Newspaper columnist and author Erma Bombeck once humorously advised parents to never lend a vehicle to anyone to whom they’ve given birth. If only life could be that simple. Most parents don’t find deflating the tires and locking away the keys from their teen driver a feasible approach and will eventually let their teen driver borrow the car.

Just because you’ve decided to let your teen get behind the wheel doesn’t mean that you want to hand the keys over haphazardly. There are several things that you can do to prepare your child and help relieve some of the uneasiness you might feel.

1. Enroll in a motor club.

One of the most important features is that the emergency roadside service you pick offers 24/7 roadside assistance. Your teen will then be able call for professional help whenever he/she might need it. You may also consider asking your motor club if they offer emergency roadside services for when your teen is riding in a friend’s car.

2. Have a candid conversation with your teen about driving.

You’ll never know your teen’s knowledge and attitude about driving if you don’t talk to them. Although the graphic details of what can happen when speed limits, stop signs, signal lights, and roadwork cautions are ignored might not be fun topics, it’s important for kids to know the consequences of their driving actions.

You’ll also want to establish ground rules for using the car, such as how many passengers will be allowed, what time it should be returned, and where it can and can’t be taken. Keep in mind that some state laws will dictate the answers to some of these questions.

Another topic of discussion should be drinking and driving. No parent wants to believe that their sweet and levelheaded child would be the type to drive intoxicated, but the reality is that even good kids can be foolish or succumb to peer pressure. Make it clear that you’ll have zero tolerance for both drinking and driving -and- riding with someone else drinking alcohol. At the same time, you’ll want your teen to know beyond a doubt that they can call you anytime they get into a bad situation and you’ll be there to come pick them up.

3. Purchase a global positioning system.

A GPS is a device that you can install to apprise you on the location of your vehicle and teen. You will establish a radius of operation for the device. The GPS will alert you if the teen takes the vehicle outside of your set radius, is driving the vehicle beyond their curfew, and if they break the speed limit.

4. Purchase a speed-monitoring device.

This device, also called a governor, restricts the fuel injection of the vehicle. This restriction prevents the vehicle from going over a certain speed. In addition to standard GPS and governor devices, there are also much more expensive high-tech options like tiny on-board drive cams that capture risky driving behaviors on video.

If you feel like you’re being intrusive, just keep in mind that NHTSA data shows the crash rates for drivers between 16 and 17 years of age are nine times that of an adult driver. As your teen driver becomes a more experienced driver and develops safe driving habits, you can always reconsider your approach.


If you are like most new car owners, then you probably paid the extra money to include the protection offered by collision coverage in your insurance policy. However, as your vehicle has now begun to age and depreciate, you’ve likely started to ponder if and when you should drop the pricey collision coverage that’s running up your insurance bill.

There’s not a one-size-fits-all answer to this question. After all, everyone won’t have the same comfort level on risk or the same insurance needs and wants. However, there are some factors that you can consider to help you determine if and when you should drop your collision coverage:

  1. Determine the value of your vehicle.

The first thing you should do when deciding if you should drop your collision insurance is determine approximately how much your car is worth. There are several ways to go about this, but one of the best methods is by getting an actual cash value (ACV) estimate. Kelley Blue Book and N.A.D.A. guides are excellent sources. However, you might want to call your insurance agent to find out which ACV source is used by their claims department, as ACV figures will often vary slightly from source to source. Do remember to factor in the wear and tear on your vehicle. Dents, scratches, upholstery holes or tears, and fading or chipping paint are just a few of the factors that can lower your vehicle’s ACV.

  1. Weigh your potential risk against the cost of your collision coverage.

Although your collision coverage premiums will generally decrease slightly as your vehicle ages, you still need to make sure that the cost of your collision coverage remains a worthy expense to cover damage that may or may not occur to your vehicle. Weigh what you’re paying every year for collision coverage against the potential risk of not having it. The ACV of your vehicle should also be a factor in your decision process. For example, the new car you bought several years ago may only be worth $3,000 dollars today, and if you’re paying $600 per year for your collision coverage, then you’re paying 20% of what your car is worth for just this one coverage.

  1. What’s your deductible?

Your deductible is another important factor to consider. Most drivers usually select a collision coverage deductible between $250 and $1,000 dollars. You might have even selected a higher deductible to keep your premiums lower. In any case, you need to remember that your deductible is the amount of money you’ve agreed to pay out-of-pocket before your insurance coverage takes effect. You need to decide if the combination of your collision coverage premiums and the deductible amount you’d pay after an accident are still reasonable costs for the value of your vehicle. For example, you’d be looking at a $1,600 out-of-pocket cost for the year for your damaged vehicle if you have a $1,000 deductible and you’re paying $600 for your annual collision premiums. If your vehicle’s value is anywhere close to what you’d pay out-of-pocket, then you can see where you’re likely wasting your insurance dollars. On the other hand, if your vehicle would cost a great deal more to replace or repair than what you pay out-of-pocket with your collision coverage, then it’s likely worth the expense.

  1. Can you live without the perks of your collision coverage policy?

You’ll need to decide how valuable the perks of your collision coverage policy are to you. For example, your collision coverage policy might offer a free rental following an accident. Without the collision coverage providing this, could you rent a car on your own or find alternative transportation?

The bottom line is that there’s no cut-and-dried answer about dropping your collision insurance. Consider the above points and how they apply to your unique situation before making your decision. You can always schedule an appointment with your insurance agent if you have any doubts, concerns, or questions during your decision process.

Vehicle Type has Impact on Insurance Rates

The costs associated with purchasing a vehicle do not end when you pay the dealer. When you own a car, you must pay for gasoline, maintenance and car insurance. The cost of car insurance usually varies based on your driving history, age and the type of car you drive. While certain types of cars lower the cost of your insurance, others will raise it.

Car insurance companies determine the cost of your policy based on the risk of loss on insurance claims for the company. If the type of car you drive is associated with a larger number of expensive insurance claims, insurance companies will charge you a higher premium than it would charge if you were insuring a vehicle with fewer risks.

A car insurance company assesses the risk associated with your vehicle by examining past information about the vehicle and about the type of person that usually drives it. If drivers of the vehicle usually make more claims, the insurance company will assign a higher premium. Cars that are often associated with more claims are usually those driven for pleasure, such as sports cars. Drivers of pleasure vehicles travel faster and may pay less attention to safety regulations. Sports cars also tend to become damaged more easily.

On the other hand, if the insurance company determines that your vehicle type does not usually result in many expensive insurance claims, it may assign a lower premium. For example, minivan drivers typically make fewer insurance claims and thus pay lower insurance premiums. This is because minivan drivers are typically carrying multiple passengers, so they drive more safely. Drivers of minivans also tend to travel less during peak traffic times.

Along with the profile of the driver and the safety of the vehicle, insurance companies also look at the cost of repairing your vehicle when determining your premiums. If repairs made to your vehicle would cost more than repairs made to most other vehicles, it is likely that your insurance premiums will be higher than the premiums associated with those other vehicles. In most cases, the more expensive the vehicle is, the more expensive the cost of repairs will be. For this reason, cars that cost more to purchase also cost more to insure, especially if the car is worth more than $60,000.

Regardless of the vehicle you drive, your age and driving history will also affect the value of your premium. If you are a young or inexperienced driver, your rates will usually be higher than the rate charged to a driver with more years of experience. Likewise, if you have a poor driving history with many insurance claims, your rate will increase. 

How Credit History Affects Auto Insurance Premiums

Many factors are involved in determining an auto insurance rate. The age of the insured driver, the vehicle type and the individual’s driving history are all key factors. However, there is a more controversial factor used by auto insurance companies, which is individual credit history. It is important for all drivers to consider the following issues.

Credit Scoring
Insurers perform a credit check to determine an insurance credit score. They use FICO scores and credit history to assign a number. Each insurance company has their own method of calculating this score. By looking at specific items on a credit report, the insurer connects each one with either a positive or negative aspect of driving. They do this because many studies have shown that certain items on credit reports relate to the likelihood of people filing auto insurance claims.

Predictive Modeling
The practice of connecting various credit report items with auto insurance is called predictive modeling. While credit was not always used in the past, insurers still used a driver’s age and record to determine rates. For example, individuals who have several traffic accidents or tickets on their record are more likely to file claims in the future. In addition to this, statistics show that younger drivers have more severe accidents due to their lack of experience. These factors have remained true over the years. Many insurers feel that credit should be treated the same way as these other factors. However, it is much harder for consumers to understand their methods. Several court hearings regarding this practice have ended with insurance companies being able to prove that specific credit items really do relate to insurance claims.

Credit Considerations
Each company has rules for what aspects of credit should be used to calculate insurance rates. As it is with the FICO calculation formula, insurance companies assign a specific percentage to various credit items. While the aspects they consider are similar to the credit bureaus’ considerations, the percentages they assign are much different than the FICO method. The common factors insurance companies consider are current debts, types of credit, payment history, length of history, account balances, recent inquiries and bankruptcies.

Improving An Insurance Credit Score
By working on the areas of credit most companies review, it is possible to improve a credit insurance score. Be sure to keep balances low, pay all bills on time, keep old accounts open and close retail store accounts. It is also important to avoid applying for several new credit cards. As a rule, insurers check an insurance credit score every one to three years. Individuals who are working on improving their scores should ask insurers to recheck them before renewing a policy.

Reviewing Individual Credit
Some items on a credit report may be inaccurate. People who have common names often see items that belong to other people with the same name. In addition to this, some people experience the nightmare of identity theft. When this happens, there may be a long list of inaccuracies on a credit report. Be sure to dispute them. If identity theft is suspected, contact the major credit bureaus directly. In some cases, it is possible to receive an exception from an insurance company while a report is being updated. For any concerns or questions about insurance credit scores, discuss them with an agent.

How to Make a Car Unattractive to Thieves

The rate of car theft is so high today that it would be a Fortune 500 company if stock analyst firms measured it. Although thieves may not be the most upstanding citizens in society, they have excellent organizational skills. Discriminating thieves will not just break into any random car to look around. When they make the effort to steal, they make sure it is worth their time and the risk of getting caught. In many cases, they may be after the vehicle itself instead of the contents of it. What they are after is economic gain, so they choose carefully. Unfortunately, people who own vehicles that are popular to buy usually also own automobiles that are popular targets for car thieves. This information may sound discouraging to many car owners. However, it is important to take the necessary steps to prevent theft.

