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Common Misconceptions About Auto Insurance

Friday, June 4th, 2010

Auto insurance is one of the most common types of insurance products purchased in the United States, and comes with a host of features that can be customized to the client’s liking. Anything from coverage type to deductible cost can be negotiated, and no two auto insurance policies ever end up being quite the same. But despite the prevalence of not only online auto insurance quotes but cars on the road, many consumers have a startling number of misconceptions about not only auto insurance but how it works for them in case of an accident. Here are a few of the most common misconceptions clients have about the car insurance industry.

First, many people assume that if their car is damaged in an accident, the insurance company will fully fix it. This is not true. An insurance policy will pay for repairs to a car up to the coverage limits laid out in the policy. Should a policy have $15,000 in property damage coverage but the cost of the repairs after an accident end up being $20,000, the $5,000 difference will be borne entirely by the policy holder. What’s more, should the cost of fixing the vehicle be more expensive than writing it off and paying the client the amount the car is listed for in the Blue Book, the car will be declared a total loss. This can happen even if the damage to the car does not reach the maximum coverage – it is the choice of the insurance company.

Consumers also often believe that a phone call to their insurance company, simply to inquire about a policy, a claim, or just for general information will result in rates being raised. This is no longer the case, as almost all states have laws which prevent them from changing rates without a specific reason. A simple inquiry does not constitute use of an auto insurance policy, and therefore no rate increases are reasonable. Some consumers are also confused by the nature of estimates after an accident. An insurance company will typically require estimates from two or three body shops before they will approve payment for work done to a car after an accident. Some drivers deliberately go to auto body shops with higher rates, receive their insurance payout, and then take the car somewhere else for a cheaper fix, pocketing the difference. This is not a clever idea, but insurance fraud. Some companies pay auto body shops directly, but all will want a copy of a paid invoice.

While an auto insurance quote can seem confusing, as can the execution of a policy, both doing research online and speaking with a company representative can help make the product less daunting.

How A Tort Lawsuit Can Affect Your Future Auto Insurance Quotes

Thursday, May 20th, 2010

Every driver wants to avoid the types of events that can cause auto insurance rates to jump. Things like traffic citations and accidents can make a major difference, and can make driving nearly impossible to afford, even if you’re driving a very safe vehicle and if your record’s otherwise decent. Because of the way that insurance prices are set, many drivers are confused as to what actually affects auto insurance quotes, and may be especially confused about the nature of insurance law–if you’re sued in a tort case (which determines the fault of a driver in an accident), for instance, will your rates necessarily rise, or are lawsuits unrelated to insurance prices?

The answer to this question can be a bit complex. An auto insurance tort lawsuit itself will not cause your auto insurance quotes to increase, as the lawsuit is simply a legal argument as to the fault of an accident–it’s an accusation, but not proof of a circumstance. Therefore, it’d be unfair for an insurance company to raise your rates simply because you’re involved in an auto insurance tort lawsuit. However, your rates will certainly rise if you’re proven to be at fault in the accident, even if the lawsuit arises months after the actual incident. This is because your driving record will be affected, and your driving record is one of the most important determinants of your auto insurance rates.

To avoid a rise in your insurance rates due to a lawsuit, you should be careful not to admit fault immediately after an accident. Don’t apologize, and simply collect insurance information from the other driver. Speak to an insurance representative first by calling your insurance company as quickly as possible. Don’t try to hide the accident from your insurer; they’ll certainly find out about it anyways. Ask your insurance agent for advice, and give them all of the information that you have. If you know that you’re going to be sued (perhaps if the other driver made an obvious statement to this effect), you should tell the agent. Allow your insurance company to prepare, and be sure to prepare yourself. Get the facts of the accident right so that the court can make a fair judgement.

Nobody likes the prospect of a lawsuit, but sometimes it’s the only way to accurately determine the fault of an accident. By staying prepared and knowing your rights, you’ll increase the chances of a judgement in your favor. You’ll also avoid an unpleasant rise in your auto insurance rates, and you’ll keep your motor vehicle record clean and clear.

