Monday, 16 April 2012

15 Car Insurance Tips Everyone Should Know

It goes without saying that we would all like the chance to find a car insurance policy that doesn’t cost a lot of money. However, you should also know that there are many ways to approach this problem, and much of it will depend upon your own personal situation and what kind of car insurance rates you are prepared to pay.
Now, there are a lot of issues to consider when searching for affordable car insurance. Some of these issues will be obvious, while others will not be so obvious. Moreover, you have to remember that car insurance is not something that is based on money alone. The cost of car insurance is determined by other issues and factors, including statistics on traffic accidents, demographics, traffic related crime like DUI’s and traffic laws in each particular state.
Although these factors vary from one location to another, what remains important is they inform car insurance companies about the level of risk they will have to contend with in relation to their clients and policy holders. This, in turn, causes these companies to create their policies and business plans.
So basically, if you want to reduce the cost of car insurance, you will have to learn what car insurance companies worry about, and prove to them that you are better than most motorists when it comes to safety and security.
The following are a few examples of how you can go about that.
  1. Quotes Matter – Now, the first thing that you have to remember when it comes to searching for car insurance is that you will need quotes. The more quotes you have, the more options you have. And the more options you have, the easier it will be to figure out what sort of coverage is best suited for your needs.
  2. Find Out What Others are Saying – Car insurance companies may offer great insurance plans and discounts, but you can’t really know for sure until you’ve been in an actual accident. So the next best thing is to go on the internet and see what people have to say about the car insurance companies that you like. Forums, blogs and third party websites, for example, are good sources for these kinds of information.
  3. Find Out How Claims Are Processed – Most people don’t really think about claims (or how much time they take to process) until the day that they find themselves in an accident or a traffic collision. Most car insurance companies are very good when it comes to responding to emergencies, but many are also slow when it comes to paying out claims to their clients. This comes as a surprise to a lot of people when they find themselves in the middle of an accident. So if you want to avoid these kinds of troubles, what you need to do is to perform a little research on the car insurance companies that you would like to work with, as well as their policies with regards to claims.
  4. Use The Internet Correctly When Searching For Car Insurance – Car insurance overlaps with a lot of different things. Things like traffic laws, DUI’s, demographics, per capita income and even crime influence the policies of many car insurance companies. And since this is the case, it’s important for motorists to look these things up online and then figure out how they relate to car insurance. This way, you will be one step ahead of most other people.
  5. Your Driving Record Counts – If there’s ever a reason to keep a clean driving record, it has to do with car insurance. Motorists who don’t have any traffic violations on their records are more likely to get car insurance discounts than those who do.
  6. Your Credit Rating Matters – Basically, a person who can take care of his/her financial obligations is someone who is likely to have little trouble keeping up with his/her car insurance payments. So from the point of view of many car insurance companies, they deserve discounts by virtue of the fact that they can handle money well.
  7. Check Your Mileage – Statistically speaking, the more often you drive, the more likely you are going to end up in an accident. So as far as car insurance providers are concerned, people who spend a lot less time driving than most people deserve lower premiums.
  8. Find Out How Deductibles Work – If you want to lower your premiums quickly without working hard for it then increasing your deductibles is the easiest way to do it. Deductibles are basically a particular portion of damages that your car insurance policy will not cover in the event of an accident. Therefore, deductibles  are your own responsibility, and so increasing them will reduce the amount of money that you are obligated to pay for your car insurance policy. The only downside however, is that your coverage will also become smaller. So it’s really your call.
  9. Why Combining Insurance Policies is a Good Thing – Most car insurance companies, particularly the large ones, don’t just offer car insurance. They also offer life, health and other forms of insurance to their clients. Of course, like any business, they’ll want to make the most of each client, and will offer them discounts and lower premiums, if they’re willing to buy other kinds of insurance policies from them.
  10. Find Out Which Factors Affect Auto Insurance Premium – Your age, gender, and civil status may have an influence on your car insurance premiums. And although their importance varies from place to place, you should still try to figure out they influence your car insurance policy on the long run.
  11. Enroll in a Defensive Driving Course – Defensive driving teaches motorists additional skills to cope with serious traffic situations. Considering how these skills reduce a person’s chance of getting involved in an accident, car insurance companies will sometimes offer discounts to people who have undergone these courses.
  12. Install Security Devices On Your Car – Car insurance companies are always concerned about car theft, and will consider whatever precaution their clients might take to safeguard their car as deserving of special discounts.
  13. If Possible, Park In A Garage – Keeping your car in a safe area, like a garage, is the surest way to keep it from getting damaged or stolen. And as far as car insurance companies which operate in towns and cities which have a high level of car theft that is certainly something which deserves lower premiums.
  14. If Possible, Buy a Cheap Car – The cheaper your car is the less money it will cost to repair or replace. Although some people may not like the idea of buying a cheap ride, in terms of long term practicality, a modest car is something which can save you a lot of money.
  15. Remember That There Different Kinds Of Car Insurance – There are many kinds of car insurance. Comprehensive coverage, for example, will cover your damages in the event of most natural disasters. Liability insurance, on the other hand, will cover a portion of the money that you owe to another party if you are at fault in an accident. Ultimately, you have to decide which type coverage is necessary for you and your car.

