Scouring the news wires, the CFA has uncovered some interesting
articles covering recent insurance trends. You probably
don't want to read all those articles, so here's the boiled-down
facts:
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Rates can vary dramatically: one study showed that
the cost of liability insurance for a motorist age 25 to 64, with
a good driving record, could range from $217 to $804 (article).
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Some insurance companies pay high commissions to agents to
persuade you to buy higher-cost insurance, yet you get
no better service (article.)
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A new study asserts that the insurance industry is piling up the
highest profits in 50 years, in part by systematically
overcharging for insurance, cutting back on coverage, underpaying
claims, and shifting costs to taxpayers (article).
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To be fair, insurance companies respond that prudent cost-cutting
and competitive pressures are the root cause of recent trends in
the insurance industry. And here's some good news:
Auto insurance premiums are expected to drop in 2007 for the first time since
1999. That's really encouraging when you consider that
inflation jacks up most other prices about 3% yearly! The
roads are getting safer, and insurance companies have been
getting better at catching the cheaters whose scams raise
insurance costs for the rest of us.
There are plenty of good insurance people who try to treat
people fairly. The only way to make sure you're being
charged a fair price is to shop around. You don't
have to pay as much as some insurers want to get out of
you.
There are many ways you can save money on auto
insurance:
| 1. |
Insuring multiple cars with the same company will save up
to 30%. You could also get a small discount by bundling
home and auto insurance with one company.
| | 2. |
Dropping collision coverage will save 15-30%. If
your car gets totaled you would need to buy a replacement car, so
this idea is perhaps best used with less valuable cars.
Another way to save is to raise your deductible on
collision coverage (and then drive very safely!)
| | 3. |
Dropping comprehensive coverage will save up to 15%. It
mostly covers theft and occasionally the damage caused by bad
weather, fire, and vandalism. If you have a visible
anti-theft device such as a car alarm and you park with
reasonable caution, the chances of your car being stolen are very
small in most areas. Most thieves will just move on and
steal an unprotected car.
| | 4. |
Good citizen discounts could save 20% or more. These
discounts are often available for distinguished professionals,
students with at least a "B" average, and people who have good
credit scores (or who have cleaned up previous bad score.)
| | 5. |
A low mileage discount could save up to 10%. These
are usually available to people who drive less than 7,500 miles
per year.
| | 6. |
Be sure to shop around. J. D. Power has the most unbiased ratings of insurance
companies that we've seen.Consumer Reports used
to offer an unbeatable service that compared insurance prices,
but unfortunately it's no longer available. Fortunately, several
other sites compare low-cost auto
insurance: InsWeb
and Progressive
are two good places to start. InsWeb has been the consensus
leader in comparing online insurance quotes ever since
they joined forces with Quicken Insurance. We are hesitant to
recommend Progressive because it's a private insurer, and we aren't sure that
their rate comparisons are as unbiased as they claim. But they do compare
rates from several major insurers that you may not see on InsWeb, including
State Farm, Allstate and Farmers Insurance.
| | 7. |
You might also call a local independent agent or two to
see if they can find you an inexpensive policy from a company
that isn't online.
| | 8. |
Remain accident-free to save up to 20%, or perhaps even
more if you previously have had a bad driving record.
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How To Switch Auto Insurance
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| 1. End-Of-Term Is Best. |
Auto insurance comes in six-month terms. If you switch
mid-term, a small extra fee might be required. But often
the savings from the switch will more than cover this fee.
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| 2. Check out several insurers. |
In addition to checking out InsWeb and
Progressive,
look at the insurers most highly rated by J. D. Power. USAA is top-rated
but is available only to military families, while Amica
achieves low rates by being very selective about who they
insure. You can visit your state's online insurance site to search
their records concerning the cost and reliability of insurers.
Find this site on Google: For example residents of Washington
can search for "washington state insurance."
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| 3. Contact your current insurer. |
You might be able to save money by amending your
policy, for example by dropping some unnecessary coverages.
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| 4. Switch smoothly. |
Follow the cancellation steps as outlined in your
insurance policy. The notice to your current insurer must
be in writing. Be certain that the new policy begins on the
same date that the old one is being terminated. To avoid
any lapses, It's best to ensure the starting date of the new
policy first, then have the old one terminated on the same date.
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Should You Switch Life Insurance?
Here's what consumers need to know:
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| 1. Savings can be significant. |
If you bought term life insurance years ago and
your health hasn't significantly declined, you can probably save
money by switching policies (perhaps as much as 60%.) This is due
to the increasing lifespans of Americans.
