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Do You Have the Right Car Insurance?

Car insurance is inherently tricky to navigate because you don’t find out just how well it works (or doesn’t) until you have an accident. And if you’re lucky, that doesn’t happen too often. So how do you know if you have the right kind of car insurance for your budget and lifestyle?

U.S. News interviewed a handful of car insurance experts to find out what you should do before making a final decision on your policy in order to get a good deal and decrease the chance of being surprised by unexpected costs after an incident. Here’s their best advice:

When choosing a policy, start by asking friends for recommendations. “It always makes sense to first ask people who you respect who they have auto insurance with, and if they were happy when they had a claim,” says Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry group.

[See: 10 Unexpected Costs of Driving.]

Strangers can also offer useful advice. People often take their complaints about car insurance to social media, blogs and other websites. Search for posts on Twitter using the hashtag for the company you are considering. The National Association of Insurance Commissioners and the Center for Insurance Policy and Research makes it easy to find formal complaints that have been lodged against companies as well.

State buyer’s guides are another resource. States release detailed guides for purchasing auto insurance that explain the ins and out of property damage as well as collision and comprehensive coverage. “Get the buyer’s guide – don’t just go to some agent,” recommends Bob Hunter, director of insurance at the Consumer Federation of America. Those buyer’s guides also outline the minimum required coverage and what factors influence your insurance rates, from driving records to how you use the vehicle.

When comparing policy prices, be sure to compare similar policies, cautions Phil Reed, senior consumer advice editor at Edmunds.com. Auto policies vary by length of time, level of service and an array of add-ons, he says. Instead of just searching the Internet to compare quotes, Reed recommends getting on the phone with companies and asking questions, too. Certain car safety features, such as alarm systems or anti-lock breaks, can help lower your rate.

[Read: Blue-Collar Workers Pay More for Car Insurance.]

At the same time, there’s no need to obsess about constantly chasing a better deal. Jeff Blyskal, senior writer at Consumer Reports, says when the magazine asked readers to try to get a better deal with a competing insurance provider, only 12 percent of respondents were able to do so. That’s despite the slew of auto insurance advertisements that would have you think a better deal is always just around the corner.

Once you’ve settled on an insurance provider, you’ll have the chance to consider various add-ons to your policy. In general, the more you pay upfront, the greater the coverage you’ll have. For example, you can opt for a higher deductible in order to minimize your rates – probably a good move for anyone who considers themselves a careful driver and can afford the higher deductible in the event of an accident.

You might also want to consider rental coverage. Auto insurance policies often allow you to add on coverage for renting a vehicle while your car is getting fixed after an accident, and if you only have one car, that kind of coverage can pay off. “Every customer who didn’t have rental coverage wished they had it,” says Richard Arca, senior manager of pricing at Edmunds.com and a former insurance adjuster. It typically adds about $20 for six months to a policy, he says.

On new and leased cars, GAP insurance can also make sense. You’ve might have heard that when you buy a new car, it loses value as soon as you drive it out of the lot. Leased vehicles also often carry a lower fair market value than what you owe on the vehicle. That means in either of those cases, if you total the car, the insurance company will only reimburse you for the car’s fair market value – and you could be out a lot of cash. GAP coverage, which stands for “guaranteed auto protection,” safeguards people from that problem. “It’s highly recommended for people who lease vehicles,” Arca says.

8 Great Ways to Save on Car Insurance

Car insurance will vary depending on things such as your driving history, your location, the cost of your vehicle, and the gap between your coverages. The right policy is as important to owning a vehicle as regular maintenance. If you happen to get into an accident without an active policy, you are at risk of paying millions in damages. Even a $5,000 penalty could be detrimental to some individuals and families. This is why choosing the right company is crucial for your legal, financial, and personal well-being. Now that we all know why we need car insurance, we need to know what are some important ways to save.

Eight Smart Ways to Save

1. Compare Policy Rates

Prices differ significantly from company to company. Take the time to explore as many options as you can before deciding on one.

2. Choose the Higher Deductible

If you can afford it, choose the higher deductible and pay less each month for coverage. A deductible is the amount you have to pay before your provider will cover the rest of your bill. A higher deductible can significantly lower your monthly bill.

3. Consider Carpooling

The less you drive, the less insurance companies charge you.

4. Buy Only What You Need

What you need for a new model is different than what you need for an older automobile. If your car is an older design, it might warrant you dropping the collision coverage.

5. Combine Your Homeowners/renters Policy

Combining other policies with your car insurance is an effective way to get the most discounts. Car insurance is considered the riskiest investment, but if you combine it with a safer investment, your monthly bill will go down.

