be paying for a rental car in between. Some policies cover this cost while others don’t so make sure to stay on top of it. “Rental reimbursement coverage” is helpful to have in these types of situations. Ask your policy provider about it.

After the assessment, money is mailed by check directly to the policyholder based on the amount determined by the insurance adjuster.

An important thing to note here is that should there still be a loan out against the vehicle, a check will still be mailed to you, but your lender’s name will also be on the check. In most situations, the lender is a bank, and you will be required to visit the bank to formally notify them of your intent to repair the vehicle. Checks are paid out in a number of ways—either to the policyholder or directly to the body shop. This is something you should coordinate with the body shop in advance.

A full and detailed description of what is to be done to the car should be outlined before you enter an agreement with the body shop. Body shops can easily manipulate these situations by adding unforeseen costs to the bill, that you will have to pay, so make sure you secure an overview of the repair costs in writing beforehand. Many times, a repair shop can sign off on an adjuster’s assessment as well to ensure this doesn’t happen.

Things to keep in mind:

Depending on your insurance company, the assessment process, and thus the check you receive can vary greatly. It can be a good idea to get a policy where the check is mailed directly to the body shop. This will ultimately mean that the body shop will not get paid unless it has completed its repairs. Insurers will often also require a pre-determined number of estimates from different body shops. The drawback to this is that the insurer can then choose which body shop to proceed with regardless of your preference. Keep all of these things in mind when considering a policy and subsequently filing a claim.

 

The Type Of Life Insurance

Many people don’t understand why they need life insurance, when they should buy it or what type of policy would best meet their needs. In this article, we’ll describe what type of life insurance will probably make the most sense for you at major milestones in your life.

Term Vs. Permanent Life Insurance
First, you need to understand the two basic types of life insurance: term and permanent.

Term life insurance provides a predetermined death benefit and covers you for a predetermined number of years, usually five to 30. The annual premiums are fixed and are based on your health and life expectancy at the time you apply for the policy.

Permanent life insurance isn’t the best choice for most people. It’s several times as expensive as term life insurance for the same amount of coverage. While your policy does accumulate some cash value through its savings or investment component, which a term policy doesn’t have, you pay a hefty premium for this feature and for having a policy that will definitely pay out one day. A term policy will hopefully expire before you do.

An oft-touted benefit of the permanent policy’s cash account is that you can borrow against it. But, with the money, you could save by purchasing term insurance instead, you could amass your own nest egg so that you don’t need to borrow anything to pay for a large expense. Also, when you borrow against your permanent life insurance policy, you diminish the policy’s value and can defeat the purpose of even having life insurance.

Now that we’ve established that most people should buy term insurance, let’s look at when and why you should buy it and how much coverage you need.

Single with No Dependents
If no one depends on you financially, you usually don’t need life insurance. Your untimely death will certainly affect a lot of people, but it won’t put them in a financial bind in most cases. If your parents aren’t well-off, however, you might consider purchasing a small, inexpensive policy that would cover your funeral and burial costs.

Just Got Married
Getting married in and of itself doesn’t mean you need to purchase life insurance. However, events associated with getting married, like buying a house and having children, do mean that you’ll probably need it soon. Since life insurance gets more expensive as you get older, and since a decline in health could make your policy more expensive or make you uninsurable, you might want to go ahead and get life insurance when you get married if you’re young and healthy.

Just Bought a House
If you’ve just bought a house, among the flood of junk mail you’ll receive will be solicitations for mortgage protection insurance, also called mortgage life insurance. These come in the form of official-looking notices instructing, not asking, you to complete and return a short document requesting personal information such as the borrower and co-borrower’s date of birth, sex, tobacco use, occupation, phone numbers, age and weight. Filling out this form does not usually mean that you’re purchasing an insurance policy; it just sets you up to receive sales phone calls to further discuss mortgage protection insurance and perhaps other financial products.

Mortgage protection insurance guards against the loss of income of the person, or people, responsible for paying the mortgage. This is to prevent one catastrophic event doesn’t lead to another like the loss of your family’s home. Though it is important to protect against the loss of a breadwinner’s income when there are significant household expenseslike a mortgage, you wouldn’t necessarily need to immediately pay off the mortgage if that person passed away, which is what mortgage protection insurance does. What you would really need is cash to cover all of your living expenses. Term life insurance will give you the cash to spend as you see fit.

