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Saving on Auto
Insurance
Saving on Auto
Insurance
Auto insurance can be a nightmare.
It's costly, confusing, and unrewarding. Find out if you bought the
right coverage from the right company.
What you
should know about Auto Insurance!
Here
is an overview of the most important points of buying auto insurance:
1.
Statistically speaking. To an insurer, you're not a person, you're
a risk! An insurer bases its premium on your "risk factors," including
some things that may seem unrelated to driving a car, including your
occupation, who you are, and how you live, where you live. The number
of miles you drive each year.
2. Insurers look at different things. As with
anything else you buy, what seems to be the same product can have
different prices from different companies. You can save money by
comparison shopping. Call the top ten insurance companies and you will
see how the prices vary!
3. Don't just look at the price. A low price is no
bargain if an insurer takes forever to service your claim. You don't
want to end up with a company that you have to fight tooth and nail
with just to pay your claim! Research the insurer's record for claims
service, as well as its financial stability.
4. Buy more then the basics. If you are using your
car for business, make sure to get higher liability coverage.
If your in a accident and the other party involved finds out you have a
business, if they decide to sue you, they will name your business in
the suit! Also, if you have a large net worth increase your coverage.
Most states require only a minimum of auto-insurance liability coverage.
5. Don’t forget to ask for discounts. Insurers do
provide some discounts. For example, if you are over the age of 55,
have 2 or more cars, government employee, teacher, and a scientist.
This is just a short list, there are many others depending on your
insurer. (Also check section Saving money on your auto insurance
coverage).
6.
At claims time, your insurer isn't necessarily your friend. (Around
this time is when they forget your name, even though they’re stilling
depositing your check!) Your idea of fair compensation may not match
that of your insurer. Your insurer's job is to restore you financially.
Your job is to prove your losses so that you get what you have been
paying for all along! Also, you choose the estimate, not your insurance
company! And don’t let them tell you different! Ask for the real thing.
Insurers cut costs by paying only for car parts made by companies other
than the car's manufacturer. These parts can be inferior. Demand parts
by the original equipment manufacturers (OEMs).
Remember to keep your policy up to
date! You want no surprises when it’s time to file a claim!
Finding the right
auto insurer
Here's
how to get the coverage you want, without it costing you an arm and a
leg.
First, check what's available out there. Start by gathering your
quotes.
Try a free database such as InsWeb,
which offers quotes from up to 8 insurers. Quicken , InsureMarket, which provides up
to 16 quotes. The larger the database, the better off you are. If
you're willing to pay for a more comprehensive database, look into Consumer Reports Auto Insurance
Price Service. Their database compares up to 25 policies in 27
states.
Additional options.
Companies like State Farm and USAA that deal directly with consumers
without using independent agents are called "direct writers". They save
you money by eliminating the middleman.
Don’t throw your junk mail away. Direct marketers
like Geico and Progressive Insurance Co. save
on overhead and pass on the savings to you, by marketing by phone,
mail, or the Internet.
Let your state be your guide. Insurance departments
in 33 states and the District of Columbia offer on-line shopping guides
for auto insurance. Your state's guide may identify little-known
companies with competitive rates. Insurance
News Network can link you to your state guide. (Illinois residents
will have to go directly to the state
Web site.)
Search for Quality. No discount in the world will
make up for slow claims processing or shoddy repairs! So find out as
much as you can about a company's service before you sign on. Consumer Reports
periodically publishes service ratings for large insurers. You can also
ask a representative about a company's claims turn-around time; a
shorter turn-around is an indication of better service.
What is their financial rating? It's wise to look at
the financial ratings of your auto insurer. Ask the company for that
information, or check out one of the financial ratings services on the
Web. An A rating or higher from Standard & Poor's or
an AA ranking or better from Moody's
Investor Service is a good indicator of financial strength. Weiss Ratings, the most
independent of the ratings services, and arguably the most stringent.
They also post’s a list of the currently weakest insurance companies.