How An Auto Insurance Quote And Your Monthly Premium Are Connected

Thursday, April 15th, 2010

When purchasing an auto insurance policy, the first piece of information that most consumers will receive is an auto insurance quote. This can be done online or over the phone, and typically represents the cheapest auto insurance that the company has to offer. The consumer, intrigued by the low auto insurance premium, makes further inquires with the company, and eventually arrives at an agreement that includes all of the coverage that they need. However, when their first monthly car insurance bill arrives, they note that the rate quoted bears little resemblance to the auto insurance premium they are expected to pay. For many, this comes as a shock, as it seems only reasonable that the original quote and the eventual premium should be the same. Unfortunately, this is not often the case. While the two are connected, there is a wide gap which lies between an initial quote and the eventual payment.

Auto insurance quotes are generated on a low-cost, best-case scenario. They include the lowest coverage levels mandated by the state, and assume a clean driving record, well-maintained car and a host of other factors that often do not all occur together. Quotes will often say things like “as low as” or “starting from.” These give an indication that although the rate could potentially be that low, it will only occur under the most optimal of conditions. Once a basic auto insurance policy has been inquired and agreed upon, most insurance providers will begin speaking to their clients about more specific add-on coverage that they may want, or may encourage clients to increase the minimum liability that they are paying. While all states require some form of personal and property liability coverage, the basic amounts are often far too small to actually cover everyone and everything damaged in an accident. Having extra coverage is very useful, but will also increase the basic monthly premium paid. Similarly, add-on coverage such as uninsured motorist coverage, which is not mandated by all states, can be very useful but will result in a discrepancy between the original quote and the eventual price.

At its heart, an auto insurance quote represents the best monthly premium for a customer under ideal conditions. Their actual monthly rate is a reflection of their initial quote, but with extra coverage, add-ons, and their specific car details and driving history factored in. The two numbers are related, but the chances of paying the rate advertised in a quote are slim to none. While this may seem unfair, it is better to have more coverage in an accident than the basic amounts offered, as a higher premium may cost the consumer initially, but can save a great deal in the long run.

What A Good Online Auto Insurance Quote Should Include

Thursday, April 15th, 2010

Looking for an auto insurance quote online can be a convenient, low hassle way to get car insurance quickly. It lets you compare the costs, benefits and coverage of several different companies in a relatively short period of time. But what do you look for in a good online quote? There are actually several important things that should appear in a good online quote. Personally, you may not need every single one of them (or need them in reduced amounts) but in general they are the things most people will need if they are ever in a car accident. ??Liability coverage is very important. Every good auto insurance quote has one. Liability protects you and your assets when you are the at fault driver.

Liability covers the damaged car and any person physically injured in the crash. Your insurance company pays the other driver and your money is protected. Collision covers damage to your car when you hit another car or object. It pays to fix your car minus your deductible. It also protects you if another car hits you. Comprehensive insurance is also important as it covers what collision doesn’t and it protects against loss if your car is stolen or damaged. If you have a newer car, one in excellent condition or if your car is leased or financed, you may need this type of coverage. Uninsured and under-insured motorist coverage should also make the list. This coverage keeps you from financial loss if your car is damaged by a driver who either has no auto insurance or not enough insurance to pay for your losses.

Comprehensive or collision coverage should include options for car rental and towing/roadside assistance. If you have one or more cars that you use almost every day, losing your car to an accident, either permanently or temporarily, can place strain on everyday life. Car rental coverage would ease this problem. Roadside assistance, while an option, can be a big help when you are stranded. Both of these are well worth the cost if you can afford it.

In the current economy, the auto insurance premium has become more important than ever. When cash is tight, choices between cost and coverage are made. Higher deductibles are an option. People, with older cars may choose to eliminate collision coverage since this coverage is limited to the car’s value. Probably the last thing you should consider doing to reduce your auto insurance premium, is to choose the minimum coverage. Every state has different minimums so check with your state for a complete list. But remember, good auto insurance will protect you and your financial assets. Minimum coverage is often not enough.

Truths About Auto Insurance Rates Being Cheaper For Female Drivers

Thursday, April 15th, 2010

There are a number of popular misconceptions about auto insurance and the way that insurance providers decide quotes for their customers. However, some of the popular knowledge is fairly accurate–for instance, female auto insurance often costs less than auto insurance for males. This isn’t true in all cases, of course, and understanding the way that gender affects insurance statistics (and therefore, insurance rates) can be very helpful when you decide to look for a new, lower-cost auto insurance quote.

