The Importance of Auto Insurance in Today’s tough Economy

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Is getting a car insurance a necessity or an expense?

As the economy takes a slow turn, people are preparing themselves for the worst and are now in search of drastic means in order to trim their expenses. This includes re-evaluating their needs by giving up some services such as car insurance. In this post, we want to see if it’s still significant to get your vehicle covered by the best insurers, in this unstable market. A research from the National Association of Insurance Commissioners (NAIC) showed that automobile insurance is one of the services that they’ll sacrifice just to reduce costs. Almost 20 percent of them have ended their contracts just so they could get immediate financial relief. However, they are unaware of the very reason as to why they’re signing up for the said service. Car insurance is the same as the life plan. You get these services because you want to be prepared when unexpected circumstances such as accidents happen. Depending on the type of accident, the average medical cost of a single person is at $820, according to the Association for Safe International Road Travel (ASIRT). Meanwhile, the minimum car repair usually costs $392. A car insurance serves as your back-up plan when you need to cover large expenses beyond your current savings. These days, companies now offer a wide variety of compensations from replacing broken car parts up to giving medical services all for free. According to Aviva’s website, all of their vehicle policies include lifetime repairs and a 24/7 help hotline to accommodate their on road clients. Apart from phone calls, policyholders also have the option to install their insurance provider’s mobile application to quickly chat with one of their representatives. Install the app at AVIVA. Other outstanding features of vehicles plans today includes the option for multiple cars to be insured. With a multi-car contract, you avoid the hassle of signing a couple of insurance for each vehicle, providing you with an efficient and cost-friendly solution. The very reason we sign for insurance is the feeling of assurance when unexpected incidents happen. Every car, whether old or new, must have a plan to secure you from the harsh payments brought by expensive repairs later on. Consider getting a car insurance as a necessity rather than a vanity. You can read Adam's Auto Advice related post, 5 Car Insurance Myths Debunked.

Financing a Used Car

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There are many considerations someone thinks about when purchasing a used car. One of the largest being how to pay for it. A majority of used vehicles are financed since this is an expensive purchase for most car shoppers A large factor when buying used vs a new car is the loan rate the credit union or bank gives you and the amount of money you are approved for.

Insurance

Although finance is the focus here, it nevertheless has a large impact on insurance. If a bank issues an auto loan it will require certain levels of insurance on the vehicle that is collateral on that loan. Although auto loan rates are typically lower than personal loan rates, if the insurance is $100/month cheaper because you are a high risk category then going with a personal loan at a higher interest rate may make sense over an auto loan, since it could save your money. This does not change the fact you have less insurance on the vehicle and if something happens to it you may lose out overall but assuming all goes smoothly you might be fine.

Dealership Financing

You may already do your banking with one or two banks or credit unions. A dealership often does business with lots of banks and credit unions and the financing arm of the auto brands they sell. Working with a dealership has the advantage of convenience and speed. Large full service dealerships like The CarShopcan assist you arranging insurance and financing a car.

However be aware that with convenience that probably means you won't be getting as good a deal vs going through a local bank or credit union. There can be a lot of “gotchas” through dealership financing you may not be aware of and you should read terms carefully.

It is always smart to compare all your financing options and I recommend taking your time to consider who you will finance any car with. Searching for financing before starting the search for a car is a good idea. Personally I recommend using a local credit union over a bank or dealership. Many actually use the lower rates they get through a credit union and pressure a dealership to give better loan rates and terms.

Cash Alternative

Maybe you have saved up for a used vehicle and intend to pay cash for it. That's great as most dealerships tell salespeople that, “A sale today is better than a sale tomorrow.” This usually means you can pressure the car salesman to give you better deal on the spot with all that beautiful cash, but that may not always be the case. Since dealerships make more on the financing of cars most of the time they might be hard negotiating a better price. If that is the case then you should move onto another dealership and not waste your time.

 

What? Men Pay More Than Women for Auto Insurance!

auto insurance
This can Happen to the Best of Us!

What? Men Pay More Than Women for Auto Insurance!

In preparation to write this story, I did an Internet search for “men or women” and the auto-complete feature suggested “better drivers” as the top choice. Apparently, I am far from the only person who seeks answers to the age-old question of who makes better drivers — men or women? As my headline suggests, the news isn't good: Men have poorer driving records than women and, therefore, we pay more for auto insurance.

Men vs Women: Driving

According to the Insurance Institute for Highway Safety (IIHS), men drive more miles and are more likely to engage in risky behavior such as speeding, not wearing seat belts and driving under the influence. I know I'm being a real downer, and here's one more stat you won't like: Accidents that involve men drivers tend to be more severe. In 2010, motor vehicle deaths with male drivers behind the wheel were over 22,902 in the U.S.; while deaths involving women drivers were much lower at 9,979.

That's just a fact, and where you live greatly affects how much men may pay in premiums.  (For instance living in Baltimore city vs Baltimore county is a huge difference!) That doesn't mean men can't find coverage that is inexpensive  it just means they have to do a little bit more homework. Many auto insurance companies lower rates for safe-driving records.  Keep a clean-driving record or move to a city or state where it's cheaper to drive with insurance to help decrease premiums.  Driving eco-friendly hybrid or electric vehicles can also result in lower auto insurance rates.  Along with many auto insurance providers, Kemper is full of great online resources to help you find a better deal.

Shop Online Insurance Providers

Some online sources offer monthly payments significantly lower than traditional providers. Of course, there's an app for that: Apps that find and price insurance on your smart phone simplify the process, as they can run the numbers and provide comparisons from wherever you are.  As with so many things nowadays, there are apps for this.  The Cheap Car Insurance Finder helps find you insurance quotes and lead you to the right coverage.  If you want another app be sure to read user reviews to find the best app for you.

You Have to Shop Around

Don't grab at the first policy that looks good on paper. Some insurance companies may not charge you up-front for your policy but might get you on the backside through the deductible. Read the fine print. Know what your deductible is, what your payments will be, how often you have to make those payments and what is actually covered in the event of an accident. Don't get caught holding your pants up with rope because your policy doesn't cover medical bills or damage to the other driver's vehicle.

Look for Discounts

If you are a homeowner, combine homeowners' policies with auto insurance and bundle premiums. Your age, your career, whether you have a clean-driving record, who else will be driving your car, and a host of other factors affect how much you pay and and the total amount of your discounts. Young male drivers are more expensive that young teenage women drivers, so letting your son drive your vehicle will cost you more.

The good news is in the last five years, the number of fatal automobile accidents involving both men and women drivers has decreased about 75 percent, according to the IIHS. Unfortunately, that's not reflected in our premiums. The Insurance Research Council looked at claim payouts in Michigan, which has the highest premiums in the country, and reported that while the number of accidents has decreased, the payouts have increased. Twenty-two percent of 2011 payouts were more than $250,000; in 2002, only 5 percent of payouts exceeded $250,000.