6. Get a Tracking Device

It records your driving history-speed, abrupt stops, travel times, distance-and after the first year, you can get reduced rates if you have been a safe driver. You can save as much as 60 percent!

7. Take Care of Your Credit Score

Those with high credit scores may get lower rates as they are considered as less risky choices for providers. Pay all of your bills on time and check your score to stay updated.

8. Take a Defensive Driving Course

By taking this one-time course, your provider might be able to give you a discount.

Of course, low cost should not be your only deciding factor. Simply choosing the cheapest policy on the market is not a smart decision. When comparing different providers, make sure to read about their history, how well they understand the industry, and how much they focus on building relationships with their clients. All of these are important factors in finding the right company. Not only does the policy have to sound good on paper, but you should also be able to personally trust and believe that the car insurance company will be there for you when something unfortunate happens.

After the Road Rage

They’re inevitable really – no matter how much we want to avoid them – accidents are something that shouldn’t happen but instead seem to take place more often than not. The road is a dangerous place and a place which we frequent almost daily. So it could happen to us (let’s hope not) but as they say, hope for the best and prepare for the worst, so if the worst does come to past you know how to handle the situation.

After an accident, depending on the damages you may have to get your car towed and for the purpose of this article, we’re assuming that after the accident, your car needed towing. How will you get your car towed? And who is going to cover the towing expenses? Will it be you or your insurance company? These are some essential questions which will run through your head in a situation like this and the following paragraphs list what you need to know.

Firstly, depending on the accident you cannot immediately ascertain which party will take the blame for the accident (of course sometimes it’s clear enough but mostly people haggle), and hence you won’t know if it’ll be the other party’s insurance company or yours which will be covering the cost of the expenses.

Again we’ll assume that it will be your auto-insurance company which will cover the expenses, and these will be whatever your particular company’s policy covers for towing. In all likelihood – as is the norm with most companies – they will pay reasonable costs within a reasonable towing distance. That is, if you’re within your own state, the insurance company would cover most of the towing expenses but if your car breaks down say a couple of states over (or in any other state) then most of the money would be coming out of your own pocket. It is essential that you talk to your insurance company and their policies on towing, so that you’re informed beforehand. After the accident its best to call your company and ask them their preferred towing company. This will save haggles later on. If you’re in your local area then use a local trusted towing service.

If you don’t mention the towing bit to your insurance company, in this scenario either you’ll get towed by a random tow service (who look out for such incidents on their police scanners) or one that is working with the police. Of course your company might not cover such expenses.

Lastly another point to take note is that some insurance companies also offer the services of optional towing as well as roadside assistance of labor which covers flat tires repair, towing and battery problems. Usually this only incurs a small amount of additional charge.

Classic Car Insurance and More Tidbits

Funny, isn’t it – how an old car is only attractive if it’s considered antique or classic? For the classic auto enthusiast, the interest is more than a simple hobby. For most, it’s a passion that perhaps even supersedes the passion of an ATV, motorcycle, truck or even boat owner. It’s a pastime that involves homeowners, renters, landlords – and the full spectrum of society.

To this type of auto fan, it becomes an obsession that should flood his or her free moments – especially weekend time. So, for all of you that insurance companies write policies for – this is for you and your wonderful craze!

Exceptional Fun Facts for the Antique and Classic Car Lover

• Do you know the difference between the automobile term, horseless carriage, and the term vintage car? A horseless carriage is in reference to the antique cars that went public from 1896 to 1915 and a vintage car refers to cars made between the years 1916 and 1925.

• See if you can guess this one! How many Barracuda convertible cars were produced in all? The grand total will set you reeling: there were seven in all!

• If you managed to come up with the answer to the above, see how well you do on this one. How many 1940 Dual-Cowl Phaetons did the manufacturing auto company produce in all? The modest answer is six!

• The great and oftentimes revered Mustang car was initially presented by its manufacturer in the year 1964.

• Though car fans usually are associated with the color red, the very first Camaro car was actually bathed in the color black. (Black is beautiful, right?)

• Ever wonder where the English dictionary came up with that great word we reference to the car? Automobile is actually two words that are blended together. Auto means oneself and mobile means the ability to move. Hence, an automobile is that wonderful invention that allows an individual to travel via driving maneuvers!

• The renowned auto company began mass production of its reasonably priced Model T automobile in the year 1913.

• If you view movies about Fidel Castro’s dictatorship, you will be led to believe that the natives only drive classic cars. The reason for the large amount of older cars on the streets of this Latin American country is due to the infamous US Trade Embargo of 1960 that resulted in no new trade of automobiles between the nations.

