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Insurance Tips
Nine ways to save on your auto insurance policyBy Insure.comWant to save money? Here are nine suggestions to help you save on your auto insurance policies. 1. Comparison shop. Use consumer information provided by your state's insurance department. These guides tell you what coverages you need and show you sample rates, usually from the biggest companies. Visit your state's home page by choosing the state in which you live from the menu on the left of this page. Then, get shopping. Get quotes from at least three insurers. 2. Ask for higher deductibles. When you file a claim, a deductible is the amount of money you pay before your insurance company pays for the rest of the damage. Higher deductibles mean lower premiums. For example, increasing your deductible from $200 to $500 on collision coverage could reduce your premium by as much as 30 percent - potentially saving you hundreds of dollars. 3. Drop collision and/or comprehensive coverages on older cars. If you own a car that's worth less than $2,000, you'll probably pay more for the coverage than you would ever collect on a claim. Although insurance companies use their own criteria to determine fair market value for vehicles, you can find out how much your car is generally worth by using the Kelley Blue Book. 4. Buy a "low-profile" car. Cars that are expensive to repair or that have a high theft rate generally have higher insurance costs. 5. Take advantage of low-mileage discounts. Some insurance companies offer discounts to drivers who put fewer than a predetermined number of miles on their vehicles each year. And with the high price of gasoline, carpooling and taking public transportation around town can help you save more than just premium dollars. 6. Consider insurance cost when making a move. Costs tend to be lowest in rural communities and highest in cities, where more traffic congestion occurs and the likelihood of theft increases. 7. Ask about discounts for air bags and other safety features. Your insurance agent should let you know about these discounts when you purchase your coverage. Most policies give discounts for air bags. 8. Ask about antilock brake discounts. Some states, including Florida and New York, require insurers to give discounts for cars equipped with antilock brakes. Some insurance companies give the discount no matter where you live. 9. Ask about other discounts. Some companies offer discounts for insuring more than one car, also insuring your home with them (known as a multiline discount), having no accidents in three years, being a driver over age 50, taking driver training courses, and having antitheft devices. Plus, remember good-student discounts when you are insuring a student who drives. Source: Insurance Information Institute Reprinted with permission of Insure.com, the copyright holder. http://www.insure.com  Auto Insurance BasicsBy Insure.comAn auto insurance policy is a package of different coverages. Most states require you to purchase a minimum amount of certain kinds of coverage. But if you're interested in protecting yourself from a lawsuit or from hefty repair bills, then it makes sense to buy more than what's required. Liability coverage limits (that's for the damage you do to others) is usually presented as a series of three numbers. For example, your agent might say that your policy carries liability limits of 20/40/10. That stands for $20,000 in bodily injury coverage per person, $40,000 in bodily injury coverage per accident, and $10,000 in property-damage coverage per accident Liability insurance Liability coverage is the foundation of any auto insurance policy, and is required in most states. If you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to others in the accident, including your legal bills. Bodily-injury coverage pays for medical bills and lost wages. Property-damage coverage pays for the repair or replacement of things you wrecked other than your own car. The other party may also decide to sue you to collect "pain and suffering" damages. The foundation of your auto insurance puzzle is liability insurance. Forty-five states require the purchase auto liability insurance (New Hampshire, South Carolina, Tennessee, Virginia, and Wisconsin don't mandate liability coverage), so your insurance minimum will depend on where you live. For example, in Texas, drivers have to purchase at least $20,000 worth of bodily injury coverage per person, $40,000 worth of bodily injury coverage per accident, and $15,000 worth of property damage coverage (also known as 20/40/15). See the Minimum levels of required auto liability insurance to find out what's required where you live. Remember, if you cause a serious accident, minimum insurance may not cover you adequately. That's why it's a good idea to buy more than what your state requires. If you own a home and have nest egg and a savings account, you should consider more liability insurance because, in most states, drivers are allowed to sue other drivers who injure them in car accidents. If you're sued and your liability insurance doesn't pay for all of the damages, your personal finances are on the hook, and it's likely you'll become a target. Collision and comprehensive coverages If you cause an accident, collision coverage will pay to repair your vehicle. You usually can't collect any more than the actual cash value of your car, which is not the same as the car's replacement cost. Collision coverage is normally the most expensive component