The only reason to consider mortgage protection insurance instead of term life insurance is if you can’t meet the underwriting criteria for the latter. You may be able to get mortgage protection insurance without passing a medical exam. However, it’s also possible to get small amounts of term life insurance without a medical exam, so if you’re difficult to insure, a combination of both of these products might be right for you.

Baby on the Way
Perhaps the most important time to have life insurance is during the years when your children rely on you to provide for them. As soon as you know that a child will be entering the picture, you should get life insurance, if you don’t have it already. If you or your spouse passes away unexpectedly, the surviving spouse will bear the burden of not only earning an income, but also caring for the children.

At this stage in your life, you’ll want a substantial policy that will not only pay for 18 (or more) years of child-rearing expenses but also ongoing household expenses and perhaps college tuition. Make sure to buy enough insurance to allow your family to maintain the same standard of living.

If you already have life insurance at this stage, you should re-evaluate your policy because you might need to purchase more coverage.

Time to Retire
By the time you reach retirement age, your term policy probably will have run out. If you want life insurance when you’re older, it will be very expensive–possibly prohibitively expensive. That’s because your chances of dying, and the chance that the insurance company will have to pay a death benefit, increase substantially when you’re older. In other words, you become a riskier customer, and insurance companies will ask you to pay accordingly.

If you have a whole life policy, it will cover you until you die, but if you no longer need the policy, you may want to terminate it to save the monthly premiums and get full use of your cash value.

If you’ve planned carefully for retirement and avoided any major financial disasters in your working years, you shouldn’t need life insurance when you’re older. Your retirement accounts and the rest of your nest egg should provide for a surviving spouse’s needs. Your mortgage may be paid off, and your children will be old enough to support themselves.

 

How Much Important Car Insurance

For many people, the best auto insurance policy provides the greatest amount of coverage at the lowest cost. Because auto insurance has become commoditized, the focus often shifts to the premium amount as the primary point of comparison, which is fine as long as you don’t lose sight of what it is you are trying to protect. Paying a $1,000 deductible for a dented bumper, while inconvenient, is not a game changer for many people; but a liability claim of $500,000 or $1 million can be a life-changer. Auto insurance coverage should provide the maximum amount of protection against that which poses the greatest possible risk. To determine how much car insurance you actually need, consider several types of insurance coverage.

Start with Mandatory Liability Coverage

Auto liability coverage is mandatory in every state except New Hampshire. Liability coverage includes bodily injury coverage, which covers injuries to others and property damage coverage, which covers the cost of damage to other people’s vehicles or property. You are responsible for any liability claims resulting from accidents when you are at fault.

Each state sets a minimum coverage requirement, usually stated as a three-part number, such as 100/300/50. Each number represents a coverage amount in thousands of dollars. The first number is the coverage amount for bodily injury for a single person, while the second number is the total coverage amount for all individuals injured in the accident. The third number is the coverage amount for property damage. The state minimums for bodily injury coverage are as low as $20,000 to $25,000, and $40,000 to $50,000 for total coverage per accident. Property damage minimums range from $5,000 to $25,000.

As for other mandatory coverages, some states have requirements for uninsured or underinsured motorist protection and personal injury protection. Check with your state insurance department for any other mandated coverage.

The Rest Is up to You

There are several other components to your auto insurance policy, but the decision as to whether you need the coverage or how much coverage you should have is up to you. For instance, unless you have a loan out on your car, you are not required to buy collision or comprehensive coverage. Other factors to consider in determining your car insurance needs include:

• Your age and driving record

• The age, make and model of the car

• Your ability to self-insure

The additional coverages you need to consider are collision, comprehensive, personal injury or medical insurance, and uninsured/underinsured coverage.

Collision Coverage

Collision covers the cost of repairing or replacing your car. Some auto lenders require this as part of your minimum coverage. If your car is worth more than what you could pay to replace it, it would be important to have collision coverage. If your car is more than a few years old and the loan is paid off, you could opt out of this coverage.

Comprehensive Coverage

Comprehensive coverage is the cost of replacing your car or its contents for just about any other event besides an accident. Such events include car theft, weather damage or fire damage. If your car is more than a few years old, you may not need this add-on.

Medical Payments

Personal injury or medical payments covers expenses related to medical and funeral expenses for you or others injured or killed while riding in your car. With the exception of the funeral coverage, medical payments coverage may be redundant coverage if you have sufficient health care coverage.

