I already have $400,000 in liability coverage on my auto-insurance policy. How do I determine whether I need to add an umbrella liability insurance policy to my coverage? How much would an umbrella policy cost?
Umbrella liability insurance is an inexpensive way to protect you and your property from lawsuits. You don’t need it if you have relatively little at stake, but “if you’ve accumulated some assets and have a home, it makes sense to have the policy,” says Rob Seltzer, a CPA in Los Angeles. He recommends that you add an umbrella policy, which starts at $1 million of coverage, to protect against lawsuits even if your net worth is far less than that. The policies protect future income as well as assets and also cover legal fees.
Insurers generally require that you have at least $300,000 in liability coverage on your home and automobile before you can buy umbrella coverage, which picks up after you’ve exhausted your homeowners and auto liability limits. The first $1 million of coverage generally costs $200 to $400 a year; the next $1 million runs an additional $75 to $100.
Raising your auto and homeowners deductibles from, say, $250 to $1,000 would offset the cost of $1 million in umbrella coverage, says Seltzer. “If you are in a car accident and have to come up with an extra $750 for the deductible, that’s not going to kill you. But if something really bad happens, that $1 million umbrella policy is a savior.”
To buy the coverage, start with your auto- or homeowners-insurance company, which may give you a discount for keeping your business in-house.
Source
Friday, August 31, 2012
Thursday, August 30, 2012
Insurance should deal with risk
Insurance is all about risk. Yet neither insurance companies nor their policyholders can do anything about one of the biggest risks — namely, interference by politicians, to turn insurance into something other than a device to deal with risk.
By passing laws to force insurance companies to cover things that have nothing to do with risk, politicians force up the cost of insurance.
Annual checkups, for example, are known to take place once a year. Foreseeable events are not a risk. Annual checkups are no cheaper when they are covered by an insurance policy. On the contrary, they are one of many things that are more expensive when they are covered by an insurance policy.
All the paperwork, record-keeping and other things that go with having any medical procedure covered by insurance have to be paid for, in addition to the cost of the medical procedure itself.
Politicians love to mandate things that insurance must cover, including in some states treatment for baldness, contraceptives and whatever else politicians can think of. Playing Santa Claus costs a politician nothing, but it can cost the policyholder a bundle — all of which the politician will blame on the “greed” of the insurance company.
Insurance companies are regulated by both states and the federal government. This means that, instead of there being one vast nationwide market, where innumerable insurance companies compete with each other from coast to coast, there are 50 fragmented markets with different rules. That adds to the costs and reduces the competition in a given state.
When there are innumerable insurance companies, it is by no means clear that political regulation of them will produce better results than the regulation provided by competition in the market. In a competitive market, insurance companies would cover only those things that policyholders are willing to pay to have covered. Policyholders would have no reason to pay to have insurance cover things that would be cheaper if paid for directly — or not paid for at all, in the case of things that are not a concern to many people, such as baldness cures.
One of the factors in the number of the “uninsured,” for whom politicians are willing to turn the whole medical-care system upside down, is the high cost of insurance that covers far more things than most people would be willing to pay for, if it was up to them. The uninsured who use hospital emergency rooms and don’t pay are a problem only because politicians passed laws forcing hospitals to let themselves be taken advantage of in this way.
Too many political “solutions” are solutions to problems created by previous political “ solutions” — and will be followed by new problems created by their current “solutions.”
There is no free lunch. In the case of health insurance, there is not even an inexpensive lunch.
Health insurance would be a lot less expensive if it covered only the kinds of risks that can involve heavy costs, such as a major operation or a crippling disability. While such things can be individually very expensive, they don’t happen to everybody, and insurance is one way to spread the risks, so that the protection of a given individual is not prohibitively expensive.
The problem of “pre-existing conditions” is a problem largely because of the way that politicians have written the laws — more specifically, by giving a tax break to employer-provided health insurance. If individuals bought their own health insurance, with the same tax advantages, the fact that an illness occurred after they changed employers would not make it a “pre-existing condition.”