Does your state offer Insurance? If your driving
record is bad, you may initially have only one option other than taking
public transportation. That's your state-sponsored high-risk pool and
it's expensive. But try shopping again a year from now. Private
insurers are always looking for new ways to serve more customers, and
one company's black mark is another's business opportunity.
Why insurance costs so
much!
Insurers
will not only judge you on your record, but on the records of people
like you.
Your 16-year-old son has passed his driver's education course, and
scraped together enough cash for his own car. You take a deep breath
and given your blessing, until your agent tells you about the increase
on your premium.
Why can insurance sometimes cost as much as the car? Why are insurers
so tough on kids, or Corvettes?
It Boils Down To: Risk.
To an insurance company, you are a collection of risks. Your sex, your
age, your marital status, driving record, type of car, and place of
residence all contribute to an insurer's prediction of whether you'll
file a claim.
An
insurance company can't know, for certain, what kind of driver you are.
They can only guess, based on the accumulated statistics for drivers
like you. Even if you're a stellar driver who just happens to be young,
single, male, and own a sports car, the insurer is probably going to
place you in a category with a high premium or it may reject you
entirely.
The good news is that all insurers don't price risks identically. While
insurers are highly regulated in many states, they still operate as
competitive businesses, focusing on certain markets and avoiding
others. What's more, some operate their businesses more efficiently
than others, passing on the savings to consumers.
That means you may be able to save hundreds of dollars a year by
shopping regularly, even if your insurer rewards long-time customers.
Once
every few years, you should shop around for new insurance quotes!
Especially, if you insurer is raising your rates every year! You might
be surprised and find that you can get insured for less then what you
are paying now for insurance!
Coverage:
Family and your assets.
Some auto coverage’s are crucial;
others are desirable; still others are just unnecessary.
Most
states require bodily injury liability insurance to cover medical
treatment, rehabilitation and funeral costs incurred by your own
passengers, the other drivers, their passengers, and even injured
pedestrians. This also covers lawyers' fees, and non-monetary losses
related to pain and suffering. State minimum coverage limits are too
low to protect the assets of most motorists. Unless your income and
assets are minimal, buy at least $100,000 per person, $300,000 per
accident. Otherwise, the 10-30-15 quote you receive will be fine.
Property-damage liability covers repair or replacement of other
people's cars and property. State minimum limits the average about
$15,000. With the average cost of a new car at $22,000, however, buy at
least $25,000 in coverage.
When a hit-and-run driver, or someone who's inadequately insured,
strikes your car, uninsured-motorist and underinsured-motorist coverage
pays for the medical, rehabilitation, funeral, and pain-and-suffering
costs of the victims in your car. This crucial coverage also insures
your household members as pedestrians. Buy this coverage at the same
limits as your bodily injury liability coverage.
Personal-injury protection (PIP), often known as "no-fault," covers
medical, rehabilitation and funeral costs for household members, as
well as some lost wages and in-home care. Unless your health and
disability coverage’s are slight, buy the minimum required.
If you can afford them, consider these options.
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Collision
coverage pays to repair or replace your car after an accident. If you
have a new car with a loan, you'll be required to buy this coverage. If
someone hits you and they have no insurance, this type of coverage will
save you from a headache! |
Comprehensive pays if your car or its contents are stolen, or if your
car is damaged by fire, water, or other perils. If a tree branch falls
on your window, your covered. Lenders will also require this coverage.
For both, you'll have to choose a deductible: a dollar amount you fork
over to the repair shop before the insurer antes up. The higher the
deductible you carry, the more you'll save. Try to carry a deductible
of at least $500 on each coverage. You can always use a credit card for
the deductible when the time comes
.
A
few words about auto claims
Insurance is a product you buy, but hope never to need.
Sad
but true: When you really need them, the company you've paid to protect
you can become your adversary.
While it's the insurer's job to restore you financially, that doesn't
mean they have to go along with your assessment of what that means. Be
prepared to prove your losses.
