Lower Your Auto Insurance Costs

Image by shainelee via FlickrI remember listening to a talk radio program on the AM dial about a year ago where the host stated that he chose not to participate in the economic recession.  Now he spends a good portion of his program showing empathy to his listeners who have been affected by the economic downturn.  No matter where we live, our neighbors are tightening their belts, spending less, and pinching their pennies.  As a father of five young children, I find myself doing the same.  Here are some ideas that may help you save money on car insurance without having to shop around.

Automobile insurance premiums often take a big bite out of a family’s budget. You may, however, be paying too much for this coverage. The following are several approaches you can use to reduce your auto insurance costs.

• Choose higher deductibles, particularly if you currently have a low collision or other-than-collision deductible, such as $100 or $250. Increasing your deductible from $250 to $500 or $1,000, for example, can reduce your collision and other-than-collision premium by 15 to 35 percent.
• Eliminate collision and other-than-collision coverage on older, less valuable cars. If your car is worth less than $1,500, it may be wiser and cheaper in the long run to just retain this physical damage exposure. Used car valuations are available online at Kelley Blue Book.
• Maintain an excellent credit record, since insurance companies are increasingly using credit scores to price auto insurance policies. Consumers with poor credit often pay more for auto insurance. 
• Buy a “low-profile” automobile. Before you purchase a new or used car, check into the auto insurance costs. Automobile models that are expensive to maintain and have higher theft and collision frequency rates tend to have higher insurance costs. 
• Take advantage of multipolicy discounts by keeping your homeowners and auto policy with one insurer. Likewise, take advantage of multicar discounts by having all autos on one insurance policy.
• Seek out other auto insurance discounts (which can vary by state and by insurance company), such as defensive driving, good student, low-mileage auto, alcohol awareness training, air bags, antilock brakes, claim-free experience, and long-term customer. 

Purchase Proper Watercraft Coverage for Your New Boat

Spring is often the time of year when boat lovers start to consider purchasing a sailboat or powerboat. Many people, however, are unaware of the significant loss exposures associated with boat ownership, and some people mistakenly believe that there is coverage available under their personal auto policy (PAP). Virtually all PAPs, though, do not provide any liability or physical damage coverage for boats. Other people may look to their homeowners policy for coverage. But most homeowners policies only cover losses arising from certain low-valued or low-powered boats. You should thus contact us before buying a boat to discuss the proper insurance protection for it. Consider the following tips to assist you in this process.

• If you purchase a boat valued over $1,500, you probably lack proper coverage under your homeowners policy for physical damage losses to the boat itself. A separate watercraft or boatowners policy is necessary to cover the physical damage to boats over this value. 
• If you are considering the purchase of a sailboat, inquire about its length. If the length is 26 feet or more, there is no liability coverage under your homeowners policy. For motorboats, there are severe horsepower restrictions under the homeowners policy for liability coverage. For example, only insureds who own or lease boats with outboard motors of 25 horsepower or less have liability coverage under most homeowners policies. Yet most powerboats have motors with horsepower far exceeding this amount. This liability coverage restriction also necessitates the purchase of separate watercraft insurance. 
• Ask us about the types of boats you are considering. Some insurance companies, for example, decline to insure personal watercraft such as jet skis and wave runners, since some of these crafts can reach speeds of 60 mph. According to the U.S. Coast Guard, personal watercraft account for a disproportionately high number of accidents. Many insurance companies also refuse to cover houseboats, homemade or kit boats, competition bass boats, and speedboats. You may have to pay a steep premium through a specialty insurance company to insure these types of craft. 
• Be wary of purchasing older watercraft. Many insurance companies reject boats over 15 or 20 years of age because they experience a higher loss frequency than newer boats. You may have trouble finding insurance coverage for older boats or end up paying an extremely high premium. 
• If you do purchase an older boat, consider ordering a marine survey or inspection of it prior to the sale. Marine surveys point out deficiencies in watercraft that may cause you to reconsider the purchase or renegotiate its price. 
• If you don't already have one, procure a personal umbrella policy in addition to a watercraft policy, particularly if you purchase a speedboat, a boat designed for water skiing, or some other craft with a higher potential to cause damage or loss of life. Umbrella policies are relatively inexpensive, and since most forms do not have limitations with respect to watercraft, they will provide excess limits above the liability coverage in the watercraft policy. In addition, the watercraft liability limits should meet the underlying limits requirements of any applicable personal umbrella policy. Lastly, you should use the same insurance company that writes your homeowners and personal auto policies for your personal umbrella policy. 