Uninsured/Underinsured Motorist

Some states combine the two, while others make you choose one or both. This is especially important if you live in certain regions of the country with high percentages of uninsured or underinsured motorists. If you or your family members have an accident with an uninsured or underinsured motorist while in your car or on foot, you will be covered for all costs related to the accident.

Your Deductible

The deductible is the amount of an insurance claim you agree to pay out of your pocket before the insurance company pays the remainder of the claim. The deductible represents the amount of financial risk you are willing to assume. If you are willing to assume more financial risk in the form of a higher deductible, your premium cost is lower.

It might seem like the smart thing to do to take the lowest deductible, typically $500, because that would mean less money out of your pocket if you need to file a claim. However, if you never have to file a claim, that low deductible will have cost you hundreds or thousands of dollars in higher premium costs over time. If you take the highest possible deductible, typically around $1,500, you could save on your premium costs, letting you put more money into an emergency fund that can be available when and if you need it for repairs. For some people, this can be a much better use of their funds.

Learn More About Insurance Checkup

Life happens, and at different stages you’re going to need different protections from your insurance. That’s why an insurance checkup is often in order. Doing it annually may seem like a waste of time, but it could yield some big savings. That’s particularly true if you have too much insurance. Even being underinsured can cost you if the unthinkable happens. But making sure you have the right level of insurance is not the only reason a checkup is important. From taking advantage of reduced rates to ensuring you are getting all the discounts owed, here’s a look at five reasons shopping around for your insurance can save you money.

To Take Advantage of Rate Changes

One of the most important reasons why you want to do an insurance checkup is to save money. Rates can change more often than you think, driven by a variety of reasons, some of which are out of the control of the insured. Take homeowner’s insurance for one example. If crime in your neighborhood decreases, so will your homeowner’s insurance premium. Shopping around is the only way you will know if lower rates are available.

Your Circumstances Have Improved

The timing of your insurance purchase can also have an impact on your rates and is another reason why you want to shop around fairly often. Take homeowner’s insurance again as an example. If you bought the policy after a rash of crimes or a big storm and things improved, your premiums could be cheaper. With auto insurance, the same thinking applies. You may have signed up for your policy when your credit score had taken a hit, but now you’re in a better financial position and your debts are paid off and your credit score has improved. Or it may be that you had points on your driver’s license that are now gone. In both instances, by shopping around you are going to save money, and in some cases, a lot of it.

Whether you own a home, car or fine art, what you pay for insurance will be based on the perceived risk. The more that risk is mitigated, the less you will pay in insurance. Take health insurance for an example. Someone who is healthy will pay less for insurance than someone who is sickly. But if that sick person got better, then his insurance should be reduced. The same can be said for an automobile or home. If you just bought a security system for your home or automobile that is going to lower your risk and thus your premiums. But if you don’t shop around or at the very least let the insurance know about the upgrades, you won’t be able to save.

You Have Too Much Coverage

Whether it is on purpose or by mistake, often people end up with too much insurance coverage whether that’s for their health, home, automobile or life. Insurance is supposed to give you some peace of mind, but that doesn’t mean you have to overpay for it. While you may not have to check up on your insurance every year to make sure you have the proper coverage, it is something you should want to do more often than not. After all, you don’t want to have full coverage on your automobile if it’s more than 10 years old or $1 million coverage on a $50,000 condo.

On the flip side, being underinsured can also be a costly mistake. The last thing you want to happen is have a major disaster and not have enough insurance to cover the repairs. If we’re talking about health insurance, not having enough of it could end up bankrupting you.

You’re Missing Out on Discounts

Insurance companies are in a cutthroat industry, and they want your business and will go to great lengths to attract and retain you as a customer. Translation: discounts abound. Whether you are shopping for homeowner’s insurance, health insurance or for car insurance, insurers are going to offer you discounts that can range from single-digit to double-digit percentage savings. There are discounts for your age, risk, how many products you have with the company, whether you are a member of a particular group and so on. If you don’t shop around for your policies, you could be leaving money on the table in discounts and deals

 

Learn More About Bundle Your Insurance For Big Savings

Most American drivers start out using the same insurance company that their parents had, and never really think to switch. Some drivers may have changed insurance companies somewhere along the way to save a few bucks, but for the most part, they’ve made no conscious choices about their insurance provider. Many first-time homeowners get their homeowners insurance in the same way, as it’s probably the company that their real estate agent or title company had recommended. Life insurance purchases usually follow a similar path.

