Monthly Archives: March 2017

Save on Auto Insurance

We all like to save money – and we especially like to save on auto insurance.  According to a survey conducted by Motor Trend magazine, the average driver spends $84,000 in their lifetime insuring their vehicle. According to one survey, annual rates can run as high as $1,800 and as low as $320, a variation of $1,480.  That’s a significant difference. If you want to shave dollars off that figure, here are some tips to help put extra cash in your pocket:

Shop Before You Buy:  With the availability of online resources for price comparisons, it’s much easier now to get a variety of quotes from different companies.   Get identical quotes from at least three different companies before you purchase insurance.  Make sure you’re getting price quotes for exactly the same coverage on your vehicle.

Surf for Discounts: Find out what price cuts you might qualify for.  Some potential insurance discounts include:

  • Completing a safe driving course can save you money on auto insurance.  Accredited courses such as this are especially applicable to drivers over the age of fifty.  Find out if you qualify for one.
  • Low Mileage Drivers often qualify for discounts.  If you drive your vehicle infrequently throughout the year, you might just get a price break from your insurer.
  • Combine insurance Policies.  Insurers will often give discounts if you combine policies.  If you have homeowner’s insurance, check with them to see if they’ll give you a discount on your auto insurance.
  • Anti-theft devices.  Insurers often offer discounts for vehicles that prevent theft, such as steering wheel locking devices and car alarms. This is especially true in high-crime metro areas.
  • Loyalty Discounts.  If you’re a long-time customer of your insurance company, they might offer you a discount.  Oftentimes they don’t offer this information freely.  Ask and you might receive a discount.
  • College Students:  If your child has gone away to college and doesn’t drive your car anymore or just occasionally, find out if you can take them off your policy.  It will save you dollars on your premium.

Five Ways to Own Fewer Cars

At a time when two- and three-car families are the norm, getting rid of one or more vehicles might seem daunting.
But if you’re willing to make a few tradeoffs, experts say, downsizing a few sets of wheels can yield sizeable savings for your household.
In addition to regular car payments, fuel, state fees, financing costs, maintenance, repairs, insurance and depreciation account for a considerable amount of your out-of-pocket expenses when it comes to owning a vehicle.

Based on these factors, according to Kelley Blue Book, the five-year cost to own a 2014 Honda Accord comes out to $33,593. That’s in addition to the $21,441 purchase price of the car.

“From our perspective, having more cars than you need in your household is going to be a costly endeavor,” says Alec Gutierrez, senior analyst with Kelley Blue Book. “Having the number of vehicles in your house right sized is critically important.”

Here are five ways to become a household with fewer cars:

1. Re-evaluate your lifestyle.

Lifestyle choices such as where you live and work and when you commute can factor heavily into the need for additional cars. Eric Tyson, author of “Personal Finance for Dummies,” says to examine your work schedule. Some families might be able to coordinate their schedules in a way that makes sharing one commute possible. “If you’re a married couple, you should really stop and think about whether you need two cars based on where you live and what your daily needs are,” Tyson says.

There’s also an opportunity to downsize if one of the adults in your household doesn’t work outside the home or works within walking distance or near public transit, he says.

If you’re planning a move in the near future, transportation should be one of the factors you consider in choosing a place to live. Urban areas, for example, are more conducive to using public transportation instead of a car. “The need for so many cars could be driven, in part, by you choosing a place to live that is not very convenient or centrally located,” Tyson says.

2. Let go of that old car.

If you’ve just purchased a new car, experts say it doesn’t make sense to hang on to your older model just because it’s paid off.

“I find that over time, some families accumulate cars. If they get a new car, they’ll just keep the old one, reasoning that it’s paid for and not costing that much,” says Tyson.

Even if the car is paid off and you don’t drive it around very often, operating expenses and maintenance can rack up big bills – especially if the car is more than five years old. “It’s really all of those ongoing expenses that are going to start to add up over time,” says Gutierrez.

3. Share the wheel with your kids.

These days it’s not unusual to see families with one car for each adult. But buying a car for your children can ultimately send them the wrong message, Tyson says. “Honestly, I can’t think of a worse thing to do than to buy a kid their own car. It’s an expensive luxury, especially if you’re handing a brand new, expensive car to a kid who hasn’t worked for it,” he says.

A better idea is to share your car with your teenage driver, Tyson says. “This reinforces that this is your car that you bought and paid for. You can use it when it works for our family, but that doesn’t mean you get to use it all the time,” he says.

Driving Guide for Teens and Students

It should come as no surprise that teens are the most vulnerable population of drivers in the U.S. After all, they are the least experienced behind the wheel, which makes them a bit reckless, a bit risky, and very expensive to insure.