DO I REALLY NEED TO INSURE HIRED & NON-OWNED AUTOS?

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Hired and Non-Owned Auto coverage is a type of insurance often overlooked by businesses, especially companies that don't have insured vehicles.  However this coverage is cheap, and neglecting to add it to your policy before a car accident can be very costly.  Ask yourself the following questions:

1. Might any of your employees run errands or make deliveries for the business using their own autos?
2. Is there a chance that you might borrow an employee's vehicle for any reason?
3. If you are unavailable (or on vacation) will an employee use their vehicle to run errands , make bank deposits, or anything else?
4. Do you foresee a need to rent a vehicle for business purposes?  (I saw my local FedEx guy driving a rented Budget truck today)
5. Will you ever pay someone to drive their vehicle for your business?

If you answered yes to any of these questions, then you need Non-Owned and Hired Auto Insurance.

For a really great article on Lessons Learned from Non-Owned and Hired Auto Insurance, click Here.
For information on Driver Training and Motivation, click Here.
For information on Driver Eligibility Criteria, click Here.  (This links to driver criteria for Philadelphia Insurance)

AM I OVERPAYING? (From: Insurance: The One Question Everyone Asks)

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“Am I overpaying?”

That’s a question that every consumer asks from time to time. Everyone is curious and concerned as to whether he or she is getting a good value for the money, whether it’s for a candy bar, a car or an airline ticket.

It’s a good question to ask about insurance, too. After all, Americans spend a lot of money on insurance for homes, autos and businesses. In 2008, American drivers spent $161 billion for personal automobile insurance, reported the A.M. Best Co., an insurance research and ratings firm.

This large market for auto insurance is highly competitive. Consumers play a large part in keeping insurance rates competitive by virtue of shopping—whether online, by telephone or on the World Wide Web. More than one of four (about 28 percent) of auto insurance buyers shopped around for car insurance in 2009, reported J.D. Power & Associates in its 2009 national auto insurance study.

But consumers aren’t the only ones shopping around for auto insurance. So too do independent insurance agents, including Trusted Choice® insurance professionals.

On average, Trusted Choice® agents provide consumers with property/casualty insurance options from eight different insurance carriers, reported the 2008 agency universe study conducted by Future One, a collaboration of the Independent Insurance Agents and Brokers of America (the Big “I”) and leading independent agency companies. For automobile insurance, those agents may compare rates and coverages at even more insurance companies, through their use of software that allows them to compare multiple policies and multiple carriers.

For auto insurance buyers, research showed that independent agents rank most highly on the most important element of customer satisfaction. The J.D. Power study measures customer satisfaction with auto insurance companies across five factors (in order of importance): interaction, policy offerings, billing and payment, price and claims. Insurers who sell their auto insurance products through agents performed “stronger in the interaction factor than do direct insurers,” reported J.D. Power.

Overall, customer satisfaction with auto insurance companies reached a five-year high in 2009, reported the J.D. Power study. The biggest improvement in satisfaction among the five factors has been in price. Interestingly, 42 percent of customers in 2009 reported that their auto insurance premiums declined without switching insurers.

Are you overpaying for auto insurance? Thanks to a competitive market that includes Trusted Choice® independent insurance agents, the answer probably is no. If you’re not sure, ask a Trusted Choice® agency to review your options.

source: TrustedChoice.com, October 2009

SAVING MONEY ON INSURANCE: CAN IT BE DONE?

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Saving Money on Insurance: How Can It Be Done?

In the throes of an economic recession, millions of consumers today are cutting back on discretionary spending—and are even tightening up on the necessities. Now is an excellent time to review your insurance coverages with your Trusted Choice® independent insurance agent to find ways to cut costs while still protecting your family or business.

The premiums paid for insurance are a tremendous value. For instance, for the cost of several hundred dollars annually, a homeowners insurance policy provides a family with the means to rebuild its home and reimbursement for the cost of temporary housing should the home be destroyed in a fire.

To consider how to cut expenses, it’s helpful to take a step back. Consider anew what insurance premiums are paying for the transfer of risk. Insurance is a unique tool that allows consumers and business owners (through a financial transaction and a legal contract) to transfer risk from the consumer or business owner to the insurance company. If you transfer less risk—either by reducing the risk overall, or retaining more of the risk yourself—the insurance carrier will charge less.

Your Trusted Choice® insurance professional can help you consider two important questions if you want to cut costs on insurance:

1. What risks might I be paying to insure that I can assume myself?

The risk profile of a family or business changes over time. It’s important to share with your Trusted Choice® agent if the family or business situation has changed recently.