As many drivers know, insurance companies rely heavily on statistics to gauge whether drivers will make claims on their policies. This allows them to accurately give low-cost policies to safer motorists. It’s a process that lends itself to a lot of discrimination, which is why younger female drivers will often see lower rates. Women make fewer claims on average than men. Some types of “discrimination” in auto insurance rates are illegal according to state and federal law, but an insurance provider is completely within its rights to discriminate on the basis of gender. Other factors may push a female driver’s auto insurance premium higher than the average male police, however; for instance, making even a single claim or getting a traffic citation will affect any driver’s rates negatively, and the lower rate given to a female driver will disappear instantly due to these types of incidents.

Age is also a major factor in insurance company statistics, and once a female driver reaches a certain age (usually around 65), her rates will be significantly higher than male drivers of the same age. This is because older female drivers, for whatever reason, tend to make more claims. Some insurance companies have speculated that this is due to female drivers’ propensity to allow other drivers (such as their husbands) to handle the driving duties at the later stages of life, which can make a female driver less experienced when she needs to get back behind the wheel. Whatever the case, age and gender have a direct correlation, and the average cost of any driver’s insurance policy will fluctuate throughout his or her life based on insurance company statistics.

Drivers don’t have any control over their age or gender, but by keeping a clean record and regularly reassessing your insurance policy, you can lock in the lowest rates possible for your coverage. Always look at more than one auto insurance quote, and try to lower your potential risks by choosing a safe vehicle. Every driver can find low insurance rates, but it’s important to take an intelligent approach in order to avoid overpaying for your car insurance coverage. You will be lucky you did when you have a premium that’s easy to pay.

How Long Before A Drivers Auto Insurance Quotes Change After An Accident

Thursday, April 15th, 2010

Having an accident is stressful enough. But as any driver knows, the fallout from the accident itself is only the beginning. An auto insurance premium increase is nearly always sure to follow, and navigating the longer term impact of handling auto insurance claims, plus negotiating for a new auto insurance quote, can take even longer. This is why it is important to know what to expect and how to handle changes to auto insurance following an accident.

Drivers in search of an industry standard are in for a rude awakening – even a cursory inspection of different carriers reveals that no such standard is currently in place. Auto insurance premium increase rates, time lapse between auto insurance claim settlements and insurance rate increases vary widely. While auto insurance carriers are required to file what is called a “surcharge schedule” with each state in which they operate, these schedules can read like Sanskrit to the unskilled eye, and the insured is often left to their own devices to decipher the financial impact of rate surcharges after an auto insurance claim is filed. This can vary by number of insured on a single policy, number of vehicles, length of time as a policy holder, and more. Even for the fortunate few whose carriers offer a first-timer accident-forgiveness clause, which means that for the first accident no rate increase will be imposed, only certain applicants who fit certain criteria are eligible for such benefits. Devoting the extra time to researching whether a carrier offers accident forgiveness and under what circumstances can pay off in the event of an accident. Similarly, accepting a slightly higher monthly rate in exchange for such protective measures can be a bargain over time.

For many individuals involved in an accident, the rate increase will not appear until renewal time. But when it does appear, the increase can carry a whopping punch – most carriers hike rates between 20 and 40 percent of the insured’s current premium. Once again, it is important for a new policy applicant to ascertain the potential impact to insurance premiums in the event of an accident to avoid being swayed by low up-front auto insurance rates. Similarly, it is important to know how long the rate increase will last, and which types of accidents will incur a rate hike. Some states and carriers penalize for all violations, while others distinguish between moving, parking, and fault or no-fault incidents. Be wary of insurance agents who are unwilling to answer these basic questions about rate increases in the event of an accident. A little extra time and persistence in seeking out a quality auto insurance quote now will be worth it in the long run.

Considering Whether Car Insurance Rates Will Continue To Rise in 2010

Thursday, April 15th, 2010

Auto insurance rates have increased in 2010 and they are expected to keep rising. The economy has a huge impact on insurance providers, and many people will have to face higher auto insurance premiums in the near future. According to USA Today, the average auto insurance policy will increase by 4 percent. Experts recommend that consumers shop around for affordable auto insurance rates. You can request an auto insurance quote online if you want to save money. Requesting an auto insurance quote is easy and it will only take you a few minutes.