There is no inherent reason for employers to be involved in the first place. The fact that some guy manufactures furniture or plumbing fixtures in no way qualifies him to understand insurance for his employees. Including him in the loop adds another unnecessary layer of bureaucratic costs.
Political risks are the biggest risks.
What The Apollo Astronauts Did For Life Insurance
This week, Americans have been remembering Neil Armstrong. But before he walked on the moon, he had to solve a much more prosaic problem.
"You're about to embark on a mission that's more dangerous than anything any human has ever done before," Robert Pearlman, a space historian and collector with collectspace.com, told me. "And you have a family that you're leaving behind on Earth, and there's a real chance you will not be returning."
Exactly the kind of situation a responsible person plans for by taking out a life insurance policy. Not surprisingly, a life insurance policy for somebody about to get on a rocket to the moon cost a fortune.
But Neil Armstrong had something going for him. He was famous, as was the whole Apollo 11 crew. People really wanted their autographs.
"These astronauts had been signing autographs since the day they were announced as astronauts, and they knew even though eBay didn't exist back then, that there was a market for such things," Pearlman said. "There was demand."
Especially for what were called covers -– envelopes signed by astronauts and postmarked on important dates.
About a month before Apollo 11 was set to launch, the three astronauts entered quarantine. And, during free moments in the following weeks, each of the astronauts signed hundreds of covers.
They gave them to a friend. And on important days — the day of the launch, the day the astronauts landed on the moon — their friend got them to the post office and got them postmarked, and then distributed them to the astronauts' families.
It was life insurance in the form of autographs.
"If they did not return from the moon, their families could sell them — to not just fund their day-to-day lives, but also fund their kids' college education and other life needs," Pearlman said.
The life insurance autographs were not needed. Armstrong and Aldrin walked on the moon and came home safely. They signed probably tens of thousands more autographs for free.
But then, in the 1990s, Robert Pearlman says, the insurance autographs started showing up in space memorabilia auctions. An Apollo 11 insurance autograph can cost as much as $30,000.
Pennsylvania Insurance Department Announces Updated Highmark Filing
The Pennsylvania Insurance Department today announced that UPE/Highmark has filed updated information regarding its proposed change of control and affiliation with West Penn Allegheny Health System.
"The new supplemental filing describes significant developments that have occurred since last November's original filing," said Insurance Commissioner Michael Consedine.
"This includes changes in Highmark's leadership, governance structure, an additional affiliation with another regional medical center, and the UPMC contract extension. The department will continue to analyze this new information and make it available for public review and comment."
Significant developments and changes in the proposed transaction include:
- Integrated delivery network expenditures: In addition to the initially proposed West Penn Allegheny Health System (WPAHS) expenditures, which remain at $475 million, the supplemental filing describes $525 million of additional expenditures related to Highmark's implementation of a broader integrated delivery network, including an affiliation with Jefferson Regional Medical Center (JRMC). The supplemental filing discloses the currently anticipated allocation of expenditures, which totals an estimated $1 billion:
- WPAHS: $475 million
- JRMC: $120 million
- Provider network expansion (physicians, community hospitals and medical malls): $364 million
- Infrastructure development (physician practice management company, group purchasing organization): $41 million
- UPMC contract extension: The original filing anticipated that contracts between Highmark and the University of Pittsburgh Medical Center (UPMC) would be terminated effective June 30, 2012, with a one-year run out period. Those contracts have now been extended and the supplemental filing describes the impact of that extension.
- Proposed affiliation with Jefferson Regional Medical Center: The affiliation between Highmark and JRMC occurred in June 2012 and is described in the supplemental filing.
- Change in UPE/Highmark CEO and description of leadership: The supplemental filing describes the appointment of William R. Winkenwerder Jr., M.D., M.B.A. as President and Chief Executive Officer of UPE and Highmark; and also describes the proposed leadership of the Integrated Delivery Network and WPAHS, if the filing is approved.
- Governance and reserved powers: The supplemental filing provides a revised description of the proposed governance structure and discloses proposed amended and restated Bylaws of Highmark, including powers to be reserved to UPE.
