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

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!

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.

Most Expensive and Cheapest Gas Prices around the World

Argh, Gas Prices! Even though gas prices have come down over the past few weeks, let's be honest… it is still “Pain at the Pump” for most drivers out on the road.

High gas prices causes us to do crazy things. Such as carpooling to work with that guy you hate, drinking less with friends, and not buying frivolous items over the Internet. You also generally plan your car trips more carefully. Does the price of gas justify you going to the mall today?

We Americans complain about how bad gas prices are here, but my automotive colleagues in European countries such as the UK feel the pain all the time. I want you to think of how large a quart is for a second. Across the Atlantic they pay for fuel by the liter, which is about the same size as a quart. The average price for a liter of fuel is $2.16 and you need four liters roughly to make a gallon. That means it would cost on average around $8.64 a gallon in the UK… ouch!

The current average price for a gallon of gas in the US, according to the US Energy Information Administration, is $3.56. Don't you love America? 🙂

The simple reality though is that most of us have to drive and use our cars, no matter the price of gas here or in Europe. We are slaves to those posted prices at gas stations. The only way around this would be if you owned a refinery (of course if you owned a refinery you probably are not reading this and if you are, thank you!)

Even though I feel for the British, because they need to pay some ridiculously high gas prices, in some countries it could be worse. While gas prices are crazy high, GDP (Gross Domestic Product) over in the UK is relatively high. According to the World Bank's data it is roughly $35,600 per capita in the UK. That means while yes gas is expensive, incomes somewhat match the high fuel prices.

Where might getting gas be even more painful? If you lived in the African country of Eritrea (Yes, this was a Wikipedia lookup) where GDP is roughly $700 per year, filling your tank would eat-up a huge amount of your income. How much? Roughly 12.12% of an average Eritrean's budget would go to a 10 gallon tank costing on average $84.90 in US dollars. Compared to the UK where it would only be a paltry 0.24% of GDP per year at $94.27 for that same 10 gallon tank, prices don't seem quite as bad.

This lead me to determine that Eritrea is “The Most Expensive Country to Buy Fuel.” While Norway ranks the top of the list according to most rankings, Norwegians also have a very high GDP ($53,300) putting them 5th on my list.

Where would it be least expensive to get gas in the world? According to the British Insurance Agency Staveley Head Venezuela has the cheapest fuel prices in the world. A gallon of gas would cost you on average a paltry 18 cents, meaning 10 gallons would be $1.80. That same amount of money would not even buy half a gallon in the US. In the UK it would not be enough to even move your car 300 feet!

Moral of the story, you better learn some Spanish and move to Venezuela if you want to buy some cheap gas. I can only imagine all the fun Venezuelans have in their cars when they don't need to worry about gas prices. Unfortunately, in most of the world we do.

Countries with the Most Expensive Gas Prices

1. Eritrea – $700 – $84.90 – 12.12%
2. Greece – $27,600 – $87.60 – 0.31%
3. Italy – $30,100 – $88 – 0.29%
4. Britain – $35,600 – $94.27 – 0.24%
5. Norway – $53,300 – $99.04 – 0.18%

Countries with the Cheapest Gas Prices

1. Venezuela $10,700 (GDP) – $1.80 (10 gallons) – 0.01% of annual GDP
2. Bahrain $27,300 – $7.80 – 0.02 %
3. Libya – $14,100 – $5.40 – 0.03%
4. Saudi Arabia – $17,200 – $8.00 – 0.04%
5. Turkmenistan – $6,900 – $7.20 – 0.10% or
6. Qatar – $93,700 – $11.31 – 0.10%

Remember this list according to GDP and gas prices, so it is different than other gas price lists you might see.

What do you think about my gas price list? Think my math is whack? Want to tell me what you think? Please leave a comment below and let me know!

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.

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.

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.

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.

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