Category: Uncategorized

Rob Berger
Contributor

Car insurance is a expensive nuisance . . . until you need it. As a father, you hate thinking about those 1:30 am phone calls. I received one last month. At least nobody was hurt. I can’t say the same thing for our 2014 Hyundai Sonata. Totaled. It’s times like these that you really appreciate having good insurance.

Good insurance, however, doesn’t have to cost an arm and a leg. Here are some tips on how to reduce your auto insurance premiums.

1. Get Multiple Quotes

Getting quotes from multiple insurance companies seems like an obvious starting point. Yet I must confess to having purchased car insurance in the past without comparison shopping. Call it inertia. I stuck with the same carrier I’ve used for years. My wife might call it laziness.

You might be surprised, however, by how much premiums can vary. As part of a study of car insurance in California, my team compared auto rates for various hypothetical drivers. In one case, the quotes for an identical policy ranged from $504 a month up to $1,488.

With tools like this one, you can get multiple quotes online in minutes.

2. Consider the Car You Drive

The type of car you drive has a significant effect on car insurance premiums. In one study on the least and most expensive cars to insure, annual rates ranged from $1,112 (Honda Odyssey LX) to $3,835 (Mercedes S65 AMG Convertible).

You can estimate the cost of care insurance before buying using this tool from careinsurance.com. You can also call your existing insurance carrier or agent.

3. Adjust Your Deductible

Insurance is a necessary evil. Whether life, health or auto, insurance protects us against losses we could not otherwise handle financially. We should, therefore, have the insurance we need to handle unacceptable losses, but no more.

A $100 deductible is far too low for many. If you can handle a $1,000 loss, why set a deductible at $100 or $250? You’re just buying insurance you don’t need.

So how much can you save by raising your deductible? The answer will vary, so it’s best to consult with your insurance carrier. But one study found you can save 9% by raising your deductible from $500 to $1,000.

4. Combine Policies

If you have multiple insurance policies, there are two good reasons to combine them with one carrier. First, it’s an easy way to simplify your finances. Working with one carrier is much easier than working with two or more.

Second, you can get a discount. We qualify for a discount because we combine our auto and homeowner’s insurance with one company.

5. Guard Your Credit

In most states, insurance carriers factor in your credit history in setting premiums. Studies have shown that there is a meaningful correlation between how we handle our finances and claims history.

And the difference in premiums can be significant. According to Consumer Reports:

Our single drivers who had merely good scores paid $68 to $526 more per year, on average, than similar drivers with the best scores, depending on the state they called home.
In Virginia, for example, Consumer Reports found that a poor credit score can cost a driver $1,513 more in annual premiums.

6. Claim Your Discounts

Auto insurance companies offer a plethora of discounts. Some you might expect, such as a discount for safe driving. Others may surprise you, like a discount because you belong to the United States Chess Federation, as I do.

Here’s a list of discounts we have with our carrier:

Accident Free
Affinity–United States Chess Federation member
Good Student
Combing Home/Car
Multi Car
New Vehicle (a discount for insuring a car less than 5 years old)
Paperless
SmartRide (used by Nationwide to evaluate how safely you drive)
Contact your insurance carrier or agent to find out if there are additional discounts you can obtain.

7. Pay By the Mile

One potential money-saver is to pay for insurance by the mile. While not available in every state, paying by the mile can reduce both the miles you drive (as you factor in the cost of insurance) and the premiums you pay. A quote from a leading pay-by-the-mile insurance carrier recently produce a cost of 3.2 cents per mile.

8. Reduce Your Coverage

Similar to raising your deductible, you can also save money by reducing your coverage. As cars age, the need to insure against damage to the car diminishes.

As Esurance describes:

In some cases, the premium you might pay on comprehensive and collision coverages plus the deductible you select may outstrip the value of the car itself. Since the value of the car itself is the most you can be reimbursed through these coverages (in the event of a total loss), consider whether you need to add them to your policy.

9. Compare Prices Annually

Getting a great rate on car insurance is just the start. It makes sense (and cents) to compare your existing rate each year. It’s easy to do online and takes just a few minutes. And comparing rates won’t hurt your credit score.

10. Pay Semi-annually

Every six months my insurance bill comes with two payment options. One option is to pay the 6-month premium in full. The other is to make monthly installments.

By paying in full, I save just over 2% on my premiums.

11. Drive Safely

An obvious tip, but one with a bit of a surprise. Of course you can keep premiums low by avoiding accidents and traffic tickets. But you can also reduce your premiums by allowing some carriers to monitor your driving habits.

