10 Things About Car Insurance That You May Not Have Known

10 Things About Car Insurance That You May Not Have Known - Many people don't take a great deal of notice of their car insurance and, when the time comes for their auto insurance to be renewed, they simply renew it with their existing insurer. If you don't shop around for car insurance, then you will end up paying more than you need to and, if you don't check the small print on your policy, you might actually not be insured at all. So, if you don't give a second thought to your motor vehicle insurance, check out these facts and tips about car insurance that might surprise you.

1. Pay your insurance premiums in one go

It may be convenient to pay your car insurance in twelve monthly payments, but it will nearly always be far more expensive than paying the whole amount up front. Most insurers add an exorbitant price for spreading the payments. It could cost you as much as 30% more.

2. Don't overdo the excess

A lot of people get caught out by agreeing to an insurance excess over and above what they can really afford to pay. Yes, a high excess will reduce your car insurance premiums, but don't forget that, if you have an accident, you are going to have to find that cash for repairs.

3. Tell the truth to your insurer

Be honest about what you use your car for, where you park it, and who is going to drive it. If you say that your car will be locked in a garage overnight, and it is stolen from the street outside your home, you could be in for a nasty surprise when you come to make a claim.

4. Check how comprehensive your fully comprehensive cover really is

The word 'fully' in fully comprehensive can mean different things to different insurers, especially if you opted for the cheapest policy that you could find. Typically, the cheaper car insurance policies won't include a courtesy car, windscreen cover, or legal cover, so it's worth checking your policy to see exactly what you are getting for your money.

5. Don't make a claim unless you really have to

If you have a minor accident, it is very often cheaper to pay for the repairs yourself than to claim it on your insurance. You should still tell the insurer about the accident, because that is often a policy requirement, but claiming may well result in an increase your premiums and excess.

6. Your premiums can still rise, even if you have protected your no claims bonus

If you have an accident, your premiums could still rise, even if you have protected your no claims bonus. Your percentage bonus may well stay intact, but the underlying cost of your insurance will rise and, therefore, you will pay more.

7. Always take photographs if you have an accident

If you do have an accident, however slight the damage may seem, always take photographs of both your vehicle and the other persons. Unfortunately, there are a lot of dishonest people who will exaggerate their claims to their insurance company and lie about the circumstances of an accident. If you can, get the contact details of any witnesses too.

8. Don't just automatically renew, shop around first

Insurance companies offer their best deals to new customers, so it is always worth shopping around for your car insurance. You can get your insurance broker to do for you, or check out a price comparison site, but always get several quotes before you decide.

9. Always notify your insurer of any changes in circumstances

Don't forget to notify your insurer of any changes in circumstances, or you could invalidate your insurance. That includes moving home, changing jobs, any modifications you make to the vehicle and even if you have started driving your car to work.

10. Don't rely solely on comparison websites for the best deal

Don't forget that not all the insurance companies allow their details to be published on price comparison websites. To enable these companies to compete, they often offer better deals than you will find on the comparison sites.

Ways To Reduce Auto Insurance Premiums

Ways To Reduce Auto Insurance Premiums - As a prior insurance agent, I was always quick to look for ways to reduce my client's costs. As I learned more about my field I uncovered a few surprises that you may not have heard about (and your agent may not even know). I recommend that you do your own research by talking with your carrier's underwriting agent.

First, one that you likely already know about is the potential savings when bundling with property insurance and multiple vehicles. Not only should you research the multi-vehicle discount, but consider bundling in the home insurance too. Most carriers offer both home and auto insurance and will discount the auto premium a few percentage points if you insure both home and auto with them.

However; you should consider a few things when making this decision. (1) Make sure that the discount is really an overall cost savings to you. If you can save more by using different carriers then there is no financial advantage to combining. A 5% savings on your auto policy is not a benefit if the carrier is charging 10% more than the competition. (2) If an auto or home insurance agent or carrier's reputation is not acceptable in your neighbourhood, then the potential for heartache may not justify the savings.

The second way that you might save is based on the usage if you have multiple vehicles insured. Check with your carrier if one or more vehicles stay at home frequently or are a very short commute to work / school. Several carriers offer a discounted rate for vehicles that are driven fewer than 10K miles each year. This is especially true of "pleasure" vehicles which are not used for daily driving.

Our third potential discount applies to motorcycles. Many years ago my "big name" insurance company quoted me an outlandish rate for just liability coverage when I purchased a used motorcycle. Their premium quote was equal to the value of the motorcycle each year. I was shocked and called the company to explain that I was not seeking full coverage, but only liability coverage for this inexpensive motorcycle. I learned that they had not made an error, but they admitted that they quote extreme premiums because they don't want to insure motorcycles. I sought another insurance carrier and insured the motorcycle for less than 10% of their quote.

Another consideration is the amount of the deductible. It is true that a higher deductible will save some money, but it is a diminishing return. You should consider this carefully based on what amount you can absorb if you must pay this deductible following an accident. With many carriers there is not much savings when increasing the deductible beyond $500.

Last on our list is a hidden gem. Years ago I lived in Houston, TX. Full Coverage auto insurance in large cities definitely costs hundreds more per year in premiums as compared to what I have paid in a small town or rural community. I was reading my policy and stumbled upon the Medical coverage section under full coverage. This particular section contains a clause to cover your personal medical costs - not that of others. It is important to understand that the section referred to does not provide coverage for damage to other's property or bodily injury (Liability), but covers your own bodily injury in an accident which as provided by Full Coverage insurance.