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| 2. Contestability Period. |
Within this period (usually the first two years of
your life insurance policy) the insurance company can investigate
the statements you made on your application, and can legally
refuse to pay the death benefit if there are relevant
inaccuracies or omissions.
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| 3. About your old policy. |
Always make sure your new policy is in effect
before canceling the old one.
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Thought for the Day:
"There are worse things in life than death.
Have you ever spent an evening with an insurance salesman?"
~ Woody Allen (1935 - ), American comedian, actor and director
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Keeping Safe From Injuries
Now let's talk about how to protect yourself and
your loved ones from the possibility of a fatal injury.
Traffic accidents are the most common type, being the cause of
death for 1.9% of Americans. In case you feel someone in
your household may be vulnerable to some of these dangers, we've
listed some helpful online resources in this table (fatalities
resulting from disease aren't included.)
The 7 Leading Causes Of Fatal Injuries
| | 1. Traffic accidents (1.9%). |
A Traffic Safety Checklist of the most
effective tips is shown below as you scroll down.
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| 2. Suicide (1.3%). |
About 4% of the population attempts suicide at
some point in their lives. You can read tips from
About.com's expert in What to do when a friend is feeling suicidal.
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| 3. Homicide (0.7%). |
Read a one-page list of homicide prevention tips, or for a more
in-depth review of your personal security options visit The Crime Doctor.
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| 4. Falls (0.7%). |
The CFA has put together a list of tips that can keep you safe
from falls, poisonings, drownings and fires in a special report
Four Preventable Tragedies (it's also available
in PDF format.) Young people are the most
susceptible to drownings and poisonings, whether accidental or
from drug overdosing. Older people tend to fall victim to
falls and fires (largely because of their lessened powers of
strength and coordination.)
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5. Poison (0.6%).
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6. Drowning (0.17%).
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7. Fires & Burns (0.15%).
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Using the information presented today, you can enjoy a life of
safety, health and happiness! Part VI of this series will
be a "Medical Savings Toolkit" that can help you save a ton of
money on health care.
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To-Do List:
1. Review your insurance needs
2. Comparison-shop for auto insurance
3. Consider shopping for life or home insurance
4. Drive safely!
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How To Save Hundreds On Home Insurance
It's often possible to cut the cost of your homeowner's or
renter's insurance by 25% or more and save hundreds of
dollars every year.
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| 1. Home security upgrades. |
Save up to 15-20%.
Get dead-bolt locks and a burglar alarm (preferably one that's
monitored 24/7).
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| 2. Fire-fighting upgrades. |
Save up to 10%.
Fire alarms and extinguishers are worthwhile. A sprinkler system
is an excellent (but costly) upgrade.
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| 3. Raise your deductible. |
Save 15-25%.
Raising your deductible can save big money, especially if it's
currently lower than $200.
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| 4. Drop unneeded coverage. |
Save up to 20%.
Eliminate any "riders" or "floater" clauses that cover unlikely
losses. Insurance should cover no more than the rebuilding cost
-- don't include the value of the land. |
| 5. Shop around. |
Save up to 20%.
Home insurance prices from different companies can vary widely,
so shop around for a lower rate at sites such as InsWeb.com, MostChoice.com and NetQuote.com.
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| 6. Loyalty discounts. |
Save up to 20%.
Most companies offer a longevity discount for people who
stick with them. Often it's a 5% discount for staying 3-5 years,
and a 10% discount after six years. Retirees often
get an additional 10% discount.
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| 7. Avoid risk. |
Avoid anything that increases the risk perceived by your insurer
(for example a low credit score, or keeping a dangerous
pit bull, or having an accident-prone swimming
pool.)
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| 8. Claims-free discount. |
Save 10-15%.
If you avoid burglaries and don't make an insurance claim for
three to five years you may get this discount.
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| 9. Block watches. |
Save 5-10%.
If you organize a block watch, insurance rates and the crime rate
will both go down in your neighborhood.
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| 10. Live in a safe home. |
Save up to 20%.
Newer homes have fewer problems. In windstorm-prone areas,
consider brick homes; in earthquake zones, wood frames stand up
better. Avoid flood-prone and high-crime areas.
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Call your insurer and consult with them. Tell them about
your home improvement plans, make sure you're adequately covered,
and be sure to ask what other discounts they offer.