Progressive offers Snapshot and Nationwide offers SmartRide. You simply plug a device into your car for a few months. The device monitors certain driving habits, such as hard stops, idle time, and daytime versus nighttime driving. Based on the results, you could see a significant decrease in the cost of auto insurance.

To read this article in its original format, please click here.

A How-To Guide from the Wall Street Journal

Homeowners insurance protects your home, its contents, and, indirectly, your other assets in the event of fires, theft, accidents or other disasters.

A standard homeowners policy (known as an HO-3 policy) will protect you from things like fires and fallen trees. Notice how we didn’t mention floods or earthquakes—those events are specifically not covered by a standard policy and require additional coverage. Homeowners in some areas of the country may be required by their mortgage company to carry these kinds of policies.

A standard policy will also protect your possessions from said disasters as well as theft. But a standard policy is not a blank check: there’s a limit to how much you’ll be compensated. If you have specific items of value, such as jewelry or artwork, you can pay a little extra each year to insure them for their full replacement value.

Now, if someone is on your property and slips and falls and sprains his ankle, he might sue you for his medical expenses. Homeowners insurancecovers your liabilities in this situation as well. And like the examples mentioned above, you can pay more for extra coverage. Homeowners insurance isn’t required by law, like auto insurance. But mortgage companies usually require you to obtain a policy before they’ll give you a loan.

How Much Coverage Do You Need? Your home-insurance policy should cover enough to entirely rebuild and furnish your home were it wiped off the map. Ask a home builder to walk through your home and give you an estimate of what it would take to rebuild; that figure should be the basis for how much replacement coverage you’ll need. Be sure to point out any unique and/or expensive details that would add to the replacement cost.

Once you’ve determined the replacement cost of your home, you’ll need to know what kind of coverage you want. There are a few key terms here:

• Guaranteed Replacement Cost Coverage– This means that the insurer will pay for the rebuilding of your home no matter the cost. These policies are hard to find these days. • Extended Replacement Coverage– Many insurers offer coverage that caps the payout at around 125% of your home’s insured value. • Inflation Guarantee (or Guard) – This feature makes sure that your home’s insured value stays current with the marketplace.

If you get a reliable appraisal, extended replacement coverage and an inflation guarantee, you should be in good shape. The appraisal provides a realistic starting figure and the inflation guarantee makes sure that your home’s price stays current. The 125% coverage means that, even if construction prices outpace inflation, they probably didn’t outpace it by 25%, so you should have enough money for whatever work you need done.

One last thing: The law requires you to have flood insurance if you live in an officially recognized high-risk area. To find out your flood risk and to find plans (which are offered by the government), go to floodsmart.gov.

When it comes to protecting your possessions, you may want more coverage than your standard policy allows. If you have anything of exceptional value (a family heirloom, a piece of art, jewelry, etc.), you should insure it separately. Insurers will charge extra for this coverage (something like an extra $10 on your monthly premium per $1,000 of value insured), but it pays to be covered.

Also keep in mind that there are two different kinds of coverage when it comes to personal articles. There’s “actual cash value” and there’s “replacement cost.” You want coverage for replacement cost. Actual Cash Value Insurance is what you’d get if you sold your valuable today — a lower amount than what you initially paid. Replacement Cost Insurance pays you the amount of money you’d need to buy a brand-new item to replace your old one. Liability Coverage Say a guest stays at your home and slips on the floor and sprains his ankle. He decides to sue you. Your homeowners policy includes liability coverage in case you lose the court case. Generally speaking, standard policies offer $100,000 to $300,000 of liability coverage.

Supplemental liability coverage can boost your protection to $1 million or more. If you don’t own a car, adding that kind of coverage can be relatively cheap—less than $100 per year—and isn’t a bad idea. If you do own a car (putting you at greater risk for causing damage to people and property), expect to pay $300 to $400 a year. Check out your auto policy to see what kind of coverage you already have.

Shopping for a Homeowners Policy There are three kinds of home insurance companies and salespeople: Direct sellers, who sell directly to consumers (GEICO, Progressive and USAA fall into this category); Captive agents, who only sell one company’s insurance products (for example, State Farm and Allstateagents); and independent insurance agents, who sell policies from many different companies.

It’s possible that all of these groups will deny your insurance application for anything from the risky pool of alligators in your backyard or the tornado that runs through your property every year. Don’t despair. Many states have state-sponsored insurance programs for the hard-to-insure. Search for your state’s FAIR (Fair Access to Insurance Requirements) plan if you’re having a tough time with the traditional insurers.

