Monthly Archives: March 2017

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

 

Learn More About Car Insurance Rates

Maybe you applied for car insurance recently, and to your surprise and dismay, you kept getting quotes that were much higher than you expected. Or, perhaps your car insurance premiums jumped dramatically, even though your driving record hasn’t changed.

Before you simply accept the higher quote or the premium rise, there are steps you can take to find out if the information used to determine those rates is accurate.

Check These Key Reports

Driving and claims records are the two most critical factors insurance companies use to determine your insurance rates. Insurers check this information using two key sources – your state’s motor vehicle report (MVR) and the CLUE database operated by LexisNexis. If you believe you have a clean driving record and there is no reason for the jump in your car insurance premiums, you may want to look into both the MVR and the CLUE reports.

  • Status of your driver’s license
  • Traffic accidents
  • Driving record points
  • Traffic law violations, convictions and fines
  • DUI public records

Another key report to review is your FACT Act Disclosure Report on the CLUE database, which will also help you determine if there is incorrect information being used by the insurance companies to determine your premiums. You can request a report online or by calling 866-312-8076. By law, you are entitled to one free report every 12 months, thanks to the Fair Credit Reporting Act, which also enables you to get one free copy of your credit report each year.

In addition to your personal information, this report will include:

  • Details about the claims that insurers have paid on your behalf
  • Details about claims insurers have denied and why they have been denied
  • Reports from an agent or adjuster regarding inquiries you have made

Information remains on this report for seven years. Once you get a copy, review all claims reported. The key piece of information you need is whether any accident on your report was listed as “at fault” or “not at fault.” If an accident is reported as an “at fault” accident and you have proof that it was not your fault – such as a police report or other accident data collected by your insurance company – it’s critical to get that information corrected before applying for car insurance. If your car was involved in an accident, for example, but you were not the one driving, you need to make sure that fact is known by the companies to which you are applying for insurance.

Keep in mind that it can take 30 days to correct a CLUE report. If you need insurance immediately, you may be able to show proof to the insurance companies you have applied to, and an insurance agent can use that information to adjust a quote.

Discounts for a Clean Record

It’s a good idea to check your MVR and CLUE reports before you start applying for car insurance. That way you’ll know what the insurance companies will be seeing about you, and you can be prepared to address any potential problems. The reason it matters: You can get a number of discounts if you have a clean driving record:

  • Good driver discounts – Auto insurance carriers offer a variety of discounts for good drivers. Some give incentives for every year you avoid an at-fault accident or moving violation. Others use safe driving records to give discounts – you may qualify for one, for example, after three or five consecutive years of safe driving.
  • Claim free discounts – You can get a discount for not filing a claim. If you have a minor accident, especially if the cost for repairs is less than your deductible, think twice about filing a claim. The loss of the discount for several years may be more costly to you than the repair. (For more, see Will Filing an Insurance Claim Raise Your Rates?)
  • Usage based discounts – Some insurers put a monitoring device on your car and reward you for safe driving habits.
  • Defensive driving or safe driving training – Some companies offer a discount if you take a defensive driving or safe driving course. One of the most popular for people over age 50 is the AARP Driver Safety Course, which you can take online or in person. Once you have successfully completed it, you’ll receive a certificate to send to your insurance company to qualify for the safe driver discount.

 

All About Car Insurance Cost Cutters

Due to the litigious nature of our society and the rising cost of vehicles, car insurance rates are hefty throughout the nation. The bad news is that insurance isn’t likely to lessen in price any time soon. The good news is that there are things that you can do to minimize increases and/or lessen the burden on your wallet. Let’s take a look at 12 tips you can employ to save your driving dollars.

1. Insure Multiple Cars/Drivers
If you obtain a quote from an auto insurance company to insure a single vehicle, you might end up obtaining a higher quote (per vehicle) than if you inquired about insuring several drivers and/or vehicles with that company. This is because insurance companies will offer what amounts to a bulk rate because they want your business, and under some circumstances, they are willing to give you a deal if it means you’ll bring in more of it.

To obtain a discount, ask your agent/insurance company to see if you qualify and get a quote. Generally speaking, multiple drivers must live at the same residence and be related by blood or by marriage. Two non-related people may also be able to obtain a discount; however, they usually must jointly own the vehicle.

2. Keep A Clean Record
It should go without saying that the more accidents or moving violations an individual has, the more he or she will tend to pay in terms of annual premiums. For those unaware, points are typically assessed to a driver for moving violations. Generally speaking, more points can lead to higher insurance premiums (all else being equal).

3. Take A Defensive Driving Course
Sometimes insurance companies will provide a discount for those that complete an approved defensive driving course. Also, sometimes a driver can reduce the number of points he or she has on his or her license by taking a defensive driving, accident prevention or other course.

