Save on Premiums With Pay-as-You-Go Car Insurance

Don't want to get locked into a demanding contract or high monthly fees? Then just pay as you go! It's a popular way to finance a mobile phone, but now you can also pay as you go for your car insurance.

For certain people, a pay-as-you-go insurance plan can make a lot of sense and save a lot of money. After all, car insurance is a major expense for many Americans.

The national average annual premium for sedans is about $1,000, though that can vary by a wide margin. For example, in New Jersey, which has some of the highest rates in the nation, the average annual car-insurance premium is about $2,500. In Michigan, it's about $2,000.

Whether you pay $2,500, $1,000, or even $600 per year, car insurance can really pinch a budget, and it's especially frustrating if the insured driver doesn't even take the wheels for a spin very much. That's where "pay-as-you-drive," or PAYD, insurance comes in.

How It Works

Pay-as-you-drive plans involve installing a monitoring device onto your vehicle that typically records when you drive, how far you go, and also how often or hard you brake. As a result, it's your own personal driving characteristics that dictate the premium you're quoted. (Some plans, now or later, will let parents monitor and even restrict teenage drivers.)

In many ways, this new offering improves on the traditional model of car insurance. The old-fashioned approach would price your premium based on factors such as your age, gender, marital status, and even your credit rating. Young, single men, for example, tend to be quoted the highest rates, but many young, single men are careful and responsible drivers, penalized for the behavior of their peers.

Those who stand to gain the most will drive the fewest miles, ideally not at rush hour, and won't exhibit characteristics of aggressive driving, such as frequent or hard braking. Telecommuters and small-town residents are promising prospects.

Who Offers It

Right now, about eight of the top 10 car insurers now offer pay-as-you-drive coverage.

Progressive (PGR) calls its offering "Snapshot" and is offering drivers the chance to test it for free for one month. Its device is plugged into your dashboard, and you're able to review its data online. When the month is up, Progressive will use that data to quote you a price for coverage. Other systems don't use a plug-in dashboard device, but rely instead on certified odometer reading, or the cooperation of OnStar technology.

Allstate's (ALL) system is called "Drive Wise," and the company is offering customers who try it a one-time 10% discount just for doing so. State Farm recently expanded its PAYD coverage to about a dozen states, suggesting that those who drive the least might be able to save 40% and possibly even 50%. (It estimates that a typical driver who covers about 11,000 miles per year would save roughly 12% with a PAYD plan.) Hartford Financial Services (HIG) offers a TrueLane PAYD plan in about half a dozen states.

How Much Can You Save?

It's estimated that about 70% of those who try PAYD insurance will be able to save money with it -- and that savings can be as much as 30% of their regular premium.

Folks at the Brookings Institution have estimated that if everyone used PAYD insurance, two-thirds of households would save about $270 per car.

There are even broader benefits possible if all of America were to adopt PAYD insurance. Per the Brookings Institution: "We estimate driving would decline by 8% nationwide, netting society the equivalent of about $50 billion to $60 billion a year by reducing driving-related harms. This driving reduction would reduce carbon dioxide emissions by 2% and oil consumption by about 4%. To put it in perspective, it would take a $1-per-gallon increase in the gasoline tax to achieve the same reduction in driving."

Savings vs. Privacy

PAYD is not a perfect solution to the car-insurance challenge. One of the biggest knocks against it is that it invades your privacy. After all, the insurance company isn't going to just take your word that you only drove your Camry 23 miles in the last month.

Worried that you might try a pay-as-you-drive plan, not be offered a better rate, and then find your premium hiked because of the insurer's findings? Progressive says that won't happen. It also points out that its device doesn't use GPS technology, so it's not keeping tabs on where you go. (Some insurers may employ devices with GPS technology, though.)

As more data are collected under this new system, it will be possible to set rates more accurately, and more insurers will be likely to start offering PAYD. Progressive has reportedly collected 5 billion miles' worth of data already.

So the next time you renew your policy, give pay-as-you-drive insurance some consideration. Ask your insurer if it's offered and whether you can take it for a test-drive.

Longtime Motley Fool contributor Selena Maranjian, whom you can follow on Twitter, holds no position in any company mentioned. Click here to see her holdings and a short bio.

                       the source :http://www.dailyfinance.com/tag/car+insurance/

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The Hidden Costs of Cheap Car Insurance

Would you willingly let your car insurance company play backseat driver every time you hit the road?
                           
Hundreds of thousands of drivers have already invited auto insurance company Progressive (PGR) to ride along. Lured by the prospect of substantial discounts on their car insurance, these drivers are allowing the company to track their driving behavior through its "Snapshot" usage-based program.

Progressive isn't the only company hitching a ride with customers who don't mind their every turn being tracked. (See "Save On Premiums With Pay-As-You-Go Car Insurance" for more.)

Are you really rewarded for good driving?
Progressive claims that its Snapshot program rewards "good drivers" by offering discounts of up to 30%. But a closer look at the driving behaviors they track shows that is not strictly true.

After it's been installed in your car, the Snapshot device collects data about miles driven, the time of day one drives, and braking patterns. While this information may reveal a great deal about the degree of risk a driver imposes on an insurance company, it does not say much about whether someone is a good driver.

To see how this is the case, let's take a closer look at how Progressive uses this data to rank customers as high-, medium-, or low-risk.

• Miles driven: Progressive recommends that drivers not drive more than an average of 30 miles per day (about 11,000 miles annually) if they want to receive a discount. Driving a greater number of miles makes people greater insurance risks. After all, the more people drive, the more likely they are to get into accidents. But mileage alone doesn't make someone a bad driver.
• Driving times: Progressive rewards drivers who are on the road during times that pose lower risks for accidents. For example, it is more likely to reduce rates on customers who do most of their driving in the middle of the day than customers who regularly drive in rush hour traffic. The company is also less likely to decrease rates on those between midnight and 4 a.m. Prospective customers should note, though, that while information about the times of day people drive may indicate their level of risk for accidents, it does not indicate their driving ability.
• Brake patterns: Progressive also rewards drivers who have fewer "hard brakes," (i.e., fewer instances in which they decrease their speed by more than 7 miles per second). While this information can indicate bad driving habits, such as tailgating, braking patterns often have a lot to do with the driving conditions.

So it's not quite accurate to say Progressive's Snapshot program rewards good drivers. Rather, it rewards lower-risk drivers. Good drivers who have long commutes, live in urban areas, or whose schedules require them to drive during high-risk times won't qualify for the discount.

In fact, if that describes your driving patterns, you may end up paying more for your car insurance over time.

The trade-offs
Consumer advocates are concerned that Progressive's Snapshot program will eventually be used to raise rates on customers. And the move toward this outcome may not be straightforward.

Progressive claims that it will not raise rates based on the data gathered through the Snapshot program. However, if lower-risk drivers are earning discounts of up to 30% for their lower-risk behavior, it's likely that Progressive will want to recoup some of the expenses incurred by its higher-risk customers. One way to do this would be to increase the starting rates on customers who do not want to participate in their tracking program and those who do not meet its standards for "good" driving.

Also worth considering is the impact Progressive's Snapshot program will have on the auto insurance industry as a whole. As Progressive reaps the rewards associated with gaining more low-risk customers, other companies will have to make a choice -- either increase rates as the percentage of high-risk drivers in their customer base rises, or implement Progressive's strategy and create increasingly granular insurance offerings to match the risk levels associated with each customer.

