Category: Auto

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.