Insurance. It’s not an exciting topic, but it’s a necessary one. A discussion on personal finance isn’t complete unless you’ve properly addressed the risks to your assets and income. And insurance is typically the last frontier of personal finance. Most people, I would think, have retirement savings and debt under control long before they tackle the subject of insurance as a whole.

But there are many different forms of insurance. It’s hard to know for sure what to do. You may be asking, “what types of insurance I need to protect myself and my family“. Below I’ll take a high level view of the various forms of insurance and provide some basic information you should know about each one.

Life Insurance

Probably the most under-purchased (is that a word?) form of insurance is life insurance. This type of insurance protects your family from the potential loss of income from your death. Not fun to think about. But it’s a reality.

When I got married and started having kids, one of the first things I started thinking about was getting life insurance. My family depends on me for my current and future income to make it. I knew I had a small bit of coverage from my company. But I knew I needed, and could afford, a bit more.

The big questions in the life insurance world typically revolve around the differences between term and whole life insurance. If you end up choosing term life insurance like I did, then the questions shift to “how much life insurance do I need?” Don’t worry, you mainly need to get insurance on the earners in the family. You can usually do without life insurance on your child. Beyond that there are plenty more questions to ask before you buy insurance on your life.

Once you’ve got all your questions answered, it’s time to start the process of actually getting life insurance. Better to start early because this can take a while. There are applications to fill out. Exams to take. And the waiting around for the underwriter to do his or her job. But with all this waiting, it’s not hard to find an affordbale term life insurance policy. The quickest way to get started with this process is to request a quote for life insurance to see what’s available to you.

Health Insurance

Health insurance comes in many forms, but it’s generally going to cover your medical expenses for any health related issues (i.e. you have a heart attack) you experience. There are two main types of health insurance: group and individual. Group health insurance is typically what you get when you work for a company. The risks and costs are spread out amongst the group and so it’s typically a better insurance for you. Better because it’s usually cheaper and it covers more.

Individual health insurance is something you’d have to get for you and your family if you don’t have an employer, or you work part time. Since this type of insurance isn’t purchased by a group, you have to bear the costs and risks to yourself. For this reason, individual health insurance is usually expensive and doesn’t cover as much. All is not lost though. There are plenty of ways to save money on health insurance, including using a health savings account, and shopping around for health insurance quotes. Get a health insurance quote online today.

Recently, health insurance reform has come to the US. There are lots of changes going on that are going to affect the way this insurance is provided and purchased in the future. Be on the lookout for how these changes will affect you and your finances.

Homeowners Insurance

When you buy a home, condo, town home, or even a mobile home, it’s likely a good idea, and maybe a requirement by your lender, to purchase some homeowners insurance. I would estimate that this type of insurance can cost annually as much as a mortgage payment for you. You can now run a home insurance quote online like you can for car insurance.

What you get in return for your annual or monthly payment is a bit of peace of mind that if something were to happen to your home, like a fire, earthquake, flood, storm, etc, that you would be repaid for the damage. Now you can see why a lender is interested in making sure you have this insurance. They don’t want to be stuck with the bill if something happens and you aren’t protected by the homeowners insurance.

Car Insurance

Auto or car insurance is probably the most well known and owned of all the insurance types. This, I suspect, is because it’s required in most states. In my state, for instance, you need to have car insurance before you can register your vehicle or have it inspected.

Most states will require a minimum level of coverage for your car to protect others in case you have an accident. But did you know that there are up to 7 types of car insurance you could use to help protect you, your asset, and others? Deciding which types you need is a thing you need to research and determine for yourself. In that sense, car insurance is probably the most used, but least understood form of insurance.

Although car insurance is usually a required expense if you drive. It doesn’t have to be expensive. And you certainly shouldn’t pay premium prices when you don’t have to. I’ve found that with a little research it’s easy to save money on auto insurance. Request a quote on affordable auto insurance today.

Disability Insurance

This type of insurance helps to cover your loss of income from some type of disability which causes you to lose your job or prevents you from earning an income. You’re far more likely to be injured than killed, so it’s probably smart to have some of this insurance.