One thing that changes is the financial risk a family faces as children are born and grow. Parents of newborns face a lot of financial risk, since they face 18-plus years of raising that child and, for many, paying for a college education. Life insurance is the common way to protect against the risk of a parent dying while a child is in school. Yet, when the child graduates, a parent might reduce the amount of life insurance they own—and thereby reduce the amount of premium they pay. Inform your insurance agent if these changes are occurring for you.

For homeowners insurance policies, the first place to look to trim expenses is the deductible, which is the amount of money the policyholder must pay before the insurance company starts to pay a claim. The higher the deductible, the lesser the premium will be for the policy. A consumer with a $500 homeowners deductible can save as much as 25 percent by raising it to $1,000, reports the Insurance Information Institute. A policy with a higher deductible is less likely to have claims, in part because consumers that bear more risk tend to be more careful and have fewer claims.

Auto insurance customers can ask their Trusted Choice® agent about whether they can save money on state-required PIP (personal injury protection) coverage. If you have already have health coverage, you may be able to keep only a minimum level of PIP—but it’s important to consider state requirements and whether your health insurance company will allow this.

2. Have I taken advantage of all the discounts offered?

The market for personal lines insurance is highly competitive. This has kept costs down: Homeowners/tenants insurance costs increased by about 17 percent between 1999 and 2008, compared with a 57 percent increase in the cost of repairing household items and a 50 percent increase in legal services, according to the U.S. Bureau of Labor Statistics.

Auto insurance carriers offer special programs that help consumers keep a lid on costs. Ask your Trusted Choice® agent about discounts for having a homeowners and auto policy with the same carrier; for maintaining a claim-free record for consecutive years; for low-mileage drivers; and for young drivers who keep good grades.

For older vehicles, consider dropping collision coverage. Since auto insurance claims occur about once every 11 to 12 years, it may not be cost-effective to insure a vehicle that is worth less than 10 times the collision insurance premium. (In this case, the claim reimbursement likely would not exceed the premium minus the deductible amount.)  Ask your Trusted Choice® agent what the cash value of your older vehicle is, to help you decide.

One caution: The slump in housing prices has tempted some consumers to cut the amount of insurance on their homes, but that’s a trap. Homeowners insurance should be based on replacement cost, not market value, and many homeowners are already underinsured. Replacement costs continue to grow steadily, year after year, regardless of market values. Your Trusted Choice®  agent can help you determine the proper amount of homeowners insurance for you.

Finally, your Trusted Choice® agent also can help by shopping your insurance needs to a number of insurance carriers. If you haven’t done so in three years, now is a good time to ask if your policies can be reviewed to make sure your pricing is the most competitive available.

REDUCING AUTO INSURANCE FRAUD

The insurance industry calculates that property and casualty insurance fraud costs our society over $30 billion annually. According to some estimates, this insurance fraud adds about $200 to $300 annually to total insurance premiums for the average household. Auto insurance fraud accounts for a large segment of these losses, which are ultimately passed on to you, the auto insurance consumer, in the form of higher automobile insurance premiums.

Auto insurance fraud can occur in a variety of ways. For example, unethical groups of doctors and lawyers can team together to overtreat patients and thus exaggerate claims. Staged accidents are also a common problem, in which a conspirator’s car pulls in front of an innocent driver’s automobile and stops suddenly. This causes the innocent driver to rear-end the conspirator’s ve-hicle. Thus, the innocent driver often believes he or she is negligent. Typical victims are usually driving alone in new and expensive vehicles. In many cases, the criminal driver uses a large, older sedan with several passengers inside.

There are several ways by which you can avoid becoming a victim of these “staged accidents,” including the following.

• Avoid tailgating at all times and focus on driving defensively.
• Obtain the names and driver’s license numbers of all occupants in the other car.
• Attain the names and key information of witnesses.
• Report your suspicions to your insurance agent immediately.Preview

In addition, auto insurance companies emphasize several key steps drivers can take to fight auto insurance fraud in general, including the following.

• Be aware of all the various ways in which auto insurance fraud can occur. Your agent is a good source for this information.
• If you believe you are a victim of auto insurance fraud, report your concerns to your agent.
• Communicate with your legislative representative about this issue and request new laws to assist the fight against automobile insurance fraud.

HELPING TEENAGE DRIVERS

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There are several things that parents can do to help keep their teenagers safe behind the wheel. We'd like to highlight a few of them.