To be better prepared and protected, vehicle owners need to know what to do to combat organized car thieves. The steps to better protection are not very difficult. The first goal should be to make the vehicle a difficult target. When thieves do a quick assessment on a car, they are likely to pass up one that is better protected. From their perspectives, they want vehicles they can quickly break into and take. There are several simple things car owners can do to make their vehicles less attractive to car thieves.

1. Never leave the keys in the ignition. Do not leave the keys sitting on the seat or in the glove box. Keep the keys in hand while the car is not occupied. More than 10 percent of stolen vehicles are taken because the keys are left in the car or in the ignition. Never leave the car running unattended, and do not leave children in it.

2. Lock the vehicle. About 50 percent of stolen vehicles are taken because they were left unlocked. Modern locks are difficult to pry, and thieves prefer unlocked doors. Be sure the windows are rolled up completely.

3. Do not hide a spare set of keys in or under the car. If this trick is so popular that there are special magnetic key holders in every auto supply store, rest assured that thieves know about them. Many car thieves watch their targets, so they may know exactly where to look for an extra key.

4. Choose attended lots over unattended areas. Vehicle thieves despise witnesses, so they try to avoid them at all costs.

5. Park under plenty of light. If a parking lot is dark and unattended, find a safer location. Thieves love places where it is difficult to be seen.

6. Limit key access in attended lots. Not all parking lot attendants are upstanding citizens, so it is important to be wary of them. When handing the keys over, only give attendants the keys to the door and the ignition. If the vehicle has a trunk with the same key as the door, have one of them changed. By doing this, vehicle owners can put important items in the trunk without worrying about lot attendants stealing them. Make sure any backseat access to the trunk is restricted. Always make sure the battery, spare tire and regular tires are in tact after returning to the car.

7. Never leave valuables in plain view. Leaving a purse or valuable item on a seat is like leaving a steak on the porch when there are stray dogs nearby. Valuable items are just bait for thieves.

8. Use the garage. Vehicle owners who have garages should use them. Thieves are not likely to want to break into a garage and a vehicle. They want something quicker and easier. Be sure to lock the garage and the vehicle.

9. Never leave the title or registration in the car. It is best to carry registration proof in a wallet that will not be left in the vehicle. Keep the title at home in a safe place. Thieves can use these documents to sell stolen vehicles.

10. Use the emergency brake. This increases car safety, and thieves will have a harder time trying to tow it.

Understanding Insurance Needs for a New Car

New cars bring the need for auto insurance, and liability coverage alone will not be adequate. Although it may satisfy the state’s legal minimum requirements, it will not be enough to compensate for most accidents. In most cases, vehicle owners have unpaid loans to think about, so repairs are almost impossible to pay for. Even spare parts are expensive if they are available at all. As soon as a new car leaves the showroom or lot, its value depreciates considerably. For this reason, the majority of vehicle owners feel safer with insurance that covers accidents, theft and natural disasters. Consider the following tips when looking for coverage.

1. Shop Around
People who are serious about buying a new car should start comparing various policies before signing the papers and taking the keys. The first step is to obtain quotes from several companies. These quotes are free, and they offer a reasonable estimate of what premium amounts will be. Some insurers may have cheaper rates than others. Several factors contribute to determining a premium, so it is very important to shop around.

2. Pay Attention To Comprehensive & Collision Insurance
Since people like to save money any way they can, they often skip extra coverage beyond the state-required liability minimums. Comprehensive coverage protects vehicle owners form a wide array of incidents aside from collisions. Natural disasters and several other calamities are covered. There are usually add-on policies available for hail damage or other specific events. Collision insurance provides money for damages resulting from an accident. The funds are available whether the vehicle owner was at fault or not. When compared with the cost of paying for accidents upfront, insurance is very affordable. For example, one accident where a person is at fault and two other injured parties are involved could easily cost over $100,000. If either of the injured parties sustained permanent injuries that require lifelong treatments, the at-fault driver could be in a financial mess for a long time.

3. Think About GAP Insurance
Many new car owners prefer this type of coverage. It provides funds for the difference between the vehicle’s market value and the unpaid loan amount. If a vehicle is lost or stolen, there will be adequate compensation. This is a great choice for people who own expensive luxury cars or have sizable loans to repay. When the amount of money owed is higher than the vehicle’s market value, GAP insurance is a good choice.

New Technologies Make Vehicles Safer than Ever

Many factors contribute to the longer average life spans of today’s world, and car safety is one of the major factors. With new advances in safety features, less people die in accidents today than they did several decades ago. Cars that drive automatically may seem futuristic, but so did many of today’s features several decades ago. Car safety technology is advancing rapidly. The following points provide some examples.

Adaptive Cruise Control
In the past, cruise control features simply set a desired speed. However, a driver paying attention to something else could still slam into the back of another vehicle. With new technology, there are sensors installed in many vehicles’ cruise control features to apply the brakes when drivers get too close. If a collision is sensed, the brakes will be applied hard. The seat belts will also tighten. This is not an invitation for drivers to give in to distractions, but it could prevent such mistakes from costing motorists their lives.

Tire Pressure Monitoring
Many vehicles are now required to have tire pressure monitoring systems. Wheel sensors alert drivers with an audible noise or panel light when pressure becomes too low.

Rollover Prevention
Many vehicles have systems for electronic stability control or preparation actions. New advances go beyond these features. If a rollover is sensed, the brakes will be applied. The throttle will also be automatically adjusted to help maintain control.

Blind Spot Detector
With this new technology, drivers are alerted when there are objects or vehicles in their blind spots. The feature is usually enacted when a turn signal goes on. The driver is alerted by a flashing light on the dash, a light in the mirror, a seat vibration or a steering wheel vibration. The detection system is only for short ranges.

Lane Departure Warning
This feature is similar to the blind spot detector. However, it determines an approaching vehicle’s speed. When a driver changes lanes, there is a warning signal. If the system detects the vehicle going over the lines on the road, it will also initiate a warning for this.

Emergency Brake Assistance
Emergency brake assistance is not the same as an anti-lock brake feature. This new technology allows the vehicle to sense a panic stop. When it senses a stop, additional brake pressure is applied to shorten the amount of time it takes to come to a complete stop. In some vehicles, this system works in conjunction with stability control or cruise control features.

Occupant-Sensitive Dual Airbags
Since each person is different from the next, low-risk airbags are being created to accommodate those differences. They can be used many times and have occupant sensors for deployment. In addition to sensing an occupant’s presence, these devices also sense odd positions. This means deployment will different for someone who is bending over to reach the radio versus a person who is sitting up straight.

Adaptive Headlights
Thermal imaging cameras and infrared lamps are helpful for night vision. New technology allows the vehicle’s controls to change the direction and height of the beams. There is also a cockpit display, which shows images far away that are hard to see.

Emergency Response
There are several new enhanced emergency response features in the latest vehicles. One system turns off the interior lights, shuts off the fuel and unlocks the doors after the airbags deploy. Some systems also turn on the hazard lights or disconnect the alternator and battery terminal. New systems may also include GPS data for emergency response units to use for locating the vehicle.

Rear Camera
These cameras protect children or pets from accidents in the driveway. Several unfortunate reports of people backing over pets or kids in recent years prompted this feature’s development. When the vehicle is in reverse, a camera appears on the dash or on a mirror, and it generates an image of everything behind the vehicle. The image range includes the ground, so small pets will be noticed. This camera feature is also helpful for hooking up trailers or parking. 

How Much Should Consumers Really Pay For Car Repairs?

With the average vehicle on the road being about 10 years old, it is apparent that Americans are keeping their cars longer these days. There are benefits associated with owning an older automobile. Drivers with older cars do not have to worry about making loan payments, and insurance costs are much lower. However, there are also disadvantages. Unexpected expensive repairs can drain a savings account. In some cases, the repairs may cost more than what the car is valued at. There are several Web sites with helpful resources for evaluating repair estimates.

Both RepairPal and AutoMD are free to use. RepairPal, which was started in 2007, is run by auto enthusiasts. Estimates from this company are based on labor rates, cumulative car repair invoices and prices of parts. An online auto parts retailer owned by U.S. Auto Parts operates AutoMD. The staff consists of certified mechanics and auto data specialists. These workers use the data gathered from average labor costs for each zip code, real-time pricing data and repair time estimates. DIY repair cost estimates are also available from AutoMD. Both companies offer zip code estimates for repairs. Estimates also include those of independent mechanics and dealerships for comparison.

Researchers conducted tests on both sites. They found that sample repair data entered into both systems produced similar estimates. AutoMD’s estimate was comprehensive. In addition to time estimates, it included price ranges for parts and labor. Prices for both dealers and independent mechanics were included. The estimates provided by RepairPal are for a range of overall costs. In addition to this, there is a breakdown of costs for labor and parts.

The pages on these sites are printable, so consumers can take the information they collect to dealers or mechanics. People who are also in search of mechanics can find local shops by searching a zip code on the site. AutoMD’s list shows request statistics, the number of mechanics at various shops, hours of operation, map location, shop details and contact information. In addition to specifying whether shops install parts provided by AutoMD partners, the site specifies whether a shop uses Chilton or Mitchell labor standards. RepairPal’s list is not quite as extensive. However, map locations, hours, reviews and specialties are included. Both sites are helpful to consumers, but it is still important for people needing auto repairs to decide whether they should use parts from a dealer or aftermarket company.

Benefits Of Pay-As-You-Drive Insurance

Usage-based insurance may also be called pay-as-you-drive insurance. It is based on a driver’s vehicle, the distance driven, the time spent driving and the driver’s behavior. When compared with traditional insurance, this type of coverage is much different. Traditional insurers attempt to reward the drivers they classify as safe, and their assessment is based on past documentation and the individual’s record. The new method uses current behavior instead of past patterns. With the traditional method, drivers must wait longer to establish themselves as safe or reckless drivers. However, the new method does not require as much time for drivers’ habits to catch up with them and affect their insurance rates.

Many transportation and environmental groups approve the new usage-based coverage. They claim it makes people more aware of what they are doing. For most people, this means they will drive more responsibly. It also encourages people to use their cars only when they need them. For example, driving a few blocks to the grocery store instead of walking would look less tempting with usage-based coverage.