So while some drivers may indeed see declining insurance rates, many others will see them rise, through no fault of their own. So before opening your car door and letting your insurer ride along, take a closer look at how the program works, and determine whether the trade-offs are worth the rewards.

Motley Fool contributor M. Joy Hayes, Ph.D. is the principal at ethics consulting firm Courageous Ethics. She doesn't own shares of any of the companies mentioned. Follow @JoyofEthics on Twitter.

                            the source :http://www.dailyfinance.com/tag/car+insurance/

                            

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Buying Car Insurance: You Better Shop Around

With more and more car insurance providers offering online quotes and sign-ups, switching policies is now easier than making a three-point turn. According to a study by InsuranceQuotes.com -- owned by Bankrate (RATE) -- 21 percent of Americans shopped for car insurance in the past 12 months, and of the nearly 43 percent of those who switched carriers, 81 percent said cost was the primary reason. Switchers do their homework: 34 percent of shoppers obtained at least three quotes; 26 percent obtained four or more.

When to Make a Change

Some insurers charge a fee for breaking a policy mid-term. So, unless the savings from the new policy are significant to offset such fees (and the coverage is comparable), it's best to wait to start comparison-shopping until several weeks before your policy is up for review and renewal. If you decide to switch, allow enough time to for the new policy to take effect, then cancel the existing policy before its automatic renewal.

Seek Out Hidden Discounts

Do you carpool once or twice a week? Pay your insurance bill annually? Use automatic bill pay? Each of these things can provide you with significant savings. Many companies offer substantial discounts for drivers who complete a defensive driving course, or who can show proof that they've taken a course through another provider or the workplace recently.

The best ways to learn about potential discounts are to check the company's website or ask an agent. Do both: One source might provide information the other might not have.

Bundle for Savings

Have a home? Need renters insurance? Own more than one vehicle? Most insurance providers offer savings to customers who buy more than one policy from them. Add in one-payment billing, a combined deductible, and one person to answer all insurance questions, and it might seem like a no-brainer. But the old adage about putting all you eggs in one basket can apply to insurance products too: What's good for the car might not be good for the house. Review all policies thoroughly, and note any gaps in coverage (including laptops, which often require a special rider for both car and renters insurance policies).

Free Safety

Because insurance companies don't ever want to have to pay out a claim, many offer preventive education classes, online tools, and interactive sessions for policyholders on everything from disaster preparedness to smart cycling. Ameriprise, for example, offers safety tips on camping, fireworks, and grilling.

Match Games

 

Before switching insurance providers, contact your current insurer for a policy review, and explain that you're considering moving elsewhere for a policy with lower premiums. Sometimes an agent can offer a better rate almost immediately, especially if they know a valued customer is about to walk.

But a policy is more than just its premiums. Many providers, including Nationwide, Liberty Mutual, and Progressive (PGR), offer accident forgiveness. Some providers offer discounted rates for recurring customers in good standing. Others offer loyalty perks. If an agent can't match premiums, he or she might be able to add features to the existing policy.

Before You Sign on the Dotted Line

To avoid having to switch again in six months or a year, customers should ask their new provider, either in person, via an online chat, or over the phone, to walk through the policy step by step. You don't want to learn after an accident that something you thought was covered isn't. Many car insurance policies also cover drivers while they're riding their bicycles. Even weekend or casual cyclists should pay attention to the fine print covering two wheels.

Items in the Rear-View Mirror...

It's easy to view car insurance as simply a line item on a budget -- until you need to collect. Deductibles, service, and how quickly and how well the car is repaired after an accident are important factors to consider before buying any insurance policy.

Unfortunately, it's impossible to truly know how good a value any insurance product is until making a claim on it. Only then will those discounted premiums prove to have been either an excellent investment or an avoidable calamity.




                                   the source :http://www.dailyfinance.com/tag/car+insurance/

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Got a Traffic Ticket? The Bump to Your Car Insurance May Not Be So Bad

Worried about what will happen to your car insurance premiums after you get caught committing a minor traffic violation? If you aren't getting traffic tickets frequently, then the results of a new study by InsuranceQuotes.com -- owned by Bankrate.com (RATE) -- may ease your mind.

According to the study, in which drivers answered questions about their histories and premiums, most drivers, regardless of age, aren't paying more for car insurance after getting a traffic ticket.

• Only 31 percent of Americans who received a traffic ticket in the past five years saw their rates go up as a direct result. Of those 31 percent, most paid less than $100 more a year.
• Younger drivers, ages 18 to 29, were more likely to have a higher increase after a ticket, and 41 percent said they paid more as a result of a violation.
• 32 percent of 30-to-49-year-olds and 15 percent of drivers over the age of 50 also paid a slight increase.

However, drivers with a history of repeated violations, or significant violations -- including driving under the influence, leaving the scene of an accident, and reckless driving -- almost always were charged higher premiums.

The nonprofit Insurance Information Institute says increases in insurance premiums will depend on the type of moving violation.

For example, going fewer than five miles an hour over the speed limit is considered a minor violation, and could result in a 5 percent to 10 percent premium increase. Going more than 30 miles an hour over the limit, or committing reckless driving offenses like passing illegally, failing to stop, and tailgating can lead to premium increases of up to 15 percent. Just how much will depend on the state the insurance policy was issued in, the driver's record, and the insurance carrier.

Steer clear of Future Increases

Drivers with one minor moving violation can work to ensure their premiums don't go up by avoiding a second ticket, attending traffic safety courses, and keeping all registrations and inspections up to date.

Also, some states have forgiveness rules. In New Jersey, for instance, carriers aren't allowed to raise rates for the first two-point speeding ticket (in most cases). And some insurers will forgive a minor violation for drivers with an otherwise clean driving history. Allied Insurance forgives one minor violation every three years without a rate increase, for instance. Nationwide offers an optional Minor Violation Forgiveness policy. Liberty Mutual and Progressive also offer customers similar options.

The Massachusetts Office of Consumer Affairs and Business Regulation offers a guide to accident forgiveness that can be useful for drivers nationwide.

All drivers, regardless of the number of accidents they've been in, can save money on car insurance by bundling policies, comparing rates regularly, and asking their existing provider for loyalty discounts and other price reductions they might qualify for.

Motley Fool contributor Molly McCluskey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our newsletter services free for 30 days. You can follow Molly on Twitter @MollyEMcCluskey.


                    the source :http://www.dailyfinance.com/tag/car+insurance/

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Everyone Gets an 'F' in Car Insurance 101

Think you know your car insurance coverage inside and out? You're probably fooling yourself. According to a recent survey by Insurance.com, consumers who said they had an "excellent" understanding of their policy actually scored the lowest when quizzed about their car coverage with an average score of 26 percent.

Not that the less-confident among us are doing that much better.

When divided into subgroups by age, gender, geographical region, or self-described expertise, no group scored higher than 39 percent on the Insurance.com quiz. Across all test takers, the average score of 32 percent earned the equivalent of an "F" for everyone.

Those weren't essay questions they had to answer, either: We're talking about 10 multiple-choice questions here.

