Add a Teen Driver to Your Policy Without Breaking the Bank

For many families, adding a teen driver to their car insurance policy can prove to be painfully expensive. After all, insurance companies generally consider teens as high-risk drivers. Fortunately, there are a few ways to keep teen insurance costs to a minimum.

Here are a few things to keep in mind as you get ready to add your teen to the family insurance policy:

Make the grade

Typically, the higher grades a teen earns in school, the less their car insurance coverage will cost. Most insurers offer anywhere between 10 and 25% discounts for teens who maintain a B average or higher. Not only will this save you money, but it will also be a great incentive for your teen to keep up her grades. Consider telling your teen if their average drops below a B, she’ll have to take a break from driving until she can make the grade.

Increase your deductible

Most people cringe at the thought of a high deductible insurance policy. However, a higher deductible often means lower premiums-and that can save you loads of money when you’re adding a teen driver to your policy.

Your insurance premiums will probably increase significantly when you add your teen driver, so you’ll want to do everything possible to bring that premium down. You can achieve a lower premium by raising your deductible. However, if you choose a higher deductible, it’s important to stress that all the drivers in your family must be extremely careful on the road. If someone gets into an accident, you’ll have to pay more out of pocket before your insurance kicks in-and to top it off, your insurance rates will go up. Be sure to communicate this clearly to your teen driver.

Keep a clean record

According to the Insurance Institute for Highway Safety (IIHS), 16-year-olds have the highest rate of car crashes than drivers of any age. Sadly, many of these accidents prove to be fatal.

Many teens start off driving safely, but after a few months, become overly confident and start driving recklessly to show off for their friends. It’s critical to make sure that your teen is and remains a safe driver-not just for the sake of your insurance rates, but also for their safety.

If your teen has an accident or even gets a speeding ticket, your insurance rates will jump significantly. You may want to give your teen extra motivation to be safe behind the wheel. Explain to them that driving is a privilege, and if they receive a traffic violation you’ll have to take away that privilege.

Consider an older car

Many parents are tempted to buy their teen a new car that includes all the latest safety bells and whistles. However, it’s important to remember that new cars often mean higher insurance premiums. Consider buying an older used car for your teen or giving him or her the oldest car on your insurance policy.

Keep your policy up-to-date

Be sure to review your insurance policy at least once a year and ensure that all the information is accurate and up-to-date. Once your teen graduates from high school or celebrates his 18th birthday, your insurance rates may drop. Also, if your teen heads off to college without a car, you may be able to take them off your policy for the time being. (However, before you remove your teen from your policy, confirm that your teen will not be driving at all. It could cost you big if he were to have an accident without insurance.)

In the World of Cars, Is Bigger Always Safer?

When it comes to cars, is it true that bigger is always better…and safer? Based on an April 2009 study by the Insurance Institute for Highway Safety (IIHS), the answer to this longstanding question is a resounding yes. The study shows that larger, heavy-duty vehicles are fundamentally safer than smaller, lightweight cars.

Considering recent announcements, this revelation is more important than ever. This May, President Obama unveiled his massive fuel efficiency plan. Under the new standards, auto makers will be ordered to increase the fuel economy of vehicles sold in the U.S. to 35.5 miles per gallon by 2016. This means manufacturers will have to produce smaller, more lightweight, fuel-efficient vehicles.

While supporters of the plan say it will help cut our nation’s greenhouse-gas emissions, opponents argue that the mandate will result in thousands more Americans dying or becoming seriously injured in auto accidents. Critics say that the number of auto fatalities could swell if hordes of “unsafe” subcompacts hit the road in coming years.

The physics behind car crashes

Why are bigger cars intrinsically safer? It all comes down to physics. According to the IIHS report, “These tests are about the physics of car crashes, which dictate that very small cars generally can’t protect people in crashes as well as bigger, heavier models.”

Based on the law of physics, when a large object crashes into a smaller object, the larger object creates a greater impact. This rule holds true for car crashes, as confirmed by the IIHS study.

For this study, the IIHS conducted three front-to-front crash tests, each involving a microcar or minicar colliding with a midsize model from the same manufacturer. The Institute did not use SUVs, pickup trucks or even large cars to pair with the micros and minis in the tests. “The choice of midsize cars reveals how much influence some extra size and weight can have on crash outcomes,” the report explains.

Instead, the Institute chose pairs of 2009 models from Daimler, Honda and Toyota because these auto makers have micro and mini models that have earned good frontal crash ratings in barrier tests.

According to the final IIIHS report, “In a collision involving two vehicles that differ in size and weight, the people in the smaller, lighter vehicle will be at a disadvantage. The bigger, heavier vehicle will push the smaller, lighter one backward during the impact. This means there will be less force on the occupants of the heavier vehicle and more on the people in the lighter vehicle. Greater force means greater risk, so the likelihood of injury goes up in the smaller, lighter vehicle.”

Real-world car crash statistics confirm this theory. In 2007, the death rate in 1 to 3-year-old minicars involved in multiple-vehicle crashes was nearly twice as high as the rate in large cars.

Good engineering makes a difference

Despite the recent IIHS study, some experts point out that vehicle safety doesn’t come down to car size alone. They say that quality engineering and design are more important to vehicle safety than the actual car size. Added safety features, such as front and side airbags, seatbelts with pre-tensioners and force-limiters, rollover prevention mechanisms, head restraints and crash avoidance systems can also greatly improve a vehicle’s safety.

Experts also say the size of a vehicle’s front end can determine how the car fares in crash. If a lighter vehicle is engineered with a large front end, creating a bigger space between the front of the vehicle and the front seat, the car would be much safer. That’s because a car with a large “crush space” decreases the severity of an impact and reduces the force to the car’s occupants.

Plus, auto makers can also reduce a vehicle’s weight without losing too much structural integrity by using aluminum, titanium or plastic. Unfortunately, most manufacturers steer clear of these materials because they carry a high price tag.

Protect Your Identity (and Your Finances) with Identity Theft Insurance

Identity theft is the fastest growing crime in the U.S, according to the Federal Citizen Information Center (FCIC). In 2006 the Federal Trade Commission (FTC) reported that approximately 8.3 million Americans were victims of identity theft, and that number is growing. Recent reports indicate that as many as 10 million people in the United States fall victim to this crime every year. Identity theft costs businesses $50 million in fraudulent charges each year, and innocent consumers pay a grand total of $5 million just to repair their good names.

According to the U.S. Department of Justice, identity theft refers to “all types of crime in which someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception, typically for economic gain.”

Fortunately, there are ways to protect yourself from this prevalent crime. First and foremost, consumers can take multiple precautions to protect their identities. On top of that, most major insurance carriers now offer Identity Theft insurance protection through standard homeowner’s and renter’s insurance policies.

Identity Theft Insurance 101

If you become an identity theft victim, Identity Theft insurance covers many of the costs associated with restoring your identity and repairing the damage to your personal financial information. This type of insurance generally reimburses victims for:

  • Lost wages
  • Phone bills
  • Mailing and notary costs
  • Attorney fees

An increasing number of insurance carriers are adding identity theft coverage to their standard homeowner’s insurance policies. Some other insurers offer it as optional coverage or as a stand-alone policy. These policies generally cost between $25 and $50 a month for up to $25,000 worth of coverage.

Is it worth it?

Victims of identity theft aren’t merely inconvenienced-they generally lose a significant amount of money, as well. According to Javelin Strategy and Research, victims of identity fraud in 2007 lost an average of $6,000 each. The average identity theft victim spends over $800 on administrative expenses alone, including phone bills, and postage and notary expenses, according to the Identity Theft Resource Center, an independent non-profit organization.

Of course, that $800 price tag does not include lost wages from missed days of work, the number of hours victims spend trying to resolve the issue or the emotional price victims often pay. Statistics show that the average victim spends more than 170 hours trying to repair the damage caused by identity theft.

According to a 2004 identity theft study conducted by The Identity Theft Resource Center (ITRC), identity theft victims reported a number of unexpected secondary effects, including difficulties in obtaining credit, clearing accounts, obtaining or holding a job and adverse effects on insurance or credit rates. And oftentimes, the harms of identity theft can reach far beyond a person’s finances. The ITRC discovered that in 2004 more than 40% of identity theft victims reported stressed family life and 9% of the victims said their relationship was “on the rocks” or ended altogether as a result of the identity theft.

Considering these alarming statistics, Identity Theft insurance is absolutely worth the cost for most, if not all, consumers. In the long run, this insurance coverage could save you untold amounts of time, money, stress and heartache.

Be proactive

You can take a number of proactive steps to shield your personal information. Here are a few of the precautions the US Federal Trade Commission recommends consumers take to protect themselves from identity theft:

  • Shred documents and paperwork that contain personal information before you discard them.
  • Never click on links in unsolicited emails; instead, type in a web address that you know.
  • Use firewalls, anti-spyware and anti-virus software to protect your home computer.
  • Keep your personal information in a secure place at home.
  • Request your credit report each year and check the reports for inaccuracies.
  • Always look for discrepancies in your financial bills and statements and question them immediately.
  • Collect your mail as soon as possible and drop outgoing mail containing financial information at the Post Office.
  • When shopping online, make sure the company is reputable, displays an approved security symbol and uses an encrypted page to take payment details. The encrypted page should not generate warnings about being signed by an unknown authority.
  • Stop pre-approved credit card mail offers by calling 888-5-OPT-OUT (888-567-8688).
  • Don’t carry your Social Security card in your wallet or write your Social Security number on a check.
  • Freeze your credit so that no one can open any form of credit in your name.