How Usage-Based Coverage Works
The simplest form of this type of insurance assesses costs based on the amount of miles driven. When, where and how a person drives may also be factored in with several insurance models. Premium amounts are based on how much a person drives, and coverage is based on the vehicle’s odometer. To track how many minutes a car is in use, a vehicle-independent module is used to transmit data using RF technology or cellphone features. The time of day, speeds, distance, driving actions and time traveled are also sent regularly. Formulas can be basic enough to include only the amount of miles driven. Alternately, they may be much more complex and include a wide array of features. With advanced features, the device is able to determine if a person should pay a higher premium for speeding, using a cellphone while driving or driving for a long period of time without a break.

Another type of system in existence is telematic usage. This system uses a device that immediately relays information as it happens, which keeps a constant feedback loop for drivers. When drivers increase their risks, their premiums change immediately. Although some drivers may think this sounds intimidating, it is actually a helpful way to enforce good driving behavior and make the road safer. The following are benefits of usage-based insurance:

– People are more socially and environmentally responsible.
– Actual risk for each driver is assessed on a more concise and up-to-date basis.
– Consumers enjoy more choices between types of car insurance.
– Responsible drivers can save more money without having to wait to clear old records.
– High-risk drivers pay more, so they are less inclined to spend time on the road.
– For responsible young people, rates are not based on group averages of peers.
– With telematic coverage, continuous tracking may help people who are stranded or hurt.

To learn more about this type of insurance and to find out what options are available, discuss questions with an agent.

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.

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.

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.

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.

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.

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 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.

Factors That Influence Your Car Insurance Rates

To drive legally all drivers in the United States must carry some form of car insurance. For many people, one of the most confusing aspects of car insurance is understanding how their rates are determined.

The first factor that goes into determining your car insurance rate is the level of coverage you receive. In most states, liability car insurance is the only required form of insurance. However, this insurance does not cover you fully in the event that you are hit by an uninsured motorist, if your car is stolen, or if you car is vandalized. To have these incidents covered, you will need to have collision and comprehensive coverage. To have these levels of coverage, you will pay more than someone would pay if they only had liability.

The second factor that goes into determining your rate is your driving history. For starters, records have shown that younger and inexperienced drivers are far more likely to be involved in an accident than more seasoned drivers. Because of this, drivers that are under the age of 25 will always have a higher rate than older drivers. For people of all ages, driving history also has a large impact on car insurance rates. An individual who has multiple at fault accidents, moving violations, or driving related arrests on their driving record will pay more for insurance than someone who has a clean record. Most negative marks on your driving record will clear up after about 5 years.

Another factor that goes into determining your car insurance rate is the type of car that is being driven. All insurance carriers have information that shows the rate of accident, theft, and damage for every make and model of car. Cars that are more likely to be stolen or involved in accidents will result in higher insurance rates. Furthermore, cars that are worth more money and more expensive for the insurer to repair or replace will have higher rates.

The location of your residence is another factor that goes into determining your rate. Cars that are stored in areas that have high rates of crime, accidents, or automobile theft will come with high rates. Furthermore, if you car is parked on the street or in an unsecured spot, your rate will be higher than if the car was parked in a secured garage. The location is also important because those who drive further to get to work will spend more time behind the wheel which increases their chance of having an accident.

Surprisingly, a driver’s credit score and marital status are also factors that go into determining a car insurance rate. Both of these factors have been historically correlated with higher rates of insurance claims being filed. People that are married or have better credit historically are cheaper to insure than single people with bad credit.

Don’t Forget the Risks of Car Sharing

If you live in an urban area, owning a car can be both expensive and a hassle. Finding a parking spot may rival finding Osama Bin Laden in its difficulty. Paying for parking can leave a major hole in your wallet. Due to the sheer number of drivers on the road, insurance costs tend to be higher in large cities. Fuel economy suffers during city driving because of the relatively slow speeds and frequent stops. Consequently, many city dwellers are saying no to car ownership and relying on alternatives. Mass transit remains an essential option, but a relatively new idea is taking hold in U.S. cities: car sharing.

According to CarSharing.net, at the beginning of 2010 there were 27 car sharing programs in the U.S., serving 388,000 members and sharing 7,500 vehicles. They go by names like Zipcar, Car2go, City CarShare, and Community Car. The programs charge an annual membership fee and may charge an application fee; Zipcar, for example charges a $50 annual fee and a $25 application fee in the Washington, D.C. area. A separate fee applies for each use of a car (for example, $30 for a four-hour reservation), which covers gas, insurance, and a specified number of miles. When a member needs a car, she reserves one by phone or online; the program directs her to a parking spot where she will find the car. She unlocks the car (Zipcar issues a “zipcard” to members, allowing them to unlock the vehicle by holding the card up to the windshield); the keys are inside. She uses the car and returns it to a designated parking spot by the end of her reservation time.

The types of people likely to use a car sharing service include:

  • Those who normally use public transportation but who need their own vehicle on occasion
  • Those who own one car and occasionally need a second
  • Those who own cars but occasionally need a larger vehicle
  • Those who can’t afford to buy a car but can afford the membership fees
  • Those who want to avoid the inconvenient parts of car ownership, such as maintenance, fees, and storage costs
  • Environmentalists concerned about the pollution that comes with car ownership

A person using a car sharing service takes risks similar to those she would take while renting a car. She may incur legal liability for injuring someone or damaging another’s property while using the car. She may suffer injuries in an accident, resulting in medical expenses and lost income. She may damage the vehicle and become responsible for repair costs. The car sharing service provides liability insurance, but the borrower has no guarantee that the amount of insurance will be enough to cover all the damages. Also, that insurance may not apply if she lets an unauthorized person drive, such as a “designated driver” during a night on the town. If she does not own a car, she may want to buy a named nonowner auto insurance policy, which will cover liability, medical, and uninsured or underinsured motorist losses over and above what the car sharing service’s policy provides. Also, certain umbrella liability policies may cover damage to a borrowed vehicle if the car sharing service’s policy does not pay. A professional insurance agent can identify insurance companies that offer these types of coverages and explain the differences in coverage and cost of the various policies.

For people living in areas where it is available, car sharing may be a very sensible alternative to owning a car. Like any special service, it carries certain risks. However, by making some simple arrangements ahead of time, drivers can take advantage of these services and be confident that they’ve limited their financial risks.

Steer Clear of Car Break-Ins

One Saturday, Jenny stopped by the mall for some afternoon shopping. The parking lot was packed, but she found a space at the very back of the lot. After she ate some lunch and shopped for a few hours, Jenny strolled back to her car—only to find that her passenger window was broken, and her laptop and iPod were missing. Her heart plummeted into her stomach, and she wasn’t sure what to do.

If you’ve ever walked into a parking lot or your own driveway to discover a thief has broken into your car, you’re probably all too familiar with that terrible sinking feeling. Fortunately, there are some steps you can take to stop car robbers in their tracks. These criminals go for the simple jobs, so they usually choose vehicles that are parked in remote areas and have valuables in plain view.

Don’t make yourself an easy target. Follow these five easy tips to steer clear of car break-ins:

Tip #1: Choose your parking spot carefully.

Car thieves generally target vehicles that are parked in remote areas so they don’t run the risk of getting caught red-handed. That’s why you should always park in a busy, well-lit area where your car is easily seen from the store or restaurant. Try to avoid parking between two larger vehicles or up against bushes, dumpsters or fences.

Tip #2: Hide your loot.

If you were to peer into your car windows right now, what would you see? A hand-held GPS attached to the windshield? An iPod plugged into your radio? A camera on the passenger seat? A laptop in the floorboard?

If so, you’ve made yourself an easy target for car thieves. Car robbers would be salivating over a car with so many treasures in plain view. That’s why you should hide all of your electronics, shopping bags and valuables under the seats or lock them in the trunk—or better yet take them into the store with you!

Tip #3: Lock the doors and roll up the windows.

This may seem like a no-brainer—but police departments across the nation receive countless reports every year from drivers who have items stolen from their unlocked cars. Even if you’re just running into the store for a minute to pay for gas or pick up your pizza, you should always roll up the windows and lock the door. (If you like to take your dog for rides, have an extra key made. That way, you can roll up the windows and keep the air conditioning on for your pup while you run into the store with your second key.)

Tip #4:  Don’t store your home address in your GPS.

You’ve probably heard the horror stories or read the elaborate sensationalized email forwards about car thieves who steal GPS devices from cars. Once they snatch the device, they find the driver’s address stored under “Home.” They then rush to the house and clear out the place.

Although it sounds like the stuff of urban legends, this has actually happened to some drivers. And it’s entirely possible that this kind of thing could happen again. That’s why you should not store your home address in your GPS device. Instead, store the address of a nearby intersection or even your neighborhood grocery store under “Home.” Better yet, take your hand-held GPS device with you instead of leaving it in the car.

Tip #5: Install a car alarm.

The last thing a car thief wants to do is draw attention to himself. That’s why car alarms are so effective. If your car starts beeping and wailing as soon as they try to break into it, they won’t stick around for very long. Many car alarm systems also come with a “panic button” for your key fob—which could come in handy if a suspicious stranger approaches you while you’re entering your car.

When it comes to protecting your car from break-ins, an ounce of prevention is worth a pound of cure. Take these five simple steps, and you’ll be much less likely to become a car thief target. If a thief does break into your car, report the theft to your local police department immediately.

Apples to Oranges: Not All Auto Insurance Policies Are the Same

When it comes to auto insurance policies, there are countless options on the market. However, not all policies are created equal. While you may be tempted to buy the insurance policy with the lowest price tag, this choice could end up costing you untold amounts of money in the long-run.

It’s extremely important to read the fine print and understand the differences between the various auto insurance options available to you. Here are a few tips for choosing the best policy:

Know your limits

Some auto insurance policies are quoted with extremely low limits, leaving their policyholders dangerously under-insured. In some states, the recommended liability limits are as low as $25,000. This meager amount often doesn’t come close to the actual worth of the policyholder. As a matter of fact, some experts say that up to 50 percent of U.S. drivers do not have enough auto insurance coverage.

It’s important to make sure that you aren’t one of the thousands of under-insured drivers. Otherwise, if you are in a car accident, you could find yourself forking out your hard earning money—even though you have auto insurance!

When you’re on the market for a new auto insurance policy, be sure to explain your specific needs and financial situation to your insurance agent. A true professional can run a detailed assessment of your risk profile to ensure that you receive the proper amount of liability coverage.

Covering the gap

Oftentimes, auto insurance policies don’t cover the full replacement value for your car if it is totaled. While the carrier may pay for the total losses based on the actual cash value of your vehicle at the time of the accident, many carriers don’t pay the full replacement cost of your original car purchase. In other words, you are not protected against the depreciation of your car with these policies.