Slicing and Dicing the Results

There were 500 drivers who answered the 10 multiple-choice questions.

So who scored the best on the quiz overall? It certainly wasn't those who said they read their entire policy. They actually scored a quite low 28 percent, on average.

The people who nailed the quiz -- relatively speaking, with a still unimpressive average of 35 percent -- were those who said they had never read their policy at all.

Here's how results shook out based on gender, age and geography:

• The average score for women was 35 percent, compared to an average of 27 percent for men.
• Drivers ages 40 to 70 scored the highest, at an average of 39 percent, compared to young drivers age 18 to 29, who only got 24 percent of the answers correct.
• Drivers in the South scored highest with an average of 34 percent. Drivers in the Northeast scored the lowest with an average of 29 percent, while those in the West scored 32 percent and drivers in the Midwest averaged 31 percent.

Test Yourself

Just two percent of test-takers got this one right:

"What does comprehensive coverage pay for?" (Select all that apply)

• Damage to my car if I crash it
• Damage to my car if an object falls on it, like a tree
• Damage to my car if I hit an animal, like a deer
• Damage to my car from a flood
• Property damage to others if I cause a crash
• Injuries to passengers in my own car
• Theft of my car

About half of those who took the quiz (55 percent) got this one:
"If your car is totaled, what does gap insurance pay for?" (Select One)

• The difference between the "actual cash value" of the vehicle and the amount owed on a car loan
• The difference between the "actual cash value" of the vehicle and the amount you paid for the car
• The difference between the amount owed on a car loan and the amount your paid for the car

More people (71 percent) knew the answer to:
"If a friend borrows your car and crashes it, whose insurance pays?" (Select One)

• Your friend's insurance
• Your own insurance

Curious to see how you'd fare? Take the test yourself here to see how your score compares.

                          the source :http://www.dailyfinance.com/tag/car+insurance/

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Reading This on IE or Safari? You're Likely Paying More for Car Insurance

On the surface, it might seem peculiar that your choice of Internet browser could affect the price you pay for car insurance. After all, browsers are merely tools for accessing the Web, and -- officially, at least -- they should all be accessing the same information. So the cost of the insurance policy that you find through Safari should be the same as the policy that you'd be offered on Google Chrome.

But here's the thing: a recent study by CoverHound, a company that helps users comparison shop for insurance, revealed that, among shoppers who bought auto insurance online, users of certain browsers paid as much as 23 percent more. According to CoverHound's analysis, the average user of Microsoft's (MSFT) Internet Explorer or Apple's (AAPL) Safari user pays $750 for car insurance every six months. By comparison, Chrome users pay $731 and Firefox users pay the least -- $608.

It would be great if using Firefox automatically resulted in lower insurance rates, but the truth is that there are other factors involved. To begin with, Firefox users skew older -- on average, three years older than Google (GOOG) Chrome or Safari users. And, since older drivers tend to get lower rates, it seems natural that Firefox users would pay less. They are also more likely to have graduate degrees, own their own homes, and be married.

But even if we control for the factors that naturally earn Firefox users lower rates, there are still anomalies that CoverHound's study reveals. For example, the average Internet Explorer user is older than the average Firefox user, which, based on industry standards, would suggest that IE users should pay less. Instead, they pay the most.

Users of Google Chrome are an even bigger anomaly. Chrome users are, on average, the youngest. They are far less likely to own their own homes and are the second-least likely to be married. By all rights, they should probably be paying the most for car insurance -- but they aren't.

According to CoverHound CEO Basil Enan, one reason for this anomaly may lie in the users themselves. "People who take the time to seek out a better browser might also be inclined to seek out a better insurance policy," he explains. "Internet Explorer and Safari often come pre-loaded on PCs and Macs. For the most part, Firefox and Chrome users have to go out of their way to get it. This suggests that they might be more tech savvy."

Another element may be Google itself. "Google is a great search engine," Enan notes. "Perhaps it's better at leading users to more attractive insurance rates. It's difficult to speculate, and would be difficult to prove, but it might be a factor."

In other words, the quality of your search might have an impact on the your insurance rate -- and the best search comes from a browser that you choose for yourself.

                         the source :http://www.dailyfinance.com/tag/car+insurance/

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Want to Pay Twice as Much for Your Car Insurance? Have a Kid

It's no great secret that across the nation, insurance premiums are on the rise. Over the past five years, the cost of insuring a home against fire and other casualty has crept up about 10 percent a year -- every year. Health insurance increases, while they've been muted of late, still rose 4 percent this year.

But if you think those hikes are steep, get a load of this next one.

Congratulations! You're a Father! (Now Open Your Wallet)

Kids are expensive. If you're a parent, you know this already. If you're a parent of a kid who hasn't turned 16 just yet, you're on track to get another lesson in how expensive they can be. Because once your offspring passes the driver's test and receive a license to drive from the state, he's going to need to be insured -- and that will cost you an extra $2,000 a year, on average.

(By the way, if your kid is getting her driver's license, your wallet won't take quite as big a hit, girls being 25 percent less expensive to insure than boys on average. But it'll still be some serious coin.)

According to the National Highway Traffic Safety Administration, driving is a risky activity for teens. The are more prone to get into accidents -- about four times as likely as older, more experienced drivers, according to the Centers for Disease Control. And traffic accidents are the leading causes of death for Americans ages 16 to 19.

Between lives lost and property destroyed, this all makes insurance companies very wary of insuring teen drivers. And when they do agree to insure a teen, they make you pay through the nose.

According to a recent report posted on Bankrate.com's (RATE) InsuranceQuotes.com, across both genders, all age categories, and all 50 states, parents pay an average 84 percent more for their car insurance after adding a teen to their policy.

Stay Between the (State) Lines

Think that's bad? It might get worse.

Unless you're fortunate enough to live in a state like North Carolina or Hawaii, where legislators have passed laws that ban setting insurance rates based on factors such as age or gender, your rates may rise by more than the average 84 percent.

How much more? Take a look at the top 10 states hiking rates on teenage drivers by 100 percent and higher:

• New Hampshire: 100.56 percent
• Louisiana: 100.58 percent
• Arizona: 103.65 percent
• Washington: 104.66 percent
• Maine: 105.23 percent
• Idaho: 106.74 percent
• Alabama: 110.61 percent
• Wyoming: 112.11 percent
• Utah: 114.62 percent
• Arkansas: 116.34 percent

That's right. Put a teenage driver on your policy in any one of these states, and you can expect to see your insurance cost for the whole family more than double.

The news is even worse for parents in Louisiana. Although its teen drivers bring "only" the ninth highest rate hikes with them when they join a policy, Louisiana car insurance in general is already the most expensive in the land -- averaging $2,699 annually for a single male driver, according to Insure.com. Add a kid to that policy, and you'll be shelling out upwards of $5,400 a year.

What's to Be Done?

Is there any way to beat the system, and avoid these hikes? Not entirely, no.

Sure, you could move to Hawaii, where insurance rates rise least. Then again, Hawaii also has the honor of hosting the nation's most expensive housing market -- so you'll end up seriously out of pocket, one way or the other. On the other hand, North Carolinian insurance rates don't rise so much when you put a teen on your policy. That market might be worth a look, if you're willing to move to save money.