If you suspect that you have been a victim of identity theft, do the following immediately:

  • File a police report to document the theft.
  • Contact one of the three major credit bureaus and ask them to place a fraud alert on your Social Security number. (The three credit bureaus are Equifax: 800-525-6285; Experian: 888-397-3742 and Trans Union: 800-680-7289)
  • If your wallet was stolen, call your credit card companies and cancel all your missing cards.
  • Check your credit report to see if any fraudulent accounts have been opened.
  • If your wallet contained any checks or ATM cards, notify your bank right away.

File a fraud complaint with the Federal Trade Commission at www.consumer.gov/idtheft.

Hands-Free Phones Not As Safe As You May Think

It seems like everywhere you turn these days, you see drivers chatting away seemingly to no one at all. Of course, by now we usually assume they’re talking to someone on their hands-free cell phone headset or their built-in OnStar phone.

Although many drivers believe they’re safer using these hands-free options, recent research proves otherwise. A new study shows that drivers are no safer talking on a hands-free phone than if they were using a hand-held one. 

Look mom, no hands!

The new study, conducted by Yoko Ishigami, Dalhousie University and Raymond Klein, appeared in the National Safety Council’s (NSC) Journal of Safety Research this summer. The study shows that any type of cell phone use distracts the driver from focusing on the road. The human brain simply can’t focus on the conversation and safe driving at the same time.

The researchers discovered that hands-free phones are just as dangerous for drivers as hand-held phones. According to the study’s findings, talking on any type of cell phone impairs a driver’s reaction times and causes them to reduce their vehicle speeds. This leads to more driving errors and car accidents.

Based on the study, there’s at least one difference between drivers using hands-free phones and those using hand-held ones. While drivers talking on any type of cell phone tend to slow down, those using hand-held phones typically slow down more.

Don’t talk and drive

This new study is not the only research that shows hands-free phones are no safer for drivers. Several other studies have made the same claim.

However, until now, many lawmakers obviously believed hands-free phones were safer. As a matter of fact, five U.S. states and Washington D.C. have passed laws requiring drivers to use hands-free phones instead of hand-held ones. But these new studies claim that it’s the conversation-not the act of holding a cell phone-that causes drivers to lose focus.

It’s clear that cell phones cause serious problems and lead to countless car accidents on our nation’s roads and highways. According to some estimates, more than 636,000 car crashes, 330,000 injuries, 12,000 serious injuries and 2,600 deaths are caused by distracted drivers talking on a cell phone in the U.S. each year.

In January 2009, the NSC called for a complete ban on cell phones for drivers. Other national organizations and lobbyists may follow suit.

In the meantime, drivers may want to take caution. Although no laws have officially been passed, you may want to refrain from taking calls or at least limit your cell phone use when you’re behind the wheel. While avoiding cell phone calls when you’re driving may be an inconvenience, it could end up saving your life in the long run.

Steer Clear of Expensive Car Insurance Mistakes

As the economy continues on its downward spiral, consumers across the nation are tightening their belts and trying to save money wherever they can. Unfortunately, many people don’t realize that they’re losing untold amounts of money by overpaying on car insurance.

If you’re looking to save on auto insurance, steer clear of these common car insurance blunders:

Blunder #1: Not shopping around for the best car insurance quote.

If you go with the first car insurance company that comes your way, you could be losing hundreds of dollars each year. It’s worth your while to shop around and try to find the best deal out there. When it comes time to renew your insurance, it may be easy to stick with the same insurer you’ve had for years-but you won’t save any money that way. Car insurance companies will calculate your rates differently, so you may be able to find a much better deal from someone else.

Blunder #2: Choosing your state’s minimum coverage requirements

Although you may be tempted to choose the bare minimum coverage amounts required in your state, this could cost you in the long run. Just because you are in compliance with state laws doesn’t mean that you’re fully protected. If you’re underinsured, a major car accident could wreak havoc on your personal finances. Everyone’s situation and budget is different, so talk to your financial advisor to discuss how much coverage you need.

Blunder #3: Opting for the lowest car insurance deductible

In the car insurance world, the deductible is the amount of money you’ll have to pay out of pocket on car repairs before your insurance company starts covering costs. Many consumers make the mistake of assuming the lowest deductible will save them money. However, this is not always the case.

Generally, if you go with a lower deductible, you’ll have to pay a higher premium. In the long run, you may be able to save more money by choosing a high deductible insurance plan with a lower premium. Do your homework to figure out what makes the most sense for your unique situation.

Blunder #4: Choosing car insurance based only on cost

While you should definitely shop around for a great price on car insurance, this isn’t the only factor you should consider. As you compare car insurance, look at the various benefits each insurer has to offer. Choose the coverage that best suits your needs and then compare prices.

Blunder #5: Missing out on major discounts

If you’re a safe driver or if you insure your car and home with the same company, you may be eligible for a discount. Take some extra time to look into what discounts are available from various insurers. You could save hundreds of dollars this year.

Will Your Insurance Cover That Water Spot on Your Ceiling?

Most people who buy homeowner’s insurance tend to think about protecting themselves from financial loss should the house burn down. A much more common cause of damage to homes, though, is water. Leaky roofs, broken pipes, and blocked drains can produce a mess that is expensive and difficult to clean up and repair. However, insurance coverage for these losses is not always certain.

The standard homeowner’s policy may cover rain damage, depending on how rain enters the home. If a storm damages the roof or a window and allows rainwater to enter, the policy should cover the cost of repairing the damage. However, if the roof has no apparent damage but instead has suffered normal wear and tear, the policy will not cover the loss.

The policy will normally cover damage caused by water leaking from pipes, with some restrictions. If a pipe breaks and floods a few rooms, the policy will cover the cost of repairs to the rooms but not the cost of replacing the pipe. However, the policy will not cover the damage caused by a burst frozen pipe unless the homeowner has used reasonable care to either maintain heat in the building or shut off the water supply and drain the pipes and appliances of water. People who leave for warmer climates during the winter must make sure these steps are taken.

One lesson that many people learn the hard way is that homeowner’s policies do not cover damages caused by flooding. The standard policy does not pay for damage caused by floods; water on the surface of the ground; waves; tides; overflows of bodies of water; or water spray whether the wind drives it or not. It also will not pay for damage caused by water or floating debris that backs up into the home through sewers or drains or which overflows or discharges from a sump or sump pump. Finally, it will not cover damage to structures such as driveways, sidewalks or foundations from water pressure under the ground. A flood insurance policy from the National Flood Insurance Program may cover some of these types of losses. Also, many insurance companies may offer a small amount of coverage for damage resulting from sewer, drain or sump backup for an additional premium.

When a water loss occurs, it is very important to stop the water flow and begin the drying process as soon as possible. Broken windows and holes in roofs should be boarded up and water shut off to broken pipes. If the water is allowed to accumulate, mold and mildew may grow in the area. The longer the affected area remains wet, the longer and more expensive the repairs will be.

A good restoration contractor can help contain the damage and speed up the repairs. He can perform emergency work, such as removing carpets, installing fans and dehumidifiers, and vacuuming up the water. He will also protect furniture by setting it on blocks so that the legs are above the water. Because the wet carpet pad may produce a foul odor, the contractor will remove and dispose of it and replace it with a new one. This may save the carpet, thus holding down the total repair cost.

Homeowners who suffer water-related losses should work closely with their insurance agents and companies. Cooperation with the company may result in a fairer settlement; the agent can be the homeowner’s advocate with the company. Most importantly, the homeowner should act quickly to limit the damage and protect undamaged property. More than anything else, this will reduce the cost and inconvenience of the loss.

Replacement Cost Value or Actual Cash Value – Which Option Suits Your Needs?

Homeowner’s insurance policyholders usually have the option to insure to actual cash value (ACV) or replacement cost value (RCV).  To make the best decision, the individual first needs to gain a clear understanding of the difference between the two policy options.

In a nutshell, the difference between RCV and ACV is wear and tear; otherwise known as depreciation.  ACV considers that the lost property has most likely depreciated over time, and endeavors to insert depreciation into the equation.  For instance, suppose the ruined property was a sofa that would cost $700 to replace.  Even though the sofa was in good shape for a 10-year-old piece of furniture, it was definitely not brand new.  In ten years time, some wear and tear inevitably occurred.  With ACV, the insurance company may determine that $30 of depreciation occurred each year since the sofa was purchased. In this case, the sofa would only be valued at $400 at the time of the loss.  The company would pay you $400 minus any applicable deductible. In a sense, you would be paying an increased deductible in the form of the $300 of depreciation.  To summarize ACV, the insured would pay the difference between the replacement cost, the amount the old sofa depreciated by, and any deductible. In essence, the policyholder is “co-insuring” that amount. 

On the other hand, RCV is simply the cost of replacing the lost property with either an identical or similar piece of property.  Using our sofa example, if it costs $700 to replace the sofa, the insurance company will pay you the $700 minus any applicable deductible.  Even though the ruined sofa was showing its age, and could never be sold for $700, RCV allows the policyholder to recoup the value of a brand new replacement sofa.

Which option is best?  This question cuts to the core of what insurance is all about – making the insured whole again. In some cases, ACV falls short.  Conversely, RCV can create an overly beneficial situation for the insured. Not including sentimental value, if the sofa is old and dilapidated, but the insurance covers RCV, it is obvious that the policyholder will benefit greatly by receiving enough funds to purchase a brand new sofa to replace the old one.

An old house that has been severely damaged by a fire may provide a more dramatic example of RCV.  At the time of the fire, the house may have only been worth $200,000, because the components of the house (such as roof, flooring, HVAC etc.) were approaching the end of their life span.  In this case, the house would increase in value as the old worn-out components were replaced with brand new ones.   So the homeowner would be better off in terms of the value of their home, than if the fire had never occurred at all.

Some insurers stipulate that all repairs must be completed, in order to obtain the full replacement cost of the property.  They may decide to pay the ACV up front, and have the rest of the payment (the difference between RCV and ACV) contingent upon all repair work being completed.  This keeps the insured from pocketing the money and gaining financially from the loss. 

