My Personal Finance Blog

The first thing comes in mind when people thinking about unexpected incidents when they drive is how to protect themselves from big loss. In this case, car insurance comes as the perfect solution. Many people have been testified that they could obtain huge benefit from it. And anyone should do the same thing. In fact, considering the important function of it, every state obliges the car owners to have it once they buy car. It delivers protection both to the driver and also passengers. In managing the need to obtain car insurance, everyone has done any efforts to find the best one. Another thing they usually consider is the price of the insurance. Though they mostly find insurance in high price but they always have the opportunity to get cheap car insurance.

So, how they can find the best cheap car insurance? The answer is they only need to access the online service that helps them during the process. From the beginning, it already gives necessary support because people can find the online car insurance quotes as many as they need. It definitely assists them in recognizing the main requirements of good car insurance. And if they are done with it, they can have more information by reading all the related articles. Once they have known what they need, they can find top listed insurance agencies throughout the states.

Do you remember the Blues Brothers? They were unstoppable. They were “on a mission from God”. Seems like almost everyone standing behind the counter in the rental agency is a Blues Brother when you come into collect the vehicle. They always want to sell you something, usually additional insurance. The most common special offer is loss damage waiver (LDW). It sounds such a good idea to have complete cover against any loss caused to the vehicle while under your control. The magic word is “waiver”. You are excluded from liability even if you drive the vehicle off the end of a pier and it sinks without trace (hopefully without you still inside it). The only problem is this good idea can seriously damage your bank balance when the final bill comes in. That hourly or daily rate just got heavy. So when should you add LDW? The answer is deceptively simple. If you do not own another vehicle and have no insurance cover in place, it may be a good buy. But most insurance policies on your own vehicle cover you while driving a rental. So it all comes down to the extent of that cover on your own vehicle.

To get the maximum discount in these hard economic times, most people have been pushing up the deductibles. In many cases, the potential losses can be managed to keep to the low end. It’s your vehicle. You can talk to the repair shop and get all the work you want done at the best price. But when it’s a rental vehicle, everything is out of your hands. The rental company has no interest in protecting your bank balance. It pays top dollar to get the vehicle repaired and sends you the bill. No searching around to find the cheapest replacement parts and lowest price body shops. Everything is top of the range and then comes the kicker. It’s called the “loss of use” charge. You are expected to cover their estimated loss of profit while the vehicle is off the road. And guess what. If you are paying their loss of profit, they have no incentive to rush the repairs. They can take their own sweet time and, in most cases, you pay – most private policies do not cover loss of use charges. Some credit card companies offer limited cover, but read the small print before relying on it. Limited cover means very little actual money will ever be paid out.

If you are only renting for a few days, it’s probably worth paying for LDW. It may not be cheap car insurance, but it protects you. But if the end bill is going to be too high, trust to luck and your own insurance policy. Hopefully, your own cheap car insurance policy will give you enough of a buffer against claims Remembering, of course, that only the best private policies cover you against the dreaded loss of use charges. If nothing else, all this bad news should give you the incentive to drive like your wheels are passing over egg shells. Drive as safely and carefully as possible. If you are going to break some eggs, make sure the damage is minor and the losses are small.

Recently, President Obama made a big speech. He was worried about education standards. He wanted to divert more resources into improving basic reading skills and giving people a better understanding of the world around them. It was interesting to see how many voices were raised in complaint. They did not agree it should be a high priority for people to know more about the world. These are the voices of big businesses like insurance that rely on you not understanding how policies work. There is more profit to be made if people do not read and understand what they are buying. How bad is this problem? The answer comes in a recent survey carried out by the National Association of Insurance Commissioners (NAIC). It seems only 45% of you have any real sense of confidence when you buy insurance policies, more than 60% failed to define simple concepts from health and auto policies, and 86% did not understand the terms being used in the healthcare reform debate. When insurance is so important to financial survival in the US, it is disheartening that people are not making decisions based on the best information.

Here is a quick test:

• if some property is stolen from your vehicle, can you claim its value on your auto policy?
• is your credit history taken into consideration when you buy a policy?
• when you buy a liability policy which insures 100/300/100. what does the last figure mean?

When you want insurance, you could make a policy decision only to buy through an agent. Being able to talk to a person gives you access to their knowledge and experience. It can give you more confidence. Except most agents will charge you a fee or there will be commission deducted out of your premium instalments, so this advice can come expensive. Is it worth it when you can do a little study and learn what you need to know. As a starting point, look at http://www.InsureUonline.org/. Getting more savvy means saving money and getting a better deal by buying a policy online. So long as you shop around, getting as many car insurance quotes as possible, you should always be able to find a good deal. But, if you are still uncertain, do not be afraid to pick up the telephone before writing out a check or authorizing a credit card payment. Now you make a choice. Your state has a Department of Insurance and all of them run help lines to answer your questions. Alternatively, call the car insurance company directly. Make sure you understand your policy before you find out the hard way when making a claim. In other words, you should always protect yourself and avoid future losses by asking before you buy.