- Other developments: The supplemental filing describes other developments that are relevant to Highmark's proposed change of control.
The updated filing, public comments and related materials are available on the department's website. Visit www.insurance.pa.gov and click on "Highmark/West Penn."
"A full, transparent, and robust public record has been one of our goals with this filing review," Consedine added. "The public comment period will remain open to afford everyone ample opportunity to provide written comments regarding this new information."
In November 2011, a "Form A" was filed by a newly-formed nonprofit corporation, UPE, which sought approval for change of control of Highmark and its insurance subsidiaries.
Written comments on Highmark's filing should be directed to:
Robert Brackbill, Chief, Company Licensing Division
PA Insurance Department
1345 Strawberry Square
Harrisburg PA 17120
Fax: 717-787-8557
rbrackbill@pa.gov
PA Insurance Department
1345 Strawberry Square
Harrisburg PA 17120
Fax: 717-787-8557
rbrackbill@pa.gov
Comments received as part of the public record are available on the department's website. Additionally, all comments received are forwarded to Highmark for appropriate response. Those responses are also made available on the department's website at www.insurance.pa.gov.
Wednesday, August 1, 2012
Tips to Buying Homeowner Insurance
Shopping for homeowner insurance is one of those nagging home buying details that sometimes manages to slip though the cracks. It’s not unusual for insurance agents to receive last-minute frantic phone calls from title and / or escrow companies requesting a home insurance binder. To save yourself trouble, it’s a good idea to start shopping for a homeowner policy as soon as your purchase offer is accepted. Here are a few tips about buying homeowner insurance that are designed to save you time and money:
Determine Insurability
Your insurance agent needs extensive information from you to quote you the best rate for your policy. To determine insurability, an agent will ask:
If the home is located in a rural area without a nearby fire department or there is no fire hydrant on the street, some companies may refuse to insure it. In that case, you may have to inquire at a specialty or surplus-lines company, and this quote will take longer to obtain.
Deductibles
You can save money by having a higher deductible on your policy. Typically, insurance companies will start giving discounts at a $500 deductible and increase the discount as your deductible increases. Most companies offer deductibles up to $10,000. Be careful, however, because many mortgage companies will not allow you to exceed a $1,000 deductible, so check with your lender before opting for a higher deductible.
How Much Insurance Do You Need?
Most agents use a cost estimator to figure cost replacement estimates. This will ensure that your home is insured for the correct amount. Insurance companies do not insure dirt. If you buy a home that includes a large lot, do not be astonished when you receive an insurance policy for a lot less than what you paid for the home. This is because you are buying coverage for the home and not the land.
In the past, replacement coverage was called Guaranteed Replacement Cost. There is no such coverage anymore. Today it is Replacement Cost Coverage, which means each insurance company designates a percentage of additional coverage on top of the insured amount. This is designed to protect the homeowner who has suffered a loss from having to pay additional construction costs to rebuild. It can cost more to build because of inflation or simply because material prices have increased. For example, if the dwelling coverage is insured for $300,000, and the company has 125% replacement cost coverage, the homeowner would receive an additional $75,000.
I recommend 200% replacement cost coverage, which gives homeowners double the coverage.
Policy Options
You have other choices on your home insurance policy that you can tailor. Liability coverage is a part of your homeowner's insurance policy that is often overlooked. This protects the insured against claims arising from bodily injury and property damage to others. For example, if your five-year-old was playing with matches and set your neighbor’s house on fire, your liability coverage would pay for this damage. You might have to move out of the neighborhood, but your insurance policy would pay your neighbor.
It is common to see $300,000 in coverage for liability, but the cost to raise it to $500,000 is about $20 more a year. You can have up to one-million coverage on most policies. Over that, you need an excess liability policy or “umbrella” policy. Umbrella policies give you an additional $1,000,000 liability coverage for a $300 to $500 premium.
Available Discounts
Make sure that you are getting all of the credits for which you are eligible. If you have an alarm system that reports to a central station (a company such as Brinks or ADT), in some cases, you can get up to a 10% discount. If you are over 50 and care to admit it, you may be eligible for a discount. Companies have different names for age preference policies, from senior discount to mature policyholder discount.