• Want to know about cheap auto insurance for your classic vehicle? Talk to an experienced independent insurance agent. He will demonstrate how to choose the appropriate policy according to your driving needs and mile accumulation as well as other factors.

PRIME Insurance is an A++-rated agency that has wide recognition for its excellence. Winner of numerous industry awards and appointed to do direct business with over 40 of the leading companies, PRIME shops its broad network to bring customers tailored coverage at competitively lowest quotes.

How To Shop for Use-Based Car Insurance

In recent years, nine of 10 top U.S. auto insurance companies have started selling policies based on how motorists drive. At least a handful of pay-as-you-drive policies are offered in every state, covering as many as 3 million U.S. vehicles, according to industry estimates. Switching to use-based insurance (UBI) could help you save a little or a lot over what car owners spend on premiums associated with a more traditional policy.

If you’re considering changing to a UBI plan, it pays to understand what you’re getting.

Carriers set UBI rates by collecting mileage or other information directly from your car, but similarities among policies end there. Some insurers use a small, meterlike electronic device that plugs into a car’s onboard diagnostics port to store or transmit information. Newer versions gather driving data through an app and a smartphone connected to a car’s infotainment or telematics system.

Drivers may happily trade access to their driving habits for lower insurance rates. But privacy advocates worry that insurance companies aren’t always 100 percent transparent about what data they collect, what they do with it and with whom they share it.

“Privacy is a real question,” says J. Robert Hunter, insurance director for the Consumer Federation of America. “What do insurance companies do with that information? If I park at the corner of Main and 14th and on one corner is a bar and another is a gym, will you raise or lower my rate?”

Here are steps to take if you’re shopping for car insurance and considering a use-based policy:

Find out what’s available: Look on the Web site of your state insurance commission or consumer advocacy agency to see which insurance carriers are licensed to operate in your area. Here’s a list of all 50 state insurance departments. Alternatively, visit auto insurers’ Web sites and type in your ZIP code to see if they sell UBI plans where you live.

Understand what types of data insurers collect: Some states restrict the information insurers can collect, which limits the types of UBI policies they offer. In California, for example, insurance companies can track mileage but are barred from monitoring where or when you drive. They also can’t track such behaviors as how fast you drive or how often you slam on the brakes, the activity known in insurance lingo as “hard-braking events.” Visit state insurance regulators’ Web sites for their explanations of the UBI plans they authorize, such as this pay-as-you-go auto insurance pamphlet from the Oregon Department of Consumer and Business Services. You can also read the fine print on UBI policies on insurers’ Web sites to determine what driving data an insurer collects, and how it is gathered.

Try before you buy: Certain insurers give potential customers a chance to take a UBI policy for a test-drive before committing to a policy. In such cases, you may be asked to plug an electronic monitor into your car’s diagnostics port for a month or so, which allows the insurer to collect enough data to set a rate. Other insurers offer UBI policies only to existing customers.

Understand how insurers determine discounts: Insurers may offer an introductory discount of 5 or 10 percent during a try-out period, and adjust the rate as needed after monitoring mileage or driving behaviors for a set time period. Progressive Insurance bases rates for its Snapshot policy on six months of driving data. State Farm customers with Drive Safe & Save policies keep electronic monitors plugged into their cars all the time, so, theoretically, their rates could change at renewal time, if they’ve driven substantially more or less than in the previous period.

Consider a UBI bundle: Some insurers offer UBI as part of a bundle of services tied to a car’s built-in entertainment, safety or maintenance systems. State Farm’s Drive Safe & Save with In-Drive Connect policy, a joint venture with Verizon Wireless, offers mileage-based insurance along with stolen vehicle assistance and hands-free mobile phone service. After a one-year free trial, charges for In-Drive Connect jump to $6.99 a month or more based on what other features a customer chooses.

See how you’re doing: If you sign up, use the Web portal associated with your UBI policy to monitor your driving. Some insurers’ dashboards give customers a grade based on their driving habits. For example, customers of Allstate’s Drivewise UBI policies can download an iPhone or Android app to look up mileage, speed, hard stops and what times of day they drive.

Purchasing the Best Car Insurance

In the past, car insurance was not a necessity, as some people went for it and some did not. However, today an auto coverage policy is one of the crucial things in your life, if you own a car. People need proper coverage, no matter how luxurious or modest their car is.

The way people buy insurance has also changed. In the past, buying a car insurance just meant to meet your neighborhood agent and ask him for it. But now, it is somewhat different, as you have got lots of other options at your disposal from where you can get your vehicle insured, with some entirely new coverage choices.

Buying car insurance: Which method to choose?