of auto insurance. By choosing a higher deductible, say $500 or $1,000, you can keep your premium costs down. However, keep in mind that you must pay the amount of your deductible before the insurance company kicks in any money after an accident. Replacement cost is the amount it would take to replace your vehicle or repair damages with materials of similar kind and quality, without deducting for depreciation. Depreciation is the decrease in vehicle value because of age or wear and tear. Actual cash value (ACV) is the value of your property when it is damaged or destroyed. Claims adjusters usually figure ACV by taking the replacement cost and subtracting depreciation. Insurance companies often will "total" your car if the repair costs exceed a certain percentage of the car's worth. The critical damage point varies from company to company, from 55 percent to 90 percent. See Total warfare: What to do when your insurer totals your car for more information. Comprehensive coverage will pay for damages to your car that weren't caused by an auto accident: Damages from theft, fire, vandalism, natural disasters, or hitting a deer all qualify. Comprehensive coverage also comes with a deductible and your insurer will only pay as much as the car was worth when it got wrecked. Because insurance companies normally will not pay you more than your car's book value, it's helpful if you have a rough idea of this amount. Check the Kelley Blue Book or the National Automobile Dealers Association. If your car is worth less than what you're paying for the coverage, you're better off not having it. Medical payments, PIP, and no-fault coverages MedPay will pay for your and your passengers' medical expenses after an accident. These expenses can arise from accidents while you're driving your car, someone else's car (with their permission), and injuries you or your family members incur when you're pedestrians. The coverage will pay regardless of who is at fault, but if someone else is liable, your insurer may seek to recoup the expenses from him or her. Personal injury protection (PIP) and broader "no-fault" coverages are expanded forms of medical payments protection that may be required in your state. Some states have optional PIP or no-fault coverage. Expanded features include payments for lost wages and child care. If you have a good health insurance plan, there might be little need to buy more than the minimum required PIP or MedPay coverages, if at all. And, if you already have disability insurance, there's little reason to purchase higher-than-minimum amounts of PIP. Uninsured/Underinsured motorists coverages Uninsured motorists (UM) coverage pays for your injuries if you're struck by a hit-and-run driver or someone who doesn't have auto insurance. It is required in many states. Underinsured motorists (UIM) coverage will pay out if the driver who hit you causes more damage than his or her liability coverage can cover. In some states, UM or UIM coverage will also pay for property damages. You'll probably want to have at least the minimal amount of UM/UIM because if you can't find the other driver, you'll at least have some coverage for pain-and-suffering damages. Add-on features Several supplemental auto coverages are available, either as separate premium items or included in augmented policies.
How do you reduce the cost of collision coverage?By Insure.comYou can do one of two things: raise your deductible or drop your coverage. The deductible is what you pay out of your own pocket before your insurance policy kicks in. The higher the deductible, the lower your premium. For example, increasing your deductible from $200 to $500 on collision coverage could reduce your premium by as much as 30 percent, according to the Insurance Information Institute. Collision coverage is generally not worth purchasing on older vehicles with high mileage because if you ever file a claim for significant damages, your insurance company will likely declare your vehicle a total loss rather than fix it. That's because the cost of fixing your vehicle far exceeds its market value. The value you get for the vehicle in the total loss may not justify the premiums you pay for the collision coverage. Source: Insurance Information Institute Reprinted with permission of Insure.com, the copyright holder. http://www.insure.com What can I do to protect myself against uninsured drivers?By Insure.comPurchasing uninsured/underinsured motorist (UM/UIM) coverage can protect you against uninsured drivers. In many states, UM coverage is required by law. UM coverage will pay for medical bills and pain and suffering if you are hit by an uninsured driver. In some states, UM property-damage coverage is available. If your car is crunched by an uninsured driver and you have UM property-damage coverage, you'll be able to get your car fixed under this coverage, rather than using your collision coverage. Generally speaking, UM property-damage coverage carries a lower deductible than collision coverage. For the states where UM property damage coverage is available, read How to buy uninsured motorist property-damage coverage. Source: Insurance Information Institute Reprinted with permission of Insure.com, the copyright holder. http://www.insure.com Which coverages pay for damages to my vehicle?By Insure.comDepending on what kind of damage your car suffers, one of your physical damage coverages - comprehensive or collision insurance - will pay for the damages. If your car is hit by a deer or other animal, stolen, catches