According to the Insurance Institute for Highway Safety (IIHS), teen driver crash rates are three times higher than for drivers over 20 years old per mile driven, and motor vehicle crashes are the leading cause of death among 13- to 19-year-olds. What’s more, in 2013 (the most recent data available), 2,524 drivers in that age group died in auto accidents, accounting for 9 percent of all drivers involved in fatal crashes.

According to the Centers for Disease Control and Prevention (CDC), drivers between the ages of 15 and 24 make up just 14 percent of the U.S. population, but they also account for 30 percent ($19 billion) of the “total costs of motor vehicle injuries among males” and 28 percent ($7 billion) of the “total costs of motor vehicle injuries among females.”

These facts and statistics come with significant and far-reaching consequences for everything from insurance premiums to new teen driver safety initiatives designed to curb such startling figures. What follows are some of the most important details about the risks and expenses of teens behind the wheel.

Most experts agree that the root cause of teen driving risk is a lack of experience, and a 2012 study from the National Institutes of Health (NIH) supports this claims.

According to the study’s lead author, Bruce Simons-Morton of the division of epidemiology, statistics, and prevention research at the Eunice Kennedy Shriver National Institute of Child Health and Human Development at the NIH, novice teen drivers are almost four times as likely to end up in a car accident or close-calls as adult drivers. Moreover, compared to older, experienced drivers, risky driving behavior is five times more prevalent among teens newly behind the wheel.

“If you think about driving as a complex physical and psychological task, the crash rates we observed look a lot like the classic learning curve,” says Simons-Morton. “And it’s not just about learning how to drive the vehicle. It’s also about developing safe driving judgment and learning how to process a lot of information at once while you’re behind the wheel.”

According to Simons-Morton, this study is the first “naturalistic assessment” of risky teen driving, meaning that rather than have teens merely respond to a survey, he and his colleagues directly observed their driving habits first through various technologies installed in their vehicles.

For 18 months between 2006 and 2008, the NIH team studied 42 newly licensed teens, comprising 22 females and 20 males who attended high school or home school in Virginia. To provide a comparative backdrop, the study also assessed the driving habits of 55 parents operating the same vehicles. Here are a few of the study’s most interesting findings:

—Over the study period, teens experienced significantly higher rates of crashes or near-crashes compared with parents—37 crashes and 242 near-crashes compared to just two crashes and 32 close-calls among the adults.

—Crash rates rapidly decline after the first six to nine months behind the wheel, even though they remain much higher than experienced adults driving the same vehicles.

—Distractions such as texting, operating an Mp3 player, or talking on a cell phone while driving were the leading causes of crashes.

Have You Pay Out Of Pocket Before You File A Claim

In theory, the amount you set for your auto insurance deductible should dictate how much money you’re willing to pay out of pocket before letting your auto insurance foot the bill, and that would be the end of the story.

But filing a claim can set in motion a chain of events that could prompt your insurer to raise your rates or even drop you altogether.

So for some consumers, there’s a bit of grey area between their stated deductible amount and the price they’re actually willing to pay to avoid having to file an insurance claim. It’s a concept some insurance researchers call the “pseudodeductible.” And

understanding this hidden deductible can help consumers set a more accurate stated deductible, and potentially save on their insurance premiums in the long run.

“People try to avoid uncertainty. That’s why you buy insurance. But when these losses happen, it creates another uncertainty: What’s going to happen to my premium when I report this claim? So it’s a balancing act between the loss itself and how it will affect the future premium,” says Dana Kerr, Ph.D., associate professor of risk management and insurance at the University of Southern Maine. Kerr authored a 2012 study on pseudodeductibles and is one of the few researchers studying the phenomenon.

If a consumer has a $500 deductible but $800 in damages, that person might be willing to pay the full $800 and leave $300 on the table, rather than file a claim for $500 and risk having their premium go up. “They’re willing to eat that cost if it gets rid of the uncertainty of what the reporting of that loss might have on their future premium,” Kerr says.

Kerr found that as a consumer’s loss gets larger in terms of dollar amount, that person is likely to be less selective about which claims to report.

“At a certain threshold amount, it’s too big, where now the greater uncertainty shifts from the loss itself and what you have to pay out of pocket, to the effect your loss is going to have on your future premium cost,” Kerr says.

People with losses of more than $1,000 were more selective than the people with total losses of less than $1,000, according to the report.

Kerr’s study also found that women and adults under 55 tend to be more selective about whether to file a claim. The same goes for individuals who have prior accidents on their records. “There are different levels of risk aversion for different types of people,” Kerr says. “The pseudodeductible effect ebbs and flows with the nature of your loss experience.”

Liability can be a game changer in terms of making a person more likely to file a claim. If you’re held legally liable for another person’s damages, the costs – though uncertain – could be significant and include pain and suffering.