Your Deductible Like auto or health insurance, your homeowners insurance has a deductible (the amount you must pay before coverage kicks in). Like those other policies, you should opt for the highest deductible you can afford. If you do, the cost of your insurance premium (the monthly bill you pay) will surely be lower. Plus, a low deductible forces your insurer to cover more of your costs — costs they pass on to you in the form of increased premiums.

Remember: You should not use insurance to cover every conceivable expense, just the big ones. If reinstalling a gutter will cost you $200, pay the $200 — don’t start filing claims for it. Insurers hate it when you file too many claims, and may raise your monthly premium or even cancel coverage because they’ll view you as too risky. It’s not about gutters—you want the insurance when you have to pay for a whole new roof.

A good rule of thumb to follow: If you can fix anything for less than $1,000, don’t file a claim.

Correction: An earlier version of this article made incorrect and unsupported characterizations of the three categories of sellers of home insurance: direct sellers, captive agents (who were incorrectly identified as “sponsored agents”) and independent insurance agents. The earlier version made an unsupported claim that direct sellers are very selective about who can sign up, and it incorrectly implied that direct sellers are the only sellers that may disqualify applicants based on where the they live or some other aspect of the application. The earlier version also made the incorrect claim that sponsored agents are often better than independent agents because they can be more inclusive about who gets covered. Finally, the earlier version incorrectly said that independent insurance agents’ prices will be higher than direct sellers or sponsored agents.

In addition, the coverage of windstorms by a standard homeowner’s policy varies by state. The earlier version incorrectly said that windstorms aren’t typically covered. And an inflation guarantee protects the insured value of a home; it doesn’t ensure that a home’s appraised value keeps current with the marketplace, as was incorrectly stated earlier.

Jim Gorzelany
Contributor

We’ve known for some time the physical hazards of distracted driving, whether it’s talking on a mobile phone, text messaging, eating, changing the radio station, or even yelling at the kids in the back seat. According to the National Highway Traffic Safety Administration, 3,477 people were killed and 391,000 were injured in motor vehicle crashes that involved distracted drivers during 2015 alone.

Aside from having to pay a hefty fine, being ticketed for distracted driving will also drive up a motorist’s auto insurance premiums by an average 16% or about $226 a year, according to a study conducted by the car insurance search engine The Zebra. That may not sound like much of a budget-buster, but it represents a premium increase of 7,944% since 2011, when carriers issued a penalty of just 0.2% for those caught texting or talking on a cell phone while driving.

As it is, even insurance rates for good drivers are at their highest levels in history – the national average is $1,427, which means they’ve risen by 20% since 2011.

Of course, as with virtually every aspect of auto insurance, the premium penalties charged to distracted driving offenders varies – often wildly – from one state to another. The costliest state for distracted drivers is Michigan, where violators will see their annual rates shoot up by an average $681; these penalties approach the $2,000 mark in the Detroit metro area, which happens to be the costliest city in the U.S. for car insurance. At the other end of the spectrum, motorists in New York catch a (perhaps undeserved) break for being caught not paying attention to the task at hand, with a subsequent average boost of only $2.51.

“Speeding, drinking and driving, disobeying traffic signals – those violations have (unfortunately) been around since the advent of automobiles. Distracted driving is really the only new dangerous behavior to affect your driving record,” explains The Zebra’s director of market insights, Alyssa Connolly, “The insurance industry and regulators have to ensure any rate changes they make are justified, so even though cell phones aren’t new to you and me, the risks and dangers they pose for drivers have only recently been substantiated – and now distracted drivers are really seeing the effects on their premiums.”

And you can certainly bet that premium penalties charged to distracted drivers will only accelerate further and faster down the road, especially if fatalities and injuries related to the unfortunate practice continue to tick upward. As it is, some claim that driving without paying proper attention to the road can be as hazardous as piloting a motor vehicle under the influence of alcohol or drugs, which warrants the steepest rate increases of any violation. Get a DUI and you could see your insurance rates skyrocket by an average of around $1,100, which is 383% more than if you’d been nailed for distracted driving. And, as always, those living in urban areas will pay more for insurance than suburbanites or rural residents, as will motorists having additional infractions and/or accidents on their records.

Here are the 10 states where being ticketed for distracted driving will boost a motorist’s auto insurance premiums by the highest average percentages, according to The Zebra:

Vermont – 41% ($425).
Connecticut – 34% ($520).
Oregon – 31% ($432).
Mississippi – 31% ($559).
Tennessee – 29% ($379).
Arizona – 28% ($344).
Michigan – 26% ($681).
Maine – 25% ($236).
Ohio – 25% ($263).
New Jersey – 24% ($407).

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