Make sure to directly ask your agent/insurance company about this discount before signing up for a class. After all, it’s important that the effort being expended and the cost of the course will translate into a big enough insurance savings. It’s also important that the driver sign up for an accredited course.

4. Shop Around
If your policy has just been renewed and the annual premium has gone up markedly, consider shopping around and obtaining quotes from competing companies. Also, every year or two it probably makes sense to obtain quotes from other companies just in case there is a lower rate out there.

However, remember that cheap doesn’t always mean good and going with the lower-priced company isn’t always the wisest decision. That’s because the insurer’s credit worthiness should also be considered. After all, what good is a policy if the company doesn’t have the wherewithal to pay an insurance claim? To run a check on a particular insurer, consider checking out a site that rates the financial strength of insurance companies (such as A.M. Best). Financial strength of your insurance company is importnant but, what your contract covers is also very important so, make sure you understand your insurnace contract.

5. Take Mass Transit
When you sign up for insurance, the company will generally issue you a questionnaire. Among the questions it asks might be the number of miles you drive the insured automobile per year.

If you use your vehicle to commute three hours to work every day, you will generally pay more in insurance premiums than someone who only drives one mile a day. If possible, try to use mass transit to rack up fewer miles, keeping in mind that you will usually have to decrease your mileage significantly before incurring a discount. Ask your agent/insurance company about the company’s different mileage thresholds so your efforts won’t be wasted.

6. Select Your Vehicle Carefully
Buying a huge SUV may sound exciting, but insuring a 5,000-pound, top-of-the-line vehicle can be more expensive than insuring a small (but safe) lower-cost commuting car. Also, older cars are often cheaper to insure than their more modern counterparts. Again, speak with your agent/insurance company to find out the exact rates to insure the different vehicles you’re considering before making a purchase. To learn more about choosing a cost-effective vehicle, see Wheels Of A Future Fortune.

7. Consider Raising Your Deductibles
When selecting car insurance, you can typically choose a deductible, or the amount of money you would have to lay out before insurance picks up the tab in the event of an accident, theft or other type of damage to the vehicle. Depending on the policy, deductibles typically range from $250 to $1,000. The catch is that, generally speaking, the lower the deductible, the higher the annual premium. Conversely, the higher the deductible is, the lower the premium. Ask your agent/insurance company how your premium might be affected if you raised your deductible. In some cases, it may make the annual premium better by several percent and put some money back in your pocket; other times, the savings may be minimal.

8. Improve Your Credit Rating
A driver’s record is obviously a big factor in determining auto insurance costs. After all, it makes sense that a driver who has been in lots of accidents could cost the insurance company lots of money. However, folks are sometimes surprised to find that insurance companies may also consider credit ratings when determining insurance premiums.

Why is a person’s credit rating considered? The theory is that individuals who keep their financial situations in ship-shape condition will tend to be more careful when it comes to driving. Regardless of whether that’s true, be aware that your credit rating can be a factor in figuring insurance premiums and do your utmost to keep your credit rating high.

9. Pay Attention to Where You Live
It’s unlikely that you will move to a different location (i.e., state) simply because it has lower car insurance rates. However, when planning a move, the potential change in your car insurance rate is something that you will want to factor into your budget.

10. Drop Unnecessary Coverage
Dropping certain types of coverage can be a slippery slope. After all, nobody can predict if or when an accident will occur. However, if an individual is driving an extremely old automobile that’s on its last legs, it may make sense (depending on the cost, the individual’s driving record and other factors) to drop collision coverage. The reason for this is that were the vehicle to be involved in an accident, the insurance company would likely total the car. If the value of the car is only $1,000 and the collision coverage costs $500 per year, it may not make sense to buy it.

In any case, before making any such decision, consider speaking with your financial advisor and your agent/insurance company. Remember, every situation is different and the decision is up to you.

11. Install Anti-Theft Devices
Individuals have the potential to lower their annual premiums, sometimes by as much as several percent, if they install anti-theft devices. Your agent or insurance company should be able to tell you specifically which devices, when installed, can lower premiums. Car alarms and LoJacks are two types of devices that you might want to inquire about. If your primary motivation for installing an anti-theft device is to lower your insurance premium, make sure to consider whether the cost of adding the device will result in a significant enough savings to be worth the trouble and expense.

12. Question Your Agent
It’s important to note that there may be other potential cost savings to be had in addition to the ones described in this article. In fact, that’s why it often makes sense for you to speak directly with your agent or a representative of the insurance company to ask if there are any special discounts that the company offers for individuals such as military personnel or employees of a certain company. The insurance company may also offer a “good student” rate or some other special savings. You never know what sort of discount pricing might be available for your circumstances, but unless you ask, you probably won’t be able to take advantage of it.