Like life insurance, most employers have a basic policy on their employees. But that might not be enough for you, and / or you might not have a job with a company. The self-employed should really look into this type of coverage. It’s something I need to do for sure. There’s lots to know about disability insurance. Mainly, it’s important to understand the distinction between short term and long-term disability insurance.

Other Types of Insurance

Other forms of insurance include business insurance (people often are concerned that they need business insurance with an LLC or corporation), casualty insurance, crime insurance, accidental death insurance, deposit insurance (FDIC), bond insurance, credit card protection insurance, loan protection insurance, worker’s compensation, travel insurance, and many others. You can even get insurance for your motorcycle. Check out one of my favorite GEICO insurance commercials (video link):

I hope you enjoyed this walk through the various forms of insurance. So what do you think? Do you have all the insurance you need?

Photo by micholitzii

Different Types of Insurance: Do You Have What You Need? is a post from: PT Money: Personal Finance by PT.

Related posts:

1. How to Get a Health Insurance Quote at eHealthInsurance.com
2. Buying Health Insurance as a Self Employed Individual
3. Protect What You Value: Getting Term Life Insurance

Last week I shared my thoughts on buying health insurance as a self employed individual. As you know, I ended up getting an individual health insurance policy that is HSA-eligible with a $10,000 deductible.

Today I thought I’d share more about the process of getting a quote through eHealthInsurance.com. It’s pretty straight-forward, but I thought I might give you an idea of what to expect. The process is a lot like getting life insurance. Except I didn’t have to go through an exam. Here’s how it goes down:

Step 1: Visit eHealthInsurance.com and Request a Quote

On page one of the request you will simply need to select “Insurance Type” and enter your zip code. I chose “Individual & Family” for type. On page two you will need to confirm your county, date to start coverage, and them complete the following for each member of your family to be insured: Gender, DOB, Tobacco Use, and College Student Status. Then, click the “go” button.

You will then be taken to a listing of plans available to you. For me, there were over 100 plans available starting at around $45 per month (adding more family members drastically increased the price though). In Texas, I had the following insurers available to me: Blue Cross Blue Shield, CIGNA, Aetna, United Health One, and some others.

Lastly, you’ll be able to sort plans by the following categories: best seller, price, deductible, ratings, and company. You will also be able to search plans that your doctor uses (very helpful).

I was disappointed that you could not sort results by “maternity coverage” or “HSA-eligible”. However, there are little buttons that designate this coverage beside the listings. You just can’t sort using them.

Keep in mind that the price you see by each plan is merely a quote. It could go up depending on your medical history and other factors. Mine went up by $20 after they learned of my weight.

Step 2: Application for Health Insurance

Once you choose a plan that’s right for you, you will need to apply to the plan. This will vary from plan to plan. But the process is generally the same. You will need to provide personal information and answer a series of medical history questions for each person being insured. If you have questions, I’ve found the staff at eHealthInsurance.com to be very helpful. They have a live chat feature and they have a toll free line at 1-800-977-8860.

You can pay for your first month’s premium during the application if you want coverage to start asap. I chose this feature and saw a charge on my account within a week.

Step 3: Questions from the Insurance Company

Your application is then forwarded to the insurance carrier. They will then review the application and call you with any further questions they might have. They ended up calling me a couple of times because the underwriter had several questions. Once all their questions are answered, you’re ready to be approved.

Step 4: Approval and Making Your Payment

The final step is to receive approval from the insurer and make your payment (if you haven’t already). In my case, my true premium was $20 more than my quote, so I received a letter, along with my insurance cards, requesting that I make an additional payment to cover the premium. Once I made that payment, I went from being conditionally approved to fully approved.

Getting health insurance wasn’t that terrible of a process. And eHealthInsurance.com made it pretty easy. You can log into your account throughout the entire process and check your status. They are in constant contact with your insurer and will keep you up to date.

Have you had experience getting a quote with eHealthInsurance.com? Would love to hear your thoughts in the comments below.

How to Get a Health Insurance Quote at eHealthInsurance.com is a post from: PT Money: Personal Finance by PT.

Related posts:

1. Buying Health Insurance as a Self Employed Individual
2. High-Deductible Health Insurance Plan Plus HSA
3. Different Types of Insurance: Do You Have What You Need?