There is at least one caveat regarding the benefits of RCV, however. Since the real estate market can fluctuate quite a bit, sometimes replacement cost value turns out to be less than ACVWhen the housing market is strong, and home prices are high, the actual cash value can be higher than the cost of replacing a home with one that has similar features and qualities.  Therefore, the additional cost of purchasing RCV may be a bad decision.  As always, consult with an agent to see which option is right for you.

The Magic Number: Understanding Car Insurance Rates

You just bought a new car, and now you’re searching for affordable auto insurance. Once you supply an insurance company with some information, including the make and model of your car, your age, your address, etc., they give you a quote for your monthly premium. But how exactly do they calculate that number?

Read on to learn how insurance companies determine your rate and how you can save money by shopping around.

Different companies, different rates

Many drivers mistakenly believe that insurance rates are set by the state. While auto insurance companies must follow certain laws when calculating rates, the rates themselves are not set by law.

When you ask for a quote, the insurance company considers many different factors as they figure out your rate. However, because each insurance company uses their own unique calculation method, you may receive widely varying rates from different insurance providers.

Crunching the numbers

Depending on the laws in your state, insurance companies typically determine your rate based on some or all of the following factors:

  • The year, make, model, body type, engine size and safety features of your car
  • Your age and gender
  • Your marital status
  • Your personal credit history
  • Your driving record
  • Your usage of the car (such as if you are using the car for work, pleasure or as a collectible.)
  • Home ownership status and occupation
  • How many drivers will be using the car and their ages
  • How many vehicles you own
  • What kind of coverage limits you want
  • Where you live
  • Your weekly, monthly or annual mileage

Generally, your insurance agent will enter all of this information into a computerized system. The system automatically places you into a price group based on your personal information. The insurance company then subtracts any discounts for which you qualify from your group’s rate and you’re left with the resulting quote.

Where your money goes

If you think the quote is fair and decide to purchase a policy with the auto insurance company, you’ll start paying a monthly insurance premium. But what exactly does your monthly premium cover? Here’s a typical insurance premium breakdown:

  • About 70 percent of your premium pays for losses and loss expenses
  • About 26 percent of your premium goes toward marketing, commissions and administrative costs
  • About 4 percent of your premium contributes to the insurance company’s profits

You better shop around

Each insurance company has differing sets of claim payments and expenses, and they set rates for each “price group” accordingly. That’s why you’ll likely receive varying quotes from each insurance company. This is why it’s so important to take the time to shop around and find the best rate.

Plus, while insurance companies are prohibited by law to calculate rates based on race and religion, they are allowed to consider your age, gender and marital status. However, each company places emphasis on different factors. For example, while one insurance company may place more weight on a driver’s gender, another company may think their driving record is more important.

This is yet another reason to request plenty of quotes before you settle on an insurance company. In addition to the rate, you should also consider which company offers the type of coverage you desire. Do your homework and find the best fit for your unique auto insurance needs.

How to Find a Trustworthy Car Mechanic

If you’ve been lucky enough to avoid car mechanic nightmares yourself, you’ve probably heard plenty of horror stories from your friends and co-workers-whether it’s the mechanic who charged your sister for a new carburetor when she just needed an oil change or the jerk who convinced your boss to purchase a brand new set of tires when a good patch job would have done the trick. As unlikely as it may seem, there are plenty of good car mechanics out there.  It just takes some research to find them.

Don’t wait until your next breakdown to hunt down a good auto shop. Find a top-notch mechanic now so you’ll know who to call the next time you need help. Here are a few tips to help you pinpoint a truly trustworthy car mechanic:

Ask for recommendations

Ask your family members, friends and co-workers if they can recommend a great mechanic. After all, if your brother or best friend was happy with an auto repair shop, odds are you’ll be satisfied with them too.

Of course, you may be better off asking for recommendations from people who have some auto expertise. While Aunt Betty might heartily recommend ABC Auto Shop, she may not realize they’ve been ripping her off all along because she simply doesn’t know much about cars.

Decide on a dealer vs. independent shop

You may be more comfortable working with a mechanic at your car dealership. That’s fine, but you should keep in mind that dealerships generally charge more for repair services. Remember that any well-trained mechanic can perform first-rate repairs, whether he works for a dealer or a small mom and pop shop.

Many independent repair shops can offer a warranty on parts and repairs and use factory parts recommended by your carmaker. This can save you loads of money in the end. On the other hand, if you require repairs associated with a recall or have an extremely unusual car problem that is common with your type of vehicle, you may be better off going to your car dealership.

Look up online ratings and reviews

Search for repair shop ratings and reviews on sites like Women-Drivers.com or mechanicratingz.com to find out how other customers rank local car mechanics. However, keep in mind that just because a shop receives two good reviews doesn’t mean they always do a great job. By the same token, if a mechanic earns two bad reviews, that doesn’t necessarily mean he’s terrible. While online reviews can be helpful, you should take them with a grain of salt. Visit the shop first-hand before you make your final decision.

Do a trial run

If you want to try out a new mechanic, take your car in for regular service like an oil change or tune-up. This will give you an idea of how quickly and effectively the shop works, the level of customer service they offer and how much they charge.

When you visit the shop, take notice of how the business runs. See if the shop seems neat and organized and if the staff seems friendly and knowledgeable. Ask if they have certified technicians on-staff and the most cutting-edge equipment. You should also ask whether or not they have credentials like Automotive Service Excellence (ASE) certification and AAA approval.

Find out if they concentrate in body or mechanical work and if they specialize in certain vehicle makes and models. Also ask if they offer a warranty and customer satisfaction policy. Also, take note if they have clearly posted labor rates. If so, compare these rates to other shops in the area.

If the staff seems annoyed by your questions or if they don’t offer clear answers, you may want to steer clear of this particular shop. After all, if they have nothing to hide, they’ll be more than willing to answer your questions-especially if they want to earn your business.

Steer Clear of Car Accidents

On average, there are more than six million auto accidents on U.S. roads every year. Sadly, 34,017 of these crashes proved to be fatal in 2008, according to the National Highway Traffic Safety Administration (NHTSA). Based on these shocking statistics, it may seem inevitable that we’ll all suffer from an auto accident at some point.

However, there are numerous precautions you can take when you’re behind the wheel to reduce your risk of having an accident. Auto insurance experts implore drivers to wear their seatbelts, drive defensively, closely follow driving laws and be considerate to other drivers. Read on for more driving safety tips that will help you steer clear of auto accidents.

Keep your eyes on the road

When you’re behind the wheel, it’s extremely important to stay focused on the road at all times. The NHTSA reports that driving distractions cause up to 4,300 accidents every day in the U.S. That’s why you shouldn’t take your eyes off the road for even a moment, whether you’re changing radio stations or dialing a number on your cell phone.

Safety experts say you should pull over to a safe place on the side of the road if you need to do any of the following:

  • Pick up an item you dropped
  • Change CDs
  • Look at a map
  • Eat or drink
  • Change radio stations
  • Dial a number, talk on the phone or send a text message
  • Read a newspaper
  • Apply makeup, comb your hair or take care of any other personal grooming

Just say no to road rage

Safety experts say drivers should also avoid aggressive driving. Be courteous to other cars on the road, and control your road rage. While it may be tempting to yell and gesture at another driver who cuts you off on the highway, try to keep your cool. If you antagonize an aggressive driver, the situations could quickly escalate. If you fear that another driver is putting you at risk, call the police immediately.

Try to remain polite on the road. There seems to be a common phenomenon where people who are generally well-mannered in every day life lose their sense of common courtesy when they’re behind the wheel. You probably see it every day during your commute. For example, when you turn on your signal to switch lanes, the driver in the next lane speeds up and blocks you in. While it may be easy to lose your temper in this situation, you’re better off letting them pass than trying to cut them off. After all, countless accidents occur every day because of aggressive driving.

Top ten safety tips

Follow these top ten safety tips to reduce your risk of having an auto accident:

  1. Never drive after you drink alcohol-even if you’ve just had one or two drinks.
  2. Don’t give in to distractions, such as playing with your iPod, reading a text message or picking up a toy your child dropped in the backseat.
  3. Avoid road rage. If you come across an aggressive driver, don’t antagonize or encourage them. Keep your cool and call the police if the driver is putting other motorists at risk.
  4. Keep a safe distance between your car and the vehicle in front of you. For every 10 miles per hour of your driving speed, leave at least one car length between your car and the car in front of you.
  5. Try to maintain a consistent speed. Don’t continually slow down and speed up unless the posted speed limit changes.
  6. Keep your car in tip-top shape. Get regular oil changes and tune ups and check the condition of your tires at least once a month.
  7. Stay alert when you drive through intersections. Most accidents occur in intersections, so be sure to look left, then right, then left again to make sure it is safe to pass through.
  8. Keep your side mirrors and rear-view mirrors adjusted properly. As you drive, check your side and rear-view mirrors every 15 seconds to make sure you’re in the clear.
  9. Be aware of road conditions and react appropriately. For example, turn on your lights if you’re driving at dusk or dawn or in the rain. If the roads are wet, snowy or icy and you feel your car starting to hydroplane, don’t brake suddenly or turn the steering wheel. This could send you into a skid. Instead, ease off the gas pedal slowly and steer straight until you feel your tires regain traction.

Sign up for a defensive driving class. With the proper training, you’ll be able to react more quickly to potential accidents on the road.

Do You Have Insurance When You Use Someone Else’s Car?

Bob is a sales manager for a chemical equipment company. He drives his employer-furnished car thousands of miles each quarter on business. He also drives it on weekend trips, errands around town, and vacations. Focused on his job, he doesn’t give much thought to who will pay if he has a car accident.