The most common discount is the multi-policy discount. This will save you money on your home and auto insurance. By combining the two policies with the same company, you are given a certain percentage discount on both. the percentage discounts vary among companies, so it’s best to shop around.
Review Your Policies
Call your agent and review your homeowner policy at least every three years. Needs change, markets change and coverages change. You should stay up-to-date on your insurance because you never know when you will need to rely on it.
Source
Determine Insurability
Your insurance agent needs extensive information from you to quote you the best rate for your policy. To determine insurability, an agent will ask:
- When was the home built?
- How old is the plumbing and electrical?
- What type of roof?
- What’s the square footage?
- How many claims have been filed over the past 5 years?
- Where is the home located?
If the home is located in a rural area without a nearby fire department or there is no fire hydrant on the street, some companies may refuse to insure it. In that case, you may have to inquire at a specialty or surplus-lines company, and this quote will take longer to obtain.
Deductibles
You can save money by having a higher deductible on your policy. Typically, insurance companies will start giving discounts at a $500 deductible and increase the discount as your deductible increases. Most companies offer deductibles up to $10,000. Be careful, however, because many mortgage companies will not allow you to exceed a $1,000 deductible, so check with your lender before opting for a higher deductible.
How Much Insurance Do You Need?
Most agents use a cost estimator to figure cost replacement estimates. This will ensure that your home is insured for the correct amount. Insurance companies do not insure dirt. If you buy a home that includes a large lot, do not be astonished when you receive an insurance policy for a lot less than what you paid for the home. This is because you are buying coverage for the home and not the land.
In the past, replacement coverage was called Guaranteed Replacement Cost. There is no such coverage anymore. Today it is Replacement Cost Coverage, which means each insurance company designates a percentage of additional coverage on top of the insured amount. This is designed to protect the homeowner who has suffered a loss from having to pay additional construction costs to rebuild. It can cost more to build because of inflation or simply because material prices have increased. For example, if the dwelling coverage is insured for $300,000, and the company has 125% replacement cost coverage, the homeowner would receive an additional $75,000.
I recommend 200% replacement cost coverage, which gives homeowners double the coverage.
Policy Options
You have other choices on your home insurance policy that you can tailor. Liability coverage is a part of your homeowner's insurance policy that is often overlooked. This protects the insured against claims arising from bodily injury and property damage to others. For example, if your five-year-old was playing with matches and set your neighbor’s house on fire, your liability coverage would pay for this damage. You might have to move out of the neighborhood, but your insurance policy would pay your neighbor.
It is common to see $300,000 in coverage for liability, but the cost to raise it to $500,000 is about $20 more a year. You can have up to one-million coverage on most policies. Over that, you need an excess liability policy or “umbrella” policy. Umbrella policies give you an additional $1,000,000 liability coverage for a $300 to $500 premium.
Available Discounts
Make sure that you are getting all of the credits for which you are eligible. If you have an alarm system that reports to a central station (a company such as Brinks or ADT), in some cases, you can get up to a 10% discount. If you are over 50 and care to admit it, you may be eligible for a discount. Companies have different names for age preference policies, from senior discount to mature policyholder discount.
The most common discount is the multi-policy discount. This will save you money on your home and auto insurance. By combining the two policies with the same company, you are given a certain percentage discount on both. the percentage discounts vary among companies, so it’s best to shop around.
Review Your Policies
Call your agent and review your homeowner policy at least every three years. Needs change, markets change and coverages change. You should stay up-to-date on your insurance because you never know when you will need to rely on it.
Source
5 Car Insurance Tips
How much you pay for auto insurance depends on several factors, including your age and marital status, where you live, and what you drive. You can't do anything about your age, and few people will move just to lower their insurance premium. You can, however, choose a vehicle that costs less to insure.
In this article, we'll give you all of the helpful tips you need when getting car insurance.