Patience Is a Virtue... That Pays

One solution suggests itself from InsuranceQuotes.com's offhand observation that certain teens cost more to insure than others.

In particular, if you put a kid on your policy as soon as he hits 16, well, new 16-year-old drivers tend to double an insurance bill no matter where they live, averaging 99 percent rate hikes.

But premiums tend to rise less when teens wait a bit before trying to drive. 17-year-olds joining their parents' policies average a 90 percent increase. 18-year-olds cost 82 percent more. By the time Junior is age 19 and ready for college, the rate hike is "only" 65 percent.

Meanwhile, the standard caveats still apply: No one's forcing you to accept "average" rate hikes, so now that you know the "average" scenario, shop around to see if someone will offer you a better deal. Ask if taking (and passing) a safe driver course might reduce your teen's rate. And of course, since we're talking student-age kids here, make sure to inquire about discounts for good students. Whether or not it makes sense, insurance companies -- like grandparents -- often favor kids who bring home A's.

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How Bad Credit Could Be Doubling Your Car Insurance Bill

You've probably heard by now that in some vague way, your credit rating has something to do with the premiums your auto insurance company charges you for coverage. But if you're like me, you've probably never quite understood the details of how this work.

Fortunately, the good folks at InsuranceQuotes.com -- a subsidiary of Bankrate (RATE) -- recently published a report that draws back the curtain on this little-understood quirk of the insurance industry.

Blame it on FICO

Used to be, the rate you paid for insuring your car was tied primarily to demographic and personal factors that were clearly connected to the risk that you'd damage your car and ask the insurance company to pay for it: things like your age, sex, marital status, and driving history. It won't surprise anyone that younger, unmarried men are more likely to be risky drivers than soccer moms, and should therefore pay higher premiums. But about 20 years ago, the folks at Fair Isaac Corporation (FICO) found a correlation between low credit scores and a higher risk of filing an insurance claim.

That's not causation, of course -- having bad credit doesn't somehow cause you to crash your car. But according to FICO, "people who choose to effectively manage their finances are also less likely to have future insurance losses." Conversely, there is a "statistical correlation between a person's credit score and the likelihood that he or she will file an auto insurance claim in the future."

Shazzam! Suddenly, FICO had a new way to hawk its credit histories to insurance companies -- and insurance companies had a new excuse to raise your rates.

News Flash: Everybody Does It

Ever since, insurance companies have used this finding to tweak the rates they charge you for insurance. Today, says InsuranceQuotes, "about 97 percent of U.S. insurance companies" do it.

But how do they do it, exactly?

InsuranceQuotes.com wanted to find out, and so they ran some tests, requesting quotes for a hypothetical insurance customer with the following attributes:

• Age: 45
• Sex: Female
• Marital status: Single
• Accident history: No prior claims
• Insurance history: No lapses in coverage.

In essence, InsuranceQuotes started with the perfect candidate. Neither too young, nor too male, to be considered an unsafe driver. Spotless driving history. Just the person you'd expect an insurance company to consider low-risk and to offer a low insurance rate. Now let's see what happens to her rates as her credit history changes.

• Excellent "credit-based insurance score" (not the same as a FICO credit score): No effect
• Median score: Premium goes up by 24 percent
• Poor score: Premium goes up by 91 percent

Ignorance Is Not Bliss

As you can see, there's some pretty serious coin at stake here. Yet according to a 2005 report out of the Government Accountability Office, roughly two-thirds of consumers surveyed had no idea that their credit rating could affect their insurance rates at all -- much less cost them nearly double for poor credit.

It literally pays to know the truth about this. And the truth is that if you're among the two-thirds who don't know the details of how insurance companies use credit history to determine your rate -- and if you're a customer of one of the 97 percent of companies that engage in this practice -- you're probably paying through the nose for your ignorance.

Let's Fix That

What do we know about how this system works? Not a lot.

Individual insurance companies hold information about their pricing practices close to the vest, calling their methods for setting rates trade secrets. Worse, according to Former Texas Insurance Commissioner Bob Hunter, now director of insurance at the D.C.-based Consumer Federation of America, "every insurance company uses this score differently."

But there are some general rules that appear to hold true across the industry.

FICO insurance underwriting expert Lamont Boyd tells InsuranceQuotes.com that just two factors make up about 70 percent of the credit-based insurance score that insurers use in setting their rates. Specifically:

• 30 percent of your score depends on "how much credit card and loan debt you have compared to how much you are allowed to borrow."
• Even more important, "40 percent of every consumer's bottom line score will be driven primarily by whether or not you paid your credit obligations on time."

Other inputs include length of credit history, collections, bankruptcies, and new applications for credit.

Knowledge Is Power

Knowing this, we can suggest a couple of simple rules that will -- if not necessarily protect you from this insurance industry practice -- at least help to minimize your risk of getting gouged.

• First rule: Don't max out your cards, and always make sure you have lots of credit available to you. That means not necessarily closing credit card accounts just because you don't need the cards anymore (which would decrease your available credit, even as it risks removing beneficial, long-held credit accounts). The key is to have a lot of cushion between the amount you actually owe and the ceiling on your credit limit.
• Second rule: Pay your bills on time.
• Extreme option: If all else fails, you could move to California, Hawaii, or Massachusetts. According to InsuranceQuotes.com, these three states are the only states that ban the practice of setting insurance rates based on credit ratings. (Although two of those states have other downsides: In a state-by-state rundown of most expensive average car insurance costs, California came at No. 7, and Hawaii at No. 15. But Massachusetts falls in the bottom third, price-wise, at No. 35.)

                                  the source :http://www.dailyfinance.com/tag/car+insurance/

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Flipping Classic Cars: What You Need to Know Before You Invest

Is investing in the classic car market the next big thing? If so, is it right for you?
With TV shows about finding, fixing and flipping classic vehicles all the rage right now, it's no surprise that investors burned by the real estate crash who are looking for a new get-rich-quick scheme are finding this one: A classic car offers the lure of a hefty potential profit, with a far smaller outlay of capital than a house requires. But is it a good investment -- something you should consider to help diversify your portfolio?
If you're thinking about investing in a classic car, you don't want to lose your shirt in the process. Here are some things to consider before you take possession of a pink slip:
Don't Invest in a Classic Car on Impulse
"Never buy a classic car on a whim," says Ryan Guina, a classic car owner and publisher of the website Cash Money Life. "It's important to familiarize yourself with the market before buying so you know you're getting a reasonable deal."

The old adage is true: Your profit is made when you buy the item for a great price -- whether it's a car, house or any other investment. Counting on your ability to negotiate an exceptional price when you sell later is a poor way to make money.

Do You Want to Drive Your Classic?

How long do you plan to drive the classic car that you bought for an investment? Will it be your everyday vehicle? Would you be happy if your classic car was your primary mode of transport for a while?

You need to remember that it might take you some time to fix and flip your car. So, consider buying a car that you not only know about but also are willing to drive for a while if you need to. You don't want to get stuck with a car you only bought because you thought it was a good investment.

Don't Forget the Extra Maintenance Costs

Classic vehicles can be expensive to fix and maintain, and you can't let those costs sneak up on you. It's just like factoring in maintenance and vacancy costs into the rent you charge as a landlord: If your margins don't include a cushion for "unexpected" maintenance costs, you're much less likely make a profit on your restoration.