Janet and her husband own one car and can’t afford to buy a second right now. They get by as best they can with one, but sometimes this is a challenge. It seems like a gift from heaven when their retired neighbors offer to let Janet use their car over the winter while they live in Florida. Janet doesn’t think about insurance coverage; she’s thinking about how she no longer has to take a 90-minute commute involving three buses.

Bob’s employer has an auto insurance policy that will cover an accident he has while using his car on company business, but it might not cover accidents occurring when he drives it for personal use. If Bob strikes a pedestrian while driving to a sales appointment in midtown Manhattan, his employer’s insurance will probably cover any liability for the injuries. However, if he hits another car while he’s on vacation in Hilton Head, the employer’s policy might not apply.

Janet’s auto insurance policy will not cover an accident she has while she’s using her neighbor’s car. The policy states that it does not apply to injuries or damage resulting from the use of a vehicle that is A) furnished or available for her regular use; and B) not listed on the policy (an exception is would be a loaner car she has while her car is being repaired.) Her neighbors have made their car available to her to use anytime for a period of months. Consequently, if she’s involved in a multi-car pileup on the way home from work, and she is at least partly liable for the accident, her insurance will not cover her share of the liability. If the neighbors have insurance in force, it should cover the accident. If, however, they forgot to pay their premium and the policy has been canceled, there will be no insurance available.

Both Bob and Janet could use some additional low-cost coverage on their auto policies. This coverage, Extended Non-Owned Coverage–Vehicles Furnished or Available for Regular Use, extends the policy’s liability and medical payments coverages to cover situations like Bob and Janet’s. The coverage has two important features:

It applies only to the person listed on the policy endorsement unless indicated otherwise. If the endorsement shows only Bob’s name, then the policy will cover only him for the use of the company car. Otherwise, the policy will cover him, his spouse and any family member using the company car.

The coverage applies on an “excess” basis over other collectible insurance. This means that the insurance company will look to the vehicle owner’s insurance to pay first; if that insurance doesn’t apply or gets used up, then the individual’s policy will pay. For example, if Janet’s neighbors have a valid insurance policy, their policy will pay for the loss until the amount of insurance is used up; then Janet’s policy will pay. If the neighbors’ policy has lapsed, Janet’s policy will pay from the first dollar.

Individuals with situations similar to Bob and Janet’s should consult with a professional insurance agent about the cost of purchasing this coverage. For a relatively small cost, they can protect themselves while they enjoy the use of a vehicle someone else owns.

Homeowners – Are You Underinsured?

About two out of three U.S. homes are underinsured, according to a 2008 survey by Marshall & Swift/Boeckh LLC (MSB), a leading provider of building replacement cost data. Based on this new data, the average homeowner’s policy only insures the home to about 82% of the projected replacement cost of the home. Over the past decade, this point has been driven home as the U.S. has endured hurricanes, wildfires, and tornadoes.  Throughout the course of natural disasters, thousands of homeowners were left without enough coverage.

Although the study did not show results regionally, nationwide the average policy falls 18% short of the projected cost to rebuild the house. Put in other terms, the owner of a house insured for $200,000 would be short by $36,000 of the funds needed to rebuild, if the averages held true.

Why do thousands of Americans find themselves in this predicament?  The most common reason for all of this is quite innocuous: homeowners often forget to update their policies.  For instance, suppose a homeowner decides to put an addition onto their home, which would drive up the value of the property beyond the stated policy limits.  If the home improvement is never reported to the insurance company, no additional coverage is added to the policy. Additionally, rising construction costs and ever-changing building codes are raising the price tag to rebuild.

To avoid this problem, homeowners should re-assess policies as they renew each year. If a homeowner suspects a change in the value of their home, this suspicion should be communicated to his or her insurance agent.  Although not every homeowner wants to insure to the full replacement cost of the home, this possibility should at least be examined and considered.

Is Your Home Properly Insured?

Here are some tips to help you evaluate your homeowners’ insurance:

  • Understand what your policy does and does not cover.  Remember that  just because your bank requires your policy to cover the mortgage at a minimum, this does not mean your insurance should be based on this amount. You need to insure your home, not the mortgage on your home.
  • If available, consider adding an inflation guard to your policy.  Although this will cost extra money, it will help offset the rising cost of rebuilding, should disaster strike.
  • If building codes change, which they inevitably do over time, you will most likely be required to rebuild according to the new laws. The older the home, the more expensive it will be to bring it up to code. In most cases, policies will not pay for these extra costs. An “Ordinance or Law Endorsement” can help pay these hidden costs.
  • Talk to builders in your area to get an approximation of replacement costs. The going rate per square foot for new construction should be considered in estimating replacement costs.  Current appraisals are also an excellent source to utilize.

What the New Flood Insurance Maps Mean to You

Is your property at risk of damage from flooding? If you answered “no,” think again. Every property has a flood risk; some may have a more severe risk than others, but all have some risk. A home on a lakeshore has a pretty obvious exposure to flooding. So, however, does a building miles from a body of water, located on a street with storm drains on it and a steady water supply. Because standard homeowner’s and commercial property insurance policies do not cover flood losses, the federal government makes insurance available through the National Flood Insurance Program. The NFIP evaluates the risk (and determines the insurance premium) for each property in a participating community according to its location on that community’s Flood Insurance Rate Map. Recently, those maps have been changing, and some property owners have received big surprises.

For a variety of reasons, the Federal Emergency Management Agency, which administers the NFIP, has spent the past several years working with participating communities to update flood maps. Some areas have experienced development that has changed water flow and altered drainage patterns. Soil erosion has impacted other areas, while changes in hurricane activity have affected coastal areas. The new digital maps give more accurate flood risk information on a property-by-property level.

For every property, the flood map changes will produce one of three outcomes:

* The risk level changes from low or moderate risk to high risk;

* There is no change in the risk level

* The risk level changes from high to low or moderate.

According to the NFIP, a low or moderate risk means that the risk of flooding is reduced but not completely eliminated. Such properties are still vulnerable from floods resulting from heavy rainfall, rapid snowmelt, clogged storm drains, and other causes. Properties with a high risk have at least a one percent annual chance of flooding. This means that a property with a 30-year mortgage has a one in four chance of flooding sometime during the life of the loan.

When the NFIP issues new maps, it normally provides a six- to twelve-month period before the new maps take effect. This gives affected property owners time to understand the changes and prepare for their effects.

If your risk level has changed to high, the federal government will require your mortgage holder to verify that you have bought flood insurance. The cost of insurance will increase to reflect the higher degree of risk. The NFIP has “grandfathering” rules to help property owners who built in compliance with the maps in effect at the time of construction or who have maintained continuous flood coverage on the property. This can offset some of the additional cost. The owner of a building that is sufficiently high above the minimum height at which a flood is likely to occur may actually see a premium reduction.

If your risk level has changed to low or moderate, federal rules will no longer require you to buy flood insurance. However, you will still have some risk of flooding, so it may be wise for you to retain the coverage. According to the NFIP, 25 percent of flood insurance claims come from properties with low or moderate risks. You may be able to convert your standard flood policy to a Preferred Risk Policy, which carries a lower cost.

Even if your risk level has not changed, you should discuss your situation with a professional insurance agent, who can suggest ways for you to protect yourself financially from flood losses. The NFIP says that flood is the most common natural catastrophe in the U.S. The time to prepare is before that flood occurs.

How Much Homeowners Insurance Do You Need?

Because your home is probably the biggest investment you’ll ever make, you’ll want to take measures to safeguard that valuable investment. The best way to protect your home investment is through homeowner’s insurance.

However, you shouldn’t settle for just any policy. The type and amount of insurance you need depends on your specific home, what’s in it and your personal requirements. But how much insurance is enough? Here are a few ways to you determine just how much insurance coverage you need:

Market value may not be enough

While you may be tempted to purchase just enough homeowner’s insurance to cover the market or resale value of your home, this may not be enough. While the market value may be enough coverage for some homeowners, that’s typically not the case.

Your home’s market value is not the same as what’s known as its “replacement cost.” The replacement cost of your home is the amount of money you would need to rebuild your home to its previous condition if a loss were to occur. This amount is different from your home’s market value, purchase price or the outstanding amount of your mortgage loan.

Especially right now, when property values are falling throughout much of the nation, the market value of your home is probably much lower than its replacement value. Therefore, you should not use the market value to determine how much insurance coverage you need.

Calculate the replacement cost

So, how do you figure out the replacement cost of your home? Your homeowner’s insurance company can calculate how much it would cost to rebuild your home based on the following:

  • Square footage of your home
  • Type and quality of your home’s construction
  • Any updates, special features or add-ons to your home
  • Quality and cost of materials used in your home

Read the fine print

Before you purchase a policy, read all the fine print so you know exactly what the policy covers. Homeowner’s insurance generally covers damages to your home and “other structures” on your property, such as a shed, detached garage, gazebo or pool.

In most policies, the amount of insurance coverage you receive for other structures is 10 percent of the amount of coverage you receive on your home. For example, if your insurance policy covers $100,000 on your home, the coverage you would receive for your other structures would be $10,000 combined. If you believe that the structures on your property are worth more than 10 percent of your home coverage, you may want to request additional coverage.

Take a look at your personal liability coverage

Most homeowner’s policies also include personal liability and medical expense coverage. Generally, your homeowner’s insurance company will pay up to $100,000 on a legitimate civil claim against you for an injury that occurred on your property.

However, this still may not be enough to cover a major lawsuit. You might consider purchasing a separate personal umbrella liability policy, which can offer additional protection. This type of policy offers a higher level of liability coverage and ensures that you and your family’s assets will be protected if someone sues you for damages. Umbrella policies typically pay up to a predetermined limit, which is usually $1 million, for liability claims made against you and your family.