If you have this kind of policy and your car is totaled, you’ll end up paying the difference out of your own pocket for a comparable vehicle. This is known as the “replacement gap” in the industry.

However, there are some auto insurance policies that can help you avoid this gap. Many of these policies cover the full purchase price of your car, including taxes and license fees if your car is totaled within the first year after purchasing. Oftentimes, these carriers will even waive your deductible. Then, every year after the first year, your car’s value is determined by Blue Book, the auto industry’s standard vehicle pricing guideline.

Get customized

If your family has more cars than drivers, you may be able to get a discount if you choose the right carrier. Many families who own a recreational vehicle or “work truck” end up paying higher premiums. However, many of these cars aren’t driven on a regular basis—and therefore shouldn’t carry such high rates.

If you find yourself in this situation, try to find an insurance carrier that offers customized rates and deep discounts for rarely driven vehicles. A reputable insurance agent can help you find the best policy for your particular needs.

Read the fine print

When you first obtain auto insurance, you may notice that a few items are not covered by the policy. While this may not seem like a big deal at the time, these uncovered items can really stack up when you’re in an accident.

For example, many policies require that you only take your damaged vehicle to “in-network” repair shops. This can end up costing you a pretty penny and a lot of hassle after an accident. If you want to avoid these kinds of headaches, be sure to find a carrier that allows you to choose your own repair shop without paying a penalty fee. Read the fine print and make sure the policy covers all the items that are most important to you.

Work with a pro

At some time or another, most of us have received phone calls from insurance “sales representatives” trying to sell us auto insurance. These salespeople, who often work from phone scripts, don’t truly understand all the ins and outs of auto insurance—much less what kind of policy your unique situation requires.

This is why it’s so important to work with a professional independent insurance agent when purchasing auto insurance. Such an agent can guide you through the details of each different policy and recommend the most appropriate option for your distinctive needs.

As you work with an independent insurance agent, be sure to discuss your net worth, your opinions about asset protection and what you expect when it comes to handling insurance claims. This will ensure that the agent pinpoints the best policy that meets all of your needs and fits your preferences.

Cover Your Classic with Collector Car Insurance

Do you dream of making heads turn as you cruise around town in a beautifully restored vintage roadster? Have your eye on a classic convertible that brings back fond memories of your high school days? Whether you’re planning to buy a sporty 1960’s classic or a rare vintage vehicle that was produced more than 100 years ago, you’ll need to find the right insurance to cover your unique dream car.

A car you can appreciate

Unlike modern cars, restored classic cars actually appreciate in value as they grow older. That’s exactly why you shouldn’t cover one of these unique vehicles with standard car insurance.

If you total your daily driver, your car insurance company pays you only the actual cash value (ACV) of the car. When insurers calculate this amount, they include the car’s depreciation in the formula. Because new cars are worth a little less every year, you rarely receive the full amount that you paid for the car.

Because classic or antique cars increase in value each year, you’ll need to cover it with special collector car insurance. Such a policy will cover the full value of your vehicle if it is totaled.

Defining a classic

The first step to finding the right insurance policy for your special car is determining if it actually falls into one of the collector car categories. While car enthusiasts sometimes disagree about the precise category years, here’s how these cars are typically defined:

  • Veteran or Antique cars were manufactured before 1903.
  • Vintage cars were manufactured between 1903 and 1933.
  • Classic cars are often a source of controversy among car collectors. Some say classics are vehicles manufactured before 1973 while others say they are at least 20 years old.

If your dream car falls into one of these categories, you should definitely try to cover it with a collector auto insurance policy.

The requirements

Of course, you’ll have to prove that your collector car meets a certain set of standards before an insurance company will agree to cover it under a collector car policy. Every insurer has a different list of prerequisites, but here are some of the most common requirements:

  • Your vehicle must be at least 19 years old and in good or restored condition.
  • The car must be stored in a fully enclosed and locked building.
  • You must mainly use the car for exhibitions, car shows and other such activities. It should not be your primary mode of transportation.

Surprisingly affordable

Many car enthusiasts are surprised to learn that collector auto insurance is relatively inexpensive. One reason the coverage is so affordable is because most insurance companies limit the number of miles you can drive your car each year—usually between 1,000 and 5,000 miles. After all, the less time you spend on the road, the less likely you are to have an accident.

Depending on your state and the insurance company you choose, your coverage options will vary. This is why it’s so important to do your homework and discuss all your options with a professional insurance agent.

Once you chose a policy, be careful to complete all the insurance paperwork as accurately as possible. One small mistake could lead to delayed payment or even denied claims if your car is damaged.

Car Color May Reflect Your Personality-But What About Your Insurance Rates?

Many people latch onto a certain color in preschool and remain ever-faithful to that shade throughout their lifetime. Whether it’s blue, pink or green, they may deck out their childhood bedroom in their favorite hue, refuse to wear any other shade in junior high and even dye their hair that color in high school. Later, when it comes time to buy their first car, these color-faithful people usually choose a vehicle in—what else—their beloved favorite color.

While this is no surprise, some research reveals that the color of your car actually speaks volumes about your outlook on life, your personality—and even your driving style. For example, a United Kingdom study shows that black cars were twice as likely to be involved in U.K. car accidents than cream-colored cars.

Here are a few more interesting findings from the same U.K. study:

  • Black cars are usually driven by aggressive people who consider themselves “outsiders.”
  • Silver cars are usually owned by cool, calm and slightly detached drivers.
  • Green cars are often driven by people with “hysterical tendencies.”
  • Yellow cars are typically chosen by idealists with upbeat, optimistic attitudes.
  • Blue cars are usually driven by introspective people who are cautious drivers.
  • Gray cars are usually chosen by calm, sober drivers who are dedicated to work.
  • Red cars are driven by energetic people who are fast talkers, movers and thinkers.
  • Pink cars are often chosen by gentle, loving people.
  • White cars can signify status-seeking extroverts.
  • Cream cars, the least likely to be involved in an accident, are generally driven by self-contained, reserved people.

Does color affect rates?

Based on this particular U.K. study, car color can reflect a driver’s personality—but can it affect their insurance rates? Many people seem to believe so.

According to a 2005 Chicago Sun-Times article, 25% of surveyed drivers said they believe the color of a person’s car does affect their auto insurance rates. After all, aren’t drivers of red cars typically risk-taking, speed-demons and drivers of black cars overly aggressive, road ragers? If that’s the case, wouldn’t drivers with those color cars be viewed as a higher risk to the insurance company and therefore be forced to pay higher rates?

The answer is no. Insurance companies do not take the color of your car into consideration when they calculate your premium. Your insurer probably has no idea what color car your drive unless you offer up that information.

Typically, insurance companies determine your rate based on some or all of the following factors:

·   Your vehicle’s make, model, body type and engine size

·   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.)

·   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

So, go ahead and buy your next car in your favorite hue to match your house, your clothes or even your hair. Although it may advertise your personality to the world, your car color will have no affect on your insurance rates.

When Should You Drop Collision Coverage

Auto insurance can be a large expense in a family’s budget, and it makes sense to look for ways to reduce the cost. In addition to shopping for a better deal, some car owners may look at all the coverages they’re paying for and wonder if they need them all. One coverage that often has a big price tag is collision coverage – the coverage that pays to repair or replace a vehicle that has collided with another car or object. If the owner still owes money on the car loan, the bank will require her to keep collision coverage. Once that loan is paid off, does is make sense to drop the coverage? The answer depends on several factors.

First, how much is the vehicle worth? Several resources are available to help answer this question. Check the classified ads in the newspaper to see what sellers are asking for vehicles of the same age and model. Publications like the N.A.D.A. Guide and Kelley Blue Book can suggest a starting point for determining value. Web sites like Edmunds.com offer calculators that take into account the vehicle’s mileage and condition.

How much does collision coverage cost? This information should be clearly stated on the insurance policy’s information page. Since many auto insurance policies run for terms of six months, the annual cost may be twice the amount shown on the policy. Compare the annual cost to the vehicle’s value. How many years of premium payments would equal the vehicle’s value? If the answer is a low number, dropping the coverage may make sense. Keep in mind two things: Collision premiums decrease as a vehicle ages, stabilizing when it’s several years old. Also, in the event of a total loss, the insurance will pay less than the vehicle’s value because the policy’s deductible will apply.

The amount of that deductible is also a consideration. This is the amount that the vehicle owner must pay out of pocket even when the insurance applies. If a collision destroys a car worth $3,000 and the policy features a $500 deductible, the most the insurance company will pay is $2,500. Therefore, an accurate estimate of the cost of collision coverage must include both the premium and the deductible. The premium decreases as the deductible increases, making the insurance more affordable and the loss less so.

Perhaps most important, the vehicle owner must determine what she can afford to pay out of pocket if a loss occurs. If she has a sizeable emergency fund in the bank, she may decide to skip the coverage and add the savings to the fund. If savings are skimpy and buying a replacement vehicle unexpectedly would present a financial hardship, keeping the coverage may be more prudent. Dropping the coverage also imposes other costs on the owner, such as time spent finding a replacement and negotiating its purchase, finding alternate transportation in the interim, and possibly renting a substitute.

Finally, dropping the coverage may mean the loss of associated coverages. For example, some companies offer rental reimbursement and towing and labor coverage only to customers who buy comprehensive and collision coverage. Some companies may also offer other benefits like “concierge” claim service to those customers. The vehicle owner must decide how important these are to her before she makes her decision.

Ultimately, each vehicle owner must decide how much financial risk she can bear on her own versus the certain cost of the insurance. An insurance agent can provide information on alternative deductibles and offer guidance. However, only the owner can decide whether the cost of the coverage is worth the potential benefit.

Your Car Has Been Vandalized. Now What?

Late for an early morning business meeting, you grab a cup a coffee and rush out the door—only to discover your car’s windshield has been smashed to bits. Your heart immediately plummets and your hands begin to shake with anger. Now what? Although you may be tempted to burst into tears or launch into a fit of rage, it’s important to take a few deep breaths and focus.

Fortunately, if you have comprehensive coverage, your auto insurance should cover the damage to your car. However, to ensure you receive the money you need for repairs, you will need to follow a few specific steps:

Notify the police

If your car has been vandalized, you should contact the police within 24 hours of the vandalism. It’s important to file a police report so that you have an official record of the incident. This record will help your auto insurance company resolve your claim.