This is a big topic. I’m not going to pretend to be an expert in this area. I’m still learning about health insurance as it relates to the self-employed person. But I have waded through a few of the details and I’m prepared to share with you how I made my decision on buying health insurance.

COBRA Continuing Coverage

First, know that if you recently left your job and were covered by a group plan there, you can take advantage of COBRA continued coverage. In my case, to continue with my old group plan, COBRA ended up being very expensive. I think a lot of newly self-employed folks find the same thing. That’s why I’m writing this post.

Group Health Insurance vs Individual Health Insurance

One of the first things you need to understand when buying health insurance is the difference between group health insurance and the individual kind. This is something that I didn’t have a firm grasp on going in and I think it helps to understand how these differ so that you know what to expect.

Individual health insurance is what you purchase if you can’t participate in a group plan. You buy this on the open market at a place like eHealthInsurance.com. As an aside, you can purchase this for your entire family. Individual doesn’t mean one family member.

Group health insurance is cheaper (with the exact same coverage) than individual insurance. This is simply because with the group, the risk is spread across a large number of people. Also, typically with group plans, your employer is picking up some of the costs. But the biggest difference, for me at least, is in this next section…

Maternity Coverage Health Insurance

Here’s the big surprise waiting for most people when they go the self-employment route. Most individual health insurance plans don’t automatically include maternity coverage. And in some states you can’t even get maternity coverage on an individual plan. When you think about it, it makes some sense. Maternity is a one time, expensive, somewhat-elective procedure. In a group plan, these costs are absorbed by everyone. On the individual level, it would mean a big payout by the insurance company just for one person. Therefore, they don’t touch it usually.

Group Health Insurance for Self-Employed

Once faced with the thought of paying for all the maternity costs, the next logical step for self-employed people going through this process is to want to jump back on some kind of group plan. The problem is, unless you have employees, you aren’t a group. You are an individual.

If you have a business and have it legally established with the state, you may be allowed to sign up for group health insurance as a “one man group.” See this list of one man group states.

Another way to get on group insurance is to look at your trade organizations. Costco even has a health insurance plan.

Also there are faith-based medical sharing groups, like Medi-Share that you could look into.

Changes Coming from the Healthcare Reform Bill

With all this, you may be thinking, “when does that healthcare reform bill kick in to save the day?” Well, you actually have a few years to go. Starting in 2014, if you are self-employed, or you do not have health-insurance because you can’t afford it (maybe you’re unemployed), will be able to purchase health insurance via state health insurance exchanges. This exchange is supposed to bring about less expensive individual health insurance. If your income is between 100% and 400% of the Federal Poverty Level (Federal Poverty Level for family of four is $22,050), there will be subsidies available to you. So, you could potentially get your health insurance for free.

How I Bought Individual Health Insurance

I ended up buying an individual health insurance policy that was health savings account (HSA) eligible with a $10,000 deductible.This is going to run my little family of 3 around $275 a month. It won’t include maternity coverage, so we’re going to either start saving for our next child (approx. $15k), or jump back on some group plan through my next employer.

I shopped for my policy through eHealthInsurance.com. If you’re considering self-employment, I’d definitely check out some quotes there first. In a later post I’ll break down the purchase process.

Buying Health Insurance as a Self Employed Individual is a post from: PT Money: Personal Finance by PT.

Related posts:

1. COBRA Continuation Coverage: A Quick Guide for the Unemployed or Newly Self-Employed
2. How to Get a Health Insurance Quote at eHealthInsurance.com
3. HSA Insurance: What Makes an Insurance Plan HSA Compatible?

When I was thinking of leaving my job one of the first things I did was visit my company’s benefit department and get an explanation of how my health insurance benefits would be affected by my leaving. Obviously I knew I wouldn’t be able to continue coverage indefinitely. I just didn’t know the particulars of when my coverage would drop and what my continuation options were.

I definitely wanted to continue coverage somewhere. If not with my old employer, then with a new policy. I’m not quite self-insured and I don’t want some major medical crisis to derail my entire financial future. If you’re considering self-employment, or if you think you may be laid off soon, I’ve got some information below regarding COBRA and how you can continue your group health insurance coverage.