People buy insurance for reasons of convenience as well as, of course, initial price. As a result, a lot of people end up with a hodgepodge of insurance carriers, and have no reason for doing so. This is fine if you enjoy opening extra mail and paying bills to three separate insurance carriers every month, and possibly overpaying for your combined insurance premiums, but you probably don’t, so read on to find out how bundling your policies can help you save big on insurance.

The Benefits of Bundling
Many of the big insurance companies price their insurance rates to attract a particular segment of the market. They usually price their insurance to attract homeowners who need to insure not only their cars, but also their homes and their lives (and other things). Many other companies can beat them on price if it’s left to a head-to-head price check on a single line of insurance (such as auto or home), but these big companies want customers who will stay with them for years instead of shopping around for a better deal every six months. To accomplish this, companies give the best deal to clients who will use their company to insure all three main lines of insurance, as people who buy one type of insurance usually have additional items that need insuring and end up paying much more in total annual premiums than the single-line customer who only insure a car or a house.

How Much Do You Actually Save?
When combining auto, home and life insurance, it wouldn’t be unusual for many families to spend between $3,000-5,000 – or more – per year. Of course, these rates depend on where you live, the value of your home and car(s), driving habits, personal health and so forth.

What’s the Catch?
For just one line of insurance, most large multiple-line companies aren’t extremely price-competitive. After all, those thousands of people on staff can really add up. By combining your policies under one roof, the companies benefit from economies of scale and can justify more discounts by getting additional total premiums. In other words, they have more of your money to work with and therefore can justify charging you less.

As for life insurance, people who have a life insurance policy are much less likely to switch insurance carriers because of the difficulty (or even impossibility) of changing policies. This difficulty is due to medical issues, age and the possible need for further medical exams, among other factors, and so people usually keep their life insurance policies in place. For this reason, many large insurance companies emphasize to their sales teams that life insurance sales are a critical product.

Companies also want to give discounts in order to retain customers because it is expensive for companies to continually process (also known as underwriting) a revolving door of new customers. Due to the added expense associated with customer turnover, insurance companies prefer to have customers who carry multiple lines of insurance and keep these policies in place for years. Moreover, bringing all of the insurance from a particular household slightly diversifies the company’s risk

 

Learn More About Life Insurance

Very few people enjoy thinking about the inevitability of death. Fewer yet take pleasure in the possibility of an accidental death. If there are people who depend on you and your income, however, it is one of those unpleasant things that you have to consider. In this article, we’ll approach the topic of life insurance in two ways: first, we will point out some of the misconceptions and then we’ll look at how to evaluate how much and what type of life insurance you need.

Does Everyone Need Life Insurance?

Buying life insurance doesn’t make sense for everyone. If you have no dependents and enough assets to cover your debts and the cost of dying (funeral, estate lawyer’s fees, etc.), then insurance is an unnecessary cost for you. If you do have dependents and you have enough assets to provide for them after your death (investments, trusts, etc.), then you do not need life insurance.

However, if you have dependents (especially if you are the primary provider) or significant debts that outweigh your assets, then you likely will need insurance to ensure that your dependents are looked after if something happens to you.

One of the biggest myths that aggressive life insurance agents perpetuate is that “insurance is harder to qualify for as you age, so you better get it while you are young.” To put it bluntly, insurance companies make money by betting on how long you will live. When you are young, your premiums will be relatively cheap. If you die suddenly and the company has to pay out, you were a bad bet. Fortunately, many young people survive to old age, paying higher and higher premiums as they age (the increased risk of them dying makes the odds less attractive).

Insurance is cheaper when you are young, but it is no easier to qualify for. The simple fact is that insurance companies will want higher premiums to cover the odds on older people – it is a very rare that an insurance company will refuse coverage to someone who is willing to pay the premiums for their risk category. That said, get insurance if you need it and when you need it. Do not get insurance because you are scared of not qualifying later in life.

Is Life Insurance an Investment?

Many people see life insurance as an investment, but when compared to other investment vehicles, referring to insurance as an investment simply doesn’t make sense. Certain types of life insurance are touted as vehicles for saving or investing money for retirement, commonly called cash-value policies. These are insurance policies in which you build up a pool of capital that gains interest. This interest accrues because the insurance company is investing that money for their benefit, much like banks, and are paying you a percentage for the use of your money.