Call your insurance company

You should also contact your auto insurance company to file a claim. Don’t delay—most insurance companies say you must file your claim as soon as possible in order to receive benefits.

Your insurance company may request a police report, personal statements and other documentation. Additionally, if any items that are protected under comprehensive coverage were stolen from your car (such as an aftermarket car stereo), they may ask for receipts for these items. Try to provide your insurance company with as much documentation as possible because this will help them resolve your claim more quickly.

Prevent further damage

Some insurance policies require you to take measures to protect your car from additional damage after vandalism. For example, if your window has been broken, you will need to cover it with plastic or another protective material as soon possible. This will ensure that the interior of your car is not further damaged by rain, snow, wind or other elements. Your insurance company may reimburse you for the materials you buy to protect your car, as long as the expenses are within reason.

If you knowingly leave a broken car window uncovered, and your car interior or electrical systems are damaged by weather, your insurance company will not cover this damage. This is why it’s so important to take measures to protect your car as quickly as possible.

Generally, once the police have taken any evidence they may need from your car and say you can move your vehicle, you should immediately take steps to protect your car from further damage. You do not need to wait for your claims adjuster to assess the damage before taking these steps.

Let your insurance company resolve the claim

Once your insurance company assesses the damage to your car, they will tell you whether or not the damage will be covered. If it is covered, they will give you a few options for repairing your car to its pre-vandalism condition. If your window was broken and your dashboard was damaged, they will be repaired. If your car stereo was stolen, the insurance company will give you a new one comparable to the one you had.

If you have any questions or concerns about your claim, do not hesitate to contact your insurance company. They understand having your car vandalized is an invasion of privacy, and they want to help you through this difficult time.

Thirteen Vehicles Named to The Insurance Institute for Highway Safety List of Safest Vehicles

Thirteen vehicles, including four cars, seven SUVs, and two minivans, earned The Insurance Institute for Highway Safety’s Top Safety Pick awards for 2007. The award is given to vehicles that best protect people in front, side, and rear crashes based on ratings in Institute tests. Winners are also required to be equipped with electronic stability control. Honda and Subaru each manufacture three of the 13 winning vehicles.

The complete list of winners for 2007 include:

·   Large car: Audi A6 manufactured Dec. 2006 and after

·   Midsize cars: Audi A4, Saab 9-3, Subaru Legacy equipped with optional electronic stability control

·   Minivans: Hyundai Entourage, Kia Sedona

·   Luxury SUVs: Mercedes M class, Volvo XC90

·   Midsize SUVs: Acura RDX, Honda Pilot, Subaru B9 Tribeca

·   Small SUVs: Honda CR-V, Subaru Forester equipped with optional electronic stability control

Pickups were not included in this round of awards because the Institute hasn’t begun to evaluate their side crashworthiness.

The Institute ratings of good, acceptable, marginal, or poor are based on each vehicle’s performance in high-speed front and side crash tests. Consideration is also provided for how well seat/head restraints protect passengers against neck injuries during rear impacts. For a vehicle to become a top pick it must obtain at least good ratings in all three of these tests.

A new electronic stability control requirement was added for 2007. This requirement was added because Institute research found that electronic stability control greatly reduces crash potential by helping drivers stay in control during emergency maneuvers. Single-vehicle crashes in general were reduced 40 percent with the addition of this feature. Fatal single-vehicle crashes declined 56 percent, and fatal rollovers decreased by nearly 80 percent.

Some manufacturers improved their vehicles specifically to earn the awards. The Institute noted that Audi redesigned the seat/head restraints in the A4 and A6 to improve performance in the rear impact test and Subaru stepped up its plans to offer electronic stability control on some versions of the Forester and Legacy in order to meet the new requirement.

Other vehicles are also in the process of being changed to make them eligible for an award. Ford will add electronic stability control to 2008 Freestyles. Most automakers have added standard side airbags with head protection, even though government regulations don’t require them yet. All 2007 winners have standard side airbags.

Seventeen other vehicles would have won awards with better seat/head restraint designs. Toyota would have earned nine awards, including three Lexus winners. Honda could have added four more awards, including one for an Acura. The Institute stated that rear crash protection is a safety area in which many automakers lag behind.

Insurance Institute for Highway Safety Says Death Rates Double for Minicars

Minicars have become increasingly more popular as fuel prices have risen. Because of their newfound popularity, the Insurance Institute for Highway Safety included them in their crash tests for the first time in 2006. The agency rated the cars for comparison of occupant protection in front, side, and rear crashes. What the Institute discovered from its testing is that driver death rates in minicars are higher than in any other vehicle category and more than double the death rates in midsize and large cars.

The results of the crash tests conducted by the Institute indicate which vehicles in each weight category provide the best protection in real crashes. This round of tests reveals big differences among the smallest cars.

Minicars weigh about 2,500 pounds or less. A typical small car weighs about 300 pounds more, and midsize cars weigh about 800 pounds more. A midsize SUV weighs 4,000 pounds or more, which is at least 60 percent more than a minicar weighs. In every vehicle category, the tests revealed that the risk of crash death is higher in the smaller, lighter models. This means that any car that’s very small and light isn’t a good choice in terms of safety.

Another objective of the testers was to find the minicars with the most crashworthy designs. The Nissan Versa scored best. It is slightly larger than the other cars tested by the Institute, which puts it in the small car classification. This is the next size class up from minicar. Still the agency included it in the minicar testing because the Versa is marketed to compete with minicars.

The Versa was the only car to earn the highest rating of good in all three tests. In the frontal test, its structure held up well, and there was minimal intrusion into the space around the driver dummy. The majority of injury measures were low. In the side test, the standard equipment side airbags prevented contact between the striking object and the heads of the crash test dummies.

The Honda Fit with its standard side airbags and the Toyota Yaris equipped with optional side airbags also earned good ratings in front and side tests. However, both cars failed to earn acceptable ratings for rear protection. The Yaris was rated marginal, and the Fit was rated poor.

The Hyundai Accent ranked lowest in overall testing. Researchers were especially concerned about its structural performance in the side test. Its standard airbags in front and rear seats provided good head protection. However, injury measures recorded elsewhere on the driver dummy revealed that a motorist in a similar type crash would be likely to sustain internal organ injuries, broken ribs, and a fractured pelvis.

Keys to Switching Auto Insurance Carriers

There are many reasons to consider a change in auto insurance carriers. You may be unhappy with the service provided by your current insurer, or you may have found another insurer that offers better rates or service. If you review your coverage annually, you can be sure you continue to receive the best bang for your premium dollar.

It pays to shop around because in some states there can be a wide spread in the premium for the same coverage. That’s because insurers base premiums on the number of claims incurred from a particular coverage group. A coverage group can be drivers of the same age or who own the same type of vehicle. If the number of claims for your coverage group increases during a calendar year, your rates will also increase. If that happens, it makes sense to check with other carriers to see if better rates are available.

Canceling your old policy is usually a matter of writing your carrier and specifying the date coverage should be terminated. In some states, your new insurance agent will notify your former carrier for you. You will receive a cancellation request form that you must sign and return to your former insurer. Some companies will also request that you return the policy with the cancellation form. Be sure that you cancel your coverage in writing. Otherwise, the insurer will assume that you are still covered and when you fail to pay your premium, it will terminate coverage and report this to your state’s Motor Vehicle Department and the credit bureaus.  This can hurt your credit rating and your ability to obtain a new policy.

Before you cancel your old policy, be sure you have a replacement. Since most states require drivers to carry a minimum level of coverage, your former carrier will require you to provide proof of insurance before canceling your existing policy.

If you do plan to switch companies, the best time is when your old policy is up for renewal. In this way, you will avoid paying printing and start-up expenses associated with the renewal process. The renewal notice is typically sent out one month before the new policy period begins. Most states allow approximately one month after renewal to switch policies without penalty. However if you miss the deadline, you could be liable for a cancellation fee.

Keep in mind that standard auto insurance policies have a provision that allows you to cancel at any time. If you plan to cancel before your policy is up for renewal, the best time is at the end of a payment period. In this way, you won’t have to concern yourself with recovering the unused portion of your premium.

When You Shop for a New Car, Consider Safety Ratings

Most people know that the federal government enforces certain safety standards for new cars. However, these are only the minimum standards a car manufacturer must satisfy in order to have its vehicles considered safe. Many automakers offer safety features beyond the required federal minimums. When shopping for a new car, you should look for a vehicle that offers the maximum safety features in your price range.

The following list of safety features should be considered when you are shopping:

·   Crashworthiness – This rating indicates the level of risk of death or serious injury if a crash occurs. Log on to the Insurance Institute for Highway Safety’s web site at www.iihs.org/searchresults.aspx?q=crashworthiness for more information about the various models.

·   Structural design – Look for a structural design that has a strong occupant compartment. The vehicle should have front and rear ends that buckle and bend in a crash to absorb the force of the crash. This keeps the occupant compartment from collapsing. If the occupant compartment collapses, the likelihood of injury increases significantly.

·   Size and weight – Larger and heavier cars are safer than lighter and smaller models. In crashes where smaller and larger vehicles collide, the larger vehicles drive the smaller ones backwards, which increases the forces in the smaller vehicles.

·   Restraint systems – Shoulder belts, airbags and head restraints are designed to work together with a vehicle’s structure to protect people in crashes. Shoulder belts keep you in place, reducing the possibility of your body slamming into something hard or being ejected from the vehicle. Airbags reduce the risk of the head and upper body hitting some part of the vehicle’s interior. They also distribute crash forces more evenly across your body. Head restraints keep your head from being violently snapped, which would injure your neck in a rear-end crash.

·   Anti-lock brakes – Conventional brakes may cause wheels to lock if you brake too hard. This can result in skidding and possible loss of control of the car. Anti-lock brakes pump brakes automatically many times a second to prevent locking and keep you in control. While anti-lock brakes help you maintain steering control, they don’t necessarily help you stop more quickly.

·   Daytime running lights – These are usually high-beam headlights at reduced intensity or low-beam lights at full or reduced power. These lights prevent daytime accidents because they increase the contrast between the vehicle and its background, which makes the car more visible to oncoming drivers.

·   Miscellaneous factors – Other design characteristics can influence injury risk. The structure of some small utility vehicles and pickups make them more likely to roll over during a crash. High performance cars tend to have higher-than-average death rates because drivers, especially young ones, speed when they are behind the wheel. You should examine the design features of any new car you are considering to be sure that they are appropriate for everyone who will be driving the car.