In some states, auto insurance rates have increased by 12 percent, including Montana. In Florida, State Farm has increased their rates by 9.2 percent. Twenty-three states have seen a rise in auto insurance premiums this year. Other parts of the country have seen a drop in premiums. Drivers in Idaho and Vermont have the lowest auto insurance rates in the nation. The truth is that insurance fraud and the amount of claims that are being filed is causing many insurance carriers to raise auto insurance rates for profit. Besides the increase in auto insurance premiums, certain vehicle models will cost more to insure due to risk ratings such as the Kia Sportage and Hyundai Sonata. Insurance rates have been going up since 2008, and they will probably keep rising. Consequently, many motorists are driving without insurance and about 16 percent of drivers are likely to let their policies expire without renewing them.

It is important that you compare auto insurance rates with a variety of insurance companies. If you find an expensive policy, you will reduce your auto insurance premium. You can obtain an auto insurance quote online with more than one insurance comparison website. You will have to enter your zip code, select the type of coverage you need, and complete a simple application. You will receive instant quotes in minutes. You can reduce your auto insurance premium even further by raising your deductibles and taking advantage of discounts. For instance, insurance companies may offer you discounts if you complete a safety, defensive driving course, if you have air bags, anti-theft devices, anti-lock brakes, a car alarm and other safety features. If you are a student and your grades are excellent, you may qualify for a discount. In addition, if you do not put a lot of mileage on your vehicle each year, if you keep it in a garage, if you insure more than one vehicle or purchase more than one kind of policy with one insurance company, you may qualify for discounts on your premiums. If you follow these tips, you may find a low cost auto insurance policy.

Age Groups That Pay The Least For Auto Insurance

Thursday, April 15th, 2010

Motorists are legally required to possess auto insurance to operate a vehicle. If a regrettable car accident transpired, an auto insurance company would help pay for any injuries or damages that resulted from the misfortune. Additionally, auto insurance may help cover the expenses of repairing or replacing your vehicle if it is either damaged or stolen. Car insurance rates are determined by many factors. Some determinants for car insurance rates are a driver’s credit history, occupation, gender, area of living, and the make and model of a motorist’s vehicle. However, another vital determiner is a driver’s age. Drivers between the ages of 50 and 65 generally receive the preeminent auto insurance premiums available on the market.

Auto insurance companies usually divide drivers into three categories to ascertain the amount that they will charge in premiums. Provided that they own a good driving history, auto insurance premiums are the least costly for drivers in the age group of 26-73. Drivers in the 26-73 age group receive reduced auto insurance premiums because they are experienced motorists that have proven over time that they can operate a vehicle in a safe manner. On the contrary, individuals in the 16-25 age group pay the highest premiums because they are inexperienced drivers that are deemed high risks on the road. Statistics indicate that drivers in the 16-25 age group are accident prone and they have historically filed the most insurance claims. Sandwiched between the 26-73 and 16-25 age groups are drivers age 74 and above. These drivers will face premiums that are a tad lower than the most risky 16-25 age group. Drivers 74 and above are considered minimal risks to auto insurance companies because some of their reflexes behind the wheel may have diminished with age.

Personal auto insurance is mandated to lawfully operate a motor vehicle. Auto insurance premiums can be quite expensive in some instances. To locate the most affordable personal auto insurance, drivers are strongly advised to seek the best insurance quote that they possibly can. Conducting research and shopping online are simple ways to find the most economic auto insurance premiums obtainable. With due diligence, online consumers can discover the foremost auto insurance premiums offered.

Many factors are considered when an agent establishes an auto insurance quote. Unfortunately for some motorists, age is of primary importance to auto insurance companies. Young and inexperienced drivers are viewed as liabilities on the road. Conversely, elderly persons are also reckoned to be perilous drivers on the road. Data has shown that drivers between the ages of 26-73 are the safest individuals to operate a motor vehicle. In particular, dependable drivers between 50 and 65 are offered the lowest auto insurance quotes.

U.S. Auto Insurance Market Veers into Underwriting Loss in 2009

Wednesday, October 28th, 2009

The challenges facing the U.S. auto industry throughout 2009, with pressures ranging from the near-collapse of both General Motors and Daimler-Chrysler to various stimulus programs that have attempted to accelerate sales, have received significant attention. A tangential, yet equally important, byproduct of this battle is the fact the auto insurance market is likely to realize an underwriting loss for the year. Faced with lower premiums and higher loss costs, according to FitchRatings’ Auto Insurance Overview, the industry is experiencing the same economic downturn that is affecting the whole economy.