When you want insurance for your car, you might be puzzled as from where you should get it. Should you deal with an insurance agent or should you go online? You can choose among different options for getting your car insurance. This includes:

  1. Buying from captive agents
  2. Buying from independent agents
  3. Buying online

People, who prefer personal services and like to form face-to-face relationships, should certainly purchase their policy from an agent. But, since there are different agents, they need to decide which one is the best for them.

Among these, some are called ‘independent agents,’ who sell insurance for numerous companies and some are ‘captive agents,’ who sell insurance for just one firm. Let us see the different features of these agents, so that you can decide easily and quickly the right agent for yourself.

1. Buying from captive agents

You should buy your coverage from a captive agent, if you are dedicated to a specific insurance firm. Since captive agents deal with only one company, they will know all the different insurance options offered by that company. And, thus they can assist you to build the right package based on your needs. However, captive agents may take more time to respond to your questions and to know your needs as compared to independent agents who work for commission.

2. Buying from independent agents

You should buy a policy from an independent agent, if you want to check out the different insurances provided by different companies, as independent agents deal with several companies and not just one particular insurance firm. This way you can get a better rate.

And, since independent agents are not directly employed by any one firm, they would not push one specific product and will tell you the right things about all the insurances. Thus, independent agents can aid you to find inexpensive coverage for your car. However, since they work for commission, they are under more pressure to grab a deal as soon as possible.

3. Buying online

The third option is to skip insurance agents completely and to work directly with the company online. However, for this you have to do most of the work yourself. You have to conduct a thorough research on different coverage providers, what they offer, the rates of their insurance, and what all their policies covers. Then, you can talk to the company, that best fits your needs to procure the coverage itself.

Among these, some insurance companies that employ agents do not necessitate you to work with them and a few of them do not employ agents at all. Buying auto insurance online is one of the best options for you if you do not have much time and want to get inexpensive car insurance, as it saves you from paying commission to an insurance agent. If you are not sure about your car insurance needs, then buying car insurance online, without an insurance agent can cause you to buy the wrong, too little, or too much insurance.

Select your type of coverage

Besides deciding which company to go with, you must also consider which policy you want. There are three main types of policies, including traditional, usage-based, and per-mile car insurance. So, have a look at these three car insurance coverage programs before you settle for one particular car insurance.

1. Traditional auto insurance

In this type of auto insurance, the insurers determine the quotes for the policy with the help of various personal factors, such as your age, driving history, gender, credit score, etc. Generally, the more risk you have as a driver as per these factors, the more high your insurance rates will be. In this, you can opt for a minimum coverage amount as per the state law or else you can select from a long list of different types of auto insurance coverage.

2. Usage-based auto insurance

As opposed to the traditional car insurance, where insurers presume your driving skills depending on a list of different risk factors and your accident history, usage-based car insurance providers offer you car insurance by seeing you in action in real. In this type of car insurance, like Allstate’s Drivewise or Progressive’s Snapshot, you get a telematic device, which you have to plug-in your car. This device records how you drive and your driving behavior, especially your bad driving habits like accelerating or hard braking.

So, if the device records that you are a low-risk driver, then you can save your money with usage-based car insurance. However, if it records that you frequently drive late at night or you drive fast, then it would not help you save money with your car insurance. Additionally, many usage-based car insurance programs are not available in each state. Therefore, if you are devoted to one insurance company, then you may have to switch your company, in case you move to a different state.

3. Per-mile auto insurance

Per-mile auto insurance providers also use a telematic device, but they focus on just one thing, that is how little or how much you use your car. However, this car insurance type is still new and is not available in every state. Among others, Metromile is the best provider of per-mile car insurance and is available in seven states until now, which are California, Illinois, Oregon, Pennsylvania, New Jersey, Washington, and Virginia.

Additionally, per-mile providers use the same elements as traditional insurers in determining your car insurance rates, but you can save some money through its telematic device. If you do not use your car much and use it only for emergencies, then your premium may be cut significantly. However, if you normally drive your car, then there are fewer chances of you saving money from it.

Shop around

No matter how you purchase your insurance, whether you go for a dedicated agent or you directly sign up with a car insurance provider, you must shop around in order to get the best rates. Do some homework and do not just settle for the first deal that comes your way. This is because rates for the same policy can differ from one company to the other by thousands of dollars. Therefore, comparing different car insurance offers is the best possible way to land up a good deal.

Theory of Selecting Car Insurance

Selecting the right car insurance requires the similar effort as selecting the car itself. While selecting a car the market research starts months prior and one test drives almost all the cars falling in one’s budget range. But the enthusiasm drops significantly when buying insurance for that priced possession. Many people in India still consider car insurance as a statutory obligation and settle for any run in the mill insurance policy or go for popular insurance company names rather than understanding what all things their policy covers.