Protect your valuables

If you have particularly valuable jewelry, artwork or collectibles in your home, you may want to opt for even more homeowner’s insurance coverage for additional protection. You may assume your valuables are fully covered by your homeowner’s insurance, but that’s not always the case. It all comes down to what’s called the “sublimit”-this is the limit on the amount the insurance company will pay for specific types of personal property. Although your policy’s total personal property limit may be $75,000, the sublimit for jewelry may be as low as $1,500.

Read through your contract and find your policy’s sublimit for artwork, jewelry and collectibles. If your valuables are worth more than the sublimit, you may want to purchase additional insurance to cover them. You can purchase what’s called a “floater” and have this worked into your homeowner’s policy. Insurance floaters typically cover one specific item, so if you have multiple valuables, you may need to purchase floaters for each item you want to insure.

Talk to a professional

Discuss your unique homeowner’s insurance needs with your insurance agent. He or she can help you determine what kind of policy will best fit your needs and whether or not you may require additional coverage.

Make the Right Decision When Choosing an Auto Repair Shop

Over time, car engines and parts have become increasingly complex, and most people just aren’t all that familiar with the inner workings of their vehicles. So it is often difficult to determine whether an auto repair facility makes honest assessments and charges fair prices.  Fortunately, there are a number of guidelines that provide assistance in determining that an auto repair shop is both competent and honest.

First of all, don’t choose a shop based on its location.  Although this may be the convenient choice, it may not be the best choice. The National Automotive Parts Association (NAPA) suggests that you find a reputable repair shop before you need repairs. When you are not worried about your current transportation needs, and not rushed to get a repair completed, you will make a more informed and logical decision regarding car repairs.

Ask Questions.  Contact local repair shops and ask about their experience with your particular vehicle make and model.  Do they specialize in certain types of repairs?  Don’t be afraid to ask the shop for a few references.  An upstanding facility that wants your business should be happy to provide them.  A reference call only takes a few minutes and could save you a lot of grief later.  Also, ask neighbors, family, friends, and co-workers to recommend repair shops they have used that do good work at fair prices.   

Investigate.  Contact your local Department of Consumer Affairs or Better Business Bureau to see if complaints have been registered against the repair shop you’re considering.  You can also ask if an independently owned and operated shop is associated with NAPA.  A shop must have a reputation for service quality in its community to be certified as a NAPA Auto Care Center.

Plan an On-site Visit.  Upon arriving at the shop, notice whether the vehicles being repaired are equal in value to yours.  Is the staff helpful and considerate? Is the facility well organized and tidy?  Does it have modern equipment? 

Within the shop, all policies (guarantees, labor rates, methods of payment, etc.) should be posted and/or explained to your satisfaction.  Inquire if the facility provides a written guarantee on parts and labor, and ask about customer satisfaction policies.

NAPA Guidelines.  Some shops advertise “free inspections,” but this is often not to your benefit.  Inspections take time, and the facility must somehow recover the cost of the time it spends on the inspection. This process usually results in an attempt to sell you repairs–whether they are necessary or not.  According to NAPA, “All reputable auto care centers must charge a nominal fee for basic inspections.”

NAPA recommends against basing your choice of repair shop on price alone.  In addition to parts and labor, you are also paying for the expertise of the mechanics.  The shop should have modern equipment as well as the skilled technicians required to make the needed repairs.  Does the shop have the ASE symbol prominently displayed?  ASE-certified technicians are trained and tested to achieve certification in a variety of repair specialties.  Furthermore, they must be re-tested every five years to maintain the nationally recognized ASE-certification.  The display of trade school diplomas and certificates of advanced course work from car manufacturers can also help identify qualified technicians.  Since it is the technicians themselves who are personally certified, not the shop, you may want to ask for assurance that a certified mechanic will handle the repairs on your vehicle.

Communicate. Once you have chosen a shop, discuss beforehand what parts will be used to repair your vehicle.  Brand name parts are typically built to the original manufacturer’s quality or better, and they usually come with warranties. ON the other hand, remanufactured parts and non-brand name parts often cost less and may also carry warranties.  Ask the staff to discuss the pros and cons of which parts to use.

Disagreements can occur due to lack of communication between the customer and the shop.  It is easy to become intimidated when communicating with a repair shop, and you hear a lot of words and concepts you don’t necessarily understand.  A sign of a reputable facility is the ability to communicate your vehicle’s problems to you, along with your options for fixing the problems.  Do not be afraid to ask questions about the repairs as well as the costs.  It is equally important to give the shop a full description of the problem.  If the car is “making a strange sound,” try to explain exactly when it happens.  Does it happen when braking or accelerating? when the engine is hot or cold? on a full or empty fuel tank?  The point is to do your part to assist the mechanic in accurately diagnosing and repairing the problem.

In these economic times, the average cost of a new vehicle exceeds $28,000, and consumers may need to drive their cars longer.  Basic vehicle maintenance and good repair service are the best ways to keep your car running smoothly for many years to come.

Parents, Tell Your Kids: Stop Texting and Drive

In the summer of 2009, a shocking video posted on the Internet gained widespread attention from the media. Viewers found it so upsetting that YouTube restricted access to it on its Web site. Created by the police department of a small town in Wales, it depicted a fictional but horrific car accident that claimed the lives of four people and seriously injured the driver who caused it. The culprit: A teenage girl who was sending a text message from her cell phone while driving.

“Texting” while driving is a very dangerous practice. Car accidents are already the leading cause of death for people aged 16 to 20, according to the Centers for Disease Control; by distracting them, texting increases their chances of getting in accidents. Eastern Virginia Medical School ran a study in which 21 teenagers with at least six months’ driving experience and no chemical influences simulated driving in 10 minute segments. When they sent text messages or searched their MP3 players while driving, they changed lanes and speeds more often than when they did not. Some of them ran over pedestrians.

The federal Department of Transportation convened a Distracted Driving Summit meeting in the fall of 2009. Participants discussed solutions to a variety of distractions, including ways to get teens to stop texting behind the wheel.

  1. Just as they would talk to their teens about the dangers of drinking and driving, parents should talk with them about driving while texting. Teens don’t necessarily think about how risky some behaviors may be. Driver education instructors might not raise this issue, so it’s up to parents to address it.
  2. When they have the conversation with their teens, parents should not worry about being too harsh. Cemeteries are full of teenagers who thought they were immortal, so this is no time to soft-pedal the message. Have them watch the Welsh police department’s video, give them testimonials from other teens to read, and show them stories about accidents like the one in 2007 that killed five girls who had just graduated from high school near Rochester, New York.
  3. Some state and local governments have enacted laws against texting and driving. New York, California, Arkansas, Texas and Missouri are a few of the states that have enacted bans. Parents should find out the laws where they live and make sure their teens know.
  4. Parents should set firm rules with tough consequences for violations. Loss of driving and cell phone privileges are some of the penalties parents may want to consider for breaking the rules.
  5. Parents should model the behavior they want from their teens. They should avoid talking on cell phones or texting while driving themselves. These practices are not any safer when someone over age 40 does them; parents should set a good example and drive safely.

Learning to drive is an important milestone in a teenager’s passage to adulthood. It is important for safe driving habits to become ingrained in new drivers. Parents are their children’s first teachers in many subjects; texting and driving should be no different. Teens’ lives and the lives of the people sharing the highways with them depend on it.

Tips to Find Affordable Car Insurance for Your Teen Driver

If your teen is getting ready to put his hands to the wheel, it’s time to think seriously about car insurance options.  A dreadful thought for many parents…but with a little research and careful planning you may be able to obtain affordable car insurance for your teen.  Let’s explore some ways to lessen the cost of your teen’s auto insurance.

Proper Driver Training

Many teens opt for driver’s education in high school, and this is a wonderful way to decrease your teen’s car insurance rates right from the beginning.  Many car insurance companies offer discounts to those who have completed a driver’s education course successfully.  Not to mention driver’s education provides proper on-the-road training for your teen.  The instructor can teach all the written and “unspoken” rules of the road while also showing proper driving techniques including defensive driving.  Knowing how to drive properly helps decrease the chances of careless driving thus making your teen a much safer driver.

Law versus Fun

Emphasize to your teen that although driving is fun, it’s also a serious responsibility.  Make sure he understands how the law works and the stiff penalties for speeding, racing, careless driving, drunk driving, running stop signs or red lights, not wearing seatbelts, parking in undesignated areas, etc.  Explain that even one traffic offense can eliminate his chances for affordable car insurance in years to come, and may even cause him to lose his driving privileges for a while.

Does Your Teen Make the Grade?

Some insurers offer discounts to students who keep their grades up.  This is somewhat of a reward for you as a parent and your child if your teen gets good grades or has a high GPA (grade point average).  Your car insurance company may offer this discount because insurers feel that a teen who demonstrates responsibility and carefulness in school is more likely to do the same while behind the wheel of an automobile.  This can be used as an incentive for your teen as well.  You might even offer a bonus allowance to your teen for keeping his grades up, using the money you’ll save with cheaper car insurance!

Choose Cars Wisely

Teens and sports cars – these two words shouldn’t be used in the same sentence if you’re shopping for auto insurance.  Insurance companies frown upon teens buying or driving sports cars, even if the teen is a safe driver.  Sports cars in general tend to carry higher insurance rates for drivers of all ages, but teens are especially vulnerable to temptation when it comes to showing off their new car and testing how fast it will go.  Opt for a sedan or family-style car with all the safety features possible.  The good thing about safety features is your insurance company may offer discounts for certain safety features such as anti-lock brakes, air bags, added frame support, and others.

Opt for an Add-On to Your Policy

When your teen first starts driving, consider adding him to your current insurance policy for a while.  You can do this as long as you remain the primary driver of your vehicle. Then your teen will be able to enjoy the lower rates based on your discounts and age.  If he has only a beginner’s permit, check with your insurance company to find out if he should be added to the policy as a driver.  Most will cover teen drivers automatically under your policy while driving with a permit.

