The Importance of Auto Insurance in Today’s tough Economy

car crash

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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

alfa-romeo-giulietta-spider

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.

 

5 Car Insurance Myths Debunked

car insurance myths

There is a lot of misleading information out there about car insurance that gets repeated so often people believe it to be true.  However, most of these so called car insurance myths neglect vital facts and more importantly facts that could save you money.  Since these misconceptions often influence what a person buys and drives for a car, which is a big decision, taking a closer look at car insurance myths is a good idea.

5 Car Insurance Myths Debunked

  1. Both New and relatively New Cars cost more to insure: While this is generally true as cars depreciate in value over time, there are many factors involved in determining rates for auto insurance for a given make or model and the replacement cost of a vehicle is a relatively small piece of that.  Better safety features and a steady insurance track record can potentially result in a new car having a lower rate than your current vehicle.  Living in a saving neighborhood with lower crime can also drastically lower car insurance rates. 
  2. The color of the car changes insurance rates: The truth is your insurance company does not know what color your car is and probably doesn’t care.  They don’t ask and no, the VIN (Vehicle Identification Number) does not indicate a color. Bright red or plain white, if the same make, model and driver are involved the same rate will result for insurance.
  3. Sports cars get more speeding tickets and will make rates go up: Not true, 9 of the top 10 models in terms of speeding tickets are non-performance vehicles. Insurers are interested in how many speeding tickets you have, not how many a type of car might get. Rates for sports cars are higher based on horsepower and insurance claims records, not the likelihood of picking up a ticket.
  4. Tickets in other states do not change insurance: Not only do insurance companies regularly find these tickets, but if they find them after the event has occurred you may be dropped from coverage completely or they may refuse to pay a claim as it was a fraudulently obtained policy. It is expensive regardless so make sure your insurance will pay if a claim needs to be filed by being above board to start with.  
  5. Full or comprehensive coverage insurance means they pay for everything: Full coverage insurance is a loosely defined term to mean both liability coverage and loss coverage. With comprehensive coverage damage to your car in an accident, theft, and fire are typically covered. Glass coverage, towing and rental coverage, theft of property in the vehicle, etc. are areas that may or may not be included. To compare policies and premiums you need to look at each of these things, not simply request a quote for full or comprehensive coverage as that definition can be very different from one policy to another.  

Policy limits also exist in every policy so even if the same things are covered but one insures for a total of $10,000 medical coverage (a 3 day stay or less sometimes in a hospital) and the other for $100,000 then the rates are different and rightly so. Often super cheap policies are dropping all coverage to the minimum legal amounts for a state. Saving $30 every 6 months is not a bargain at the risk $90,000 in medical bills if the situation would warrant the latter.

Most full service insurance agents will happily take the time to go over different options available to you in car insurance from ways to cut the cost down to ways maximize protection in the areas of coverage you need. AXA is an example of a website that allows you to tailor a policy online and then have an actual agent review the policy to address any questions. Many online insurance companies now will allow you to print all the policy details to compare accurately. Doing the investigation before shopping for your new car or used car can save you a lot of frustration with car insurance down the road,  Literally and figuratively speaking.  

5 Most Dangerous Countries to Drive In

Driving can have its share of dangers, but there are certain countries where drivers have to take special care. These places have roads and other conditions that make them more of a challenge when taking to the road. If you are traveling to these countries, be sure that you are aware of traffic laws, safety precautions and prepared for any emergencies that could arise. All figures in this article are for the period from 2006-2007.

United Arab Emirates

1. United Arab Emirates
This country is in the top ranks of the most dangerous countries to drive in. It has more than a million vehicles that are registered to drive on the roads. The United Arab Emirates also has an astonishing 1,056 car-related deaths, with a rate of deaths in accidents at 37.1 per 100,000 residents in the country. This number of accidents also leads to a higher rate of filing auto insurance claims.

Gambia

2. Gambia
Gambia has a large population of over 1,000,000 people with over 14,000 vehicles that can legally be on the road. There have been at least 54 deaths in vehicle accidents, with an accident death rate of 36.6 individuals out of 100,000. This makes for a lot of traffic and busy streets while driving, so if you are visiting, watch for possible accidents on the road.

Niger

3. Niger
This is a beautiful, prospering country that boasts a population of over 14,000,000 people who drive over 76,000 vehicles on its roads. The busy traffic has led to a total of 570 deaths in car accidents, with a vehicle accident death rate of 37.7 per 100,000 people.

Iraq

4. Iraq
Iraq’s population of over 28,000,000 people has had to contend with war over the years, and have also garnered a top spot on the list for being dangerous to drive in. There are over 2,000,000 vehicles on the road daily, with a total of 1,932 deaths from accidents. Every 38.1 out of 100,000 people die in vehicle crashes.

Egypt

5. Egypt
Egypt is a country that is popular with tourists, since it has the pyramids, its history and beautiful cities to tour. It has one of the highest spots on the list of dangerous countries to drive in with a total of 15,983 deaths from automobile accidents. This is possible with over 75,000,000 people in the population and more than 4,300,000 cars on the road. There is a mortality rate of 41.6 per 100,000 people.

If you are planning to travel overseas, make sure that you are prepared for the possibility of an accident. Preparation includes knowing the traffic laws, having good car insurance and being aware of the heaviest traffic zones. This knowledge is vital to making your drive overseas smoother and safer.

Written by Christina Jones