The process to compare cars plans is very significant from saving upon premium as well as getting better plan features perspectives. In case of car insurance it is said that one must compare plans of at least three insurance companies. The more the merrier philosophy holds true in this case. Inviting quotes from a big number of companies always works in favor of the buyer as it helps plucking out the cheapest plan in the market.

A comprehensive car insurance policy covers the owner’s damages as well as the damages of the third parties who suffer loss due to collision. If your car is new then never commit the mistake of getting only third party insurance done, which is mandatory to have by the Indian law, as repair costs in case of accidents can be steep. Also, there are many add-ons over the regular OD (own damage) section of comprehensive car insurance policy that one should consider while selecting a plan. Important add-ons are:

• Depreciation Reimbursement: The depreciation on parts that have to be replaced because of damage is waived off under this add-on.

• Return to Invoice: The insurance company pays the difference between the claim admissible and the sale invoice price of the vehicle or new replacement value of the same make and model, whichever is less.

• No Claim Bonus Protection: NCB of over 25% is earned on a new vehicle or by no claims in previous two years. This NCB is protected under this add on provided there are up to 1 claim in a year and the policy is renewed on or before 90 days of the expiry of the policy.

• Repair of Glass, Rubber, Fiber & Plastic Parts: NCB is not affected when claim is filed to repair the glass, rubber, fiber & plastic parts instead of replacing them.

• Emergency Transport and Hotel Expenses: In events when the vehicle becomes UN-usable the cost of hotel accommodation at nearest place and return to home expenses are allowed up to 50% of the sum insured or Rs. 50,000, whichever is less under this add-on.

• Loss of Personal Belongings: Loss of personal belongings lying in the insured vehicle following an accident is covered.

• Key Replacement: Cost of replacement of lost vehicle keys is allowed.

• Daily Allowance: Cases where the damage takes place due to insured peril and the vehicle takes more than 3 days to get repaired, the insurer would pay allowance for hired transport up to 10 days for normal damages and up to 15 days for total loss. Per day allowance ranges from Rs.600 to Rs.2000 depending on the category of the vehicle.

• Engine Protector: Covers damages to the internal parts of the engine due to water ingress ion/leakage of lubricating oil and/or damage to gear box as a result of accident.

• Spot Assistance or Road Side Assistance: This cover provides a range of emergency services that the vehicle owner could face in daily use of vehicle. Some of these emergencies do not arise from an accident.

Based upon the category of vehicle and its usage one should decide what all add-ons one must ensure having in one’s car policy.

Study shows that people who compare car plans online save up to 30% on premium. Online car insurance plans are generally cheaper than offline counterparts because online plans eliminate the scope of agent commission. This brings down the premium considerably.

Young Drivers, Marijuana and Car Insurance

Marijuana, young drivers and serious car accidents are on a collision course. Fatal crashes involving drivers whose systems showed evidence of THC, the active ingredient in marijuana, nearly tripled in 10 years, rising from 4.2 percent in 1999 to 12.2 percent in 2010, according to a study released earlier this year by Columbia University’s Mailman School of Public Health. In another four-year study, 43 percent of fatally injured drivers under 24 tested positive for cannabinoids. The percentage was lower for older age groups.

Now that marijuana is legal in Colorado and Washington and widely tolerated elsewhere in the U.S., parents may be on their own collision course with pot: They face steep car insurance hikes and even cancellation if young drivers on their policies are convicted of a DUI stemming from marijuana use. Here’s what parents need to know about drugged driving and the effect it can have on insurance coverage.

Drugged Driving: A Growing Concern
Pot use behind the wheel is a subset of a category that law enforcement and the traffic safety community call drugged driving. Every state has laws addressing it. In many, the laws say if a driver is stopped and authorities can prove the individual drove under the influence of any substance that impairs driving ability, he or she could be convicted of a DUI. Nearly one-third of states feature “per se” laws. These more strict laws say that any amount of a controlled substance found in the driver’s body is evidence of impaired driving.

The hazards of drunken driving are well known. A growing concern among researchers, law enforcement and those in the traffic safety community is the destruction wreaked by individuals driving under the influence of drugs including marijuana, cocaine and prescription and over-the-counter drugs. Conservative estimates put the cost of these accidents at 6,700 deaths and nearly $60 billion in costs each year.

The effects of marijuana use on driving vary from one person to the next. In the words of the National Highway Traffic Safety Administration (NHTSA), “It is difficult to establish a relationship between a person’s THC blood or plasma concentration and performance impairing effects.” Concentrations of the drug are “very dependent on patterns of use as well as dose.”