Get Car Insurance Designed for Classics

Guina says it's a good idea to purchase specialized car insurance. "I was surprise at how inexpensive my insurance policy was on my 1973 Corvette," he says. "The best way to find a good deal is to shop around for an insurance company that specializes in classic cars."

Those types of insurance companies might very well be the best route for you and your investment to ensure that it's properly covered.

Much as prices do for fine wines and baseball cards, the values of classic cars can fluctuate over time -- they don't simply depreciate like new cars start to do the moment you drive them off the lot. You'll want to make sure that your insurer considers recent sale prices from reputable auctions and other venues when it values your classic car.

Do You Need a Dealer License?

Every state has laws on the books that address car dealer licensing requirements. For example, Florida considers anyone who sells three or more cars in a 12-month period a car dealer. The practice of buying and selling a lot of cars without a dealer license is known as "curbstoning." Not only is it illegal, it can also be a red flag for buyers -- which can make reselling your restored classic more difficult.

So if you're buying and selling a lot of classic cars in a single year, you should consider getting a dealer's license. That often will entail shelling out for an annual fee, insurance, bonding, and other costs.

Whether you're trying to make a quick buck flipping or simply looking for a sweet ride to refurbish and drive yourself, a classic car can be a lot of fun and a great investment. But as with any investment, there's a lot to consider before you buy.

Have you bought and sold a classic car? Did you start out just looking to flip it for a profit? Or were you after an everyday driver to enjoy before selling?

Hank Coleman is a financial planner and the publisher of the popular personal finance blog Money Q&A, where he answers readers' tough money questions. Follow him on Twitter @HankColeman.

 

                          the source :http://www.dailyfinance.com/tag/car+insurance/

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Why You Should Let Your Car Insurance Company Ride Shotgun

Tired of paying too much for your car insurance? If so, you're not alone.

According to J.D. Power, car owners got hit with average increases of 35 percent -- $153 -- on their car insurance premiums last year. And that was up from an increase of $113 in 2012.

As rates reach for the sky, more car owners are reaching out for options to control their costs. And according to consumer financial website NerdWallet, one option you should look hard at this year is usage-based, or "pay-as-you-go" car insurance.

The 411 on Usage-Based Insurance

Usage-based insurance is a relatively recent innovation. The National Association of Insurance Commissioners describes it as a way to align the premiums that drivers pay with the amount and manner they drive, "making premium pricing more individualized and precise."

The basic idea is that the less you drive, the less chance your car will be damaged while driving -- and so the less you should pay to insure against the risk of such damage. Similarly, the better you drive -- e.g., by driving "gently," obeying the speed limit, and neither accelerating nor braking too precipitously -- the less you should be charged.

The question is how to prove to an insurance company that you drive little enough, and well enough, to deserve a discount. And the answer to this question is telematics.

Big Insurer is Watching You

Telematics refers to new advances in technology that permit an insurer to monitor how a driver drives. It basically boils down to you, the driver, permitting your insurer to install a GPS monitoring device in your car that records how the vehicle is driven over a period of time.

GPS technology has the ability to track both how far a car travels over time and how fast the it's being driven. By comparing these two data points, GPS telematics can also tell how quickly a driver accelerates and brakes.

All of this can give an insurer a good picture of how aggressively or carefully the car is being driven, allowing the insurer to better calibrate how "risky" it is to insure the driver.

What's in It for You?

NAIC thinks that within the next five years, enough insurers will offer telematics to have 20 percent of cars on American highways covered under usage-based insurance plans. But why would you want to participate?

To be blunt, if you're a bad driver with a lead foot and a need for speed, you probably won't want to have anything to do with telematics. But for good drivers, it could be a great way to reduce the cost of car insurance.

FC Business Intelligence, which runs an informational website on telematics, estimates that good drivers buying insurance from Progressive (PGR), for example, can save as much as 30 percent by installing the company's Snapshot telematics device in their cars, and providing data to Progressive on the number of miles they drive, how often they drive late at night, and similar information. Progressive provides the Snapshot device free to policyholders.

Drivers insured by State Farm could save even more. The Telematics Update website suggests that discounts based on the driver (age, occupation and place of residence) and data from the company's Drive Safe & Save telematics program can add up to as much as 50 percent off base insurance rates.

Mind the Fine Print

Not all usage-based insurance programs are created equal, so pay attention to the details before signing up.

State Farm, for example, offers its UBI program in partnership with General Motors' (GM) OnStar service, and with Ford's (F) Sync. But if you don't subscribe to either, you'll need to subscribe to a third service, called "In-Drive" -- and pay a $7 monthly fee for use of its telematics device. The first year of the service is free -- but after that first year, fees could eat into any savings on your insurance premium.

That is, assuming you drive gently enough to receive any savings at all.

Motley Fool contributing writer Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors, and Progressive. The Motley Fool owns shares of Ford.

                               the source :http://www.dailyfinance.com/tag/car+insurance/

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How Insurers Secretly Target Lazy Shoppers for Higher Prices

Have your auto or homeowner insurance rates been creeping up? If so, you may have been "POed."

According to the Consumer Federation of America, some insurance companies are secretly "price optimizing" customers -- charging them a higher rate for no other reason than they think the customer won't shop around for a better deal. "Price optimization is a data mining tool used by insurers to charge higher premiums to those consumers least likely to shop for a new policy in the face of a rate increase," says the federation.

How do they know whether you are likely to shop around? For now at least, that information isn't public. "I don't know what's in the black box," says Bob Hunter, director of insurance for the federation, which unites nearly 300 nonprofit consumer organizations. But he notes that insurance companies typically can review credit report data, information provided on applications and a host of other data available from third-party sources about current and prospective customers.

As an actuary, Hunter says he first heard of this practice when he participated in an industry webinar touting the benefits to insurers of pricing policies this way. He subsequently reviewed industry information that indicated this is not an isolated practice. When insurers use a price optimization tool, "if you are in a group that shops less, you are going to pay more," he says.

The federation and other consumer groups are asking regulators to stop insurance companies from using price optimization techniques when setting rates and premiums.

Julia Angwin, whose book "Dragnet Nation: A Quest for Privacy, Security, and Freedom in a World of Relentless Surveillance" revealed many ways companies track consumer information and use it to increase profits, sees this as one example of the way our own information can be used to get us to pay more. "All the ingredients are there for ... charging the prices consumers can bear," she says.

What Does This Mean for You?

If you've been POed, how do you fight back? One way is to call the bluff. If your rate goes up, shop around. Better yet, shop every time your policy comes up for renewal, even if you think you have a good rate.

The federation recommends that consumers start by using the rate comparison tool available from their state insurance commissioner to identify the six insurance companies with the lowest rates for the sample profile closest to yours. Then use the NAIC complaint database to narrow down your choices to the four companies with the lowest level of complaints. Once you have your list of four, contact each one for a quote.

That's what I had to do when my auto insurance rates started to climb, even though I had been with the same insurance company for more than two decades, and my husband and I had good driving records. We switched. A year later, the new insurer raised our rate substantially for no apparent reason. My old insurance company kept sending me letters asking me to come back, and when I responded, they offered me a rate well below the one I was paying before I left.