1. Know Your Coverage Types
What is your car insurance actually insuring? Although you're buying a single insurance policy covering a specific vehicle, a number of components make up the final cost:
2. Your Vehicle Affects Your Premium
You might want a sports car or a fancy SUV, but your insurance company may charge you more to protect you while driving it.
Insurance premiums are based partly on the price of the vehicle, which affects the replacement cost if it is stolen or "totaled" in an accident. How expensive the vehicle is to repair -- including parts and labor -- can also affect the cost. In addition, surcharges may apply to vehicles that are frequently stolen or involved in accidents.
Industry-wide information on injury claims, collision repair costs, and theft rates by vehicle model is available from the Highway Loss Data Institute (HLDI). You can write them at 1005 North Glebe Road, Arlington, VA 22201. HLDI is affiliated with the Insurance Institute for Highway Safety (IIHS).
According to HLDI, the lowest injury claims are from large vehicles -- cars, pickup trucks, and sport-utility vehicles. Small 2- and 4-door cars have the highest injury claims. Small cars also are among the highest in collision costs, along with sports cars.
If you have your heart set on a sporty vehicle, you'll probably pay dearly. Insuring a high-performance car can easily cost two or three times the insurance amount for an ordinary model.
Sport-utility vehicles, the hottest market segment, often have higher insurance rates than mid- and full-size cars, but some SUV models are relatively cheap to insure. SUVs are "hot" for other reasons: They are among the most frequently stolen vehicles, and they are more expensive than most cars. Cadillac's Escalade is currently the most popular model sought by thieves, but it's followed by the Nissan Maxima sedan. SUVs also can cost more to fix after an accident if the 4-wheel-drive system is damaged.
However, insurance companies set rates based on their own experience. If Company A has more collision and theft claims for a particular vehicle than Company B, then A will charge more for the same coverage. It all boils down to a company's actual experience with a particular vehicle or category of drivers. That is why it pays to shop around for insurance.
3. Who You Are Affects Your Premium
Factors that you can least control may have the greatest impact on your insurance costs. Your age, gender, and driving record are key factors that affect your insurance premium.
Single males under the age of 25 pay the highest rates. Statistics show they are involved in the most accidents, so insurance companies charge young men higher premiums than women of the same age. Married men, who statistically have fewer accidents, pay less than single men. A handful of states do not allow rates based on sex or age, but that prohibition has tended to result in higher rates for women, not lower rates for men.
If you are convicted of moving traffic violations or of causing an accident, your premiums will likely go up, no matter what your age. Drivers with clean records -- no tickets, no accidents -- pay the lowest rates.
Where you live also plays a big role in how much you pay. Urban areas, with their greater population densities and heavier traffic, get higher rates than rural areas. According to the Insurance Information Institute, the average insurance expenditure in mainly urban New Jersey -- traditionally the most expensive state -- in 2002 was more than double that of North Dakota, a rural state with the lowest average premiums. High costs in states such as Florida, Massachusetts and New York are attributed to growth in fraud and theft.
In most states, too, insurers set rates by zip codes. If you live in a major city like Chicago or Los Angeles, you will probably pay more than if you lived in a nearby suburb.
4. Decide How Much Coverage You Need
While it is dangerous to be underinsured, having too much insurance can be an expensive mistake as well. Without insurance, your property is put at risk in an accident that is your fault. The minimum amount of insurance required in your state is seldom enough.
State law may require as little liability coverage as $15,000 per person, $30,000 per accident, and $5000 property damage. About half of the states require $25,000 per person and $50,000 per accident. Half of them require $10,000 in property damage coverage. If you can afford it, buy more than the minimum. After all, $10,000 for property damage may not be enough if you hit a $100,000 Mercedes-Benz.
The more assets and income you have, the more insurance you need. Most insurers recommend liability coverage of at least $100,000 per person, $300,000 per accident, and $50,000 property damage if you have assets to protect, such as a house. Some insurers also recommend a $1 million "personal liability umbrella" policy issued in conjunction with homeowner's coverage. State Farm reports that such coverage averages $270 a year, but the amount varies significantly depending on location and other factors. An "umbrella" policy could protect a family from financial ruin in a major lawsuit.