While the increase in loss costs is somewhat expected on a year-over-year basis — as cars become more expensive to repair, labor costs rise and newer cars replace less expensive older cars — the decrease in premium revenue is the direct result of the economic slowdown. At the heart of this issue is the decrease in auto sales – new cars command higher insurance premiums than older cars and net a better return to the insurance companies. As early in the year as January, Reuters was reporting that auto sales in the U.S. were expected to fall by 13 percent, reaching the lowest levels in 27 years — these numbers have worsened since those projections.

The “Cash for Clunkers” program had some impact on accelerating car sales, enticing buyers who may have chosen to wait to buy a new car sooner. However, the crunch felt by the consumer is undeniable. The program was short in duration and may have only been successful in keeping the level of new car sales from decreasing to even lower levels, rather than having a significant impact in boosting sales. Consumers are being more selective with their decreasing levels of disposable income, significantly slowing the rate of new car sales.

Also adding to the decreased underwriting levels, as noted in the same Fitch report, is increased price competition. As insurance companies must fight harder for each dollar, they have been unable to increase auto insurance premiums sufficiently to keep pace with the lower rates they receive on the older vehicles they insure. Furthermore, as consumers are increasingly drawn to the low-cost provider over the high-service provider, online-centric companies have been able to increase their market share and have continued to drive down the overall level of auto insurance premiums. In the current economic environments, pricing power has been decreased across the board, forcing companies in general to be more competitive. With inherently increasing costs, the industry faces a year in which costs will outpace revenues.

The combination of falling revenues — driven by lower new car sales and increased price competition — and rising cots, make it likely that the auto insurance market will report an underwriting loss for 2009.

Turn Your Clunker into Cash — Escort or Ram Van?

Wednesday, July 29th, 2009

How do you turn your hot 2002 Ford Escort into cold, hard cash? No problem, Uncle Sam can help. In an effort to stimulate the challenged U.S. auto industry, in June, Congress passed what is now being hawked as the “Cash for Clunkers” Act. Officially, it’s a government program called CARS (Car Allowance Rebate System). Unfortunately, you won’t actually ever see the cash. Instead, you’ll save up to $4,500 on top of any other savings at your auto dealer when you trade in your beaten up jalopy. Your dealer then gets the rebate from the government. It’s not a bad deal. You could end up double or even triple dipping on the savings. If you purchase a fuel-efficient hybrid, you can still qualify for a federal tax credit. Add on top of that any dealer incentives, plus the $3,500 or $4,500 from the government and all of a sudden that new ride is looking pretty good.

Plus, you’ll finally be able to retire that late 80’s hunter green, high-top Dodge Ram Van with the wicked panel art, running boards, and after-market Blaupunkt cassette player. Hmm, on second thought, trade in the wife’s mini-van instead. You never know when you’ll need to find a quiet escape in the warm embrace of your coffee-stained captain’s chair with Boston’s “More Than a Feeling” setting up on entertainment system.

OK, let’s get to the basics. Here are the rules to know:

1. Your trade-in vehicle has to be less than 25 years old.

2. You need to be purchasing or leasing a new vehicle to qualify.

3. In a nod to the Green movement, the program is designed to take old, gas guzzlers off the road. So your trade-in vehicle must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements). Be safe, and double check that your vehicle qualifies before you race over to your auto dealer.

4. Trade-in vehicles must be registered and have auto insurance continuously for the full year preceding the trade-in date

5. Act fast because the program runs through the earlier of November 1, 2009 or when the $1.0 billion program funding runs out. As of today, there was $858 million left in the kitty, or just about enough for another 200,000 sales.

6. Because the program is intended to permanently remove these wasteful, rust-buckets, the dealer is also required to estimate the scrap value of your trade-in and will throw that amount, however small, on top of the rebate as well.

More detailed Program FAQ’s can be found here or call the CARS Hotline at (866)-CAR-7891.

Last, but not least, it is critically important that you get the right auto insurance for your new vehicle. Remember, cruising around in a brand new gem is going to be a lot different than your last ride. And with your hard-earned $$ at stake, you need to make sure you’re covered. In keeping with the money-saving spirit of the “Cars for Clunkers” program, go no further than to get the lowest quotes on your auto insurance.

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