At What Amount Should I Set my Auto Insurance Deductible?

While almost everyone would like to save on their auto insurance, it can be a big mistake to be penny-smart, dollar-foolish. The dollar amount you set your comprehensive and collision deductibles at will be one of the most important decisions you make during the purchase of auto insurance. In turn, the deductible amounts you set will be one of the main determining factors in the amount of your monthly premium.

Any insurance policy covering comprehensive and/or collision will contain a deductible. Most deductibles are $1,000, $500, $200, or $100 dollars; but deductible amounts do vary by state. Deductibles are the cost you will pay out-of-pocket during an insurance claim. For example, let’s say that your deductible is $500 and you’re involved in an auto accident that causes $4,000 dollars in damage to your vehicle. You will be responsible for paying the initial $500 and the insurance company will then pay the remaining $3,500. On the other hand, if your deductible is $100, then you will only pay $100 before the insurance company pays the remaining $3,900. As you can see, a higher deductible means you pay more out-of-pocket and a lower deductible means you pay less out-of-pocket after an accident. As a general rule, lower premiums are associated with higher deductibles and higher premiums are associated with lower deductibles.

It can be difficult to weigh what premium amount you’re willing to pay now against what deductible amount you’ll be willing to pay for any future claim. Be sure to take into account your comfort level; income, savings, and credit lines; driving history; and your vehicle’s value as you make your decision on the deductible amount.

Choosing a high deductible/low premium or low deductible/high premium will greatly depend on what you can reasonably afford. Imagine that you had an auto accident today – would you have funds from your household income, credit lines, and/or savings to use as your deductible? If so, what financial impact would using funds from these sources have on your family and how much would you be comfortable using to pay the deductible? If the deductible you have in mind (or already in place) is higher than what you have available or feel comfortable using, then it should be lowered. On the other hand, if you have the funds easily available to pay a higher deductible amount, then you can raise the deductible and save money on your premiums.

You also need to ask yourself how much risk you are willing to assume. Will you continue to be prepared to cover the deductible amount you set? If not, are you willing to risk having a high deductible and bet on not getting into an accident?

How often you expect to make a claim on your insurance is another factor to consider. While accidents are unpredictable and no driver wants to think they’re a bad driver, your driving history speaks for itself. If you’ve had a history of frequent fender-benders or accidents, then it could be best for you to opt for the higher premium/lower deductible option. On the other hand, the lower premium/higher deductible could be a better option if your driving record is excellent or only has a few infrequent driving incidents. You might also consult your insurance agent on what the average deductible is for your driving experience and the age of your vehicle.

Don’t forget to review your auto insurance deductible at least once a year. Ask yourself if your financial situation has changed since the deductible was set and if the deductible amount is still something you could comfortably pay if you had an auto accident today.

The bottom line is this: don’t let purchasing car insurance confuse or overwhelm you. Take your time to assess your finances and circumstances to figure out what you feel comfortable with paying on both a monthly basis and at any given time an accident should occur. If you have any questions or concerns, don’t hesitate to consult your auto insurance agent.

Four Rules of Thumb to Follow When Purchasing an Auto Insurance Policy

There probably aren’t very many, if any, drivers that look forward to buying auto insurance. If you’re like most people, you feel that you have an overwhelming task when it comes to sifting through dozens of companies and agents to find the ideal insurer for your vehicle and unique financial situation. The process can leave you feeling unrewarded and irritated as you think about writing a check for a policy that you hope you’ll never need to use.

On the other hand, you know that having auto insurance is a necessity that can be the difference between a financial catastrophe and enduring a minor inconvenience if you were to have an auto accident.  Furthermore, there are steps you can take that make the act of buying insurance less painful and complicated.

The following four rules of thumb can help you drastically simplify the process, while still getting the best auto insurance policy for your needs:

1. Don’t forget to consider the size and type of vehicle you drive when you choose your limits.

Insurers will not sell you a policy that is less than the minimum requirements for your state. However, that doesn’t mean that you should mistakenly opt for auto insurance limits based on the minimum amount required. Depending on the size and type of vehicle you drive, the bare minimum may not be enough to fully cover you if you should have an auto accident. For example, let’s say that you’ve selected the $10,000 minimum property damage amount set by your state, you drive an SUV or large truck, and you hit and cause $22,000 in damage to a brand new Mercedes. Since you’re only covered for $10,000, you will pay the remaining $12,000 out of your pocket.

2. Be forthcoming and honest with insurers.

Even if you think it won’t be favorable on your premiums, it’s extremely important for you to just tell it like it is when you’re asked about your driving history. You can choose to be less than truthful regarding your moving violations and auto accidents, but you won’t be given an accurate quote. This wastes both your time and the insurers, as all insurers will check your driving record themselves and make adjustments to the quote based on your actual driving record. Be honest from the start and you will save time by getting accurate quotes that you’ll be able to compare side-by-side.

3. Look at the whole picture.

It’s tempting to opt for the insurer offering the lowest rate, but cheapest isn’t always the best deal. Know exactly what you’re getting for your insurance dollars and pay careful attention to the fine print in the contract. Unusually low rates have a catch. Would you rather pay low rates with an insurer offering substandard service, or slightly higher rates with an insurer offering an attractive package and reliable 24/7 customer service? Are options on repairs and parts an important option to have? Is it price or convenience that’s at the top of your priorities? These are questions only you can answer in choosing your insurer.

4. Don’t waste insurance dollars on duplicate coverage.

Look at all your auto coverages and ensure options aren’t being paid for twice. For example, AAA members most likely have their towing costs already covered and wouldn’t need a policy with roadside assistance.

Finding the best auto insurance policy isn’t always fun or easy. However, by following a few rules of thumb during the selection process, you can certainly save yourself a lot of money, frustration, time, and regret.

Head Restraints Found Inadequate in SUVs

With rear end collisions, there is always the possibility of the victims suffering from whiplash. That’s why head restraints are so important to your safety provided they function properly.

Although the primary purpose of a head restraint is to prevent injury to your neck during a rear end crash, there are significant differences in the way head restraints are made. Some are adjustable, while others remain in a fixed position. Some adjustable restraints can be locked into position, but others are not manufactured to lock. There are also variations in height as well as the distance from the back of a person’s head.

The Insurance Institute for Highway Safety recently conducted a study of the seat/head restraint combinations in 44 current model SUVs. Only six of the models tested received a passing rating for protection against whiplash injuries in rear end crashes.

According to the study, if a seat/head restraint is well designed, it should keep the head and torso moving together during a rear end collision. When a car is struck in the rear, the seats push the occupants’ torsos forward. If the occupants’ heads are not supported properly, they will remain behind as the torso moves forward. This difference in motion between the two body parts results in the neck being snapped back. The faster the torso moves, the more sudden the movement, and the greater the forces exerted on the neck, which makes the possibility of whiplash more likely.

A head restraint needs to extend at least as high as the center of gravity of the tallest occupant’s head. A restraint should be located close to the back of an occupant’s head so it can provide support at the point of impact.

The Institute evaluated the seat/head restraints with a two-part test. First, the restraint geometry was measured to determine its height and distance from the head of an average-size man. Seats/head restraint combinations that flunked the geometry test were immediately given a poor rating because they cannot provide protection for enough different body types in rear-end crashes.  If the seat/head restraint combination was rated either good or acceptable for its geometry, it was then tested to see how it performed while in motion. The testers used a movable platform and a dummy to measure forces on the neck. This test, known as a sled test, simulates a collision in which a non-moving vehicle is struck in the rear end by a vehicle of the same weight traveling at 20 mph.

In general, the researchers found that four out of five SUV seat/head restraint combinations tested were marginal or poor in terms of whiplash protection. This was the first time the Insurance Institute for Highway Safety had tested SUV seats using a dummy to measure forces exerted on the neck during a rear-end crash.

The SUVs whose seat/head restraint combinations received an overall good rating were the Ford Freestyle, Honda Pilot, Jeep Grand Cherokee, Land Rover LR3, Subaru Forester, and Volvo XC90.  SUVs with poor ratings included such popular models as the Chevrolet TrailBlazer, Ford Explorer, and Toyota 4Runner.

Flood Damage to Cars Isn’t Always Easy to Spot

Wherever you find disaster, you almost always find someone attempting to profit. Following hurricanes Katrina and Rita in the summer of 2005, thousands of water-damaged vehicles showed up in car lots all across the southern United States, many with no visible problems.  They were sold outside of the hurricane’s heavy-hit areas, to avoid suspicion of flood damage.  Though in excellent physical condition, these refurbished cars could still be prone to problems, which is why concealing their disastrous history is against the law.

A “flooded” vehicle is one that has been submerged or partially submerged in water to the extent that damage to the body, engine, transmission or differential occurs.  However, even though physical damage is visible within hours of the flood, it could take weeks or even months for the car to exhibit symptoms of damage with the transmission, on-board computer or electrical systems within the dashboard, anti-lock brakes, airbags, and other safety functions.

Even though most state laws require that the buyer be informed in writing of previous flood damage to a vehicle, there are still several cases each year where the buyer believed they were getting a great deal on a great car.  Despite a flawless exterior, there are other ways to spot a flood-damaged vehicle.

To prevent yourself from being taken advantage of in this situation, here are some basic guidelines in spotting a flood-damaged car:

·        Check the engine, trunk, glove compartment, and the floor beneath the carpeting for signs of sand, silt or moisture.

·        Examine all of the computerized and electrical components of the vehicle, including lights, gauges, air conditioning, wipers, turn signals, radio, etc.

·        If you suspect the car may be flood-damaged, ask the seller directly. 

·        If you are still unsure, have the car examined by an independent mechanic.

Traffic Violation Cameras and Your Auto Insurance Premium

With the sudden presence of traffic violation cameras (red light, speeding, aggressive driving) in states across the country, many Americans feel that their privacy is violated.  Others believe that this is a government ploy for fundraising, or to replace the local police department.  Many people are curious as to the effect a red light camera violation will have on their insurance premium.

Since initiating the program a few short years ago, participating cities have seen very promising results from their investments.  Many have seen a 40% decrease in violations since starting the program.  Fines can be anywhere from $35 to $200, depending on the city in which the violation was issued and the speed over the legal limit at the time of the photograph.

If you are found in violation, the cameras take a picture of your car, with a motion-triggered shutter, which captures an image of you in your vehicle in addition to a zoomed-in image of your license plate.  Some cameras even take a few seconds of video.  Once the data is analyzed, you are issued a ticket through mail.

