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7 Things to Consider when Getting Insurance for Teenage Drivers

The day has finally arrived – time to add your teenage driver to your car insurance policy. And it could be much more expensive than you thought. According to the most recent RateWatch data, adding a teen to to your car insurance policy could add an average of $2,000 to your annual premium. There are some things both you and your teen can do to make sure the additional cost of getting insurance for teenage drivers is as low as possible. Here are 7 things that could affect the cost of adding a teen to your car insurance policy.

1.Grades: One more incentive for your teen to do well in school – discounts for students with good grades can range anywhere from $80 to $300, depending on the company and the state you live in.

2.Instruction: many parents leave most – if not all – of the driver training to the driving school instructors. But statistics show that teens whose parents also spent time teaching them to drive are slightly less likely to have an accident or ticket.

3.Car Choice: A new car might not be the best way to celebrate your teenager's new independence. They cost more money to insure – and more money to fix in the event of an accident. Older compact cars also have their disadvantages – most are not equipped with safety features such as airbags and anti-lock brakesthat can protect your teen driver and provide discounts on your premium.

4.Curfew: It might go without saying, but it is a good idea to limit your teenager's driving time. Many states have curfew laws that limit the hours a teenager can drive, and research shows that the chances of your teen being injured or killed in an accident increase dramatically in the hours between 9 pm and 6 am.

5.Passengers: The most common cause of accidents involving teenagers is driver distraction. A car full of friends could be dangerous, and it is a good idea to limit the number of people your teen can have in the car at any given time.

6.Traffic Laws: If you consistently watch your speed and wear your seat belt, your teen is more likely to do the same. If he or she does bring home a citation, make sure there are consequences. Enforcing good driving habits now can save you both a lot in the future.

7.Compare Rates: Though you might be tempted to just add your teen to your existing policy, it is a good idea to compare the rates of several insurance companies first. In some states, the difference between the highest and lowest car insurance premiums for a policy with a teen driver varies by $3,000 or more.

How to Save Money on Car Insurance: 10 Tips to Lower Premiums

Saving money is something most of us like to do. Whether it's clipping coupons or hitting the big sales, we like to feel like we're getting the best deal. However, many people don't realize that they can apply money-saving strategies to things like car insurance as well. If you are wondering how to save money on car insurance, here are 10 good tips to help you lower your premiums.

1.Drive Safely: One speeding ticket can increase your car insurance rates and average of 5-10%. Many insurance companies offer safe-driver discounts to people that have no traffic violations or accidents for a specified period of time, usually 3-5 years.

2.Credit Matters: The law in many states allows insurance companies to include your credit rating as a “risk factor” when determining rates. Establishing a good credit rating by paying your bills on time can help you lower your premiums.

3.Increase Your Deductible: Increasing your deductible – or out-of-pocket expense – from $250 to $500 can decrease your premium by as much as 10-15%. Just make sure you will be able to afford to cover the deductible in the event of an accident.

4.Drive Less: Many auto insurance companies offer low-mileage discounts for people who drive less than 7,500 miles per year. Some companies also offer commuter discounts for those who take advantage of public transportation.
5. Avoid Using Your Car for Business: Many insurance companies will increase your premiums based on your annual mileage, and some will add a surcharge to your premium if you use your car for business purposes. Don't think you can just forget to mention it to get the lower rate – you may not be covered if you're in an accident while driving for business purposes.

5.Park in the Garage: You may be able to receive a slight deduction if you park your car in a garage. Insurance companies know that these cars are less likely to be vandalized or stolen.

6.Install Safety Features: There are a variety of discounts available for vehicles with safety features such as airbags or anti-lock brakes. GPS tracking systems, car alarms and other anti-theft devices can also lower your premiums.

7.Drive a “Low-risk” Car: The type of vehicle you drive can affect your insurance premiums. Sports cars and other flashy vehicles are popular targets for thieves, and statistics show that the people who drive them are also more likely to have an accident.

8.Get Out of Town: If you live in the city, saving money on your car insurance could be as easy as removing yourself from the crime and traffic. People who live in rural communities have statistically lower premiums than city-dwellers.

9.Shop Around: Doing a little comparison shopping for your car insurance can save you a lot of money. Insurance premium differences in some states can vary by as much as $2,000-$3,000 from company to company.