However, if you were to take the money from the forced savings program and invest it in an index fund, you would likely see much better returns. For people who lack the discipline to invest regularly, a cash-value insurance policy may be beneficial. A disciplined investor, on the other hand, has no need for scraps from an insurance company’s table.

Cash Value vs. Term

Insurance companies love cash-value policies and promote them heavily by giving commissions to agents who sell these policies. If you try to surrender the policy (demand your savings portion back and cancel the insurance), an insurance company will often suggest that you take a loan from your own savings to continue paying the premiums. Although this may seem like a simple solution, this loan will cost you, as you will have to pay interest to the insurance company for borrowing your own money.

Term insurance is insurance pure and simple. You buy a policy that pays out a set amount if you die during the period to which the policy applies. If you don’t die, you get nothing (don’t be disappointed, you are alive after all). The purpose of this insurance is to hold you over until you can become self-insured by your assets. Unfortunately, not all term insurance is equally desirable. Regardless of the specifics of a person’s situation (lifestyle, income, debts), most people are best served by renewable and convertible term insurance policies. They offer just as much coverage and are cheaper than cash-value, and, with the advent of internet comparisons driving down premiums for comparable policies, you can purchase them at competitive rates.

The renewable clause in a term life insurance policy means that the insuring company will allow you to renew your policy at a set rate without undergoing a medical. This means that if an insured person is diagnosed with a fatal disease just as the term runs out, he or she will be able to renew the policy at a competitive rate despite the fact that the insurance company is certain to have to pay out.

The convertible insurance policy provides the option to change the face value of the policy into a cash-value policy offered by the insurer in case you reach 65 years of age and are not financially secure enough to go without insurance. Even though you will be planning in the hope of not having to use this option, it is better to be safe and the premium is usually quite inexpensive.

Evaluating Your Insurance Needs

A large part of choosing a life insurance policy is determining how much money your dependents will need. Choosing the face value (the amount your policy pays if you die) depends on:

  • How much debt you have: all of your debts must be paid off in full, including car loans, mortgages, credit cards, loans, etc. If you have a $200,000 mortgage and a $4,000 car loan, you need at least $204,000 in your policy to cover your debts (and possibly a little more to take care of the interest as well).
  • Income Replacement: One of the biggest factors for life insurance is for income replacement, which will be a major determinant of the size of your policy. If you are the only provider for your dependents and you bring in $40,000 a year, you will need a policy payout that is large enough to replace your income plus a little extra to guard against inflation. To err on the safe side, assume that the lump sum payout of your policy is invested at 8% (if you do not trust your dependents to invest, you can appoint trustees or chose a financial planner and calculate his or her cost as part of the payout). Just to replace your income, you will need a $500,000 policy. This is not a set rule, but adding your yearly income back into the policy (500,000 + 40,000 = 540,000 in this case) is a fairly good guard against inflation. Remember, you have to add this $540,000 to whatever your total debts add up to.
  • Future Obligations: If you want to pay for your child’s college tuition or have your spouse move to Hawaii when you are gone, you will have to estimate the costs of those obligations and add them to the amount of coverage you want. So, if a person has a yearly income of $40,000, a mortgage of $200,000, and wants to send his or her child to university (let’s say this will cost $80,000), this person would probably want an $820,000 policy ($540,000 to replace yearly income + $200,000 for the mortgage expense + $80,000 university expense). Once you determine the required face value of your insurance company, you can start shopping around for the right policy (and a good deal). There are many online insurance estimators that can help you determine how much insurance you will need.
  • Insuring Others: Obviously there are other people in your life who are important to you and you may wonder if you should insure them. As a rule, you should only insure people whose death would mean a financial loss to you. The death of a child, while emotionally devastating, does not constitute a financial loss because children cost money to raise. The death of an income-earning spouse, however, does create a situation with both emotional and financial losses. In that case, follow the income replacement trick we went through earlier (your spouse’s income/8% + inflation = how much you’ll need to insure your spouse for). This also goes for any business partners with which you have a financial relationship (for example, shared responsibility for mortgage payments on a co-owned property).