Shop for the Best Deal

If you’re shopping for a car insurance policy for your teen, you’ll be surprised at the differences among companies.  Every company varies in what it considers to be “high risk” drivers.  Some insurers specialize in insurance for young drivers and are able to offer cheaper rates than others.  Also, compare each company’s discounts for teen drivers.  Some may offer more discount opportunities than others.

Having a teen driver creates awareness about road safety and car insurance like nothing else.  Use these tips to guide you as you shop for car insurance that will provide the most coverage for your money.

Car Insurance 101 – The Importance of the Annual Insurance Checkup

Few people look forward to shopping for insurance, and once that coverage is in place there is a strong temptation to simply leave it as is. But that set it and forget it approach can be a big mistake. Insurance needs change over time, and it is important for everyone to take a look at their own insurance needs to make sure those life, health, home and car insurance policies are still providing adequate coverage and protection.

Reviewing your insurance coverage, including your car insurance policies, on a regular basis is a great way to save money and gain peace of mind. If the results of your assessment show that you do not need to make any changes you will have the satisfaction that comes with knowing that you are well protected. If on the other hand you find gaps in your coverage you will be able to address those shortcomings and avoid problems down the road.

Check the Cost of Coverage

When you first purchased automobile insurance you no doubt shopped around – comparing premium rates and coverage levels for every insurer you could find. But since then you may have assumed that the company you are insured with will always have the lowest price in town. That may or may not be true – but the only way to know for sure is to check the rates offered by competitors.

Is it Time to Drop Collision Coverage?

The annual insurance review also gives you a chance to determine whether or not it still makes sense to carry comprehensive and collision coverage on your vehicle. If the value of the car you drive has dipped below $3,500 it may not be prudent to carry full coverage. You may be better off dropping that coverage and stashing the premium savings into an emergency fund. Your current policy should break out the cost of collision coverage, so it will be easy to see how much you could save. If you have the fiscal discipline it takes to funnel the money you save into a special account you can self-insure and cover the cost of repairing or replacing your car in the event of a total loss.

Reviewing your insurance coverage may not be fun, but it is certainly important. Taking the time to do an annual review of all your insurance coverage can yield significant cost savings and give you the peace of mind that comes with knowing you are well protected.

Car Insurance 101 – Why State Minimum Coverage May Not Be Enough

No driver can afford to be without automobile insurance, but it can be difficult to know how much coverage you really need. These days most states require that all drivers purchase car insurance, and in states where coverage is mandated there is a minimum coverage threshold that must be met. Many drivers assume that this state minimum coverage is enough, but in many cases that level of protection is completely inadequate. It is therefore important for every driver to evaluate his or her own insurance needs in order to determine the best level of coverage for liability, property damage and other insurance categories.

Why the Minimum

When states pass laws mandating that every driver carry automobile insurance they need to consider a number of factors, but affordability is often near the top of the list. If the state legislature is going to force people to purchase a product or service they need to make sure that product or service will be affordable. For this reason many states set the bar very low for car insurance coverage. This low bar makes policies more affordable, but it also leaves many drivers without the protection they really need.

For that reason it is important to look at your own state’s minimum coverage levels and determine if those levels really provide adequate coverage. If for instance your state requires that you carry only $10,000 in property damage insurance, what happens if you total your neighbor’s brand new Porsche 911? If you do not have enough property damage insurance in place you could be on the hook for the rest of the damages. The same is true of personal injury – it is important to take a realistic look at the minimum coverage levels set by your state and determine whether or not they are truly adequate for your needs. The more you have to protect the more insurance coverage you will need.

The Low Cost of Upgrading

Many drivers simply assume that upgrading an existing car insurance policy from the state mandated minimum coverage levels to something more realistic will be prohibitively expensive, but that is not necessarily the case. In many cases drivers can upgrade from the minimum set by their state to $300,000 worth of coverage or more for only a small increase in their premium levels. Upgrading coverage can be extremely affordable for those considered to be good risks, but even those with a few black marks on their driving records are often surprised at just how affordable that extra coverage can be.

Reviewing your car insurance coverage on a regular basis is the best way to make sure you are providing adequate protection for your car, your family and your personal property. By knowing the legally required coverage levels and adjusting those levels to suit your own needs you can save money on your premium without sacrificing the protection you need.

Do You Have Coverage Wherever Things Go Wrong?

How is this for bad luck?

* Bob goes on vacation to Cancun. While he’s walking on a sidewalk one day, a car jumps the curb. He jumps out of the way and escapes injury, but his $2,000 camera gets run over by the car.

* To cheer himself up, Bob goes to a golf shop to try out some clubs. Forgetting where he is, he takes a practice swing; his back swing breaks the nose of the woman looking at putters next to him.

* Bob cuts his vacation short. He returns home to find snow and ice have accumulated on his driveway. The next day, he also receives an emergency room bill for the broken ankle suffered by a neighbor who slipped on the driveway while attempting to look in on his cat.

* Bob retreats to the hideaway cabin that he owns in the mountains. He chops some trees for firewood on what he thinks is his property. Actually, the trees are five feet on his neighbor’s side of the property line.

Bob has a homeowner’s insurance policy covering his house. Does it cover any of these losses? For three of the four losses, the answer is yes.

A typical policy covers an insured person’s personal property anywhere in the world. It also covers property that person is using, even if he doesn’t own it. The property is covered for losses caused by any of the perils listed in the policy, including fire, lightning, smoke, explosion, vehicles, and others. Therefore, Bob’s policy will pay to repair or replace the camera damaged by the car. However, the insurance company will subtract his deductible from the amount it will pay.

In addition to insuring property, a homeowner’s policy covers an insured person’s legal liability for injuries or damages suffered by others. It covers liability for all of the person’s actions anywhere in the world, except for types of losses that it specifically lists as not covered. Accidentally hitting someone in the face with a golf club is not on the list, so Bob’s policy will pay the amount he owes for the woman’s medical treatment.

Likewise, Bob has coverage for the neighbor’s broken ankle. Since he invited the neighbor to check on his cat, and his driveway was not in a safe condition on which to walk, he is legally liable for the injury. The policy covers liability arising out of an “insured location.” The term “insured location” has many definitions; one of them is the residence listed on the policy. Bob’s policy lists his home, so it covers losses that arise from the home.

Unfortunately, the next loss is where Bob’s luck runs out. His policy lists his home but not his cabin. It does not cover his liability that arises out of premises he owns, rents, or rents to someone else if that premises is not an insured location. Since he owns the cabin and did not list it on his policy, and it does not fit into any of the other definitions of “insured location,” the policy does not cover his liability for accidents that happen there. Consequently, he must either seek coverage under another policy, if there is one, or pay for the damage to the trees out of his own pocket.

It’s a good idea to have a periodic chat with a professional insurance agent about your life circumstances. If you have a place in the mountains, own significant amounts of special property such as jewelry, or conduct business out of your home, you need special insurance coverage. Make sure you have the right coverage before you have a run of luck like Bob’s.

Take Precautions in Severe Weather Driving

Severe weather can strike at any time of the year. It is not always possible to avoid driving during dangerous weather conditions.  However, being a cautious driver can mean the difference between getting home safely and standing along the side of the road waiting for a tow truck.

Snow and Ice

Winter often brings frozen precipitation, in one form or another.  Ice and snow cause driving challenges for most of us, but we can all be safer on the road by following a few key driving tips. The first rule of thumb is to take the time to properly de-ice and clean your windows. An extra 5 minutes defrosting and scraping all your windows will enable you to see others and use defensive driving skills. Once your windows are cleared, and you are on the road, keep your speed slow and consistent. In deep snow, travel at a speed fast enough to keep your momentum going but slow enough to maintain control of the vehicle. Road signs usually warn us that bridges freeze before roads. Therefore, slow down before crossing bridges and overpasses and avoid sudden changes in speed or direction.

Use extra care when braking in winter weather conditions.  Braking should be slow and deliberate. If you brake too quickly or abruptly, your brakes may lock-up, causing you to lose steering capability. Anti-lock brakes will help to keep you from losing steering control in a quick braking situation. To engage anti-lock brakes, push the pedal to the floor and hold; do not pump the brakes. Ice and snow do not change the application of your anti-lock brakes – push and hold the brake pedal to avoid losing steering control. If these safety tips fail and you find yourself stuck in the snow, straighten your wheels and accelerate slowly. Try to avoid spinning your tires and, if necessary, use sand or cinders for added traction under the drive wheels.


During foggy conditions, stay to the right side of the road and turn on your low-beam headlights. If you cannot see the edge of the road, it may be safest to pull over. If you make the decision to pull off the road, be sure to pull to the far right, off of the traffic lane, and turn on your hazard lights.

Wind and Rain

Wind and rain present special challenges for drivers. If you have a high-profile vehicle such as a trailer or motor home, consider staying off the roads until the winds die down. The beginning of a rain storm is the most treacherous time to be on the road, as water mixes with road oils and dirt to create a slick surface. Be careful to avoid hydroplaning by slowing down and maintaining traction between your tires and the road surface. Turn on your lights to allow your vehicle to be seen by other drivers and use your defroster or air-conditioner to improve visibility.

Severe thunderstorms can result in tornados and hail. In the car, monitor your news radio station. If you see a tornado, the safest place to be is outside of the car. Pull over and find a ditch or other low-lying area where you can lay face down and protect yourself from flying debris. In a hailstorm, pull under an overpass or bridge to seek shelter while on the road. When a hurricane is in the forecast, head inland to high ground well before the storm approaches land.

By exercising caution in severe weather driving conditions, you can save yourself the headache of sliding off the road, having an accident, or suffering even greater damage to yourself and your property.