Some drivers have contested that if the vehicle owner is not the driver at the time of the violation, they should not have to pay the fine.  Most cities allow residents to appeal the citation in this situation.  Other states, however, hold the vehicle owner responsible regardless of who was driving.

There have been a few reports that suggested the cameras increase traffic accidents.  This is both true and false.  As the lights change from green to yellow, drivers begin to panic.  To avoid receiving a traffic violation, they are inclined to stop much more suddenly, which could cause minor rear-end collisions, and fender-benders.  However, more serious side-impact and head-on collisions caused by drivers speeding through red lights have significantly decreased.  As these crashes were much more hazardous, and resulted in far more injuries, the cameras are still viewed as a positive implementation.

Since violations are usually issued as a civil penalty, in most cases they do not result in changes to your insurance premium or points on your license, except in extreme cases.  Driving safely, however, will always result in better insurance rates.

When Should You Get Car Insurance for Your Teen?

As soon as they start learning to drive, whether they are starting with a learner’s permit or going straight to the license, you should inform your insurance company to have them added to your policy.  This is usually much more cost-effective than placing them on their own policy, especially if you are a safe driver with a clean record.  They will also be eligible for more coverage under your policy.

Statistics show that teens are more prone to accidents than those in other age groups, so starting out with the right amount of coverage is extremely important.

When your child goes to college, unless they are taking a car with them, you will probably want to switch them to “occasional drivers” under your policy.  Some other considerations:

·   You may qualify for a multi-policy discount if your child’s car is covered under your policy.

·   You may also qualify for a discount during the time your child is away at college.

·   Encourage your child to earn good grades, and take a driver training course.  Some insurers discount due to good grades, and for completion of training courses.

·   Serve as a good role model; your child will learn by example, so it is important to demonstrate good driving habits early on (i.e. not talking on the phone, using seatbelt, not drinking and driving.)

Sport Utility Vehicles Improving Rollover Safety Record

According to Newsweek, one in four automobiles sold in the United States is a sports utility vehicle. Every SUV purchase nets an average of $15,000, according to Forbes magazine, in profit for the vehicle’s maker. Because of this high demand and lucrative sales potential, the makers of SUVs have been accused of ignoring safety when it comes to the design and production of their products. The biggest safety complaint about the SUV is its high rollover record.

This lax attitude toward safety, however, is an item of the past. The National Highway Traffic Safety Administration (NHTSA) recently released new rollover results for 2006 and 39 SUVs earned four-star ratings, which was the highest rating earned by the vehicles tested. No SUV earned the top ranking of five-stars. Under this ratings system, a vehicle rated at five-stars has a rollover risk of less than 10%. A four-star vehicle has a 10% to 20% risk, and a three-star vehicle has a 20% to 30% risk.

Newly tested SUVs that received four stars included: the Chevrolet HHR, Honda Pilot, Toyota RAV4, Subaru B9 Tribeca, Hyundai Tucson, Mercedes-Benz ML Class, Suzuki Grand Vitara and four-wheel drive versions of the Chevrolet TrailBlazer.

Among top-scoring SUVs, the HHR had a 14% chance of rollover and four-wheel drive versions of the Pilot had a 15% chance.

The four-wheel drive version of the Nissan XTerra had a 25% percent chance of rollover, the highest percentage among the new SUVs tested. The two-wheel drive version of the XTerra, the two-wheel drive Chevrolet Tahoe and Hummer H3 each had a 24% chance of rollover, and all received three stars.

The new statistics also reveal that SUVs have shown consistent improvements in the area of safety. Only two-dozen SUVs received four stars last year, and just one SUV earned the ranking in 2001. In addition, the agency noted that 7 in 10 new SUVs are equipped with electronic stability control. This feature is an anti-rollover system that automatically applies the brakes if the vehicle begins to skid, which helps to stabilize the vehicle. Government studies have found stability control reduces single-vehicle sport utility crashes by 67% compared with the same models sold in previous years without the feature.

Since 2004, NHTSA has asked auto manufacturers to voluntarily install electronic stability control because of its proven potential for saving lives.  As a result, nearly all automakers now offer electronic stability control as standard equipment on a total of 57 SUV models, and on 6 SUVs as an available option. This is up from 20 standard and 14 optional in 2003. NHTSA is expected to issue a new proposal later this year specifying a performance criterion for stability control.

What Coverage Limits Do You Need for Homeowner’s and Auto Insurance?

Most people avoid thinking about scenarios that would cause an insurance claim – our homes damaged by fire or tornado, someone injured on our property, or family members hurt in an auto accident.  However, it is necessary to give some thought to these upsetting possibilities to ensure that you are adequately prepared and protected in the event of a catastrophe.  Reviewing your insurance coverage will also clarify if there’s a need for an additional umbrella policy for extra protection.  So, let’s try to summarize some of the basics on coverage limits.

Homeowner’s Insurance

Homeowner’s insurance covers three areas:  damage to the home, damage to the contents of the home (personal property), and your liability for injuries to others.

Prior to obtaining homeowner’s insurance, it’s a good idea to stop and consider exactly what you want the insurance to cover.  You may want coverage just to pay off the mortgage in the event you can no longer occupy your home.  It’s more likely you’ll want to continue living in your home after a claim or sell it at market value, so you will want your insurance to pay for repairs caused by wind, fire or some other covered peril.  In most cases, reconstruction means you will need insurance that actually covers more than the home’s market value.

Replacement value, which is the cost to reconstruct a damaged home, is typically higher than the cost of buying a similar home on the market due to the specialized nature of reconstruction as opposed to new construction.  For example, in reconstruction there is an initial cost of debris cleanup.  New construction starts at the bottom and builds up, but with reconstruction it is often necessary to take off the roof and build down, which is more expensive.  Additionally, after a natural disaster, construction costs may rise due to increased demand.  Keep in mind that your insurance can cover not only the costs to rebuild, but also the costs for you to live elsewhere, if necessary, while the home reconstruction is completed.  An experienced insurance agent can help you assess your coverage needs as well as determine available coverage based on the age and condition of your home. 

Also, you will need to consider whether you want replacement coverage for clothing, furniture, appliances, and other personal property inside your home.  Without replacement coverage, your coverage for personal property is depreciated by the age and wear of the items lost.  Due to depreciation, the computer you paid $500 for three years ago may be valued at only $150 or $200, which is all the insurance company would pay if you don’t have replacement coverage.

Some insureds will need more coverage for personal property (contents) than their policy provides. The amount of personal property coverage is usually limited to 70% of the coverage limit for the structure.  For instance, if you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to your agent about supplemental coverages, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection.

Liability limits generally start at about $100,000; however, some experts recommend that you purchase at least $300,000 worth of protection, which covers personal liability for damage to property or personal injury caused to others.  The additional coverage also help to protect your assets in the event you are found liable in a personal injury lawsuit.  Additionally, you may want to consider purchasing a separate liability umbrella policy (discussed below).       

Auto Insurance

There are six different types of auto insurance coverage.  Three relate to liability, two for damage to your vehicle, and one provides specific coverage for accidents involving you and an uninsured or underinsured driver.

Collision coverage covers the costs of damage to your vehicle caused by collisions with other cars or objects; comprehensive coverage covers theft or damage to the vehicle caused by events other than a collision with another car or object.  The amount of coverage you need depends on the value of your vehicle.

Auto liability insurance is required in most, if not all, states, but the liability limits that drivers are required may not be enough to protect your assets.  Even one serious injury caused by an accident for which you are liable could cost into the six figures, or more in extreme cases, just for medical expenses.  And the amount only increases if there are more injured people.  It’s easy to see that the $50,000 of per accident liability coverage required in many states would not be enough to pay all the costs of property damage and bodily injury.  Auto insurance companies recommend that you have $100,000 of bodily injury protection per person and $300,000 per accident. If your personal net worth is more than $300,000, consider buying additional liability auto insurance.

What About an Umbrella Policy?

Unfortunately, even with our best intentions and efforts, accidents may happen for which we are legally at fault.  Medical costs can skyrocket.  If someone were permanently disabled by an accident, the expenses of lifetime care could be astronomical.  If someone killed left behind survivors who were depending on that person for support, you could be liable for damages to the survivors.  Be aware that any costs not covered by insurance will come out of your pocket.  Hence, you could be forced to sell property or to turn over part of your earnings for years to come, perhaps the rest of your working life, to an injured party.

There are limits on the amount of liability coverage available as part of your homeowner’s and auto insurance policies.  If you have total assets valued at more than these limits – including, say, your vacation home, investments, rental property, boats and vehicles — or if you have a high income, an umbrella policy offers a great deal of protection for a relatively low premium.  

In addition to the assets you want to protect, you may want to consider your risk of being sued.  Do you live in a state that is particularly friendly to plaintiffs?  Do you have frequent guests on your property?  Do you have a swimming pool, trampoline, swing set, or other sports equipment in your yard?  Do you have a dog that is overly protective of your property?  Are you or any of your household members aggressive, fast, or careless drivers?  If so, your risk is greater that someone may be injured, perhaps very seriously, and you would be legally at fault.  In fact, any situation that could result in serious injury, long-term physical impairment, psychological damage or death could put your financial well-being at risk.

Once the liability limits are exhausted on your home or auto policy, your umbrella policy takes over and provides another layer of liability protection.  Policies typically start at $1 million with coverage available up to $10 million.  Premiums start at around $300 a year – less than a dollar a day for a great deal of protection.

The best way to determine whether you need an umbrella policy is to discuss your financial status, lifestyle, and current and future assets with your insurance agent.   Ask him or her to review the liability limits in your current policies and suggest the best strategy to ensure protection of your assets in the event of an injury for which you are legally liable.

Safety Tips for SUV Drivers

Considering the increase in fuel costs and environmental awareness, it is surprising that the most popular vehicle in America is still the sport utility vehicle.  With a higher rollover occurrence, higher center of gravity, and increased difficulty of handling, driving a SUV can be dangerous. 

SUVs are completely different from lower-bodied sedans.  They need much more braking distance between themselves and the car in front of them.  They also are much more prone to slip, skid, or flip in hazardous road conditions; according to research done by the National Highway Traffic Safety Administration, more than 10,000 people each year die in SUV rollovers.. By following these basic tips, you will be better informed of how to safely maneuver in a SUV.