10.Avoid Using Your Car for Business: Many insurance companies will increase your premiums based on your annual mileage, and some will add a surcharge to your premium if you use your car for business purposes. Don't think you can just forget to mention it to get the lower rate – you may not be covered if you're in an accident while driving for business purposes.

How to Shop for a New Car Insurance Policy

For most people, shopping for car insurance is one of those dreaded chores to be put off for as long as possible. When they finally have to see to it, many people just call the phone number they see the most on TV. With just a little more effort, it is often possible to save hundreds – maybe even thousands – of dollars per year on insurance premiums. Here is what every consumer should know about how to shop for a new policy.

Average Savings

How much you might be able to save simply by shopping around depends on several factors. The type of coverage you need, your driving record and your credit score (where applicable by law) all affect the price of your auto insurance. In some states, the difference between the highest and lowest quotes could vary by as much as $3,000!

You can shop for more competitive rates at any time, but the best time to compare insurance prices is usually when your current policy is about to expire. This can save you even more money if you've recently had tickets or if old citations have reached their statute of limitations and have dropped off your driving record. You should also consider comparing rates if you have a teenager about to reach driving age or if you move, buy a home, get married or have another life-changing event.

Decide the Amount of Coverage You Need

The first step in shopping for a new car insurance policy is deciding the level of coverage you need. Federal law requires all drivers to carry a minimum amount of liability insurance coverage on all vehicles, and the amount of coverage required varies by state. Some states also require drivers to carry additional uninsured or under-insured driver coverage. You can contact your state's Department of Motor Vehicles if you are unsure what coverage the law requires where you live.

You should also consider your personal financial situation and driving habits when deciding what car insurance coverage you need. Premiums need to be within your budget, but you also want the best coverage for your money. If you are leasing a car or making payments on a loan, your lender will require you to carry additional coverage to protect the vehicle. More comprehensive coverage may also be necessary if you are an accident-prone driver.

Gather Information and Get Quotes

Once you have decided on the coverage you need, you only need to set aside about one hour to shop for car insurance. Gather all the necessary information in advance – you will need your current policy information, driver's license number and vehicle registration(s) handy to receive the most accurate quotes.

For most people, the best place to start shopping for quotes is online. You can get comparison quotes from several companies at once and save yourself some time. Online quotes are not available in a few states, so you may have to resort to phone calls if you live in a place where the insurance companies do not provide this.

Take notes for each insurance company to keep all of the different options in order. Get quotes for the same coverage from all the companies that you contact and note the following information:

1.Annual and monthly premium amounts

2.The company's payment policy, and when a late payment puts the policy in default

3.Applicable discounts such as low-mileage, safe driver, homeowner or other discounts

Choosing the Best Auto Insurance Policy

Once you have received your quotes, how do you determine which policy is best? Just like with many other things in life, the lowest price isn't always the best deal. The value of an insurance policy goes beyond the price you paid for it – company reliability also includes factors like consumer complaint ratios and how fast or fairly the company responds to claims. Here are three ways to determine the best car insurance policy for your money.

1.Consumer Complaint Ratios: Every state has a department of insurance that regulates all of the insurance companies licensed to operate in that state. Most of these departments publish consumer complaint ratio data on the different insurance companies right on their websites. This data shows you the number of complaints each insurance company receives per 1,000 claims. It is a good idea to look at the data for a few different states to see if a company has a consistent pattern of positive or negative data. A consistently high number of complaints should be seen as a red flag, no matter how appealing the company's premiums are.

2.Professional Recommendations: Once you have narrowed the list by looking at the consumer complaint ratios, you might consider calling local repair shops and car dealerships to see which companies they recommend. These people work closely with the different insurance companies when vehicles need to be repaired, and they can tell you which companies are the best when it comes to fixing your car.

3.Financial Ratings: A.M. Best and Standard & Poor's both publish financial strength ratings for all insurance companies. These ratings look at each company's assets and other factors to determine the company's ability to pay out a claim. The rating scales differ, but in general you should consider only those insurance companies that have a minimum B+ rating from A.M. Best or a minimum BBB rating from Standard & Poor's.