COBRA Continuation Coverage

Federal law (the Consolidated Omnibus Budget Reconciliation Act or COBRA) gives you or your spouse or dependents the right to continued group health insurance coverage in the event that you lose your group coverage when there is a qualifying event. The Act basically forces your employer to let you participate in their group plan for a bit longer. This was set up so that you could continue to have health insurance while you looked for another job, or while you shopped for private individual medical health insurance.

The health insurance plan you have continued access to is the same plan you were under when you were employed. The major difference is that you have to pay for the full premium. Your old premium, plus the amount that your employer was paying for you. For most people, this will be a sizable difference. For me it was about a $750 difference. Yikes! It’s for this reason that the recently unemployed turn to their spouses health insurance plan for coverage, or strike out on their own to find an individual health insurance plan.

Unemployment COBRA Subsidy

If you were involuntarily terminated (fired/laid-off) by your employer, you are eligible for a subsidy of the amount you will owe towards your COBRA premium. The subsidy, provided initially by the ARRA, covers 65% of your premium and lasts for 15 months. You must have been termed from September 1, 2008 to May 31, 2010 (recently extended!). If you think you qualify for this subsidy, visit http://www.dol.gov/ebsa/cobra.html

How Long will Continuation Coverage Last?

For loss of coverage from end of employment, the regular COBRA continuation will last for 18 months. In order to continue coverage, you’ll need to make your payments on time and not get medicare or group health insurance elsewhere. Also, your former employer will need to maintain their group plan.

How Can You Extend COBRA?

You can extend COBRA beyond the 18 months if you are disabled or a second qualifying event occurs (i.e. death, divorce).

Electing and Paying for Continuation Coverage Under COBRA

To get signed up with COBRA you need to do the following:

• Be a “qualified beneficiary” who experiences a “qualifying event”.
• Receive notice of your right to elect continued coverage.
• Make the election via the election form provided with your notice within 60 days.
• Make your payment within 45 days of making the election.

The key takeaway here is that you have 60 days to decide if you want to use COBRA, and then you have another 45 days to pay for it. A common question at this point is “will I be retroactively covered?” Yes. But keep in mind you will need to make premium payments dating back to the time you lost coverage from your employer. So, if you wait the full 105 days to pay, you’ll need to make 4 months worth of payments at once.

My Decision Regarding COBRA

I decided against using COBRA continuing coverage. While I liked my old group plan provided by my employer, I couldn’t afford that type of plan on my own. Since I voluntarily termed, I’m not eligible for the subsidy. So, I’ve turned to a high-deductible, HSA-eligible individual health insurance plan to get my coverage. I’ll explain more about that purchase in a future post.

Disclaimer: Keep in mind that I’m not a professional on this matter. Do more research regarding your particular situation at the DOL’s COBRA Website.

COBRA Continuation Coverage: A Quick Guide for the Unemployed or Newly Self-Employed is a post from: PT Money: Personal Finance by PT.

Related posts:

1. Buying Health Insurance as a Self Employed Individual
2. How to Get a Health Insurance Quote at eHealthInsurance.com
3. Save Money on Health Care: A Quick Summary of Tax Advantaged Medical Savings Accounts

In this post I’ll share how to protect what you value: your family’s financial future. I’ll focus on the why and how of getting term life insurance.

The reason I’m focusing only on life insurance is two fold: most other forms of insurance are required (e.g. home owner’s insurance if you have a mortgage, auto insurance) and life insurance is something a lot of people need, but just haven’t taken the time to purchase.

I realize I could also devote another whole email to spending less on other forms of insurance. That is important. But not as important, I believe, as getting those without life insurance, who need it, signed up with a policy.

What is Life Insurance?

Life insurance is a contract between the policy owner (you) and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual’s or individuals’ death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums.

What Life Insurance is Not

Life insurance is not an investment opportunity. I’m of the opinion that investing and life insurance are two separate things. Why the heck did investing and life insurance ever get involved? Insurance products that promise investing returns are just an expensive waste. Keep investing simple, inexpensive, and separate from your insurance goals.

