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Tag: Auto Insurance

  • Benefits and Drawbacks of Usage-Based Car Insurance

    Benefits and Drawbacks of Usage-Based Car Insurance

    Finding the right car insurance coverage can be exhausting, overwhelming, and downright frustrating. The market seems to grow every year, with companies offering new ways to bundle coverage and reduce premiums.

    Saving money is great, but it can be difficult to find the right coverage at the right price while navigating the endless options. Is full coverage necessary for all drivers? What about people who drive significantly fewer miles than average?

    Let’s face it, commuting to a workplace is becoming less and less common nowadays. More people are preferring virtual jobs and more businesses are opting for virtual offices, resulting in less time in the car. The transition to a more virtual world brings with it advantages while also highlighting some less than practical functions in life.

    Buying a standard auto insurance policy doesn’t always suit the needs and lifestyle of modern individuals. There needs to be a way to pay for only the coverage you use, not the extra you-should-probably-have-this-because-you-drive-everyday coverage.

    Pay-as-you-drive insurance is the solution. This type of coverage allows a driver to pay for auto insurance when they need it – for the miles or amount of time they are actually on the road. But can it really be that simple?
    What is usage-based car insurance?
    Pay-as-you-drive insurance options are a growing trend in the insurance world. These coverages offer the same peace of mind and simplicity as the auto-pay bill option many banks offer. Drivers sign up for the usage-based insurance coverage and pay for the car insurance they use. It sounds simple enough, right? Let’s look deeper.
    Pay-Per-Mile
    Pay-per-mile, as known as pay-as-you-go or pay-as-you-drive, is a coverage option based on how much a driver actually drives. The more miles driven in a year, the more a driver pays for their insurance coverage.
    Pay-How-You-Drive
    Another usage-based option factors in how safely a person drives. This type of coverage requires constant monitoring and analyzes everything from when you drive to how quickly and sharply you turn. The riskier your driving maneuvers, the more expensive your coverage.
    Manage-How-You-Drive
    This type of coverage is much newer than other usage-based options. Manage-how-you-drive is similar to pay-how-you-drive but with more real-time feedback and cost analysis.
    How are drivers monitored?
    Usage-based insurance requires high levels of monitoring. Insurance companies need to know when and how you drive so they can provide discounted rates. Drivers who choose usage-based insurance are usually offered two different options for monitoring.

    Depending on the provider, drivers are provided with a tracking device. This device is small and unobtrusive. It simply clicks into the underside of your dashboard and collects data about your driving habits.

    Other providers outfit their customers with a phone app. The app is activated when inside the car and collects similar data on driving habits.
    What are the benefits of usage-based car insurance?
    Some benefits of usage-based insurance may seem obvious, but there are some that are worth exploring more closely.
    Financial
    The biggest benefit to this type of car insurance is cost. Drivers can see big discounts in their premiums and rates based on how well and how often they drive.

    The biggest savings are seen by those who drive better than statistics suggest, such as young or new drivers. Drivers between 16 and 25 are considered some of the most costly to insure. If a young driver uses usage-based car insurance and drives safely, they could see big savings.
    Societal
    One benefit that is often overlooked is society at large. The more people turn to usage-based insurance, the safer the activity of driving becomes.

    Usage-based insurance encourages drivers to practice safer, more aware driving habits. This means all road users — drivers and passengers — are at lower risk of accident or injury. Those who are more aggressive or higher-risk drivers will be discouraged from these habits when they see an increase in their premiums.
    Security
    This type of insurance coverage also offers security benefits. Cars that are equipped with a tracking device for insurance purposes can be more easily recovered in the event of a theft. Drivers can breathe easier knowing they have an extra layer of support and security.
    What are some drawbacks to usage-based car insurance?
    This car insurance coverage does present some concerns or drawbacks. These drawbacks should be understood and weighed alongside the advantages to determine if usage-based car insurance is the right option for each driver.
    Information Security
    There have been concerns or worries about personal information and data breaches. Because usage-based insurance relies on technology and the collection of personal information, people have voiced concerns about its safety.

    News of large tech companies falling victim to online hackers has people worried about the vulnerability of their personal information. A breach or loss of data is possible with usage-based coverage.
    Limitations
    Depending on the provider, usage-based insurance can have some serious limitations. Some providers limit when a driver can be on the road, blocking out certain times of day as riskier. Other providers limit this coverage by placing age restrictions.

    This type of insurance coverage can also be limited when circumstances change. If a driver finds a different job with a longer commute, usage-based coverage may no longer make any financial sense. Usage-based insurance can be limiting just by its own nature.

    Usage-based insurance is a new trend. It’s growing in popularity and shaking up the car insurance industry. Similar to when buying car insurance online became the norm, usage-based insurance may soon be the new norm.

    Laura Gunn writes and researches for the auto insurance comparison site, BuyAutoInsurance.com. She and her husband work out of the home, so they understand the need for flexible, personalized auto insurance options.