Was I POed by either company? I'll never know, but if I hadn't taken the time to shop I would have paid hundreds of dollars more than I needed to.


 the source :http://www.dailyfinance.com/tag/car+insurance/

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Disability Insurance: The Coverage You Lack, but Really Need

Are you one of the 100 million people in the United States who are putting their retirement and financial lives in jeopardy?
                 
    Imagine driving home this evening and then suddenly waking up in an unfamiliar bed surrounded by unfamiliar people. You notice your loved ones and the look of concern on their faces. You are told that you were in an auto accident. You struggle to remember what happened, but fortunately there were several witnesses. The accident, to your relief, was not your fault. You think you've dodged a bullet because you know your auto policy insurance coverage was minimal.

In the days that follow, you learn that it may take months -– if not years –- to get rehabilitated. You worry how you will pay your bills if you cannot work. Luckily, your brother-in-law knows a great personal injury attorney who has agreed to help you. Should you expect a settlement of several hundred thousand dollars? Your attorney says to take it one day at a time, but that it is possible based on your injuries and the amount of time you will be unable to work. Although you would much rather be healthy enough to work, you can rest a little easier knowing you have an open and shut case.

And then you get a call that changes your life forever. Your attorney says the person who hit you has no insurance and no personal assets. "But I can still sue him, right?" you ask. "I can still get the money I need to pay my bills," you continue. The answer is no. If there was no insurance and there are no assets, you can sue -- but there is nothing for you to get.

Your health insurance policy will pay for your medical treatment, but once you are released from care, there are no assets to help you pay your mortgage or living expenses. You are on your own. After just a few months, what took you years to save has been depleted. You now are unable to work and have no assets left. The auto accident may have been unavoidable, but your situation sure was.

The Answer Is Disability Insurance

Disability insurance provides monthly income to those who become disabled as a result of injury or sickness. Unless you are nearing retirement, your ability to earn an income is your largest asset. And although disability is quite common -– studies have suggested a 35-year-old has an almost one in four change of becoming disabled during their working career -- approximately 69 percent of workers are without private disability income insurance. The reasons for this lack of coverage are many, but the high cost of disability insurance policies is one of them.

If you work for a large company, ask the human resources department if a group plan is provided and if you can increase your coverage. If you don't have access to employer-provided disability insurance, go for private coverage. If that doesn't work out add "uninsured/underinsured" coverage to your automobile insurance policy.

A rider you can request from your auto insurance company can protect you from the (are you ready for this?) 16 percent of U.S. motorists who have no auto insurance. Mississippi, Alabama and California have the highest percentage of uninsured drivers (all 25 percent or higher); Maine, Vermont and Massachusetts have the lowest percentage (all 6 percent or less).

Here's how it works. Even if someone hits you and you are not at fault, if they don't have insurance or enough assets to pay your lawsuit, your insurance company will pay the claim. It's basically an insurance policy protecting you from all these drivers who can't afford to pay you if they injure you.

For those without this coverage, Los Angeles personal injury attorney Jeff Wolf has to have a tough conversation. "It is very difficult to tell a client that her options are limited even when the driver who hit her and caused her serious physical injuries is clearly at fault. Yet, this is the conversation I am forced to have when the at-fault driver has no insurance or has insurance with a low policy limit. But, if a client has a large uninsured or underinsured motorist policy, then this practical hurdle never arises."

For $500,000 of uninsured/underinsured coverage, it will cost you approximately $200 to $300 extra a year, according to property and casualty insurance broker Mark Ray. This is cheap retirement protection, considering 14 percent of car accidents are caused by uninsured motorists.

Robert Pagliarini is a national expert on sudden wealth. His wealth management firm has developed a unique process for handling the financial -- and often psychological -- issues of sudden wealth from inheritance, lottery, divorce, stock options, lawsuits, and sports/entertainment contracts. Connect with Robert on Twitter @rpagliarini or Google Plus.

                     the source : http://www.dailyfinance.com/tag/car+insurance/

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Walmart Brings One-Stop Shopping to Car Insurance

NEW YORK -- Walmart (WMT) is bringing one-stop shopping to another area: auto insurance.

The world's largest retailer has teamed up with AutoInsurance.com to let shoppers quickly find and buy insurance policies online in real time to cut down costs.

The service is available immediately in eight states -- Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee and Texas. It will be available nationwide in the next few months.

Shoppers can go to autoinsurance.com or access the site through Walmart's website at www.walmart.com/autoinsurance.

AutoInsurance.com, a division of Fort Lee, N.J.-based Tranzutary Insurance Solutions, a licensed property and casualty insurance agency, was created after Walmart realized there was an opportunity for a quicker service where shoppers can buy and save on car insurance that provides the final price -- with no bait and switch tactics. Walmart says car insurance is among the biggest monthly expenses for customers, and for some, it can outpace health care costs.

In a Tuesday briefing with the media, Daniel Eckert, senior vice president of services for Walmart U.S., said the Bentonville, Ark.-based discounter will be AutoInsurance.com's exclusive retail partner and receive promotion payments in its role as marketer. AutoInsurance.com will earn a commission every time a policy is sold.

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"Our customers too often have to settle for auto insurance policies that aren't the best fit and cost more than they want to spend," Eckert said.

The strategy marks Walmart's latest flirtation with insurance marketing and also highlights how the retailer is trying to use its size to expand beyond food and other staples into a one-stop shopping destination as it seeks to bring in more shoppers to its site and its stores. Walmart plans to promote the insurance shopping service in its stores.

Last month, Walmart introduced a new money transfer service that it says will cut fees for its low-income customers by up to 50 percent compared with similar services elsewhere. That service is being rolled out in partnership with Ria Money Transfer, a subsidiary of Euronet Worldwide (EEFT).

Joshua Kazam, founder of AutoInsurance.com and the founder and chairman of Tranzutary, noted that 90 percent of people compare prices online for products and services like airline tickets, but its survey shows that only one in five comparison-shop for auto insurance because it's a complicated process.

Walmart has had a relationship with Kazam, an entrepreneur, and his partners that dates back several years. For example, in 2009 Kazam and his team partnered with Walmart to bring PetArmor, a generic version of a popular flea and tick preventative treatment, to Walmart customers. Kazam founded Velcera, which created the PetArmor brand and was acquired last year by Perrigo (PRGO). But recently, Walmart has been working with Kazam in improving the experience related to insurance products.

In 2012, Walmart tested a program with Tranzutary to sell prepaid MetLife (MET) insurance policies in 217 stores in Georgia and South Carolina. Then last April, it launched a test program in Pennsylvania where customers who purchased policies from AutoInsurance.com reported annual savings on their insurance of $1,168, on average. At the same time, it displayed kiosks in Illinois where shoppers could pick up a saving card that offered a discount on a new auto insurance policy sold through Esurance.

Walmart decided that focusing on a price comparison service was the way to go.

It works this way: customers log on to the site and provide their name, address, date of birth and contact information. They can also have the site retrieve their current auto insurance policy, allowing AutoInsurance.com to automatically fill in the necessary coverage information for an apples-to-apples comparison. The free service offers customers multiple quotes from some of the leading national insurance carriers like Esurance, Safeco, and Progressive (PGR) within minutes.

