Monthly Archives: February 2017

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.

Learn About Beginner’s Guide To Auto Insurance

Whether an auto collision is your fault or somebody else’s, your auto insurance coverage should help you. How much it helps, however, is up to you, and this is determined by the combination of options that comprise your insurance policy. Despite what the TV commercials would have you believe, there is no one-size-fits-all insurance package, and it can be confusing to choose the best options for your situation.

In order to protect yourself without overpaying, let’s explore what factors you should consider in putting together the right coverage for your vehicle, as well as how to select a good insurance company that will handle your claims if an accident happens.

Factors to Consider Before Buying Auto Insurance

  • Personal Injury or Personal Liability – Always put you and your family’s safety before anything else. Personal injury or personal liability coverage should be given great importance when putting together an insurance package. During accident situations, health insurance is the first thing requested by any medical facility treating you. If you don’t have health insurance, load up this option with hefty coverage that will pay for any medical expenses incurred in a major accident. (For help with health insurance, read 20 Ways To Save On Medical Bills and How To Choose A Healthcare Plan.)
  • Uninsured Drivers – According to an Insurance Research Council (IRC) study, if someone is injured in an auto accident, the chances are about one-in-seven that the at-fault driver is uninsured. Don’t trust other drivers and don’t take for granted that they will have as good of coverage as you do. Though it can be hard to digest that you must pay a premium and the deductible for someone else’s mistake, it’s better than forgoing this coverage and risking losing your vehicle.
  • Major Accidents – You should never neglect the worst-case scenario when selecting insurance. What if your car is totaled and needs to be replaced? If the accident is not your fault, the other driver’s insurance (or your uninsured motorist coverage) will pay for the vehicle. But, there are other situations and natural calamities that can also destroy your vehicle, and in those cases, you’ll only be able to rely on your own insurance. In case such a situation arises, it is better to have enough coverage to fully repair or replace your vehicle.
  • Getting Stranded – A vehicle is a combination of mechanical, electrical and rubber parts. Things can go wrong at any time and they are not always in your power to prevent. But being prepared for those events is in your power if you add towing and rental coverage to your insurance. This might work out better than having a separate towing club membership, which could save you those annual fees.
  • Deductible Vs. Premium – The insurance deductible is inversely proportional to the premium amount. If the deductible goes up, the premium goes down and vice versa. This relationship reflects whether you prefer to pay more or less from your own pocket before stretching out your hand to the insurer. Whichever option you choose, make sure you can afford it. Some people are better off paying a higher monthly premium in exchange for a lower deductible to avoid any large payments after an accident.
  • Quality and Age of Your Vehicle – A new vehicle probably will not break down for at least a year or two, so your towing coverage should be minimal (though flat tires are still a concern). Some dealers even offer free towing for mechanical breakdowns on new cars. However, a new car will also be expensive to fix or replace in the event of an accident, so make sure your choice of coverage reflects this. (To fix a sour deal on your car, check out Did You Buy A Lemon?)If you own an old vehicle or an out-of-warranty on one, you will need better towing and rental coverage. Rental coverage becomes important if you are at fault and your car is damaged. If you don’t have a second vehicle and you need a car to get to work, rental coverage will tide you over while your car is being repaired or replaced.
  • Driving Experience – Many insurance companies automatically recommend certain coverage for particular drivers. For example, if you have a teen driver at home, it is better to have good personal liability coverage with a lower deductible because new drivers are prone to making mistakes. On top of that, rates to cover teen drivers will automatically be higher because of their lack of driving experience. Try not to let the higher rates prevent you from getting ample coverage, though.Experienced drivers with past mistakes, such as moving violations or accidents, can also have higher premiums. Defensive driving courses help to offset some of the cost, but not all of it, so drive carefully and consciously to avoid paying higher premiums later in life.

In the next section we’ll look at some quick tips to help you find the perfect auto insurer.

Choosing Your Auto Insurer
Choosing the right coverage is just the first step. You must also choose a good insurance company if you want to maximize the chance that your claims will be paid. Look for the following qualities when choosing your auto insurer.

  • Reliable and Reasonable – Insurance companies should be reliable, and offer reasonable coverage for the prices they charge. In some states, there isn’t much difference in price among insurance companies because of state mandates. In most states, however, companies will quote different prices for similar coverage.
  • 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. (An accident can mean higher insurance costs – even if it wasn’t your fault; to learn more, read Will Filing An Insurance Claim Raise Your Rates?)

Be a smart buyer: do your homework and check out what a company’s policy does and does not cover before purchasing your policy. 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 a need 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

 

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.