The answers to the questions are: property stolen from your vehicle is covered by your homeowners policy not the auto insurance policy; your credit score is a key factor for setting your premium rate in the majority of states; and the final $100,000 is the maximum amount payable for damage to property.

Starting with excessive rates to buying a separate policy for your teen driver, dealing with auto coverage is often confusing, complicated and it also involves a lot of money to be spent. Still, you can’t go around it, as it a legal requirement in most states and a helpful tool to give you a peace of mind when dealing with traffic accidents. Sure, it may seem like a dirty job and you don’t want to waste your time on it. But what if there’s an easier way to get your auto insured without all the hassle you fear of dealing with? If you are interested, read the frequently asked questions below as answered by insurance experts, who know how to get the right policy no matter what’s your situation.

Q: Am I obliged to carry insurance coverage when driving my car?

A: Nearly all states have it as a legal requirement for drivers to carry liability auto coverage as a guarantee that the damages you deliver in a car accidents are paid for. Each state has a minimum amount of liability coverage that a driver must carry with his policy. And even the states that don’t have vehicle insurance as a legal requirement oblige the driver to show proof that he has enough financial resources to pay for the caused damage. Any other types of insurance coverage, outside liability coverage are purely optional and can be purchased with respect to your personal insurance needs.

Q: Is insurance required before buying a new vehicle?

A: If that’s your first vehicle, you will be required to have insurance coverage before even taking it from the dealer. Moreover, if you’re using an auto loan to finance the purchase, you may be required to buy additional types of coverage besides liability. If you already have a car and are changing it to a new one or buying an additional vehicle, you have 14-30 days to report the changes to your insurance company.

Q: How can I get cheap car insurance?

A: Compare insurance quotes in order to see what other providers are offering, and if it turns out that you’re overpaying – switch the provider. If your current rates are quite competitive, compared to other companies, see if you’re taking advantage of all the discounts you can opt for.

When looking for a new car, always make sure that the make and model you are interested in provides cheap car insurance options. Some cars are a lot cheaper to insure than the others, ask your insurance agent to learn what cars are the most cost-effective from the insurance perspective.

Another way to get cheap car insurance, although a bit risky one, is to increase your deductibles. By raising the amount of out-of-pocket expenses you can afford before the policy kicks in you get lower premiums. And if you’re driving an older vehicle that has a low market value, you may want to drop collision and comprehensive coverage as it takes depreciation of the car value into account.

You can also adjust the amounts of coverage your policy carries, although experts do not recommend decreasing them to the level of state minimums as it is usually not enough to pay for a serious accident.

The easiest way to understand how an insurance policy works is to think about gambling. You are about to drive your vehicle out on to the public roads and you make a bet with the insurance company. If you can do this without having an accident, you lose the premium. If you have an accident, the insurance company pays your losses. So, as with a field of horse about to set off round the track, the bookmakers check the records of each horse. How many times has it run and placed. This gives them a basis on which to set the odds. In theory, everyone has access to the same information so you decide whether to place the wager depending on the fairness of the odds quoted. Well, it’s exactly the same with drivers. The insurers make a risk assessment of you as a driver. What make and model are you driving? How many miles a year do you drive? How many years of experience? How many tickets and claims? This profiling gives them the odds of an accident and the company sets the premium rate to quote you. You also know your own track record and have a good basis on which to decide whether to pay the premium.

Unlike a conventional bet, you can decide to self-insure a part of the potential liabilities. This is done through the so-called deductible where you pay the nominated amount before the insurer has to contribute. So if the claim against you is for $800 and you have a deductible of $1,000, you pay the whole of the $800. But if the claim is for $1 million, you only pay $1,000 and the insurance company loves you like a brother. The majority of traffic accidents are minor fender benders and the repair costs are usually low. If no-one is injured, self-insurance is a cost-effective option, i.e. the amount you save on the premium covers the likely payments of claims. But you should consider the issues carefully before accepting the maximum deductibles. Suppose you have a bad run of luck and, in the space of a year, you are involved in three accidents where the claims exceed the deductible. Now you have to find the deductible multiplied by three as a cash sum and your premiums will go up because you have proved yourself a bad risk. Can you afford the pay this lump sum without breaking the bank? Given your premiums are going to rise, do you still want to pay the maximum deductibles in the future?

Planning is all about the worst case scenarios and hoping for the best. There are good discounts for increasing the deductible. There are also good discounts for insuring more than one vehicle or combining both car insurance with home insurance. Because you cannot guarantee you will never have accidents, you should decide what discounts you can find and how much you are prepared to pay if the worst happens. Do not simply buy the cheapest car insurance you can find. In many cases, these policies do not give a good value-for-money cover against liabilities. Shop around and buy the policy that gives you the best protection at a price you can afford.