Customers can choose to either purchase the policy online immediately, speak with a licensed agent at 800-700-7500 or save the information and purchase later.

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How to Insure Your Retirement Like You Do Your Car (Almost)

You can insure your home and car from disasters and accidents. Life insurance essentially protects your family from the loss of your income should tragedy strike. You can't insure your retirement accounts in the quite same way, but there are a few tried and true strategies that can safeguard them.

1. Continue Saving for Your Retirement Even During Your Golden Years

There is no rule that you have to stop investing when you hit your golden years. One of the best hedges to outliving your retirement assets is to continue investing even when you reach retirement age. While there are mandatory age distributions from 401(k) retirement plans and traditional IRAs, you can continue to make investments in other assets during your retirement.

"With increasing life expectancy and retirements that could last for decades, investing may be a necessity for many retirees, says J.J. Montanaro, a certified financial planner with USAA. "If you just look back at the last 30 years, a dollar has lost nearly 60 percent of its purchasing power to inflation. Investing offers a way to combat that loss of purchasing power. The key is to develop a plan that will allow you to achieve what you want to achieve without causing chronic insomnia."

2. Work Longer

While some Americans must continue to work during retirement because of a lack of savings, others simply want to work and enjoy the social aspect of working during retirement.

Mitch Anthony debunks the old concepts of retirement in "The New Retirementality." "A longer work life means continued engagement as well as continued paychecks," he says. "The day you cash your last paycheck, the price of everything begins to matter. Why enter a shrinking economic reality sooner than you need to?"

Retirement today looks very different than it did decades ago, and that isn't necessarily a bad thing. The real problem is getting over our preconceived notions as to what retirement means in today's economy and society.

3. Invest in Passive Income Strategies

Many financial experts believe that you need several buckets of income to supplement your retirement. For example, you could have a pension, income from real estate, Social Security and an annuity to help replace the income that you had before you retired.

"Typical retirement planning is that you work like a dog for 40 years, save up and spend from principle until you exhale your last breath," says Todd Tresidder, financial mentor and author of "How Much Money Do I Need To Retire" and other books. "If you flip that upside-down and -- rather than amassing a big pile of assets -- save assets that produce cash flow in excess of your expenses, we then eliminate risks. We create perpetual income."

Retirement is a euphemism for old-age financial independence. The core of financial independence using passive investments is that you create cash flow from investments that exceed your expenses and only spend the cash flow, not the principle balance. A passive income requires minimal input from you after you invest in it to start.

4. Invest in Annuities

An annuity is essentially an insurance product. You trade a lump sum for equal monthly or yearly payments when you invest in an annuity. For example, a $1 million lump sum payment to an insurance company could provide you with more than $40,000 in yearly payments for you and your heirs the rest of your lives. (Of course, details vary.)

"Annuities shift risks from you to the insurance company," says Tresidder. "Retirement planning as it's commonly practiced today is nothing more than self-insurance, where you are accepting most of the risk. Using annuities shifts market risk, actuarial risk and longevity risks from you to the insurance company."

There are many benefits and several drawbacks to annuities. They may provide higher yields than traditional pension plans and other retirement options, but they also leave no assets for your heirs when you die.

5. Hedge Your Investments

My father-in-law retired after working as an executive for decades at a large, national bank. In addition to his pension, he held a lot of company stock that he received as options. After the financial crisis in 2008, his stock and dividends took a severe hit. The stock has recovered, but my in-laws endured several rocky years.

You can use option strategies to protect your stock positions in many cases. An option gives you the opportunity to sell or buy shares of stock with contracts at a future time at a set amount of money, instead of relying on the fluctuations of the market. If you don't feel comfortable with options, you can enlist a financial planner to hedge your retirement investments.

6. Get Professional Help

It never hurts to get professional financial help if you are worried about your retirement accounts and if you will have enough saved for retirement. It has never been easier to find qualified financial planning -- fee-only, commissioned-based, or even by the hour for giving advice without creating a financial plan.

Insurance companies do not offer retirement portfolio insurance, but there are ways that you can hedge against calamity with your retirement accounts.

Should there be insurance for your retirement accounts? Should insurance companies offer this type of insurance coverage just like they insure your car or home? Would you buy retirement insurance? 

                      the source :http://www.dailyfinance.com/tag/car+insurance/

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Here's How to Get the Best Deal on Car Insurance - Eventually

You've probably had this experience: you're frustrated because the driver in front of you is going too slow for your liking. You can see the driver's gray hair and think that this person should not be driving any longer. Just the opposite is true: 60-something drivers gets the last laugh. Not only are they more likely to arrive safely at their destination, they are rewarded for it with lower auto insurance rates.

"Older drivers by and large are far safer in terms of the number of accidents they have and the number of claims they turn in than the typical driver," said Marty Agather, senior vice president of the consumer resource site TrustedChoice.com. He says insurance companies collect incredible amounts of data to set prices. "The sweet spot in the auto marketplace is someone who is recently retired but still vital," according to Agather. "They're not driving to work every day, still with it, and their reaction time has not slowed down too much. You still have a very safe operating behavior."

According to 21st Century Insurance, "senior citizens are some of the safest, most responsible and defensive drivers on the road." As a result, many insurance companies offer special rates and discounts for these mature drivers. In general, rates for drivers who are 50 and 74 years old are 5 percent to 15 percent below those for people 30 to 50. And of course, drivers younger than 25 can pay more than double what the seniors pay. "For young males, the numbers are astronomical," said Agather. "They are 200 times more likely to get into an accident."

As Your Life Changes, So Does Your Premium

DMV.org says car insurance rates gradually decline from the time you turn 25 until you turn 70 -- as long as you maintain a good driving record. By the time you're in your 40s, you are likely to have a family, which encourages safer driving, and you are less likely to be at a bar at 2 a.m., which does not. But once you hit 70, rates start to go up again because you are more likely to have impaired vision, slower reactions and poorer cognitive functions.

For those in the 50-to-70 sweet spot, some discounts are applied automatically; some require you to inform your agent or insurance company of changes in your lifestyle; and others come from being pro-active. For example:

• Low-mileage discount. If you're retired, you have probably cut down on the miles you put on each day. Inform your agent and your insurer. They don't know about changes in your life unless you tell them.
• Defensive driving classes. AARP, AAA and others offer classes for drivers of all ages. They cost about $50, usually earning a discount of up to 5 percent a year, for three years. AARP says automatic discounts follow a course for drivers in Alabama, Alaska, Arkansas, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Idaho, Illinois, Kansas, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Montana, Nevada, New Jersey, New Mexico, New York, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, West Virginia and Wyoming. Residents of other states should ask their insurance agent about discounts.
• Policy changes. Older people with more assets may want to take the risk of going with a higher deductible -- and they might also want to boost liability coverage. Agather said you need to make sure that your liability limits equate to the assets you have at risk. "Just because you have an insurance policy, that doesn't limit how much you are liable for in damaging someone else," he warned. "Your assets are at risk if you hurt a brain surgeon or hit a Ferrari." To protect those assets, he recommends an umbrella policy that protects your assets if you are sued for more than the liability limit on your auto policy covers. "It also may make sense to drop comprehensive and collision coverage, which may be costing you $400 to $500 a year," said Agather. "Don't pay a lot of money to insure something you can afford to pay out of pocket," especially if you're driving an older car.