Alternatives to Life Insurance

If you are getting life insurance purely to cover debts and have no dependents, there is another way to go about it. Lending institutions have seen the profits of insurance companies and are getting in on the act. Credit card companies and banks offer insurance deductibles on your outstanding balances. Often this amounts to a few dollars a month and in the case of your death, the policy will pay that particular debt in full. If you opt for this coverage from a lending institution, make sure to subtract that debt from any calculations you are making for life insurance – being doubly insured is a needless cost.

 

Reduce Auto Insurance Costs

When was the last time you took a good look at your auto insurance policy? Most likely, the answer is ‘never’ – or at the very least, ‘not for a long time.’ You’re not alone. The majority of folks renew their policy without giving it a thorough look, even when premiums rise. But those few minutes to review what kind of coverage you have and what you actually need, can save you money.

Here are a few things to consider if you’re looking to reduce your costs:

The deductible is the amount of money you have to dish out before your insurance policy takes over. By increasing your deductible to $500 from, say, $200, you could lower the cost of your collision and comprehensive coverage by 15 to 30%. Increasing it to $1,000 could decrease that cost by at least 40%.

Avoid Duplicate Medical Coverage
Most insurance policies have an option for personal injury protection and medical coverage. But if you have an existing health plan, you may be paying extra for double coverage. Purchase only the minimum which is required by your state. One word of advice, though: check with your health and medical plan to make sure that policy will cover injuries incurred in auto accidents.

Drive a Lower-Profile Vehicle.
The belief that car color bumps up your premium is false. However, owning a car that is a target for theft, expensive to repair or has a less-than-stellar safety record can easily boost your costs. Car insurers are more interested in the make and model, year, body style, engine size and, in some areas, location (street parking versus driveway/garage-kept vehicles, for instance).

If a car falls under the “sports car” category – two seats, lots of horsepower, performance engine, high-end wheels and racing tires – expect to pay more. Insurers see these vehicles as higher risk for accidents (drivers tend to use the speed potential, also increasing the potential for getting traffic fines), more damage (sports cars tend to be smaller than family sedans) and higher maintenance costs (sports cars usually are equipped with unique or high-tech parts which make them costlier to replace).

Bundle Your Coverage
Many companies offer discounts for multiple policies. Ask your insurance carrier what the price difference would be if you combined your auto, homeowners and/or life insurance policies. If there are no discounts, consider shopping around. (To learn more, see Bundle Your Insurance For Big Savings.)

Consider Safety Options for Your Vehicle
Most newer vehicles include safety options, such as anti-lock brakes, air bags and automatic seat belts. But auto insurance companies take into consideration extras when determining your costs. Alarm systems, anti-theft devices, daytime lights and passenger-seat air bags can help reduce your premiums.

Maintain a Clean Driving Record
Driver behavior is a big factor when it comes to insurance costs. Moving violations, like speeding or reckless driving that result in “points,” certainly affect the cost of premiums.

Ask About Other Discounts.
You shouldn’t be shy when it comes to asking questions about auto insurance. Many companies offer reduced rates for folks over 50 or 55 years of age, if you have a clean driving record or have been a longtime customer. There may also be discounts for customers who complete a defensive driving course refresher (many states offer it online), teens who have completed a driving course through an approved driver’s education program, teens who are included on your policy or students who attend college and do not take their car with them.

Before you agree to expensive collision and/or comprehensive coverage, ask yourself a few questions first: How old is your vehicle? What is the vehicle’s market worth? Sometimes this coverage isn’t worth it because a claim may not exceed the amount of the insurance policy or deductible. Likewise, if you might want to drop emergency road assistance coverage through your insurance company if you have an adequate plan with another program, such as AAA or through your credit card.

 

Spike Your Auto Insurance

You may already know the importance of shopping around to score the best rate on your auto insurance premiums, but did you know that certain factors (or the absence of them) could cause your insurance premiums to rise?

To understand what makes your insurance premiums spike, it helps to understand the basic nature of auto insurance: Insurers make money when they insure drivers who don’t have accidents, and don’t make claims. They lose money when the opposite happens. As such, it is in the insurer’s best interest to predict driver risk factors as accurately as possible. When any of the following factors are present in your life, they indicate an increased likelihood that you, as a potential auto insurance policyholder, may have an insurance claim that will cost the insurer money. To compensate for the increased likelihood of a payout, insurers charge you more money in the form of a raised premium. Here are six things that spike your auto insurance.