Insurance Follows the Car
Driving while stoned is a serious matter for teen and twenty-something drivers, who risk death, injury, criminal prosecution and civil lawsuits. In addition to those outcomes, drugged driving also can have financial impacts on parents, who often own and insure the cars their adult children drive.

“Insurance follows the car, not the driver,” says Loretta Worters, vice president of communications for the Insurance Information Institute, a national insurance trade association. A young person’s drugged-driving conviction is likely to be treated like a drunk driving conviction, whether the recreational use of pot is legal in that state, says Bob Passmore, personal lines policy senior director with the Property Casualty Insurers Association of America.

“As with any DUI conviction, your insurance company could cancel your policy, ask you to take the individual off the policy, or keep him or her on at a much higher rate, depending on the rules in the state,” Passmore says. “The individual with the conviction might need to get their own policy.” That would come at a much higher rate than if the driver is on his parents’ policy, he says.

Worters agrees. If a young person is convicted of driving under the influence, “insurance rates will jump astronomically, because driving under the influence is illegal,” she says. “DUI convictions can result in multi-year jail terms. You’re also putting the parents’ assets at risk” if there are civil lawsuits in connection with the accident, she warns.

Not every teen uses pot, of course. In 2012, less than 8 percent of youths ages 12-17 had used marijuana in the past month, according to the 2012 National Survey on Drug Use & Health. And about 80 percent of teens say they disapprove of their friends using pot. Pot use increases markedly for young adults, however. In 2012, 18.7 percent of 18-to-25-year-olds had used marijuana in the past month.

If your child does use pot, you may need to take a tough stance when it comes to his or her use of your cars.

“Parents may want to consider either taking the car privileges away until they’ve cleaned up their act, or taking them off your insurance policy,” Worters says. An insurance company may not be comfortable with a young driver continuing to be on the policy if they’re “living in the same house, having possible access to the keys, even if they aren’t driving,” she says, “because that risk is always there.”

Talk to Your Insurance Agent
Parents should consider contacting their insurance agent to assess their coverage, preferably before a teen drives under their car insurance policy, experts says. Parents also might want to review their liability limits and consider an umbrella liability policy. This will provide protection in case their child causes a serious injury and is sued.

“You want to make sure you and your child are protected,” Passmore says.

Underwriting Auto Policies

It is the most affordable type of auto insurance, yet it complies with state’s regulations. All optional coverage for example Rental Reimbursement and Roadside Assistance are not in the policy to reduce the premium without losing the necessary protections.

Standard and Non-Standard Insurance Market

There are two different types of insurance markets including standard and non-standard markets. The former is the typical auto insurance for drivers with little to zero traffic tickets in the driving records. Insurance companies regard consumers of this market as low-risk drivers. Non-standard is for drivers who have major traffic violations histories such as speeding or DUI. For these drivers, acquiring auto insurance from the standard market can be difficult due to strict approval requirements by providers.

Standard market insurers are reluctant to provide policies because of the following reasons:

· High-risk drivers have tendencies to commit the same traffic violations

· There is a chance that the insurer must pay a considerable amount of compensation for repeated violation

· Some drivers get their high-risk status because of policy cancellation from the previous company as a result of frequent late payment

Non-standard market insurance consumers or high-risk drivers must pay a higher price for the policies, but the system allows them to get an easy approval. Regardless of past driving records or involvement in the accident, all applicants should acquire auto insurance policies to help them get back on the road without problems.

Minimum Auto Coverage

Every driver only needs to acquire the state’s minimum coverage requirements to drive without breaking the law. Depending on the states, the coverage limit can be different, but most states require at least the following coverage in the policy:

· Bodily Injury Liability: the coverage that provides payout or compensation following an accident in which the policyholder is at fault. The payout is for someone else who sustains injuries.

· Property Damage Liability: similar to Bodily Injury, the payout is for someone else whose properties or cars suffer from damages in an accident. The at-fault party must help cover repair or replacements.

In some states, Personal Injury Protection (PIP) is also a mandatory coverage. This applies in states that use no-fault regulation.

Collision coverage is a financial protection for a policyholder’s vehicle in case it suffers damages from the accident. The payout from this coverage is available to help repair or replace vehicle’s parts.

Comprehensive also has the same purpose, but it only applies when damages are results of non-accident occurrences for examples falling objects, flood, theft, or hitting an animal. Both optional coverage types are sometimes mandatory by a leasing or financing company.