on fire, or is vandalized, your comprehensive coverage will kick in. If you crash into something and crunch your car, your collision coverage will kick in. Both of these coverages are optional and, of course, adding them to your policy will raise your insurance premium. Source: Insurance Information Institute Reprinted with permission of Insure.com, the copyright holder. http://www.insure.com The basics of rental car insuranceBy Insure.comWhat's in a name? Rental car insurance by any name will cover you just the same. Whether you buy it from the rental car agency or use your own insurance, you'll be protected from having to pay costly repair bills if you damage the rental company's property. However, there are some intricacies of rental car insurance of which you should be aware in order to make an informed purchasing decision. Your auto insurance Your own collision coverage is "excess" to any other coverage Your collision insurance coverage in your personal auto insurance policy will likely cover damage you cause to any car that you're driving - including a rental car. However, many auto insurance policies say that your own collision insurance is "excess" to any other coverage, meaning that any coverage you buy from the rental car company kicks in first. In addition, your own collision insurance requires you to pay a deductible before the insurance company picks up the tab. Your comprehensive coverage will likely apply to any rental car you drive and cover fire, theft, vandalism, or animal collisions. Again, your personal comprehensive coverage is excess coverage and is subject to your deductible. If you cause an accident, your liability insurance will pay for the damages you cause to someone else, plus any medical expenses that arise from your negligence. Your liability insurance will cover you up to the limits of your policy, and if you were driving a rental at the time of the accident, your personal auto liability insurance, like your comprehensive and collision, will likely be excess coverage. Rental car company's insurance Rental car companies such as Alamo, Avis, Enterprise, and Hertz offer various types of insurance and waivers that broaden your liability protection and that can relieve you of the responsibility of paying for a wrecked rental. Loss damage waivers (LDW) and collision damage waivers (CDW) from the rental company essentially take the place of your own collision and comprehensive insurance, letting you off the hook if the rental is stolen or vandalized, or if you crash the rental car company's vehicle. Some LDWs include the CDW, and some waivers require you to pay a deductible, just like your comprehensive and collision insurance. Alamo, Avis, Enterprise, and Hertz insist that the waivers are not insurance. (In order for these to be true insurance, you have to purchase them through an insurance company. This option is not underwritten or sold by an insurance company, but it's the rental car company's version of comprehensive and collision insurance.) Cost: between $7 and $25 per day, depending on the rental car company and what kind of car you rent. Alamo, Enterprise, and Hertz offer liability insurance supplements that will cover you for up to $1 million if you cause an accident, damage property, or injure others. This coverage has a "combined single limit," meaning the insurer will pay no more than $1 million for bodily injury and property damages. If you purchase this insurance from the rental car company, it becomes your primary liability insurance. Your own personal auto liability insurance is, again, relegated to excess-coverage status. Cost: between $7 and $15 per day, depending on where you rent. You can also purchase accidental death and personal property insurance from your rental car company. Enterprise, for example, provides Personal Accident Insurance (PAI), which pays out a death benefit of $100,000 for the driver of the rental vehicle, whether you're in or out of the car. For example, if you slip in the bathtub and die during the time you're renting the car, the accidental death benefit pays out. It also provides a $10,000 death benefit for passengers who are killed while in the rental. Further, the PAI will pay for up to $3,500 in medical expenses for both you and your passengers. Cost: between $1 and $5 per day, depending on the rental car company. Alamo, Enterprise, and Hertz also offer "limited" coverage for your personal property that might get stolen out of the rental vehicle. Making sense (and cents) out of all the coverages you already have on your auto insurance and the ones that are offered by the rental companies is not easy. Buying all of the insurance offered from a rental car company can double your rental costs. Buying none of it might put you in a bad financial spot if you have an accident. Here are some factors to keep in mind. If you don't have your own collision coverage, buying the LDW is a good idea. If you don't have collision and comprehensive insurance and you're renting a car, it's a good idea to purchase the LDW or CDW, whichever your rental company offers. You might want to buy the waiver that offers you the broadest protection in this situation. Rental companies have several levels of damage waivers. For example, Alamo provides three levels of coverage: you're not responsible for any damage; you're responsible for damage that exceeds $500; you're responsible for damage that exceeds $3,000. Of course, the broader the coverage, the more you're going to pay. Enterprise's partial CDW, for