Common Sense Tips to Avoid a Home Burglary

When driving down a street at night looking at houses, you are most likely drawn to the house with exterior lighting, neatly trimmed landscaping, and lights on inside. That’s because the house looks inviting and well cared for. Now imagine a burglar is driving down the same street. The things that drew you to the previous house are the same things that will turn that burglar away, looking for better opportunities.  A property with no exterior lighting, overgrown landscaping, and possibly no one at home, invites criminal activity.

It is important to note that burglary is a preventable crime. Common sense dictates some of the steps you can take toward making your home safer and less attractive to burglars. The following are some general tips you should incorporate into your routine that can make the difference between the burglar stopping at your house or passing it up for another one further down the road.

The first line of defense between you and a burglar is to properly secure your home. Make sure your yard, driveway, and all entrances to your home are well-lit. Consider the use of lights on a timer or photocell, which turns lights on automatically at dusk and shuts them off at dawn. Trees and shrubs around windows should be cut back so you don’t give a burglar a place to hide while preparing to enter your home.

If you are going to be away from home for a period of time, leave a light on. Lights left on indoors, especially those on a timer that turn on when it gets dark and shut off at bed time, can be a large deterrent to a burglar. The goal is to make it look as if you are home.  Ask a neighbor to pick up your newspapers and bring in your mail. Along the same lines, if you will be gone for an extended period, arrange for your lawn to be maintained. Permitting your grass to grow high or get dry is a sign of neglect and can invite unwanted attention. If you have a garage – use it. Parking inside your garage on a regular basis makes it more difficult for a burglar casing your home to know whether or not you are really there.

Burglars will usually spend about five minutes trying to get inside your home. Make that task as difficult as possible by doing the obvious – lock your doors and windows! If you forget to lock your back door, this can be viewed as an invitation by a burglar looking to get in to your home quickly. In addition to the obvious, avoid spring bolt locks. It takes only a credit card to push open the bolt and allow access to the inside. Deadbolt locks should be installed on all exterior doors. The American National Standards Institute (ANSI) has established testing and ratings for deadbolt locks. Grade 1 locks are the best, with Grade 3 locks being easier to penetrate. Look for Grade 1 locks when shopping for a deadbolt. A key lock or pin-type lock work best for patio door, or any door with glass that could be easily broken to access a knob on a deadbolt. Heavy-duty strike plates should also be used to prevent a burglar from successfully kicking in your door.

When purchasing a new home, make sure all locks have been changed. Also, think about calling a reputable locksmith who can advise you on proper locks for doors and windows. Carefully preparing your home, including adequate locks, lighting, and regular maintenance, can make the difference between a burglar deciding to make a stop at your house or to keep driving.

Earthquake Protection – Do You Need Coverage?

When the threat of earthquakes arises, most Americans think only about California, or more recently Haiti.  For many years, the San Andreas Fault Line has been the recipient of much of the press concerning earthquakes in the U.S.  Furthermore, predictions concerning the ultimate cataclysm believed by many to eventually be centered there have given it a mythical stature unrivalled by fault lines elsewhere in the country.

Despite all the focus on the San Andreas Fault, California does not have a monopoly on earthquakes. The New Madrid Fault Line, centered in Missouri, has been cited by the U.S. Geological Survey as being a potential source of a significant earthquake threat.  The USGS also notes that earthquakes in the central and eastern parts of the country usually have a broader range than their western counterparts.  One such earthquake along the New Madrid Fault Line in 1811 rang church bells as far away as Boston, Massachusetts, about 1,000 miles away from the epicenter!  More recently, in April 2003, a quake measuring 4.9 on the Richter Scale hit Alabama.  A year earlier, a slightly more powerful quake hit Plattsburgh, NY.   In January 2002, a 5.0 quake hit Evansville, Indiana.  These quakes all shook neighboring states and caused significant damage to businesses, homes and infrastructure in and around their epicenters.

Although none of these quakes equaled the intensity and resulting damage caused by the Northridge Earthquake of 1994, they do serve to support the idea that it may be wise to consider adding earthquake coverage to your property policy even if you are not located in close proximity to a known fault line. 

Since earthquake insurance is generally an elective coverage, it may prove to be beneficial to do a quick review to determine whether or not it is a covered peril.  Also, look at any scheduled property endorsements or personal property floaters to see if specific items are covered for earthquake-related damage regardless of whether or not the earthquake coverage endorsement has been purchased.   If the answer is “no” to any of these questions and you would like to obtain a quote, contact your agent for details.

Stay Cautious on Deadliest Driving Days

With more than 34,000 car crash fatalities in the U.S. annually, there’s no question that driving can be dangerous any day of the year. However, research shows that holidays are often the deadliest days to be behind the wheel.

Read on to find out which holidays you may want to steer clear of the roads:

Turkey Day = High-Risk Roads

It turns out that Thanksgiving Day is the most lethal driving holiday. As a matter of fact, 502 people died in car accidents on Thanksgiving Day in 2008-that’s a whopping 400 more car-related deaths than the typical day. The vast majority of these fatal car crashes occurred at night.

Believe it or not, that number is down from previous Thanksgivings. The DOT started tracking traffic fatalities in 1982, and the 26-year average of Thanksgiving Day deaths had been 556. Some experts say fatalities dropped partly because sky-high gas prices kept many drivers off the road.

It’s no wonder why Thanksgiving ranks as the most fatal driving day. According to the National Safety Administration, Thanksgiving weekend is the most traveled holiday period of the year, and nearly 90 percent of Turkey Day trekkers travel by car. Although the DOT has not yet released 2009 Thanksgiving stats, some experts predicted fatalities would be higher because lower gas prices would lead to more drivers on the road.

Eat, drink and be merry-but don’t drive

One reason holiday driving is so hazardous is because many drivers enjoy a few too many festive drinks before they hit the road on these special days. Based on National Highway Traffic Safety Administration statistics, nearly half of all traffic fatalities on New Year’s Day are alcohol-related-the highest number of any holiday.

Other hazardous holidays

Based on DOT research, the following are the top five most dangerous holidays for drivers heading out the highway:

#1: Thanksgiving Day
Number of Fatalities in 2008: 502
Average Number of Annual Fatalities Since 1982: 567

#2: Labor Day
Number of Fatalities in 2008: 487
Average Number of Annual Fatalities Since 1982: 544

#3: July 4th
Number of Fatalities in 2008: 491
Average Number of Annual Fatalities Since 1982: 542

#4:  Memorial Day
Number of Fatalities in 2008: 425
Average Number of Annual Fatalities Since 1982: 508

#5:  Christmas Day
Number of Fatalities in 2008: 420
Average Number of Annual Fatalities Since 1982: 414

Buckle up

If you’re planning to hit the road on one of these holidays (or any other day) be sure to buckle up. According to The National Safety Commission, more than two-thirds (or 67 percent) of car occupants who died on Thanksgiving 2008 were not wearing their seat belts.

Many states have more stringent seat belt laws these days for this very reason. In most states, law enforcement officers can pull you over and cite you simply for not wearing a seat belt-regardless of whether you’ve broken any other traffic laws. In recent years, the National Highway Safety Administration (NHTSA) has sponsored a nationwide “Click-It-Or Ticket” campaign on Thanksgiving weekend. This is all the more reason to stay buckled up on holidays-and every other day.

Slow down

Another thing you can do to protect yourself on the road is to watch your speed. Speeding one of the most common causes for traffic crashes. That’s because when you speed, you have less time to react to an emergency on the road. Plus, high speed increases the crash force of a collision.

While you should remain particularly vigilant on these high-traffic holidays, it’s important to buckle up, watch your speed and keep your eyes on the road every time you hit the road. After all, holidays aren’t the only days when car crashes occur. So, drive safely-on holidays and every day.

What Can You Do to Lower Your Homeowner’s Insurance Premiums?

There are several steps you can take to ensure you are getting the best homeowner’s insurance rates possible for the coverage you need:

  • Before purchasing a home, it is wise to learn about its insurance loss history.  If there have been past losses, be sure to closely inspect the home to determine if proper repairs were made.  The CLUE and A-PLUS databases enable insurers to check the claim history of the property as well as that of the homeowner. 
  • Raising your deductible is a great way to reduce your premiums. Higher deductibles on your homeowner’s insurance could produce savings of 25 percent or more.
  • Consider upgrades to your home. Do you need to modernize your heating, plumbing and electrical systems to reduce the risk of fire and water damage?  Are there upgrades you could make that would reduce the risk of damage in windstorms and other natural disasters? You may be able to save on your premiums by adding storm shutters, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them more capable of withstanding earthquakes. If you do make home improvements, be sure to make your insurer aware of the changes.
  • Improve your home security. You can typically get premium discounts of at least 5 percent for installing a smoke detector, burglar alarm or dead-bolt locks. Some companies will cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that signals the police, fire department and other monitoring stations. These systems are not inexpensive and not every system qualifies for a discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost, and how much you would save on premiums.
  • Buy your home and auto policies from the same insurer. Some companies that sell homeowner’s, auto and liability coverage will take 5 to 15 percent off your premium if combine policies with them.

Maintain a good credit rating. Most insurers use credit-based insurance scores to determine homeowner’s and auto coverage premiums. All else being equal, a person with a good credit score will pay much less for insurance than someone with a lower score. 

What You Don’t Know about Car Insurance Can Cost You

Without a solid understanding of the car insurance market and how it works you could end up overpaying for the coverage you need. Buying car insurance is different from buying many other forms of insurance, and insurers consider a number of factors when determining the premiums you will be required to pay.

The Credit Score Trap

One of the most surprising aspects of car insurance is that something totally unrelated to your driving ability may affect your premiums. Among the criteria many insurers use to determine rates, is your credit score. A low credit score could translate into higher premiums.