Car Claims: Don't
compromise on Quality
Take a collision claim, for instance. A shop in your insurer's network
of preferred providers, an automotive version of an HMO may fix your
car faster than others because you won't have to wait for an adjuster,
or argue over repair costs. However, because of their mandate from the
insurer to keep repair costs low, such shops may stint on quality. It's
probably better to find a repair shop on your own whose reputation you
trust.
Watch out for "generic" replacement parts, particularly hoods and
fenders. They may not fit or resist rust as well as parts by the
company that made the car, the original equipment manufacturer (OEM).
Before you authorize the repair, scan the repair order for generic
parts labeled LKQ (like kind and quality). Most likely, you'll prevail
if you insist on OEM parts. A survey by Industrial Market and Research,
an auto-industry research firm, found that 71 percent of consumers who
demanded such parts ultimately got them.
If you can't convince your insurer to supply OEM parts and your car is
fairly expensive, consider paying an appraiser to determine if your
car's market value is significantly lower after the repair. Your policy
should enable you to collect the difference between the old and new
values.
The insurer may decide your car is totaled, even if it’s still
driveable. In insurance lingo, "totaled" means the car's market value,
after the deductible, is less than the restoration costs. In other
words, it would theoretically have cost less to buy the exact same car
of the same age than to repair your car. So, the insurance will just
pay you the value of the car rather than paying for repairs. If your
car was in exceptional condition prior to the accident, provide
whatever documentation you can to support that fact. Otherwise, the
totaled car will be valued as if it were only in average condition.
Information Is The Best Protection
After a car accident, take down the names and license numbers of all
drivers involved, and identify any witnesses. Record your version of
the event; take photos, if possible. Get a police report. If the police
are not at the scene of the accident (Usually they won’t show if the
damage is $500.00 or less and no one has been hurt), then go to the
nearest police station and have a police report written up. Call your
insurer as soon as you're able, and keep notes of all related
conversations. Record the conversation if you think you might need to,
of course only after informing the other party?
Saving
money on your auto insurance coverage
Discounts are available, but you have to ask for them.
You
can't change many of your risk factors. But you can save money by
taking advantage of discounts that insurers offer for behavior that
lowers your risk from driving less than the average number of miles per
year to taking a defensive driving class.
Certain
types of people senior citizens, for instance also are eligible for
lower rates. You'll also save by if you have certain safety or
protective equipment installed in your car, like anti-lock brakes or a
security system. Make sure you ask about these discounts. Your agent
usually will not tell you about them.
Here are some other money saving tactics:
Combine your coverage. As with any product, it's
cheaper for insurance companies to sell more to one customer, so
insurers often cut premiums up to 15 percent if you link auto and
homeowners policies.
Filing claims. Frequent claims are red flags for
insurers; some won't renew policyholders with more than two claims in
three years. So try to carry more of the risk yourself by paying for
repairs costing under $1000 out of your own pocket. Or, if the damage
is purely cosmetic, you could just ignore it.
Raise your deductible. The average driver files a
collision claim once every 3 year’s, and a comprehensive claim once
every 10 years. Increasing a collision deductible on your auto policy
from $200 to $500 can save up to 30 percent annually. Given the
likelihood of filing a claim, you might come out ahead with the higher
deductible.
Drive safe. A clean driving record for at least 36
months, keeps your premiums low. Completing a defensive driving course
can qualify you for a discount.
Doing the research. Cars that cost a lot to repair,
or that are popular with thieves, can cost more to insure. The Consumer Insurance Guide has a list
of the most frequently stolen cars.
Get your records straight. Insurers have access to
all sorts of personal information, including your motor vehicle record,
credit record, and your history of claims with other insurers. It makes
no sense to lie about your background. Mistakes can happen, however,
and a glitch on your report could make you look like a worse risk than
you are. If you haven't done so in a few years, consider obtaining your
credit reports from all three credit reporting services, Equifax, Experian, and TransUnion. For a combined
report, check out Qspace.
Saving on Auto
Insurance
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