Medical Insurance

Before buying a special medical insurance policy for your trip, check with your medical insurer — you might already be covered by your existing health plan. Ask about benefit caps and deductibles (if any), and have them walk you through the procedure. Generally, your expenses are out-of-pocket, and you bring home documentation to be reimbursed. In some cases, you may have to contact your insurer for approval before seeking medical help. While many US insurers cover you overseas, Medicare does not. Much of the additional coverage you buy is supplemental (or "secondary"), so it covers whatever expenses your primary coverage doesn't.

Travel medical insurance generally covers emergencies only. If this is the case, ask what happens after you are moved from the ER to a recovery room. The hospital will typically work directly with your insurer on billing, while a quick visit to a doctor will more likely be an out-of-pocket expense (you'll bring home documentation to be reimbursed). In some cases, you may have to contact your insurer for approval before seeking medical help.

Many pre-existing conditions are covered by medical and trip-cancellation coverage, depending on when you buy the coverage and how recently you've been treated for the condition. If you travel frequently to Europe, multi-trip annual policies can save you money. Check with your agent or insurer before you commit.
The US State Department periodically issues warnings about traveling to at-risk countries (see www.travel.state.gov). If you're traveling to one of these countries, your cancellation and medical insurance will likely not be honored — unless you buy supplemental coverage.

Where Medicare Doesn't Go: For travelers over 70 years old, buying travel medical insurance can be an expensive proposition. Compare the cost of a travel medical plan with that for comprehensive ("full-meal deal") trip-cancellation insurance. The latter plans come with good medical and evacuation coverage that can otherwise be very expensive to buy. A travel-insurance company (see earlier) can help you sort out your options.

Types of Travel Insurance Coverage

The travel insurance menu includes five main courses: trip cancellation and interruption, medical, evacuation, baggage, and flight insurance. Supplemental policies can be added to cover specific concerns, such as identity theft, or political evacuation. The various types are generally sold in some combination — rather than buying only baggage, medical, or cancellation insurance, you'll usually purchase a package that includes all of them. If you want one type of coverage in particular — such as medical — ask for a policy that focuses on that coverage (though it might come with a little cancellation or baggage insurance, too). The most complete version is called "comprehensive insurance." 

Insurance costs vary dramatically, but most packages are between 5 and 12 percent of the total trip cost. Two factors can increase this price: age at the time of purchase (rates go up dramatically for every decade over 50) and trip cost (more expensive trips cost more to insure). Coverage is generally inexpensive or even free for children 17 and under.

Travel agents should recommend that you get travel insurance, and can provide information on options (in fact, they can be held liable for your losses if they don't explain insurance options to you). However, they are not insurance agents, and specific questions should always be directed to the insurance provider.
Some travel insurance, especially trip cancellation coverage, is reimbursement-only: You'll pay out-of-pocket for your expenses, then submit the paperwork to your insurer to recoup your money. Medical coverage is more likely to pay your hospital or doctor bills directly. Either way, if you have a problem, it's wise to communicate with your insurance company immediately to ask them how to proceed. Many major insurance companies are accessible by phone 24 hours a day — handy if you have problems in Europe.
Policies available vary by state. For example, Washington State regulates insurers more strictly than most other states, so Washingtonians may have fewer options than, say, Ohioans. Furthermore, not all insurance companies are licensed in every state. If you have to make a claim and encounter problems with a company that isn't licensed in your state, you don't have a case.

For each type of insurance below, I've outlined some of the key legalese. But be warned — these are only guidelines. Policies can differ, even within the same company. Ask a lot of questions, and always read the fine print to see what's covered (e.g., how they define "travel partner" or "family member" — your great-aunt might not qualify).

Travel Insurance Coverage

Travel insurance coverage — whether you're traveling to Europe or elsewhere — is a way to minimize the considerable financial risks of traveling. These risks include accidents, illness, missed flights, canceled tours, lost baggage, terrorism, travel-company bankruptcies, emergency evacuation, and getting your body home if you die. Each traveler's risk and potential loss varies, depending on how much of the trip is prepaid, the kind of air ticket purchased, your state of health, the value of your luggage, where you're traveling, the financial health of the tour company or airline, and what travel insurance coverage you already have (through your medical insurance, homeowners' or renters' insurance, or credit card).
For some travelers, travel insurance is a good deal; for others, it's not. What are the chances that you will need travel insurance? How willing are you to take risks? What is peace of mind worth to you? The following information will help you understand your options and make an informed decision for your trip.

