Thursday, January 1, 2009

8 Things You Should Know About Auto Insurance

By: Lara Newcomb

Dealing with the ins and outs of auto insurance can be as tricky and confusing as trying to untie the Gordian knot. Although we can`t help you with the knotty Gordian problem, the following recommendations could help you figure out some of the more complicated points of auto insurance.

1) Determine appropriate coverage.
Help control the price you pay, just ask American Insurance Association executive Dave Snyder. For example, Snyder notes that half of your auto insurance bill covers liability and "that has to do with how you are going to use the vehicle, such as for commuting to work and your driving record. If you`ve got a clean driving record, you figure to pay less for insurance than you would if you had a speeding ticket on your record. You can control the other half of your premium which covers damage or loss to your vehicle, comprehensive and collision coverage."

2) Shop around for insurance.
"In most states," Snyder reports, "there are hundreds of insurers competing for business, so it`s possible to save hundreds of dollars by obtaining quotes from different auto insurance providers." Picking up on Snyder`s theme is his AIA colleague, Nicole Mahrt. Mahrt urges you to work with your insurance provider to get more than one quote. "It pays you to shop around, especially if you feel you`ve been paying too much."

3) Look for insurance discounts.
"Many insurers will give you a discount if you buy two or more types of insurance from them, for example auto and home insurance," confirms John Marchioni, senior vice president of Personal Lines for Selective Insurance, in Branchville, N.J. More cost-saving suggestions from Marchioni: "Ask about discounts for air bags, anti-lock brakes, daytime running lights and anti-theft devices."

4) Consider taking a higher deductible.
"You could lower your insurance bill by increasing your deductible," Mahrt says. "But just make sure you can pay the higher deductible if you file a claim."

5) Look into "stacking" coverages if you file an insurance claim.
Insurance trade group officer Daniel Kummer explains that stacking uninsured/underinsured motorist coverages means "you can collect from more than one of your auto insurance policies. Most states prohibit this practice, but there are about 19 states that either allow stacking or don't address the issue either through legislation or litigation," according to Kummer, director of personal insurance for the Property Casualty Insurers Association of America. "Be sure to check your auto insurance contract to see if it's allowed. "Be advised that you`ll likely pay a higher insurance premium if you have stacked coverage. "It could be 10% to 30% more depending on the litigious nature of the state in which you reside," says Kummer.

6) Check with your insurance provider BEFORE buying a car.
"Your premium is based in part on the car`s sticker price, the cost to repair it, its safety record and the likelihood of theft," answers Selective`s John Marchioni. Remember to avoid shopping by price alone. "You want an agent and a company that answer your questions and handle claims fairly and efficiently," emphasizes Marchioni, senior vice president of Personal Lines for Selective Insurance.

7) Notify your auto insurance company as soon as you change companies.
"Be sure to cancel your old policy," suggests PCI`s Dan Kummer. "Do it the same day, but don`t cancel your old policy until you`ve lined up a new contract. That`s important because some states like New York will fine you for the number of days you go without insurance." One last thought from Kummer on the subject: "Most auto insurers specify in your contract that you can terminate your policy any time you want by informing your company in writing about the date you wish that coverage be terminated or you can do that over the phone.

8) Pick the insurance payment option that best fits your budget.
"Generally, most companies will give you the ability to pay over time, but that comes at a price," says Kummer. "Your payment could increase a few dollars each time you pay by installment. Insurers can accept payments monthly, quarterly, or every six months, what ever is most convenient for you. Remember, though, that the more you break down your payments, the more the cost adds up."

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Series 63 Exam Information & Overview -

What Does Liability Mean on Your Car Insurance?

Liability insurance is very important and most state auto insurance laws require that an individual maintain at least liability insurance on their automobile. What it does is protect you against costs that are associated with the damage and injury of another in an automobile accident in which you may be deemed at fault.

There are two parts to the policy. There is property damage liability and bodily injury liability. It is pretty easy to guess that property damage liability is going to protect you against any cost and damage that is associated with damaging another person's physical property and that bodily injury liability is going to protect you against the personal injury inflicted on someone else as a result of the accident.

Usually, there are some numbers that a person may see on their policy. These numbers usually look like this: 50/100/25. Now what this means is that the policy is split up into three different amounts each policy can be different depending on what the individual chose when they opened the policy. In this case, 50/100/25 means that the insurance will pay for the bodily injury of an individual in an amount up to $50,000, will pay for the bodily injury costs on everyone in a vehicle in an amount up to $100,000, and will pay property damage costs up to $25,000.

Every vehicle requires its own level of liability insurance depending on what state you are located in. It is important to know what your state's auto insurance requirements are so that you have an idea of what you would have to pay in your insurance premium.

The cost

Liability insurance is cheaper than full coverage insurance that also includes damages from theft, natural disaster, and vandalism. Liability only covers costs associated with an accident so that you do not lose your hard earned assets in a lawsuit. There are have been cases in which a person has been sued for more that what they have in coverage, but the liability insurance does lessen the blow. However, a person can pay for different levels of liability insurance to ensure that they will not be "taken for everything they've got." Not having enough insurance can still have a heavy impact on a persons life when an accident occurs.

No one intends on hurting another and they usually do not purposely engage in an auto accident because there is so much trouble involved, including the possible loss of the vehicle. That is why it is important to carefully assess how much insurance you think you will need. Liability is rather affordable. Some states have a minimum requirement of 20/40/10, but you could carry something such as a 50/100/50 if you think you need it. The cost is still not going to be much.

Just remember

Don't forget that if you set your limits too low you could be setting yourself up for financial disaster even though you have car insurance. This is to be considered carefully. It is easy to make the decision to save money by paying the lowest premium possible, but paying the lowest premium possible could later result in the loss of your assets. It is also important to remember that liability just covers bodily injury and property damage. If a tree falls on your home during a wind storm, it is then time to assess your options.

However, liability insurance will protect you from those nasty lawsuits that may come your way as a result of an accident. That in itself makes it more than worth the money because you have the peace of mind that most or all your assets are protected.