Life insurance is not a waste of money. You aren’t just throwing money away. Therefore, cheap isn’t always better. Make sure you get the proper amount, type, and quality of life insurance.

Term Life Insurance Is Best for Most

For most people, a simple term life insurance policy will do. Term life insurance ends after a specific period (or term). This makes it less expensive than other forms of life insurance and it also matches the specific needs of most people. Most people have dependent people (kids, stay at home spouse, etc.) in their life for around 20 to 30 years. After the kids have left, and you’ve built up retirement savings, there’s not much need for more life insurance.

When to Get Life Insurance

I’m of the opinion that life insurance isn’t needed until there is a dependent relationship established. Once you have someone in your life that relies on your income and is unable to produce that income by themselves if needed, then you need to look into life insurance. For most people, this means when they get married and/or have children.

How Much Life Insurance Do You Need?

This is probably the most personal decision you’ll need to make when getting life insurance. It really depends on several factors: your current and expected monthly expenses, your current and expected savings funds, your current and expected debts, your spouses ability to work full-time even without you, etc. The list could go on. Luckily, there are plenty of calculators out there that will help you come up with an amount that’s right for you. Also, the cost difference between $500,000 and $1M in term life insurance isn’t that great, so it won’t hurt to over insure by a little.

Read how I personally came up with my own life insurance amount.

Where to Get Life Insurance

There are lots of places to get life insurance. You can check with your employer, the company that insures your auto or home insurance, your bank, or at a life insurance broker, like Zander Insurance. The key is to shop around, get quotes, look for discounts, and make sure you use a highly rated company. Check ratings at www.insure.com.

A while back I polled some members of the personal finance blogging community and got the scoop on where they got their life insurance.

I personally ended up getting my 20 year term life insurance plan with ReliaStar (a company under the ING name). You can see their rates at www.ingforlife.com.

Get Started Now

Don’t put off this need any longer. It takes some time to get set up with life insurance, so it’s important to get started early. Here’s a post I shared a while back about going through the process of buying life insurance.

For even more reading on life insurance see: Further Thoughts on Life Insurance and Do You Need Term Life Insurance.

Protect What You Value: Getting Term Life Insurance is a post from: PT Money: Personal Finance by PT.

Related posts:

1. Do You Need Term Life Insurance?
2. Why I Bought a $500k 20-Year Term Life Insurance Policy and You Should Too
3. The Long Road to Getting Life Insurance

Editor’s note: After my recent discussions on getting affordable auto insurance, I had someone ask, “can I get temporary car insurance?” I didn’t have a good answer, so I brought in a guest writer to explain more…

Driving without valid car insurance is illegal, and more than that, it’s just a bad idea. There are too many uncontrollable factors that come into play when you get on the road, and insurance is the best way to make sure you’re covered in the event of an accident.

However, there are more options for coverage than the standard six-month amount. I’m talking about temporary car insurance. It’s not uncommon for people to have questions about temporary car insurance, but the answers are different than you’d think.

Why Do I Need Temporary Car Insurance?

You can purchase temporary car insurance for several reasons. One of the most popular is the one- or two-day policies offered to drivers who buy new vehicles. This allows them to take delivery of the car and be covered for a few days until their full policy takes effect.

It’s also a good investment if you’re going to be traveling and only need to cover yourself for a brief period of time that’s less than the standard policy length. It can also be helpful if a friend or family member not on your policy is going to be driving your car temporarily.

You can buy a temporary policy set to expire at a certain time rather than adding someone to your existing policy and then having to remove them later. The goal of temporary car insurance is to provide a convenient way to boost your coverage that’s finished when you want it to be.

How Much Is Temporary Car Insurance?

The prices for temporary car insurance vary based on a number of factors, including your location and the make and model of your vehicle. However, almost every temporary car insurance policy shares in common a higher price structure than regular insurance. This is for two main reasons.

First, there’s the convenience factor. Obtaining quick, temporary car insurance means paying more money because it’s an uncommon request, and because getting it fast raises its value to the buyer.

It’s also higher priced because the company issuing the policy typically knows less about you and your driving history than other insurers or their insurer you’re already using. It’s in their interest to safeguard their investment, so extending temporary insurance to customers they don’t know well means they’re going to set the price higher than ones you’d see attached to normal policies.