To avoid unpleasant surprises you should obtain a copy of your credit report before you start shopping for car insurance. Doing so can give you a heads up about any errors on your report and allow you to correct them before a potential insurer sees them.

Where You Live Can Affect Your Rates

Where you live can also have a profound impact on how much you will have to pay. Auto insurers use a number of statistics to determine regional rates, including the number of car thefts in a given area and the number of dangerous intersections that have been identified within a given radius. All of these statistics play a role in determining the premiums drivers in those areas will pay. While moving to another city or state to get cheaper car insurance may not be an option it is important to be aware of how geography can affect car insurance premiums.

Your Education and Your Job

Many drivers are also surprised to find out that their levels of education and occupation can also have an impact on their car insurance rates. While it may seem silly to charge higher premiums to those with less education, studies commissioned by the industry have shown a correlation between educational level and insurance claims. The same correlation seems to exist for those in particular industries and occupations.

Auto Recalls Spur Drivers to Evaluate Auto Insurance Coverage

With news of recent car recalls reverberating throughout the automotive world, auto owners are scrambling to make sure that their cars are safe. The recalls are serving as an eye-opener to many, and those folks are recognizing that now is the perfect time to re-evaluate an old auto insurance policy and to make sure that it is still providing positive value. Whether an accident occurs as a result of some sort of mechanical failure or due to a bad decision, the proper insurance policy will help drivers stay afloat even with a difficult situation.

Prior to renewing any existing policy, examine your current situation and figure out exactly what your needs might be in the near future. The times are changing and change has become a certain reality for many individuals. If you are moving in the near future, changing jobs, or doing something else that might impact your driving, then you’ll need to evaluate your options. Additionally, many people are seeing changes to their current policy because of either adding or removing a child from their policy.

With or without a major life change, it’s important to take a look at your own situation every year. Don’t just renew the policy because it is easy or convenient. Often, there is a better deal available, if you just take the time to look.

The key to cost cutting

This can be done in a number of different ways. Some people cut insurance costs by picking up discounts for safe driving and for driving less. Others cut costs by shopping around and finding a lower cost insurer. Others keep their costs low by choosing a car that warrants a lower insurance premium. These things are all important, and they are factored into the equation when insurance companies calculate your premiums.

Searching for the right provider

Today’s insurance industry is fierce, and this is a positive for you. The more competition there is, the more likely you will be to get both a good deal and acceptable terms. When shopping around for insurance, understand that while a few carriers dominate the market those are not your only choices. Certainly rates should play a major part in your decision, but you should also consider customer service when evaluating offerings.

There are so many auto insurance options available today that finding a solid combination of good rates and excellent service shouldn’t be too big of an issue.

Thinking of Buying a New Car? Be Sure to Consider Insurance Costs

If you are in the market for a new car you have probably looked at the reliability ratings, fuel economy statistics and safety tests. But have you looked at the insurance rates for the car of your dreams? If not you may want to take a step back and consider what that new car will cost to insure. Before you sign on the dotted line it is a good idea to contact your car insurance company for a premium quote. Some cars are surprisingly expensive to insure, while others are surprisingly affordable. The key is to find out how much the premiums on your proposed vehicle will be before you commit to buying.

If you are currently driving an older vehicle it’s likely that you no longer carry full comprehensive and collision coverage on it. When shopping for a new vehicle consider that you will be upgrading to full coverage, which translates into higher premiums by itself. Be sure to factor these higher insurance costs into the equation when determining what kind of car you can afford. Many drivers just look at the monthly payment for the car and forget about the cost of insurance, regular maintenance and other important expenses. By comparing insurance rates on the vehicles you are considering you can avoid those unpleasant surprises and keep your transportation budget in check.

One good strategy is to narrow your choice of vehicles down to three or four by using the typical criteria – reliability ratings, government crash tests, cost of ownership and the like. After narrowing the field, contact your agent to determine how much it will cost to insure each vehicle. You may not be able to get an exact figure without the vehicle’s VIN number, but your agent should be able to at least give you a ballpark figure. You can then use those figures to determine the true cost of ownership for each type of vehicle you are considering. Depending on how the numbers work out the cost of insurance may be enough to tip the scales in favor of one model over another.

Shopping for a new car can be fun and exciting, but it is also serious business. That is why it is so important to consider all of the factors, including the monthly payment, the total cost of the car, the cost of ongoing maintenance and of course the cost of car insurance. By understanding all the factors that go into the price of that car and its operating cost you will be able to make an intelligent and informed decision.

Drive Less to Save a Bundle on Car Insurance

If you’re like countless other consumers across the nation, you’re probably pinching some serious pennies right now. In these tough economic times, everyone is searching for creative ways to save a few bucks. Here’s one way to hang onto your dollars: consider walking to work or the store instead of driving. Not only will you save on gas and get some exercise-you also may qualify for a valuable discount on your car insurance.

Drive less, save more

Many insurers offer what’s called a “drive less, pay less” plan for drivers who rack up lower than average mileage on their cars each year. Depending on your insurance company, you could save up to 18 percent if you drive less than 7,500 miles a year. However, these plans are available only in certain states. If you’re looking to beef up your wallet, ask your insurer if you may be eligible for this low-cost coverage.

How does it work?

The “drive less, pay less” plan varies with each insurance company. While some insurers will take your word for it on how many miles you drive each year, others require proof.

Then there are those insurers who offer even greater discounts-but they closely monitor their drivers. For example, at least one insurer requires an OnStar subscription to be on the drive less plan. Although an OnStar subscription costs about $19 a month, you could save as much as 54 percent on your car insurance if you drive less than 15,000 miles a year under this plan. If you conduct a quick cost benefit analysis, you may find it’s well worth the extra $19 a month.

Another insurer offers an option to install a small, wireless device in your car to monitor your mileage as well as your driving habits. While it may be a little strange to know that “Big Brother” is always watching, you could save loads of cash with this plan.

Pay-As-You-Drive (PAYD)

Another low-cost car insurance plan that’s gained a lot of attention in the past year is Pay-As-You-Drive (PAYD). According to the Brookings Institution, PAYD can save consumers an average $270 per vehicle. However, while PAYD is popular overseas, it is not widely available in the U.S..

The Brookings Institution also points out the PAYD could save taxpayers up to $50 billion a year. If more drivers enrolled in this type of car insurance plan, everyone would drive considerably fewer miles. That would translate into fewer cars on the road each day, which cuts down on traffic congestion, car accidents, traffic related hospitalizations and emergency services-all things that cost taxpayers loads of money.

Green-friendly car insurance

Not only are these drive less, pay less car insurance plans good for your pocketbook-they’re also better for the environment.  Some experts say if PAYD were offered in all 50 states, it could reduce total U.S. greenhouse gas emissions by 2 percent. That adds up to a monstrous 99 million tons of CO2 per year.

If you want to steer clear of overpriced car insurance, ask your insurer if they offer a “drive less, pay less” plan. If not, you may consider switching to a company that does offer these low-cost plans.

Understanding Your Auto Insurance Policy’s Rental Car Coverage

When your car gets damaged in an accident or stolen, the repair or recovery cost is only part of the story. Going without one while your car is being repaired can be a significant hardship. Without another vehicle available, your only recourse may be to rent one. The good news is that you may be able to buy insurance that will pay some of the cost of a rental; in fact, your policy may already include it.

The standard Personal Auto Policy includes a coverage called Transportation Expenses. If you have purchased Collision coverage on your car and that car is damaged in a collision, this coverage will pay for “temporary transportation expenses.” The same applies if you have purchased Comprehensive coverage; if the car is damaged by something other than a collision, the policy will cover these expenses. The policy pays up to $20 per day, up to a maximum of $600. This coverage also applies to a vehicle to which you do not ordinarily have access, such as a friend’s car or a rented pickup truck.

Time limitations apply. If your owned or borrowed car is stolen, coverage begins 48 hours after the theft and ends when you are able to use the vehicle again or when the insurance company pays you for the loss. If the cause of loss is something other than theft, the insurance pays the expenses incurred more than 24 hours after you lose use of the vehicle. Finally, the insurance stops paying at the end of the period of time reasonably required to repair or replace the vehicle.

Some examples will illustrate how this works.

  • John has both Comprehensive and Collision coverages on his sedan. On Tuesday at 10 AM, a frayed wire in the engine catches fire, resulting in major damage to the car. The car is in the shop for 15 days, so he rents a replacement for $35 per day. His insurance will pay $20 per day, starting with the expenses he incurs after 10 AM on Wednesday. If 15 days is a reasonable time for these repairs, the company will pay for days 2 through 15.
  • John gets his sedan back. A month later, it breaks down. This time, he borrows his neighbor’s car. While he is driving this car, a deer runs in front of him; the ensuing collision badly damages the car. Because he has Comprehensive coverage, which applies to collisions with animals, his insurance again will pay $20 a day for him to rent a replacement while the shop fixes his car.
  • He gets both cars back and returns his neighbor’s car. A week later, he walks out of a store to find an empty space where his car should have been. He reports the theft to the police and his insurance company. The company will pay $20 per day, starting 48 hours after he discovered the car missing. It takes 35 days for him to find a replacement car; his insurance pays $600 (the maximum) for his rental costs.
  • Concerned about how much his insurance premiums will go up, he drops the Collision coverage on the replacement car. A month later, a bee stings him while he’s driving and he plows into a highway sign. This time, the company will not cover his rental costs because he had not purchased Collision coverage.

Not all auto insurance policies are the same. Some may pay more than $20 per day for rental costs, but they will pay only if the insured vehicle is stolen. Others cover theft only and pay less than $20. Check with your insurance agent to find out what coverage you have. If it’s not what you would like, ask the agent if you can purchase additional coverage.