This personal health insurance is only applicable if no one else is liable. (An example would be if you slid on ice and had an accident as a result.) The issue is that this is secondary insurance and not the primary health insurance. If you already have health insurance through your employer or other means; then the secondary insurance provided by your auto policy is untapped unless your primary insurance runs out of coverage money. Even then you must first be aware of this insurance to order to engage the carrier. Most of us do not even know that this coverage is buried in the auto policy we pay. When I discovered this clause I called my underwriter to clarify. What I learned from the underwriter was that I could waive this coverage and reduce my premium by $80 annually. (By the way... the underwriter admitted that she waived this coverage herself.) This must be a personal decision. I urge you to call your underwriter and thoroughly discuss your options and implications before making your decision. If you do not live in a high premium area then the dollar amount of this savings is not as great... perhaps 5% of the premium.

Finally, do yourself a favor and call your carrier even if you are totally happy with your coverage. You will likely find that they can reduce your cost simply because you asked. This is a competitive market and all the carriers want to keep a good customer. To keep you happy they will likely have some promotion or gimmick to offer you that will save you money. One thing is sure... you won't get any discounts unless you ask.

7 Myths About Life Insurance

7 Myths About Life Insurance - Life insurance is kind of like the Rodney Dangerfield of financial planning. As one of most people's least favorite financial topics, it gets no respect. When people think of a life insurance agent, they think of someone like this guy. Yet, it's something that almost everyone needs and not having it when you need it can be devastating to your family's well being. 

Here are some of the most common and dangerous myths about this often misunderstood product:

1) Your employer-provided life insurance is all you need.

Your employer may provide you with life insurance equal to 1-2 times your annual salary and you may even be able to purchase up to 4-6 times your salary. But there are several problems with that. First, your "salary" doesn't typically include commissions, bonuses, and second incomes. Second, to replace your income for dependents, you generally need at least 5-8 times your income and some experts even recommend 10-12 times. (You may want to use a calculator like this to determine your specific needs.)

Even if you do have enough insurance through your job, you may lose it when you leave. You may be able to convert your optional insurance to an individual policy or purchase one on your own but either way, it may be much more expensive than purchasing a policy today, especially if your health deteriorates.

Finally, you may actually be able to get a better deal on your own, especially if you're young and/or in above average health. Even if your employer's policy is initially cheaper, the cost may go up each year and you may not be able to take it with you when you leave, You can purchase an individual policy that locks in your rate for a period of time or allows you to build cash value if you want to keep the policy your whole life. Only include your employer's coverage in covering your needs if you can take it with you at affordable rates. Otherwise, consider it a  bonus.

2) Life insurance is really expensive.

A recent study conducted by Life Happens and LIMRA, found that 25% of Americans said they need more life insurance but only 10% planned to purchase it within the next year. The main reason given was cost, with 63% saying that it's too expensive. However, 80% of them overestimated the cost. 25% thought that a $250k 20-year level term policy for a healthy 30-yr old would cost $1k a year or more when it actually would cost about $150.

3) Only the breadwinner needs life insurance.

“Imagine if something were to happen to the stay-at-home spouse in your family. The breadwinner may need to hire someone to clean and take care of the kids and that can cost a lot of money. Unless your family would have that extra income to spare, you may need life insurance on both spouses,” advises Marvin Feldman, President and CEO of life insurance non-profit organization, Life Happens. Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss.

4) My health disqualifies me from life insurance.

There are a lot of companies that cover a range of health conditions and some even specialize in high-risk cases. You can also purchase a policy that is not medically underwritten at all. Just be aware that they tend to be more expensive and have lower coverage limits.

5) You get a better deal purchasing life insurance online.

“The Internet can be a great place to research life insurance and find an agent but you actually pay the same price whether you purchase a policy online or through a human being,” says Feldman. “What you don't get online is the personal service that can help you figure out how much you need, which company is likely to give you the best price based on your health situation, and what the terms on the application mean. A web site may not realize that you need coverage for your whole life due to a child with special needs or that your health won't qualify you for the rates offered by the lowest price company. Most importantly, a commission-motivated agent can help motivate you to actually get the policy as it's something very easy to procrastinate.”

6) Everyone should buy term and invest the difference.

While this generally makes sense for most people, a permanent policy can be a better deal if you need life insurance for your entire life. Some examples would be to provide for a special needs child or to cover estate taxes. For a small percentage of the population, the cash value can also be a good investment if you need life insurance, are in a high tax bracket and have maxed out all your other tax-advantaged options.

7)  You're too young to worry about life insurance.

Life insurance actually makes the most sense when you're young since the premiums are less expensive and you have fewer assets to pass on to heirs. The longer you wait, the more expensive it will tend to be and the more likely you are to develop a medical condition that makes it much more expensive. Of course, the biggest problem with procrastinating life insurance is that by the time you need it, it's too late to get it.

Every person's situation is unique. Some people don't even need insurance at all. Whatever decision you make when it comes to life insurance, just be sure it's an informed one. After all, if something does happen to you, you don't get to come back and relive the day like Bill Murray did in Groundhog Day.