After you lock in your policy with the insurance company of your choice, you will need to cancel your old policy. Many states also require you to carry proof of insurance, so make sure you have a copy of your insurance card safely tucked away in your wallet or purse for easy access. It is generally not a good idea to keep your insurance information in your vehicle – you will need this documentation in the event your car is lost or stolen.

How Your Credit Affects Your Car Insurance Rates

Banks use your credit report to decide whether to lend you money or extend credit and how much interest to charge you. Employers are increasingly using credit reports as another means of determining if you are a trustworthy employee. Many people don't realize that insurance companies can also use consumer credit reports to determine policy premiums in most states. And your credit rating could determine whether or not a company will even sell you an insurance policy. Here is how your credit rating affects your car insurance rates.

Bad Credit = Higher Risk

Insurance companies use several factors to determine policy rates. Your age, your driving record and the type of vehicle you drive are the three most important factors that affect your car insurance rates, but the law in many states also allows insurance companies to use your credit rating as a risk-determining factor as well.

The theory is that those with a stable credit history are more responsible and less likely to have an accident or file a claim and more likely to pay their premiums on time. Those with bad credit – or even no credit history – are considered higher-risk by the insurance companies because they are seen as less responsible and more likely to default on their premiums.

Your Rights

All insurance companies are required by law to inform you if you are denied coverage or your insurance rates increase due to information contained in a consumer credit report. You are also entitled by law to a free copy of the credit report from the issuing agency any time this report is used to make a decision about you. Also, companies are required to tell you which consumer reports (driving record, credit report, etc.) were used to determine your rates.

Federal law also requires each of the three major credit reporting bureaus – Equifax, Experian and Trans Union – to provide every consumer with one free copy of their credit reports each year. This law was passed to help consumers determine if the information contained in their reports is accurate, and also to help consumers determine if they have been victims of identity theft.

What You Can Do

Check with your state's department of insurance to determine if insurance companies are allowed to consider your credit report when determining rates where you live. If your credit history – or lack of it – is affecting your ability to get affordable car insurance, there are some things you can do.

1. If a lack of credit history is an issue for you, now is a good time to start building a good rating. There are many ways to obtain a good credit score without putting yourself in debt. Many credit unions offer secured credit cards for those with no credit or bad credit. If the thought of massive amounts of credit card debt scares you, it doesn't have to. Secured cards are backed by money you deposit with the credit union, and the amount of the deposit usually determines your credit limit. These cards can be a great way to establish a good credit history without going into debt.

2. Request a copy of each of your credit reports at AnnualCreditReport.com to make sure the information contained in each is accurate. Dispute (in writing) any mistakes or errors with both the creditor and the credit reporting bureau involved.

3. Clean up any bad credit history. Set up payment plans for any outstanding balances, and make payments on time. Consolidate high-interest credit card balances to one or two lower-interest cards. Most importantly, don't spend more than you can afford.

No matter what your credit history, a little effort could go a long way. Not only could you save money on your car insurance by improving your credit, you could also save a lot of money on future interest rates when making large purchases – and you might even find it easier to get a good job.

Understanding Auto Insurance Basics

The many different types of auto insurance policies can be confusing sometimes. Liability, PIP, Gap coverage, deductibles, exclusions – we know that it can be a real headache trying to figure out what it all means, but understanding auto insurance basics is very important in the long run. Knowing the difference between the assorted types of coverage can help you choose the policy that is best for you.

Who Needs Auto Insurance?

All states require some sort of minimum liability coverage on all vehicles. The exact coverage requirements vary from state to state – your state Department of Motor Vehicles (DMV) can tell you what the minimum requirements are for your state. For example, some states require that you also carry additional uninsured or underinsured motorist coverage. Liability insurance only covers damages another person incurs if you are at fault. There are two parts to standard liability insurance:

1. Bodily Injury Liability: This portion of the policy tells you the maximum amount your insurance will pay in the event you are held liable for an accident in which another person is injured or killed.

2. Property Damage Liability: This part of the policy tells you how much your insurance will pay toward the repairs or replacement of the other party's vehicle or other damaged property.

You will see a set of numbers on your policy that show your total liability coverage, usually something like 10/20/15. This would mean that you are insured for $10,000 in bodily damage to the driver, $20,000 total bodily damage for all passengers in the vehicle and $15,000 for personal property damage. Again, the amount of coverage you are required to carry varies by state and only covers damage to the other party unless you live in a “No-Fault” state. No-fault laws let each individual's insurance cover their damage regardless of who caused the accident.