• Coach your Son or Daughter. You should "coach" your teenage driver. Talk openly and frankly with him or her in order to determine his or her attitude about being behind the wheel. Work with your teen to set ground rules, such as the number of people allowed in the car, where the car may be taken, and curfew.
• Utilize Emergency Road Service. If you do not belong to a motor club, you should consider joining one that provides 24-hour emergency road service. That way, your teenager may call for help at any time if they need gas, need a jump-start, are locked out, or need a tire changed. You can also arrange with the motor club to provide service for your teen if they are in a friend's car.
• Have an Open Discussion about Driving under the Influence. While no one wants to think about the possibility of their teenager drinking and driving--or being in a car with an impaired friend at the wheel--we need to be realistic. History has shown that teenagers will experiment with alcohol. You should make it clear to your teen that driving after drinking is not acceptable. However, if they ever do drink, or are in a car with someone else who is impaired, make it clear to your teen that he or she can call you at any time of the day or night and that you will come to get them--no questions asked.

Two other effective, though more costly, things that can be done are:

1. Install a "Governor." Many vehicles--school buses and certain types of delivery vehicles are good examples--have a "governor" installed in them that restricts the amount of fuel that can be injected, thus preventing the vehicle from being driven over a certain speed. A governor in your teen's car may help keep him or her within the speed limits.
2. Install a Global Positioning System (GPS) in your car. You can program it to let you know where your teenager is driving at any time. With the GPS, you can set a radius of operation and the GPS will notify you if your teen has taken the car outside of that radius. It can even alert you when the speed limit is being exceeded. Finally, a GPS can notify you if the car is being kept out past an agreed upon curfew. We realize that this may seem like a rather extreme measure. Use of a GPS may best serve those parents who have a reason to mistrust their teenager.

When your son or daughter gets a driver's license, come into our office so we can review such options with both of you. It is important for you--and your son or daughter--to remember that, yes, your auto insurance rates will go up, but they will come down after a couple years of driving experience. However, the rates will really go up if your teenager has tickets or gets into accidents.

PURSUE THOSE AUTO INSURANCE DISCOUNTS

One way to avoid paying too much for your personal automobile insurance is to assure you are getting all the discounts you deserve. The following are discounts you should inquire about. Some may not be available in all states and from all insurers, but it doesn’t hurt to ask. These discounts may significantly affect your insurance premium.

• “Defensive Driving Discount.” This discount can save you 10 percent on most of the major coverages under your auto policy, such as liability, medical payments, and collision coverage. Defensive driving courses can cost as little as $20 and last as few as 5 or 6 hours. However, the discount normally applies for 3 years. For example, if your auto insurance premium is $100 per month, the premium is $3,600 for 3 years. If liability, collision, and medical payments or personal injury protection coverage constitute 85 percent of this $3,600 premium, the resulting premium subject to this discount is $3,060. In this scenario, the actual premium savings would be $306 (10 percent of $3,060) for that 3-year period. To get the true savings, you must deduct the cost of the defensive driving class. If the cost is $26, the savings in this example would be reduced to $280. If you spend 6 hours taking the class, you are earning $47 per hour in savings—not an unproductive way to spend a Saturday!


• “Good Student Discount.” Statistics show that good students tend to be more reliable and mature than students with marginal grades, leading to better driving decisions. Therefore, many states allow a 5 to 10 percent discount if your student driver makes good grades, usually an overall “A” or “B” average in high school or college. If your child has to pay his or her own automobile insurance, this will be another motivator for him or her to make good grades.


• “Home/Car Discount.” Many insurers offer discounts of 10 percent or more if they provide both your homeowners and personal automobile insurance. This can lower your costs on both policies.


• “Auto Safety Features.” Most insurers recognize that owners with cars containing safety features may have fewer accidents and reduced injuries. Many insurers encourage drivers to purchase cars with antilock brakes by giving small discounts for these safety features. Other insurers give discounts for vehicles with airbags and daytime running lights.


• “Auto Club and Professional Organizations.” Some insurance companies offer auto insurance discounts if you are a member of AAA or similar organizations.


• “Multicar.” Many insurance companies provide generous discounts up to 15 percent if you have multiple cars on your policy. This reduces the insurance company’s administrative costs, on a per-vehicle basis, in issuing the policy.


• “Long-Term Customer.” More insurance companies are offering discounts of 5 to 10 percent if you stay with them at least 5 years.


• “Claims-Free Customer.” If you have been insured with the same insurance company for at least 3 years and have not experienced any losses, inquire about a claims-free customer discount. These discounts help insurers retain customers with excellent driving records.