Like buying a car, there is no single best solution when it comes to buying insurance. Rates vary widely. Surveys suggest that you could pay anywhere from $500 to $2000 annually for the same coverage from different companies. Shop for insurance by consulting two or three of the largest insurers, such as State Farm and Allstate. Then, contact one or two independent agents who can quote premiums from more than one company. In addition, there are direct-marketing companies, such as GEICO and Progressive, which do business over the phone rather than through agents and offer some of the lowest rates. Ask for an itemized list of coverages and costs.
"We're price-competitive," said spokesperson Dick Luedke of State Farm, whose rates dropped somewhat during 2004. But with so many factors involved in setting rates, it's wise to check several prospects.
In 2004, the average price of auto insurance nationwide was $871, according to the Insurance Information Institute. They expected that the cost of auto insurance would rise by 3.5 percent in 2004, which would be the smallest increase in four years.
Don't forget the Internet. Many companies now offer online quotes, and insurance shopping on the Web allows you to compare rates from multiple providers in the comfort of your own home.
5. You Can Reduce Your Premiums
The biggest difference you can make is to buy a vehicle that qualifies for a discount or at least doesn't carry a surcharge. Ask your insurance agent about the cost of insuring vehicles you are interested in before you make your purchase decision. Here are several other ways that you can save money on your car insurance:
Source
In this article, we'll give you all of the helpful tips you need when getting car insurance.
1. Know Your Coverage Types
What is your car insurance actually insuring? Although you're buying a single insurance policy covering a specific vehicle, a number of components make up the final cost:
- Bodily injury liability: Covers injury and death claims against you, and legal costs, if your car injures or kills someone.
- Property damage liability: Covers claims for property that your car damages in an accident. Because liability coverage protects the other party, it is required in all but three states.
- Medical payments: Pays for injuries to yourself and to occupants of your car. This is optional in some states. In "no-fault" states, personal injury protection replaces medical payments as part of the basic coverage.
- Uninsured motorist protection: Covers injuries caused to you or the occupants of your car by uninsured or hit-and-run drivers. "Under-insured" coverage also is available, to cover claims you may make against a driver who has inadequate insurance. In some states, as many as 30 percent of drivers are uninsured.
- Collision coverage: Covers damage to your car up to its book value. Collision coverage carries a deductible, which is the amount per claim you have to pay before the insurance takes effect. The lower the deductible, the higher the premium. While it is legally optional, a lending institution or leasing company usually requires collision coverage.
- Comprehensive (physical damage): Covers damage to your car from theft, vandalism, fire, wind, flood, and other non-accident causes. Comprehensive also carries a deductible.
2. Your Vehicle Affects Your Premium
You might want a sports car or a fancy SUV, but your insurance company may charge you more to protect you while driving it.
Insurance premiums are based partly on the price of the vehicle, which affects the replacement cost if it is stolen or "totaled" in an accident. How expensive the vehicle is to repair -- including parts and labor -- can also affect the cost. In addition, surcharges may apply to vehicles that are frequently stolen or involved in accidents.
Industry-wide information on injury claims, collision repair costs, and theft rates by vehicle model is available from the Highway Loss Data Institute (HLDI). You can write them at 1005 North Glebe Road, Arlington, VA 22201. HLDI is affiliated with the Insurance Institute for Highway Safety (IIHS).
According to HLDI, the lowest injury claims are from large vehicles -- cars, pickup trucks, and sport-utility vehicles. Small 2- and 4-door cars have the highest injury claims. Small cars also are among the highest in collision costs, along with sports cars.
If you have your heart set on a sporty vehicle, you'll probably pay dearly. Insuring a high-performance car can easily cost two or three times the insurance amount for an ordinary model.
Sport-utility vehicles, the hottest market segment, often have higher insurance rates than mid- and full-size cars, but some SUV models are relatively cheap to insure. SUVs are "hot" for other reasons: They are among the most frequently stolen vehicles, and they are more expensive than most cars. Cadillac's Escalade is currently the most popular model sought by thieves, but it's followed by the Nissan Maxima sedan. SUVs also can cost more to fix after an accident if the 4-wheel-drive system is damaged.