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Actual Auto Insurance
Claims
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| 1. | "In an attempt to kill a fly, I drove into a
telephone pole."
| | 2. | "The other car collided with mine without giving
warning of its intention."
| | 3. | "The pedestrian had no idea which
direction to go, so I ran over him."
| | 4. | "I thought my window was down, but I found it
was up when I put my head through it."
| | 5. | "I had been driving for 40 years when I fell
asleep at the wheel and had an accident."
| | 6. | "I saw a slow-moving, sad faced old gentleman as
he bounced off the roof of my car."
| | 7. | "The indirect cause of the accident was a little
guy in a small car with a big mouth."
| | 8. | "I was thrown from my car as it left the
road. I was later found in a ditch by some cows."
| | 9. | "The car in front hit the pedestrian but he got up so I hit him again"
| | 10. | "An invisible car came out of nowhere, struck my
car and vanished."
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Email this joke to your favorite people in just two clicks!
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Traffic Safety Checklist
Here's what the CFA learned from its crusade to
improve automotive safety through devices such as LiveDrive:
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| 1. Drive clear-headed. |
15% of habitual drunk drivers eventually die in a
traffic accident; many more end up in jail.
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| 2. Drive cool-headed. |
Two-thirds of fatal accidents involve risky
driving maneuvers that are often done in an impulsive or
negatively emotional state of mind.
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| 3. Eyes on the road. |
About half of all auto accidents involve
distracted drivers. Don't fiddle with anything else
while driving: if you let this slide, eventually something
will distract you enough to kill or maim you.
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| 4. Buckle up. |
It halves your chance of death or serious injury.
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| 5. Beware of the Dark Side. |
At night you are three times as likely to get into
an accident.
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| 6. Know your limits. |
Driver fatigue or drowsiness is a factor in about 25% of
accidents. If you're tired, don't take a chance: pull
over and rest.
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| 7. Youth needs guidance. |
16-year-old drivers are 45 times more
accident-prone than mature adults. 18-year-olds are still
15 times more likely to get into an accident.
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| 8. Navigate intersections carefully. |
In urban areas, 65% of accidents occur at intersections.
|
| 9. Keep looking ahead. |
Don't just concentrate on the car in front of you,
watch the traffic in front of that car too. This improves
your chance of seeing a problem soon enough to save you from an
accident.
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| 10. Maintain a safe distance. |
Don't tailgate, and try to stay three seconds behind other cars
to allow enough room to stop. Get away from any cars that
appear to be driven unsteadily. Be aware when passing cars
that their drivers might change lanes without looking
back.
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| 11. Avoid the "fast lane." |
Most fatal crashes occur at higher than average speeds. The
left lane of highways is where most highway accidents occur, and
staying off it will give you more ways to escape danger if you
encounter a problem ahead of you. And remember, you're more
likely to be noticed by police patrols in the "fast
lane."
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| 12. Maintain your car well. |
Follow the manufacturer's recommended maintenance schedule to
ensure that your car doesn't break down. Inflate your tires
to the correct pressure once every few months. This will
help prevent a tire blowout or a rollover accident, and it can
also improve gas mileage dramatically.
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(For more tips covering safety equipment and adverse weather, see
AutoSafetyHub.org.)
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Sources:
1. Auto Insurance Guide, Consumer Reports article.
2. Automobile Insurance Information, Washington Insurance Commission site.
3. National Study Reveals Significant Savings For Insurance Consumers Who Shop Around, InsWeb.com article.
4. Practical Guide to Your Money, book by the Editors of Kiplinger's Personal Finance.
5. Consumer Reports Auto Ratings, Consumer Reports website.
6. National Highway Traffic Safety Administration (NHTSA), government traffic safety website.
7. Traffic Safety Facts, NHTSA article.
8. LiveDrive vs. Other Drive-By-Wire HMI Designs: A Feasibility Comparison, David R. Snell, LiveDrive.org study.
9. Providing High Levels of Customer Satisfaction Has Clear Financial Implications for Auto Insurers, J. D. Power article.
10. Switching auto insurance carriers can be a smooth ride, Jenny McCune, Bankrate.com article.
11. Buying Life Insurance, Fred Waddell & Josephine Turner, Alabama Cooperative Extension System.
12. Ten Ways To Cut the Cost of Your Homeowner's Insurance, Deborah Fowles, About.com Financial Planning
13. Homeowners Insurance Information Center, Insurance Information Institute website.
14. Insweb's Directory of Home Insurance, InsWeb Learning Center website.
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