You should also note that temporary car insurance isn’t available in every state, so be sure to check with your current insurance company or others to ascertain if your state allows short-term coverage.

How Do I Find Temporary Car Insurance Quotes?

There are a variety of ways to obtain temporary car insurance quotes and, if you’re satisfied, buy temporary car insurance. If you’re currently insured, contact your company to see if they offer short-term policies and what their requirements might be. They can tell you what you need to know about temporarily padding your coverage with a brief policy.

There are also multiple insurance companies set up just for the purposes of offering temporary car insurance, many of which can provide quotes and purchase information online. A few quick Web searches yield results for multiple resources for temporary insurance.

It’s also a good idea to check with friends and colleagues for personal recommendations, since they can often provide helpful advice and tell you things you can’t learn just by browsing search results.

Temporary car insurance isn’t for everyone, but it can be a great resource in certain situations. If you’re traveling or need to meet a special, short-term need, check out a temporary policy and see if it works for you.

This guest post is contributed by Raine Parker, who writes on the topics of accounting degree. She welcomes your comments at her email Id: raine.parker6@gmail.com.

The Facts About Temporary Car Insurance is a post from: PT Money: Personal Finance by PT.

Related posts:

1. Do You Need Term Life Insurance?
2. 20 Tips for a More Affordable Auto Insurance Policy
3. Cheap Car Insurance: Women Have the Advantage

Here’s a nice infographic I found which outlines the changes coming as a result of the new health care bill that just became law.

And here’s a calculator that the Washington Post put together to help you determine an estimate of what the effects of the new laws will be to your coverage, taxes, etc.

So what’s your opinion of the new health care bill? More importantly, how will you be affected? Both by the laws, and the affects the laws have on our future economy and health care.

Question of the Week: How Will You Be Affected by the New Health Care Bill? is a post from: PT Money: Personal Finance by PT.

Related posts:

1. Save Money on Health Care: A Quick Summary of Tax Advantaged Medical Savings Accounts
2. How Much Do You Contribute to Your Health Care Flexible Spending Account?
3. Question of the Week: What Are the Most Important Takeaways of Personal Finance?

Today I want to delve a little deeper into this week’s main topic of auto insurance. Specifically, women’s car insurance. If you’re a woman, or even if you’re married to a woman, there are some facts here you’ll be interested in.

Typical Women Drivers

How would you describe the typical woman driver? Women, in general, get razzed all the time about their driving abilities. And most men are pretty proud of their driving abilities. Women, here’s a cheesy joke your husband might have used before:

“We bumped into some old friends yesterday, my wife was driving.”

Check this out. Someone actually put together this viral video of bad women drivers.

And who could forget this classic photo of a woman driver. But is it fair to cast these stereotypes? Are women bad drivers? Luckily I’m not here to debate those questions. What I do want to do is present an interesting fact:

Women, in general, pay less for car insurance.

Yep. All the information that I’m reading says that women pay less for car insurance, especially young women compared to young men. Why they pay less is up to some debate though. Is it because of actual stats (accidents, tickets, etc.) or is it simply discrimination?

There are several factors involved. Women do have less accidents than men, and they also get few speeding violations. On top of that women are more likely to drive less and have a car that’s cheaper to insure. So, if you were to ask who the safer driver was, you’d have a hard time saying it wasn’t women.

But is there gender discrimination going on? Apparently some think there is. I found this from an associated content article:

Legally, auto insurance companies in 43 states have the ability to discriminate between male and female in terms of charging them on auto insurance. Currently males between the ages of 16 to 25 generally pay about 6.8% more money for their insurance than females with an equal record regarding tickets and accidents. Some people say that the price is justified because of young male behavior but others argue that it is discriminatory and stereotypical.

Interesting stuff. What are your thoughts on this? Let me know in the comments below…

So How Can Both Men and Women Benefit?

The above information got me thinking about married couples. Would it be cheaper to have the wife get quotes for car insurance, sign up the best car insurance, and then subsequently add the husband to the policy?