Important Tips for Purchasing Life Insurance

Insurance is an important part of financial planning — but understanding insurance and buying the right product can be tricky. From whole to term life, riders to convertibility clauses, how do you make sense of all the choices? Most people rely on the expertise of their insurance advisor, broker, or sales representative to help them make the right decision. Yet, for some people, insurance representatives have developed a bad reputation, and many people do not trust the “recommendations” they receive.
From my own experience in the insurance industry, and knowing how representatives are trained, I wouldn’t trust many insurance sales reps either. Here are some steps you can take to ensure you get the right product for the right price:
  1. Understand your needs. No one understands your financial situation better than you. That means you should avoid letting someone else tell you how much protection you need. You can get a rough estimate of your insurance needs by adding together your debt, estimated funeral costs, and six months to a year of income replacement. [J.D.'s note: One common rule of thumb is to multiply your yearly income by between 5 and 10, using the lower level if you don't have many dependents and few debts, and the higher level if you have larger debts and multiple dependents. But Ray is right: understand your own needs.] Taking stock of your financial policy can allow you to select the right policy for your needs. As sales representative, we were trained to sell large policies. Remember, you may not need an exorbitant policy — you need the policy that’s right for you and your family’s financial situation.
  2. Understand term insurance versus permanent insurance. Understanding the difference between term and permanent life insurance (such as whole life) can help you make an informed decision about your insurance needs. Today, a term insurance policy should be able to cover most of your debt and financial needs. In turn, you may not need to purchase a whole life policy. Try not to be sold by the “what if” scenario you might hear from an insurance sales rep. Insurance companies traditionally make more profit from whole life policies than term policies, so be prepared to hear a sales representative promote whole life as the best possible choice (even though it might not be the best fit for your needs). Remember, buy what you need and make adjustments as changes become necessary. Term insurance is typically renewable and should have a convertibility clause which allows you to make changes in the future. There are certain situations where a whole life policy maybe more advantageous than term; however, do not purchase it simply because your sales representative told you should.
  3. Speak with an independent broker. These brokers will have access to many more products than just one firm can provide. When I worked as an independent broker, I was able to offer much more to my clients than just a company product.
  4. Avoid one-meeting recommendations. If your broker makes a recommendation in the first meeting, you know that they have not really analyzed your situation and looked for best options. So just say, “No, thank you” and keep researching.
  5. Understand how the advisor gets paid. Find out if they are compensated through commission, fee-plus-commission, or fee only. If there is any commission involved with the sale, make sure to look at all alternative products available. With commissions, the advisor may have a conflict of interest. Just because your advisor is commission-based doesn’t mean they are bad — just ask more questions with them. I always worked on 100% commission, but I would give my clients several options and disclose if I got paid differently.
  6. Recognize that insurance is for protection — not investing. Term insurance provides protection only, without a savings component. Whole life and universal life policies have a savings component and are much more expensive. You are almost always better off just paying for term insurance, and using the cost savings to invest elsewhere.
  7. Ask the tough questions. Don’t be afraid to ask the advisor questions. You should know the product inside out before buying it. Is the policy renewable and non-cancelable? How long are premiums guaranteed for? Is there an accidental death rider? What are the exclusions?
  8. Watch out for “know-it-all” advisor. If the advisor answers all your questions without referring to anything, or pretends she “knows it all”, chances are that she does not. Insurance policies are complicated, and even the best advisors do not know every product 100 percent and may have to look things up. There is nothing wrong with that.
  9. Compare similar products. When you price shop, make sure you compare similar products.
  10. Don’t replace old whole-life policies. If you have had a whole-life policy for several years, try not to replace it. You may lose all the premiums you have paid. You may also have to pay new administration fees (if applicable), and reset some clauses (such as the suicide clause). If your situation has changed and you need more insurance, just buy more. (This warning does not apply to term life.)
  11. Do not buy expensive riders. The advisor might ask you to add on all types of riders. Stay away from them unless you fully understand them and need them. Again, in training there was always an emphasis on selling riders. Often I didn’t see any benefits to the client.
  12. Do your homework. Make sure you do your homework before purchasing an insurance product. Make sure it fits your needs and budget, and make sure you understand the contract. The advisor is obligated to explain it to you. Don’t sign until you understand the contract.
  13. Take a 30-day free look. You have 30 days to look at the policy and understand it. If you are not satisfied with it during that time, cancel the policy and you will get your premium back.
  14. Keep it simple. Do not make your insurance planning complicated. Because it is based on protecting your family, it should be based on your needs. Don’t fall for all the bells and whistles the company may try to sell to you.
I hope these fourteen steps will help in your insurance planning. The basic idea is to educate yourself by doing your homework so that you can understand what you are buying.

 
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