Buying a New Car
Because a new car as an asset is worth more money than an older model, it will cost more to replace. Additionally, if you finance or lease your new car purchase, most lenders require you to carry full coverage at a stated level, which makes it impossible to skimp or strategize only on the coverage you need. You can be wise about how your new ride will impact insurance premiums before you buy. According to a recent study by Insure.com, the cheapest new cars to insure tend to be larger, sturdy models such as minivans, SUVs and trucks. Don’t assume that premium boosts come only with a flashy sports car or other high-priced model. The study indicated that the Honda Civic, for example, commands higher insurance rates simply because it tends to be driven by younger, childless owners who are inherently deemed riskier than parents. Further, it’s one of the most stolen vehicle models in the United States.

Long commutes to work don’t just cost you in time and fuel; they’ll also boost your auto insurance premiums. Again, the risk is much greater that you’ll get into an accident when you’re driving during rush hour. Further, if you are in a profession that involves frequent driving, like a pizza delivery person or salesperson, you’ll pay for the increased time that you spend in the car because more time spent driving increases the risk of an accident.

Moving
Though actual risk is determined by the zip code you live in, city residents statistically have more accidents, which drives their premiums higher than those who live in rural areas. Additionally, more people living in an area means more claims, which is reflected in the higher premium prices in such places. If you’ve recently taken up residence in New Mexico, Alabama, Oklahoma or Florida, expect to pay higher premiums. According to the Insurance Research Council, these states have the greatest concentrations of uninsured motorists, which ultimately seeps into insured drivers’ premiums.

Marital Status and Age
If you’re unmarried and without children, you’re considered part of a higher-risk category than married couples with kids. If you’re 26 or younger, and male, you’ll pay even more.

Dumping Your Auto Insurance
If you ditched your auto insurance in an effort to save some money, you’ve committed a classic case of being “penny smart and pound-foolish.” Not having any auto insurance, even for just over 30 days, will cause your premiums to jump.

Having a Brush with the Law
Having no accidents or tickets will lower your auto insurance premiums and, as you might imagine, having either or both could raise them. When and if you’ll see the spike is largely determined by your locale and your insurance provider. Insurance companies use a “merit plan” system. Most insurance companies periodically scan for recent traffic violations, whether you are a new or existing customer. After you commit a traffic violation and your insurer learns of it, your auto insurance rates could be higher for the next few years.

 

Know Cheap Car Insurance For College Students

If you’re of college age – or have a college-age student in the family – you probably know it’s a terrible time to buy auto insurance.

First, teens have higher premiums because of their inexperience behind the wheel. Statistics show that automobile accidents are the #1 teen killer with more than 3,000 fatalities and nearly 450,000 injuries annually. Second, money is tight. A higher premium charged to somebody just starting off in life makes the payment feel even larger.

Before you resign yourself to paying massive monthly premiums, take some time to do a little shopping. Following these tips could lower the rate significantly.

Most auto insurance companies offer a discount for teens who have good grades. Normally somewhere around 10%, this discount is usually available to college students too – until age 25, depending on the company. That’s why it pays to get quotes from several insurers before making your choice.

Safe Driving

No accidents, no speeding tickets and no other trouble could mean a sizable discount. Some companies say that your discount could be as much as 45%.

Defensive Driving Class

Take a defensive driving course and save another 10% at some companies. The length of the classes varies but 10% can add up fast, especially if you’re a college student trying to save every dollar.

Stay on Your Parents’ Policy

In general, you can stay on your parents’ auto insurance policy until you permanently move out of your primary home. If you’re living on a college campus, that is considered a temporary residence. It doesn’t hurt to compare an individual policy to a family policy, but most of the time you will pay less by staying on the family plan.

Install an Anti-theft Device

Just because it’s a school doesn’t mean that it’s safe. Auto insurance companies will often give you a discount for an anti-theft device. The size of the discount depends on the type of device you install. Remember, if your car is going with you to college, you have to inform your insurance company; the cost of insurance depends on where the car will be located.

Add Up How Much You’ll Drive

If you’ll be living on campus more than 100 miles from home – and you’re not taking your car to college and nobody else will be driving it while you’re away – tell your insurance company. Your parents’ car insurance could drop as much as 30%.

On the other hand, if you’re commuting back and forth to classes – especially a hour or more each way – you might want to up your coverage since you’ll spend a lot more time in your car