Liability coverage also covers a certain amount of legal expenses in the event that you are subject to a lawsuit as a result of the accident. There are limits to the total amount of expenses covered, and additional insurance is usually a good way to fully protect your assets.

Other Types of Auto Insurance Coverage

Unless you can afford to cover the cost of your losses in the event of an accident, it is usually a good idea to add additional insurance coverages to your policy. These additional coverages are considered optional in most states, but if you are leasing a car or paying off a loan the lender may require you to carry some of these additional insurance coverages:

1. Collision: This coverage pays toward the repair or replacement of your vehicle if it is damaged.

2. Comprehensive: Also called “other-than-collision” coverage, this insures your car against damage not directly related to an accident. Examples of covered damage include fire, theft or vandalism.

3. Uninsured/Underinsured Motorist Coverage: This coverage can be a good idea if your state is not a “no-fault” state. It insures you against the losses you might incur due to other drivers with little or no insurance coverage. It can also cover passengers in your vehicle, people listed on your policy even in they are in another vehicle and lost wages.

4. Personal Injury Protection (PIP): Also known as medical payments coverage, this insures you, your passengers, and anyone else listed on your policy while either riding in a vehicle or as a pedestrian. This coverage pays various medical and/or funeral expenses you may incur due to an accident.

Additional Coverage Options

Many insurance companies offer additional options that add relatively little to your policy premium and can provide you with additional protection. These options include:

1. Gap Coverage: Usually required by the lender if you are still paying on your vehicle, this covers the difference between the current cash value of the car and the amount you still owe on the loan in the event the vehicle is totaled in an accident.

2. Towing and Labor: This option usually covers the cost to tow your vehicle to an approved repair facility and make minor repairs after an accident.

3. Roadside Assistance: This option also covers towing, minor repairs and fuel delivery in the event that you break down or run out of gas.

4. Rental Reimbursement: This option will cover the cost of a rental car in the event your vehicle is not drivable due to an accident. Some companies will send you a check for a portion of the covered expense even if you do not rent a car.

Auto Insurance: What is not Covered

You might think that your car insurance policy is supposed to pay for everything, but you would be wrong. There are some expenses that will always be your responsibility, so it is a good idea to read your policy carefully.

1. Deductibles: This is the amount you agree to pay out of pocket before your insurance coverage kicks in. You can choose the amount of your deductible – usually higher deductibles result in lower insurance premiums., and there are no deductibles for minimum liability-only insurance.

2. Exclusions and Limitations: These are specific events or circumstances that your policy does not cover. Examples of these include any damages or injury that you cause intentionally or mechanical failure due to normal wear-and-tear.

3. Costs over Policy Limits: You are responsible for any expenses that exceed the maximum dollar amounts listed on your policy.

Auto Insurance Policy Premiums: Get a Good Rate

There are many factors that can affect the price of your car insurance. These include your age, driving record and type of vehicle as well as the neighborhood you live in and the amount you drive. In many states, the law also allows insurance companies to take your credit history into account when determining your rate. Here are a few ways to lower your premiums.

1. Increase your deductible: The more you're willing to pay out of pocket in the event of an accident, the lower your premium will be.

2. Eliminate unnecessary options: Skip any options that you will not use. For example, if you have an alternate vehicle that you can use in the event your car is not drivable, then it might be a good idea to forgo the rental car reimbursement option.

3. Ask about available discounts: Many companies offer a multitude of discounts based on your individual situation. There may be discounts available if you only drive a limited number of miles in a year, if you purchase multiple policies through the same company or if your vehicle has anti-theft equipment installed. There are also discounts for homeowners, safe drivers and others.

4. Good driving record: This is probably the most important path to lower premiums. If the insurance company sees that you have a clean driving record and little to no insurance claims in your past they consider you less of a risk.

Most importantly, it's a good idea to shop around. Prices for car insurance can literally vary by hundreds or even thousands of dollars from company to company. It is a good idea to get at least 3-5 quotes before you choose a company, and make sure the quotes accurately reflect the coverage you need. Don't let price be your only guide – make sure the provider company has solid financial strength ratings and a good history of processing claims.

 
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