  • Why High Auto Insurance Costs despite Fine Driving Records

    Why High Auto Insurance Costs despite Fine Driving Records

    Good drivers are highly profitable clients for insurers since they keep paying premiums without asking anything back in return except a piece of paper called policy. Most motorists believe that having no accidents and moving traffic violation tickets is a sure way of getting the best car insurance rates. However, there are other factors that can be as important as motoring history.

    Most of them enjoy great rates compared to other drivers of the same age, experience and locality. However, a few of them still end up paying excessive premiums. In some areas a middle-aged male with good driving history may still have to pay between $1,000 and $1,500 for basic state enforced third party liability coverage. Considering how little cover such policies provide, asking these premiums does not make sense.

    Why Good Drivers Pay High Premiums

    One of the main reasons is that they live in a high crime area with too many uninsured drivers. In order for insurers to be profitable in certain zip codes they have to charge enough for each policyholder in the area. If auto theft, vandalism and accidents are high and the numbers of policyholders are low, the large total claim losses will be divided by a smaller number, making it harder for everyone to get inexpensive vehicle insurance.

    This is usually the case in many large cities and some companies are not happy to be doing business there due to high risks. Therefore, it is not surprising at all that some companies may ask as much as $3,000 for a simple liabilities policy. In these areas price gaps between insurers can really be so large that motorists who fail to shop around may be stung by expensive companies.

    Second reason may be that their state minimum liability insurance requirements are higher than the rest of the country. The best way of checking if you are paying too much or not is to get a few quotes and see what other providers offer. This simple practice clears things out very fast.

    Third reason is that their driving may be spotless but they may fail to impress insurers with the rest of their details. These factors can be as influential as credit scores or as menial as home ownership. There are tens of factors companies can include in their premium calculations. Furthermore, each company would place a different level of importance to each of them.

    Other Factors Influencing Rates

    Lately, there is a new thinking in the industry. Some underwriters think that driving records offer past information and it may not usually be the best tool to look at future possibilities. They feel that motorists’ personal circumstances like being married, having a good job, living in a nice zip code and owning a home and financial positions like credit score may offer more meaningful information as to what type of people they are and if they are likely to make a claim or not.

    That is why someone with a great record but bad financial position may not get as good auto insurance rates as someone with one or two issues in their history like a claim or traffic ticket but have great credit score. This may sound unfair to some people and it may be at times but companies are allowed to look at people’s scores and take them into account when they determine prices.

    What Good Drivers Should Do

    They can start enquiring with the current insurer as to why they are charged high rates. They should be able to look at the particulars and give an explanation. By law companies will have to tell their policyholders why they are applying surcharges. The next step would be to work on those issues and try to turn them around, if possible. For example, you may find out that you are living in an auto theft hotspot and own a car that is stolen the most in your zip code. Changing your automobile to a more secure and safer one would lower your premiums.

    Many studies reveal that large numbers of policyholders stick with their current providers too long. They should have had regular automobile insurance quotes from alternative sources and keep checking the competitiveness of renewal terms. Failing to carry out this simple task would keep costing them until they wake up and check their options because many companies offer great rates for things like having no claims.

  • Price Determining Factors of Auto Insurance Policy

    Price Determining Factors of Auto Insurance Policy

    There are a number of factors that can actually determine your auto insurance rates. According to a research, men pay an average $15,000 more for auto insurance in their lifetime compared to the American women. It might be tempting for you to reduce the amounts of coverage for lowering your car insurance premium. But, it is also essential for you to build a clear conception about the other price determining factors of Auto Insurance.

    So, here is a list of the factors which has the capacity of affecting the price of your auto insurance policy.Auto Insurance Policy

    Marital Status:

    It has been noted that married people are less prone to meet with an accident, compared to the single people. Thus, getting married can significantly help you to cut down the rate of your auto insurance. Although, the decreasing rate of the policy highly depends upon your driving history. If you belong to that group of people who has never met with an accident before, you would be able to witness the rates going down to a great extent.

    How much you Use the Car?

    This is also one of the most essential factors which can determine the price of the policy. The more miles you drive, the chances of meeting with an accident also increases. If you are using the car for work or driving it to a long distance regularly for reaching your work place, you will pay more. On the other hand, if you are driving your car occasionally- what some companies have tagged as ‘pleasure use’, you will definitely pay less.

    The Car you Drive:

    Some cars can be more expensive to repair or more likely to be stolen than the other cars. Larger cars are generally considered safer than the smaller ones. Therefore, a lot of people are picking larger cars to have a safe drive. However, cars with larger engines relative to body size tend to have higher rates. The cost of your car itself can be the major rate factor. The cost of repairs, size of the engine also has the capacity of providing an impact over the insurance premiums.

    While fixing the rate of your auto insurance policy, the insurer will not only look at the safety of the occupants, but they will also look at the potential damage a car can do for the other. If a car has the capability of inflicting a huge amount of damage to another car, then the insurer might charge you with an extra amount of money.

    Where you Live?

    In most cases, it has been noted that a lot of accidents occur closer to the homes. Thus, the location of your house can affect the amount of your auto insurance directly. If you are living in a populated neighborhood with a lot of cars around you, then you are at a higher risk of meeting with accidents or collisions.