However, insurance companies set rates based on their own experience. If Company A has more collision and theft claims for a particular vehicle than Company B, then A will charge more for the same coverage. It all boils down to a company's actual experience with a particular vehicle or category of drivers. That is why it pays to shop around for insurance.
3. Who You Are Affects Your Premium
Factors that you can least control may have the greatest impact on your insurance costs. Your age, gender, and driving record are key factors that affect your insurance premium.
Single males under the age of 25 pay the highest rates. Statistics show they are involved in the most accidents, so insurance companies charge young men higher premiums than women of the same age. Married men, who statistically have fewer accidents, pay less than single men. A handful of states do not allow rates based on sex or age, but that prohibition has tended to result in higher rates for women, not lower rates for men.
If you are convicted of moving traffic violations or of causing an accident, your premiums will likely go up, no matter what your age. Drivers with clean records -- no tickets, no accidents -- pay the lowest rates.
Where you live also plays a big role in how much you pay. Urban areas, with their greater population densities and heavier traffic, get higher rates than rural areas. According to the Insurance Information Institute, the average insurance expenditure in mainly urban New Jersey -- traditionally the most expensive state -- in 2002 was more than double that of North Dakota, a rural state with the lowest average premiums. High costs in states such as Florida, Massachusetts and New York are attributed to growth in fraud and theft.
In most states, too, insurers set rates by zip codes. If you live in a major city like Chicago or Los Angeles, you will probably pay more than if you lived in a nearby suburb.
4. Decide How Much Coverage You Need
While it is dangerous to be underinsured, having too much insurance can be an expensive mistake as well. Without insurance, your property is put at risk in an accident that is your fault. The minimum amount of insurance required in your state is seldom enough.
State law may require as little liability coverage as $15,000 per person, $30,000 per accident, and $5000 property damage. About half of the states require $25,000 per person and $50,000 per accident. Half of them require $10,000 in property damage coverage. If you can afford it, buy more than the minimum. After all, $10,000 for property damage may not be enough if you hit a $100,000 Mercedes-Benz.
The more assets and income you have, the more insurance you need. Most insurers recommend liability coverage of at least $100,000 per person, $300,000 per accident, and $50,000 property damage if you have assets to protect, such as a house. Some insurers also recommend a $1 million "personal liability umbrella" policy issued in conjunction with homeowner's coverage. State Farm reports that such coverage averages $270 a year, but the amount varies significantly depending on location and other factors. An "umbrella" policy could protect a family from financial ruin in a major lawsuit.
Like buying a car, there is no single best solution when it comes to buying insurance. Rates vary widely. Surveys suggest that you could pay anywhere from $500 to $2000 annually for the same coverage from different companies. Shop for insurance by consulting two or three of the largest insurers, such as State Farm and Allstate. Then, contact one or two independent agents who can quote premiums from more than one company. In addition, there are direct-marketing companies, such as GEICO and Progressive, which do business over the phone rather than through agents and offer some of the lowest rates. Ask for an itemized list of coverages and costs.
"We're price-competitive," said spokesperson Dick Luedke of State Farm, whose rates dropped somewhat during 2004. But with so many factors involved in setting rates, it's wise to check several prospects.
In 2004, the average price of auto insurance nationwide was $871, according to the Insurance Information Institute. They expected that the cost of auto insurance would rise by 3.5 percent in 2004, which would be the smallest increase in four years.
Don't forget the Internet. Many companies now offer online quotes, and insurance shopping on the Web allows you to compare rates from multiple providers in the comfort of your own home.
5. You Can Reduce Your Premiums
The biggest difference you can make is to buy a vehicle that qualifies for a discount or at least doesn't carry a surcharge. Ask your insurance agent about the cost of insuring vehicles you are interested in before you make your purchase decision. Here are several other ways that you can save money on your car insurance:
- Most companies give a break to those who drive less than 7500 miles a year. If you take public transportation instead of driving to work, your premium will go down. Out of the question? Try carpooling.