Payment Options

All high-risk drivers can revoke their high-risk status after taking some obligatory courses for example Defensive Driving or Driver’s Education Course. Please remember that driving without insurance is an illegal act. The price for insurance from non-standard market is higher, but the company allows for flexible payment options as follows:

· Economy Plan: payment system which allows policyholder to pay the down payment to acquire a policy. Installment every 30-day applies for the remaining amount.

· Quarterly Plan: another installment plan in which policyholders can spread the payment and pay once every four months for a year.

· Annual Plan: this is the simplest payment method with one-time payment up front for a year policy.

The rates remain the same throughout one-year policy period regardless of the payment plan applied. The insurance firm guarantees the rate for a full calendar year.

High-risk Drivers

Many people associate the term “high-risk” with repeated violations or major infraction, but most insurers have different views towards the case. Besides bad driving records, some other factors can determine whether or not someone is high-risk including:

· Age: new or teen drivers fall under high-risk category because they have very little experience in driving. Elderly people (70 years or older) are also high-risk due to hearing/vision issues. The company helps these people to get auto insurance in an easy way.

· Address: living in an area where the crime rate is high makes a driver high-risk as well. Cars in such neighborhood often fall victim to vandalism or theft.

· Credit history: The company does not use drivers’ credit history to determine approval.

Apart from those three factors, insurers use many variables to decide whether an applicant deserves approval or cancellation. the company only needs basic personal data to start underwriting auto insurance policies for customers.

Discounts

To help policyholders save money on insurance, the firm offers multiple discounts. There are three categories for discounts:

· Driver Discounts: eligibility requirements include taking Defensive Driving Course or Driver’s Education. Students with good grades are eligible for the discount as well.

· Policy Discounts: more affordable premiums for policyholders who registers multiple vehicles under one policy. Those who pay in full get 31% off premium.

· Vehicle Discounts: installing safety devices such as airbag, passive restraint, cell-phone blocking, and anti-theft system grants more discounts, too.

How To Cut Teen Insurance Rates

Teens ages 16-19 are three times more likely than drivers older than 20 to be involved in a fatal crash (or any crash, for that matter) according to the Insurance Institute for Highway Safety. It’s not too surprising, then, that teen drivers tend to have high insurance premiums. For parents, this can mean a big jump in insurance premiums once you add your teen driver to your policy. However, there are ways to reduce your costs right out of the gate, even for very inexperienced drivers. Here are some ways to keep policy costs at a minimum.

Choose the Right Car
It’s simply a matter of economics. There are some cars that cost more to repair and replace than others. There are also some cars that are more likely to be stolen and others that protect passengers better in a crash. Combined, these three characteristics have a lot to do with how much you’ll pay for the collision and theft portions of your policy, says David Goldstein, the author of Insure Your Car for Less: A Practical Guide to Saving Money on Automobile Insurance.

There are several ways to choose the least expensive car to drive. First, check the Insurance Institute for Highway Safety’s Top Safety Pick awards and the National Highway Traffic Safety Administration’s 5-Star Safety Ratings to see which cars scored the best in crashworthiness. You’ll also want to check the National Insurance Crime Bureau’s list of Hot Wheels: cars that are most commonly stolen.

Your insurance broker or company can also help you find the best rate for the cars you’re considering, says Goldstein, who has worked as an insurance and claims adjuster. “If you’re considering several cars, call and ask for a rate quote on each,” he suggests.

Midsize family cars are generally the cheapest to insure, says Jeanne Salvatore, senior vice president and chief communications officer at the Insurance Information Institute, a nonprofit information service. “You want a car that’s easy to drive and highly protective. Those are the cars that are going to keep your teen safe and cost the least to insure,” she says.

You may also want to consider a car that doesn’t need collision insurance, which will cut your rates considerably, says Salvatore, and either way, the age of your car may lead to more discounts.

“Some companies offer a utility discount for cars older than a 2002 model year,” she says. That said, make sure any older car you purchase has a solid crash rating and all of the safety features that a newer car might have including airbags, an antilock braking system (ABS), daytime running lights and (for SUVs) electronic stability control.

Adjust Driver Assignments
When you call the insurance company to add your child to a policy, the representative will ask you to designate which car will be driven by each member of your family most often.

You can save money by designating and having your child drive the car that’s the least expensive to insure. The trick is finding out which car that is, says Goldstein. “Driver assignment can really affect your rates,” he agrees.

If you get someone on the phone who is willing to work with you, he or she can take you through all the different scenarios. “Occasionally, I’d quote rates for four people and four different cars: two parents and two kids. If we played around with it, we could often save money,” Goldstein says.