·        Slow down. Driving too fast is dangerous; driving too fast in an SUV is even more so.  The longer you have to react, the less likely you are to cause or be involved in an accident.

·        Avoid sudden or sharp steering.  An SUV is not designed to make fast, sharp turns as a smaller, lower, car can.  Allowing yourself more time to react will allow you to make smoother steering transitions.

·        Learn to brake in an SUV. While driving your vehicle, you should be considerate of those around you.  Those behind and beside you will not be able to see around you, so the more warning you can give before you brake, the better. 

·        Check blind spots frequently.  The biggest mistake most SUV drivers make is feeling invincible.  You are in the largest car, but that doesn’t mean you are in the safest.  Many SUV drivers do not use turn signals, or check blind spots, before pulling out or changing lanes, making a collision with a smaller vehicle all the more likely.

·        Avoid overloads. Carrying a great deal of cargo, or even passengers, can throw off the center of gravity even further, making the car more likely to flip over. This also wears on tires and brakes, overheats tires, and can result in a blowout.

Simple Tips to Prevent Auto Theft

Every thirty seconds, a vehicle is stolen in the United States.  That means over 1 million vehicle owners each year find themselves victims of auto theft.  In the event your car is stolen, contact the police with the following information immediately: make, model, year, color, license plate number, VIN, approximate time of theft, location, and witnesses, if any. You should know this information, or have it available at all times.  Then, contact your insurance company.  Preventative measures, however, could prevent this tragedy from ever happening.

Some tips to consider:

·        Install an anti-theft device.

·        Never leave the keys in the vehicle, or the vehicle running, while unattended.

·        Keep doors locked at all times, and windows up.

·        Never store valuables or packages in plain sight.

·        Have your VIN etched into windows and other parts of your car, making resell on the black market more difficult.

·        When parking on the street, turn your wheels, use your emergency brake, and park between other cars (making it harder for a thief to tow).

·        Avoid parking in long-term lots if at all possible.

·        Park in a safe, well-lit, or well-traveled area at night.

Research Shows Side Air Bags Can Save Lives

In a recent study, The Insurance Institute for Highway Safety estimated that side air bags offering head protection could save the lives of about 2,000 drivers a year if every vehicle were properly equipped. The study was based on federal crash data involving 1997-2004 model year cars involved in crashes from 1999-2004 and 2001-2004 SUVs involved in crashes from 2000-2004.

The agency’s conclusion is based on insurance industry research that shows driver deaths in side-impact collisions dropped by more than 50 percent in SUVs equipped with head-protecting side air bags. The study also found that the risk of death dropped 30 percent in side collisions involving SUVs with side air bags that only offer protection to the chest and abdomen.

In passenger cars struck on the driver’s side, the risk of the driver being killed dropped 37 percent in autos with side air bags that have head protection. The risk of driver death fell 26 percent for cars with side air bags providing just chest and abdomen protection. The researchers discovered that fatality risks were lower across the board in vehicles with side air bags, whether the crash involved older or younger drivers, male or female drivers, and drivers of compact cars or larger passenger vehicles.

The side air bag was introduced in the mid-1990s, and has been credited for allowing motorists to escape serious injuries and death when struck in the side. In a head-on crash, the vehicle’s front-end absorbs most of the impact. However, a motorist struck in the side has very little protection without the side air bags.

Side-impact crashes are a major concern. In 2004, the government estimated that 9,270 people were killed in these types of crashes, which amounted to almost 30 percent of traffic deaths reported that year.

Although federal regulations don’t require side airbags in passenger vehicles, more and more manufacturers are installing them as standard equipment. This is due primarily to a 2003 voluntary agreement among automakers to improve occupant protection in side impacts for SUVs and pickups. The agreement is supposed to result in all cars, SUVs, and pickups having side airbags with head protection by 2010.

The auto industry has been keeping pace, and almost four of every five new car and SUV models already have standard or optional side airbags that include head protection. This is a significant increase since side airbags were introduced in the mid-1990s. If you would like model-by-model information on side airbag availability in 1996-2006 models, log on to iihs.org/ratings/ side_airbags/side_airbags.aspx

Can an Auto Accident Affect Your Ability to Reinstate Your Policy?

In January of 2006, the Supreme Court of Vermont was asked to rule on a tricky question about the reinstatement of coverage under an automobile insurance policy. The plaintiff in the suit argued that her insurance company was responsible for covering a loss that occurred after her automobile insurance policy had expired because the company was aware of the loss when it offered to reinstate her policy retroactive to the expiration date.

Even though the insured received a renewal notice a month before the policy expiration date, she failed to pay her renewal premium on time. Consequently, the policy expired on August 13, 2003. Three days later, the insured’s car was in an accident and sustained major damage. The insured reported the accident to her insurance agent on August 18, 2003. She was told that same day that coverage was denied because the policy had expired.

However, the insured also received a “Final Notice” dated August 18, 2003 generated by the insurer’s computer system. The notice stated that the insured could reinstate the policy back to 8/13/2003 if she paid her premium by August 31, 2003. The insured paid the premium and the insurance company sent her an “Acknowledgment of Late Payment,” stating that the coverage under the policy had been reinstated and remained in force without interruption.

On August 27, 2003, the insured re-submitted her claim for the August 16th accident. In a letter dated August 29, 2003, the insurer denied coverage for the accident. The company said that the reinstatement of the policy did not provide coverage for the accident, and that the policy covered only unknown losses. The letter also stated that the previous denial of coverage had never been withdrawn.

The insured sued, saying that the insurer wrongfully refused to provide coverage for the accident. Her contention was that the insurance company could have withdrawn or changed its offer to reinstate coverage concerning the accident that occurred after the policy had lapsed, but it never did. The court that presided over the trial ruled in favor of the insurance company, finding that while an insurer may decide to cover a loss already known to it, there was no evidence that this insurance company made that decision.

The Vermont Supreme Court affirmed the decision in favor of the insurer. It stated that the insured could not show that the insurer was required to cover the accident because of its offer to reinstate her policy. In response to the insured’s argument that it was implied that the insurer had waived its right to deny the claim when it made the renewal offer, the Court noted that the offer to reinstate did not demonstrate any intention to reverse the previous refusal of coverage. It also added that the plaintiff couldn’t prove any change on the part of the insured’s position based upon its actions. The Court concluded that the insurer’s actions in this case were unmistakable in denying coverage for the claim. With regard to the insurer’s argument that insurance does not apply to losses that have already occurred, and that it was providing insurance coverage for future risks, the Court stated that this was somewhat inapplicable given the insurer’s prompt and proper denial of coverage without any change in that position.

In fact, it was this unwavering declining of coverage on the part of the insurance agent and company that seems to have been the controlling factor in the case. Regardless of the insured’s assertions to the contrary, the Court found nothing that suggested the insurer’s conduct would have led the insured to believe that she had coverage for the accident.

Available Discounts Can Lessen Your Auto Insurance Premiums

Personal automobile insurance can be expensive, but did you know that insurance carriers offer discounts that can ease the burden?  Ask your insurance agent about the types of discounts available. Keep in mind that not every discount listed below is available in every state or with every carrier:

Defensive Driving Discount – Reduce your risk of accidents by taking a defensive driving class, and many insurers will give you a discount on premiums. These courses usually last from 5 to 6 hours and train you to recognize road hazards and how to react in enough time to prevent accidents. The fee is about $20.00, but successful completion can earn you a 3-year, 10 percent discount on liability, medical payments and collision coverage.

Good Student Discount – Earn good grades in school and your carrier may reward you. That’s because statistics show that good students make better drivers because they are more mature and reliable. Many states allow a 5 to 10 percent discount if your student driver makes good grades, usually an overall “A” or “B” average in high school or college.

Good Driver Discount – Maintain a clean driving record, and you can save money. If a carrier’s risk is lowered, it will pass the savings on to you.

Home/Car Discount – Purchase both your homeowners and automobile insurance from the same carrier, and you may receive a discount of 10 percent or more, which will lower the premiums on both policies.

Multiple Car Discount – Insure two cars with the same carrier, and you may be eligible for a discount on both cars’ coverage.

Model-Related Discounts – Buy a car that has been assigned a high safety/anti-theft rating. Industry agencies rate every car model based on its collision history and the number of injury and theft claims associated with it. The higher the rating, the more probability of insurance premium discounts. Choosing a car with a lower rating can significantly raise a premium because of the higher risk factor.

Protection from Physical Damage/Theft – Choose options that protect your car from physical damage and theft, and you may receive a discount. Many insurers reward consumers who reduce risk by opting for anti-lock brakes, airbags, alarm systems and other security devices.

Low-Mileage Discounts – Use public transportation to commute to work, and your carrier may offer you a discount. That’s because the less time you spend on the road, the less of a possibility there is for an accident.

Can Your Car Insurance Survive a Storm?

With winter coming to a close, it’s time for many parts of the country to start preparing for tropical storms. Such storms can cause massive amounts of damage, not only to your home, but also to your car. Do you have enough auto insurance coverage to withstand that kind of destruction?

The Insurance Information Institute (I.I.I) says that even with comprehensive auto coverage, you may not be fully protected. Comprehensive coverage will pay for losses caused by fire, falling objects, catastrophic storms, vandalism, or animals. It will also protect your car against flood damage.

What you may not be aware of is that even with comprehensive coverage, your auto insurance does not automatically pay for a replacement rental car while your car is being repaired, or while waiting for an authorization from your insurer to purchase a new one.

That’s why it’s important to review your car insurance annually with your insurance agent to determine the extent of your coverage. It’s also a good time to talk about the need for additional coverages such as rental car reimbursement.

Here are a few more tips if your car suffers storm damage:

  • Report damage as soon as possible. If your car is not drivable, your agent or claims center may be able to save you time and money by having the car towed directly to the repair facility instead of to a temporary storage facility. In addition, arrangements may be made immediately to provide you with a replacement rental car, if your policy includes this coverage.
  • Know what your deductible is, as well as any additional charges you will be expected to pay before you authorize any repairs. Be sure your insurance adjuster, claims representative or repair facility appraiser reviews the damage with you and explains the repair process, including the use of original or generic auto parts.
  • Ask about warranties on repairs. You should also find out if your insurer has a repair facility referral program that offers a written limited or lifetime repair warranty backed both by the repairer and insurer for as long as you own your vehicle.
  • Do business only with a reputable insurer. Obtain insurance from companies that have a proven track record of handling auto insurance claims effectively. Get a referral or contact your local Better Business Bureau or State Department of Insurance.