Mrs. PT and I did it the opposite way. I signed up for auto insurance and then added her as a driver to our policy. I wonder if I could have saved by doing it the other way around? Anyone had experience doing this?

More Ways to Save

Lastly, regardless if you are a woman or a man, there are plenty of ways to get a more affordable auto insurance policy: raise your deductible, look for discounts, compare competing quotes, etc. And even for women, policy premiums can vary by as much as $1,000 annually. So it’s probably just more important to compare plenty of quotes and only pay for the items on your policy that you want, than it is to worry about gender.

Cheap Car Insurance: Women Have the Advantage is a post from: PT Money: Personal Finance by PT.

Related posts:

1. The Facts About Temporary Car Insurance
2. I Really Did Just Save a Bunch of Money with GEICO
3. Question of the Week: How Much Do You Spend on Auto Insurance?

What does it take to get affordable auto insurance? As I mentioned last week when I shared my story of getting more affordable auto insurance with GEICO, there are two main ways to go about lowering your auto insurance premiums: (1) reduce the cost of your current policy, or (2) get a new auto insurance policy. Today I’m going to walk you through both of those ways, plus introduce some more drastic steps you can take to lower your auto insurance.

Review Your Current Policy

1. Ensure Your Policy is Accurate – The very first thing you need to do is make sure that your current policy accurately reflects your situation. This includes all your vehicle information, like age and make. Also, make sure your yearly estimated mileage is properly stated. If you work at home or have a very short commute, make sure that your policy reflects that for that vehicle.

2. Be Aware of State Minimums – The state you live in will have a minimum set of auto insurance liability coverage requirements. You can find these at your state’s insurance commissioners website. You can also visit this page to see the full list of state’s insurance requirements. The minimums will be expressed in bodily injury liability limits and property damage liability insurance. Just make sure you know the minimums you have to maintain.

3. Be Aware of Financing Requirements – If you currently finance your vehicle, the financing company may have additional requirements of their own for you to maintain in insurance coverage. This usually affects your deductible, so be sure you know your required limit before you raise your deductible.

4. Consider Raising Your Deductible – Now that you know your requirements, it’s time to consider raising your deductible. If you raise your deductible, keep in mind that you will be responsible for that amount if you get into an accident and it’s your fault. If you’ve set up a nice emergency fund, you’ve already self-insured to a degree. So, raising your deductible wouldn’t be a bad idea. To my knowledge, raising your deductible has the biggest impact on your auto insurance rates. Read more about car insurance deductibles.

5. Consider Dropping Certain Coverage Items – Each insurance policy will have different levels of coverage. Some are required, some are recommended, and some just aren’t needed for your situation. I’m not going to tackle each type of coverage here today, but I will discuss the main three and when you could consider lowering the coverage.

• Liability – This type of coverage pays for personal injury to others, including medical expenses and lost wages. It also includes property damage, which covers the damage you do to their vehicle or other property. Liability is the baseline of insurance coverage and most states, as mentioned above, have minimum requirements. If you’ve got a decent car and a few assets to protect, you should consider getting 100/300/100 level coverage here. There’s no reason to skimp in this area.
• Collision – This type of coverage pays for the damage to your vehicle. How much is your car worth? If only a couple thousand, it may be a good idea to drop this coverage, since you’ll only need a couple thousand to replace it.
• Comprehensive – This type of coverage pays for any loss or damage to you vehicle for anything other than an accident. For example, if your car is stolen or damaged in a flood. Similar to collision, factor in the value of your vehicle and how much the insurance premiums are.

Those are the three main types of coverage, but here are some more add-on types you can consider lowering or dropping all together: Medical Coverage, Personal Injury Protection (PIP), Uninsured Motorist, Under-insured Motorist, Rental Reimbursement

The bottom line: meet your requirements, get plenty of liability insurance, and factor in the value of your vehicle when deciding on collision and comprehensive.

6. Consider Dropping Extras – Many insurance policies will have little extras that you simply don’t need. Emergency road side assistance is one that comes to mind for me. I just don’t need this and so I make sure I’m not paying for it on my policy. Have a discussion with your agent or insurance company and know exactly what extras you are paying for. Evaluate which one’s you want to drop.