Look for Alumni Discounts or Resident-Student Discounts
One of the perks of going to college is that many schools ink alumni deals with large organizations, such as insurance companies. While the discount is usually around 5 or 10 percent, it’s still worth looking into. Geico, for instance, offers an 8 percent discount for DePaul University students and alumni. Liberty Mutual offers special rates to those who attend Arizona State University.

If your child goes away to college and doesn’t take a car along, you can save a lot on your premium. Allstate, for example, offers a 35 percent discount off premiums for students who live at a school that is more than 100 miles from where their car is garaged. “There’s an assumption that they are only going to be driving on weekends and school vacations,” says Salvatore.

Finally, all full-time high school and college students who get good grades can benefit from their diligence. Most companies offer up to 25 percent discounts for good report cards. You’ll also see rates drop as your child advances in school. Seniors in college have better rates than freshman, so if your child takes college credits over the summer or in high school, let your insurance company know when he or she reaches the next college milestone, says Goldstein.

Wait an Extra Year Before Licensing
Some teens may not like this idea, but you can save a lot of money simply by having your son or daughter wait an extra year to get a driving permit.

“Wait until they are as old as possible before they get their permit,” says Goldstein. “For instance, in some states you can get your learner’s permit as early as 16 but you’re probably not going to be driving [without restrictions] until you’re 18. Why pay for insurance those two years unless you have to?”

Delaying the process is more common than you may think, according to several recent studies. The AAA Foundation for Traffic Safety reports that just 44 percent of teens get their licenses within 12 months of the minimum age and only 54 percent get their licenses before they turn 18.

However, if you go this route, make sure teens know that they’ll still need the practice and supervision that a graduated driver licensing program affords.

Tracking for Discounts and Better Driving Habits
In recent years new devices that connect to a car’s computer and use GPS technology to track driving habits and routes have flooded the market. While they can be very useful for parents who want to make sure that their teen isn’t speeding or driving outside an approved area, they’re also being used by insurance companies to help set rates for drivers of all ages in an approach called use-based insurance.

Snapshot, a program by Progressive Insurance, is one such option that uses a pocket-size telematics device that transmits car data using cell-phone technology. The device plugs into a car’s onboard diagnostic port and measures driving habits such as how and when someone drives, tracking behaviors like mileage, time of day and if the person performs hard braking maneuvers.

“Our Snapshot program gives all consumers, including teens, more control over their car insurance costs by offering personalized discounts based on their actual driving behavior,” explains Jeff Sibel, a spokesman for Progressive Insurance. “People who drive less, in safer ways and during safer times of day are most likely to receive a discount.”

Some companies are offering the device for parental tracking, but without an immediate insurance discount. Its use could result in lower rates going forward, says Rebecca Hirsch, a spokeswoman for insurer USAA. “We’re offering the device for free and parents get the monitoring for a year free,” she says. “Parents can get text messages if their teens are doing things like hard braking. It enables the parent and the teen to have a conversation around safe driving habits. The first few years are so critical. Anecdotally, we’ve seen that the devices help build better driving behaviors.”

Take a Class
Adults and teens alike can save money by taking a six-hour driving safety course either online or in person. Some insurance companies are offering teen-specific courses that can help reduce the number of crashes that involve teens by providing realistic driving simulations.

Liberty Mutual, for example, offers something it calls teenSMART, a program that focuses on the six factors that most commonly cause teen car accidents. The company says teens who complete the program may get “special savings” on their auto policies, but doesn’t offer any examples of what those savings might be.

State Farm offers a program called Steer Clear for drivers under the age of 25 or new drivers with less than three years of driving experience. It requires drivers to watch a video, sign a safe driving parent/driver agreement and complete a certain number of supervised trips of 15-30 minutes over the course of a month, filling out a log after each trip. By completing the program, drivers can get a discount of up to 15 percent on their coverage, says State Farm spokeswoman Rachael Risinger.

Finally, driver-training classes — so-called driver’s ed — can also help lower your premiums by up to 10 percent, depending on your insurer.

Make Smart Choices
Even if they apply every discount imaginable, most people will find there’s no getting around the fact that rates will go up with a teen driver on the policy — at least for a little while. And while it might be tempting to simply “forget” to inform your insurance company that Junior has his license, take note: Doing so can have serious consequences if your child is in an accident.

You’ll also want to make sure you have enough insurance coverage. “Don’t go for the minimum limits,” suggests Burl Daniel, a former insurance agent and corporate risk manager who testifies as an expert witness in insurance cases. “You’re exposing yourself to potential problems, if your kid does have a wreck and seriously injures someone. Don’t take the bait now just to save a few hundred dollars when it could end up costing you a lot down the road.”