- Make sure you get all the discounts you are entitled to. You might qualify if your vehicle has an alarm, for example. Discounts used to be given for such safety features as airbags, but they're fading away as those items become more commonplace. Discounts might also be available if you insure your vehicles and your home with the same company. People who pass a defensive-driving course or don't smoke or drink often get discounts.
- Review the status of all the drivers in your family with your agent. Most discounts apply only to one portion of the policy, so don't expect dramatic savings.
- Increase your deductible for collision and comprehensive. Switching from a $100 deductible to $1000 can reduce the collision portion of your premium by 30 percent, said Luedke. You'll still be covered for catastrophes, but you foot the bill for fender-benders. Also, think twice about filing small claims with your insurance: Why risk a premium increase?
- Shop around. Instead of just renewing, study the fine print of your policy to see if its terms -- or your situation -- have changed. Another company might have better rates, but you won't know unless you shop. Most insurers give rates over the phone and many via online computer services, making it easy to compare premiums.
- Drop collision coverage on older cars. Claims are limited to "book" value, so you're not likely to get much anyway if you car is more than seven years old. A good rule of thumb is to drop collision when the annual premium reaches 10 percent of your car's value.
- Be a good driver. Avoid accidents and traffic violations and you will be rewarded with good-driver discounts. Bad driving is expensive. The "safer you can be" on the road, Luedke said, "the lower your premiums."
- Drop coverage for such extras as towing costs or the expense of renting a car while yours is in the shop. The savings are probably small, but your new-car warranty's roadside assistance provision may provide them at no cost.
- Have your teenager share the family car instead of owning his or her own. Be sure to tell your agent if your son or daughter makes the honor roll or moves away to college. Both qualify for discounts with most companies.
- If your group health insurance provides generous coverage, consider dropping the medical-payments portion of your policy.
- Keep your credit rating healthy. A growing number of insurers are considering a person's credit score when setting rates.
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Friday, July 20, 2012
Autoinsurance.com: Usage-Based Auto Insurance Race Heating Up
Sprint announced Thursday that it is offering a trial run for use of its technology suite to insurers seeking to establish usage-based insurance (UBI) programs, further complicating an already crowded fight among auto insurers who are capitalizing on an increasingly popular coverage option, according to autoinsurance.com.
Sprint’s Integrated Insurance Solutions(IIS) employs a “cloud-based system” that collects driver data that can be analyzed by auto insurance companies for rating purposes and presented to policyholders so that they can review their habits on the road. The system utilizes the telecommunications giant’s nationwide 3G network to transmit the data.
Sprint is offering IIS as a three-month “jump start” program to all insurers.
The offering is the latest in the arena of UBI, which bases coverage rates on a motorist’s habits behind the wheel and other driving data. For example, frequent hard braking can run up costs, while the opposite can lead to discounts.
IIS technology was tested in a pilot program in Arizona through a partnership with Esurance,accor ding to a Sprint statement.
Esurance recently launched its first UBI program in Texas “based on the success of that program,” adding yet another player in the race between insurers for the most-effective UBI program.
The company's offering a fully established network for driver monitoring could make it much easier for more insurers to offer usage-based discounts. Progressive already has its usage-based program, which it developed on its own, available in about 80 percent of the country.
Last week, Progressive announced that its UBI program, called Snapshot, would be open to policyholders at competing insurers as a one-month trial. Participants who test-run the program will be able to review their possible coverage savings before deciding if they want to switch insurers.
Progressive’s Snapshot has long been the largest UBI program in the market but has since seen competitors’ offerings edge into its territory.
In May, State Farm announced a partnership with Ford in which cars equipped with the automaker’s SYNC connectivity systems will be able to enroll in its UBI program. Under the partnership, such vehicles will be ready to participate in State Farm's Drive Safe & Save upon purchase.
The burgeoning UBI market has also produced some nasty competition. The Hartford and State Farm are currently facing a lawsuit brought by Progressive, which alleges that it is "suffering from the effects" of patent infringement.
Copyright:(c) 2012 PRWEB.COM Newswire
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