7. Get Every Discount You Can – The quickest way I’ve found to do this is to call your insurance company or agent and ask them for a list of all their discounts. Write them all down and them systematically work through the list to ensure you’re getting the full discount. One that I have on my list right now is the defensive driving discount. I just need to find a place to take the course. Consider more ways to save on car insurance.

8. Combine Policies if Newly Married – If you just got married, and have the same insurer, call them up to have your policies combined. This will save a great deal because of the multi-car discount.

9. Consider Paying in Full – You may be paying an extra fee for paying your policy month-to-month. Start saving now and pay your auto insurance premium in full next time.

Consider a New Policy

Let’s say you’ve looked over your bill and you’ve exhausted all the tactics above. You should still check to see if there is a more affordable auto insurance policy available from another insurance company.

10. Shop Online for Quotes Through Insureme.com – A website like insureme.com will allow you to run one check and get back several auto insurance quotes. This way you can see who is offering you the best deal.

11. Shop Direct for Quotes – You can also go straight to the source, as some insurers aren’t included in the multi-quoting process above. Get direct quotes from Allstate, Hartford, GEICO, etc..

Here’s a video on buying auto insurance:

12. Consider a Multi-Policy Discount – If you are considering a new policy, it might be a good idea to check with your home insurer to see if they have a discount for multi-policies. Most of the companies above insure both home and autos, so it’s worth a try to see if you can pay less by bundling insurance policies.

13. Take Advantage of Multi-Car Discounts – If you’re getting a new policy, consider going with the insurer that your spouse uses, if you aren’t already. There are big savings for keeping all the cars under your roof within one policy.

14. Group or Organization Discounts – As a member of a trade organization or other group (i.e. your employer), you may be eligible for a discount. Check to see if you need to purchase through them to get the discount though.

Consider These Big Changes

Here are some more drastic changes you might could make to lower your rates and make your auto insurance more affordable:

15. Consider Going to One Car – Do you really need that extra car? If you’re married and one of you work from home, consider going with just one car. The savings on payment, maintenance, and insurance could be in the hundreds.

16. At Least Consider Lowering Your Commute – If you can’t drop to one car, consider working closer to home, working at home more, or taking alternative transportation to work. The lower your commute to work is, the lower your auto insurance policy will be.

17. Move to a Different City or State – Different states not only have different requirements, but they also have very different premiums. Read more about the most expensive places to insure a car in the US.

18. Improve your FICO Score – Insurers can use your FICO score to determine how safe a driver you are. Therefore, having a better FICO score will lower your insurance premiums. Check your FICO score and then review these ways to improve your FICO score.

19. Get a Different Car – Lastly, we saw last week how the type of car you drive can have an impact on the amount of insurance you pay. Consider driving a different vehicle. At least one that’s less likely to be stolen.

20. Do You Have Something to Add? – Help me think of the 20th tip. Let me hear from you in the comments below.

20 Tips for a More Affordable Auto Insurance Policy is a post from: PT Money: Personal Finance by PT.

Related posts:

1. Question of the Week: How Much Do You Spend on Auto Insurance?
2. The Facts About Temporary Car Insurance
3. I Really Did Just Save a Bunch of Money with GEICO

Insure.com recently commissioned a study to find out what it costs to insure different vehicles. The results are pretty interesting. The least expensive vehicle to insure is the Mazda tribute at $1,070 annually. While the most expensive is the Porsche 911 at $2,940 annually. The study was based on:

“coverage of $300,000 for all injuries, coverage of $50,000 for property damage in an accident and a $500 deductible on collision and comprehensive coverage”

Here’s a graphic of the average auto insurance premiums for common vehicles:

Next week I’ll be looking into ways to lower your auto insurance premiums to make them more affordable.

My question today is simple:

How much do you spend on auto insurance premiums on a monthly, bi-annual, or annual basis?

Question of the Week: How Much Do You Spend on Auto Insurance? is a post from: PT Money: Personal Finance by PT.

Related posts:

1. 20 Tips for a More Affordable Auto Insurance Policy
2. Question of the Week: Who Does Your Car Service?
3. I Really Did Just Save a Bunch of Money with GEICO