    Repairing your cars in some places can actually be quite costly. There are many urban areas where the ratio of uninsured cars are very high due to the problem of unemployment. Some expensive cities of America like Philadelphia has a higher range of auto insurance, because of the high traffic density. If you are living in a place, where the chances of theft is greater than the price of your auto insurance policy will automatically hike.

    The Gender:

    According to a study, women are prone to pay more for their life insurance policies compared to the other policies. While on the other hand, men pay a higher amount of auto insurance premiums. According to the statistics, women belong to that group where there is the chance of getting into an accident is very low. A study has revealed the fact that, auto insurance rates can be 68% lower for a married woman with a college degree and a job. This ratio can be altered in the case of a single woman with a high school degree.

    As more male teenagers have accidents than female teenagers, young men have to pay higher rates for their auto insurance policies. Thus, it is one of the most common factors used by the insurance companies in determining the rates of your car related policy.

    Driving History:

    If you have been in accident previously, the insurance company will definitely charge an extra amount from you. If your driving record is bad enough, some insurance company might also refuse to provide you with an insurance at all. Generally this defect tends to fade away over the time. So, try to drive more slowly and carefully for avoiding all hazards.

    Paying for the car insurance is one of the most crucial parts of owning a car. So, you need to be more cautious about doing all the needful things for lowering the rate of your auto insurance. You can also think about taking the help of a local agent to understand which deductibles, coverage or limits would be appropriate for you.

    James Paul is the editor and personal finance blogger at Basic Finance Care where he writes about personal finance and money management tips. He is also a regular contributor to many other personal finance blogs.

  • 10 Steps Towards A Cheap Car Insurance

    10 Steps Towards A Cheap Car Insurance

    Car insurance is a legal requirement by the law of USA. It is also beneficial to cover financial losses happens due to unforeseen events like theft, fire and accident. When you go to buy auto insurance, your first requirement is to get a suitable and cheap insurance plan. You require a reliable auto coverage with the best services at reasonable price. When I particularly talk about California, then there are many companies who offer similar insurance products at competitive prices. It is quite a task to get the best suitable insurance coverage. Now what to do to get best auto insurance plan at cheap price in California? Here is your answer. There are some points that determine the cost of your car insurance and how you can lower the premium amount.

    Are you interested in the best car insurance quotes? Some important things to be sure about could be having the right insurance for your car. You need to check the various quotes from numerous companies to ensure you’re getting the cheapest quotes for your insurance policy.

    1. Your car – Your car is the first thing which determines the cost of insurance plan. Generally collision and comprehensive coverage depends on your car. The model and make effect the premium. Inexpensive car will make your premium low and expensive one will increase it. To cut your cost on insurance premium you could drive the car which is cheap to insurance.

    2. Insurance limits – Every state of America has set the minimum liability coverage. It includes bodily injuries and property damages. You need to know the minimum coverage required by the state. For this you could search it on state commission website and lower your cost on insurance.

    3. Install safety devices – Installing safety devices in your car such as anti-lock, alarm, air begs etc. will help you get cheap insurance. Safety devices reduces the risk involvements. The high risk involvement you have, the higher you get premium. Make sure that you have necessary car safety devices installed.

    4. Deductibles – Deductibility is the best way to get cheap insurance. It means that when you are at fault so how much you are going to pay out from your pocket. The rest will be paid by the insurance company. The higher your deductibility, the lower your premium. You could choose $1000 deductible amount instead of $250 and according to your choice and budget. It helps you get the cheap insurance plan for your car.

    5. Credit score – Insurers require the details of your credit before providing you insurance. They check your past history and determine the cost. If you have bad record of credit such personal bankruptcy, overdueetc. so this could lead to high premium. Maintained credit record will lower the premium. It is the helpful step to towards a cheap insurance for your car.

    6. Talk to an agent – Talking to an agent is the best way. An agent has proper knowledge of plans. Agent can understand your individual requirement and assist you for the coverage. Doing this could also lower your premium.

    7. Ask for discounts – When you are buying insurance, you could ask for discounts. Insurance companies have discounts as well. If you are buying car insurance from an insurer and also buying home insurance then insurer will give you discount. Because of this, the premium of insurance will be low.

    8. Leave the unnecessary coverage – if you are driving old car and having collision and comprehensive. Then it is not going to give you that much benefit. It is just making your premium higher. So you could drop this coverage and get cheap insurance plan. So leaving the coverage which you don’t need will help you get your cost low on premium.

    9. Govt. insurance program – California’s govt. has been running low cost or no cost insurance programs for the people, their household income is equal or less then poverty level. If you qualify in the program so it will help you get cheap car insurance. Check the programs running by the govt. to make lower the cost of insurance.

    10. Review your policy – Reviewing your policy once in a year gives you more details about your requirement for a auto insurance .If you are using your car to travel less than earlier then it can lessen the premium you pay for your auto insurance. More travel has more associated risk and make the premium higher.