example, requires you to pay a deductible (which varies by state). That costs $6.99 per day. Enterprise's full CDW costs $16.99 per day, but you aren't responsible for paying a deductible. All of Hertz's LDWs are deductible-free. You might eschew the LDW altogether if you have collision and comprehensive coverage because you'd be paying for "double coverage." Just remember that you have to cough up your deductible if the car is stolen or vandalized, or if you crash it. You who don't own cars will likely find the supplemental liability insurance offered by the rental companies valuable if you don't already have a nonowners auto insurance policy (For more, see No car, no problem.) The cost compared to the coverage is pretty good, but keep this in mind: Most states require the rental companies to automatically provide at least the minimum required liability coverage at no charge to you. In this situation, you won't have to purchase any insurance from the rental company to get some liability coverage. If you feel that you can get by with just the bare-bones policy, you won't spend a dime on liability insurance. (For more, click to your state's minimum auto liability requirements.) Got your own liability insurance? In this scenario, it will generally kick in first if you cause an accident. And remember, there's no deductible for liability insurance. Rental car company offerings of accidental death and personal property insurance give you needless "double coverage" if you already have health, homeowners or renters, and life insurance. Typically, your health insurance (or auto insurance if you have MedPay) will kick in for your medical costs, regardless of what car you're driving. Your homeowners or renters policy normally covers personal property if it's stolen or damaged while in your car. And your life insurance will pay out, regardless of how you meet your end. Before you rent a vehicle, check your auto and homeowners or renters policies to get an idea of what coverage you have while in the rented vehicle. And while at the rental car company, take some time to find out exactly what they offer. Compare those coverages to the ones you already have. That way, you can avoid buying coverage you don't need. Source: Insurance Information Institute Reprinted with permission of Insure.com, the copyright holder. http://www.insure.com Do you need MedPay coverage?By Insure.comDrivers living in "no-fault" states are required to buy either Personal Injury Protection (PIP) or Medical Payments (MedPay) coverage. PIP and MedPay cover the medical bills of you and the passengers in your vehicle after a crash, regardless of who's at fault. Having both MedPay and health insurance can be confusing for the policyholder. If you have MedPay as part of your auto insurance, filing a claim requires several steps. You would first have to pay for your treatment up front, get a receipt from the doctor or hospital, send that receipt to the insurance company, and wait for your reimbursement check. If you use MedPay to cover medical expenses, tell the doctor or hospital your auto insurance will pay for the treatment. Some insurance companies let the policyholder decide which coverage (MedPay or health insurance) to use. Your health care provider might want you to use MedPay first, if you were injured in an auto accident. MedPay or PIP is designed for "immediate and short-term care" and is generally used first. Once your MedPay or PIP limits are exceeded, your health insurance then kicks in. In no-fault states such as Pennsylvania and New York, your MedPay or PIP is the primary coverage when you're injured in an auto accident. If you live in a state without no-fault insurance, and have MedPay or PIP on your auto policy, use it first to pay medical expenses related to auto accidents. Your health insurer might deny coverage, until you have exhausted any MedPay or PIP benefits. Living in a "no-fault" state? If you live in a "no-fault" state, there's little reason to buy both MedPay and PIP: That's because PIP provides coverage equal to and beyond MedPay (although PIP often has a 20 percent deductible and MedPay has none). MedPay generally covers reasonable and necessary expenses for medical, surgical, dental, and chiropractic treatment. It also covers hospitalization, ambulance services, X-rays, nursing services, prosthetic devices, and funeral services. PIP, on the other hand, covers the same services as MedPay. PIP also covers psychiatric, physical, occupational therapy and rehabilitation, plus any other professional health services. (Check your policy for exact details.) In addition, PIP covers lost wages, reasonable costs other than medical and work-loss expenses, and a small death benefit. In many situations, having both MedPay and PIP is duplication of coverage. There are certain situations in which MedPay can be valuable, such as when you're driving with someone who's not in your family. MedPay covers everyone in the vehicle at the time of the accident, so your friends will have coverage, even if they don't have health insurance. MedPay can help offset the deductible that comes with PIP. If you have health insurance or belong to an HMO, you probably don't need MedPay. Also, MedPay is no substitute for broader health insurance. Few companies are willing to sell more than $25,000 worth of MedPay coverage. Source: Insurance Information Institute Reprinted with permission of Insure.com, the copyright holder. http://www.insure.com |
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