                                          the source :http://www.dailyfinance.com/tag/car+insurance/

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Google May Soon Help You Save on Car Insurance

Google (GOOGLE) has rolled out an auto insurance comparison service in the U.K. called Google Compare. This service compares rates from over 125 different providers, allowing consumers to choose the policy that fits them best, while saving money at the same time. It appears Google is preparing to enter the U.S. car insurance market by introducing a price comparison tool, according to an analysis by Ellen Carney from Forrester.

Planned Rollout

It appears Google will roll out their comparison service in California in the first quarter of 2015, before expanding to other states that may include Illinois, Pennsylvania and Texas. If Google is successful in these test markets, they could quickly expand to sell insurance in more markets in the United States as they have already obtained licenses to do business in more than half of the 50 states.

At the same time, speculation has also been growing that Google may take over CoverHound, which already provides the comparison service Google hopes to grow. If this proves to be true, Google could be in the business of auto insurance comparison faster than the current estimated plans. This should be welcome news for most consumers looking to save money on auto insurance.

However, the U.S. version of Google Compare could face headwinds if insurers do not work with Google. Only a small handful of insurers have granted Google authorization to sell insurance policies on their behalf at this time. If the big insurers do not jump on board, the comparison tool may not be seen as robust enough for consumers to make a valid comparison.

Consumers in the U.S. could potentially save hundreds of dollars a year by using Google Compare. Imagine comparing hundreds of car insurance companies by filling out just a few simple questions rather than calling dozens of companies or filling out hundreds of different quote forms.

You may even find quotes from companies you were never aware of prior to the service rolling out. The best rates would be easy to find and the amount of time to find them would be negligible. Of course, a service like Google Compare has its problems, too.

The Downside of Using Google Compare

Google Compare in the U.S. could provide hundreds of quotes, but would consumers make the best choices using this service? Some users will end up choosing the cheapest policy possible without considering the consequences. Cheaper insurers may cut costs when it comes to their claims process or they may not have strong financial ratings. While you could save hundreds of dollars using this service, you may also end up with an auto insurer that you regret choosing.

It should be noted that Google will not be providing this service out of the kindness of their hearts. Instead, Google will likely earn a commission on each policy they sell depending on their arrangement with each individual insurer. This could lead Google to show the results based on how much money they would make off each sale rather than based on which policy is truly best for the consumer.

Finally, relying on Google to provide yet another service in our lives could make some consumers weary. Voluntarily giving Google even more information about us will allow them to target advertising even more precisely, in addition to any commissions Google may earn for selling insurance on the behalf of other companies.

While Google's entrance to the U.S. auto insurance market has not yet happened, it could be right around the corner. Once the service rolls out nationwide, the auto insurance shopping process could be greatly simplified, while saving consumers a great deal of money at the same time.

                                       the source :http://www.dailyfinance.com/tag/car+insurance/

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Why You Should Give Your Insurance Policies a Checkup

The insurance industry often urges customers to check their policies every once in a while to make sure everything is up to date. While that sounds like self-serving advice -- because you know any conversation with your insurance agent will end with a pitch to buy more insurance -- it's actually a good idea.
As Bill Swymer, an adjunct finance professor at Bentley University in Waltham, Massachusetts, observes: "The No. 1 reason people need to be reviewing all insurance policies is because circumstances change, and you do not want to be left underinsured or paying for insurance you no longer need."
If you bought life insurance when you were married or after your first child was born, and you're now on baby No. 4, you're probably long overdue for an upgrade. Or maybe after you bought a new car, your insurance policy covered you for every possible circumstance. If you're now driving a clunker that isn't worth the gas you're putting in the tank, you are probably vastly overpaying for your coverage. Some other things you might realize in a review.
You Might Catch Mistakes
You probably have a lot of insurance policies -- health insurance, life insurance, auto insurance, homeowners insurance. There may be an error or two or three in one or more of those policies. For instance, Aflac, which provides supplemental health insurance, found in its annual employee benefits study, which surveyed 5,209 employed adults and 1,856 benefits decision-makers at companies, that 42 percent of workers waste up to $750 each year on insurance benefit mistakes.
You Might Find Better Rates
Ken Davidson, co-founder of Dallas-based Eagle Independent Insurance, points out that you may lower your premium if you regularly compare insurance quotes. "Insurance premiums can frequently change for several reasons," he says, citing homeowners insurance as a type you'd want to look at fairly often. The crime rate, for example, could go up or down, changing your rates. You may have purchased your homeowners insurance policy after recent storms inflated rates, and perhaps yours haven't come down but competitors' rates have.
"So only by comparing different policies at every renewal period -- or even more frequently -- can consumers ensure they're getting the best deal at that time," Davidson says.
You Might Find More Assets That Need Coverage
Your life doesn't just change. What you cover does. Leigh Needelman, CEO of Florida Assurers, an insurance agency in Miami Beach, Florida, recalls a client whose diamond ring was stolen in a home burglary. Fortunately, it was insured, and the client was sent a $6,000 check. So the client went to the jeweler to replace the diamond ring. But she wasn't able to replace the diamond ring -- or if she did, she had to kick in a lot of her own money. "When the jeweler was given the check to replace the diamond ring, he advised [her] that the ring had appreciated to $18,000," Needelman says.
Even if you aren't concerned about insuring your engagement ring -- maybe you're single or need a microscope to see the diamond and figure it isn't worth the trouble -- if you've been around a while, you have probably collected some stuff over the years, and perhaps a lot of it is expensive. For instance, maybe you locked in your home insurance rates when your new home was filled with secondhand furniture. If all of that has been replaced with sofas and a dining room table purchased from an actual furniture store, and that 20-inch TV was swapped for a 60-inch set, it may be time to discuss these upgrades with your homeowners insurance agent.
Sure, you'll likely see your rates go up, which is painful, but if a disaster occurs, you'll actually be covered for what you own. According to Liberty Mutual New Beginnings Report, which surveyed 1,936 American adults, fewer than one in five Americans adjust their insurance policy after making a major purchase. Only 18 percent have formal documentation of their belongings, meaning, apparently, that everyone else just makes an estimated guess and stores all the information in their heads. One-third of Americans don't know the value of their household possessions, and almost 10 percent are unaware that they should check to make sure they have enough coverage to protect their belongings from theft or damage, the study found.
You Might Decide It's Time to Bundle
If you have four different policies with four different carriers, you might want to bundle a few. That is, have your homeowners and car insurance with one company, for example. You can often get discounts of at least 10 percent when you start bundling, says David Spencer, a senior vice president at ACE Private Risk Services, which offers insurance for high-net-worth individuals and businesses.
You Might Get Some Discounts
Yes, your insurance agent may talk you into buying more insurance, but at the same time, you may learn that you're due for some discounts. "Homeowners can earn credits on premiums by installing safety devices like burglar alarms, water leak detection systems, battery backups for sump pumps and automatic standby generators. When combined, these credits can reduce homeowners' premiums by 30 percent or more," Spencer says.
Think about that. If you bought a security system months ago, or years ago, and you didn't tell your homeowners insurance agent, you have probably been overpaying on your homeowners insurance for some time.

 

 

                     the source :http://www.dailyfinance.com/tag/car+insurance/

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