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Articles

Cheaper Car Insurance: Data-Tracking Devices

October 19, 2011 – 4:34 pm

Allstate alone reported over 500 claims within 24 hours of Hurricane Irene assaulting the east coast, and the total damage is estimated at nearly $12 billion. The irregular flooding and numbers of natural disaster claims will have an effect on rates, and has left many living in areas not prone to floods struggling to find out if they’re covered.

Once an area is hit with a natural disaster, rates will naturally rise since that occurrence means a higher likelihood of future occurrences; therefore, more people are going to make claims from that area. Live in a Northeastern state? From Delaware to Vermont, your premiums are likely to rise because of this unprecedented flooding and potential for damage to your vehicle. Worse, scientists agree that Irene is probably a phenomenon related to climate change, which means we can expect a repeat of Irene’s push into the Northeast.

Since there is nothing you can do to avoid these raised rates other than leaving the area, you can try to mitigate this increase by lowering your monthly premium in other ways, such as making yourself look better to the agency by improving your credit, remaining a loyal customer, and maintaining a good driving record. You can also consider raising your deductible.

What To Do In A Natural Disaster

Catastrophes of nature are becoming more and more common as years go by, so you had better be prepared. Use these tips to protect yourself.

Take Photos And Protect The Scene

If your car is damaged by a natural occurrence like a hurricane, the first thing to do is to treat the area like a crime scene and avoid moving anything so the insurance agency can inspect the damage. Take photos of the scene so that you have an undeniable record in case you have a dispute with the auto insurance company.

Contact Your Insurer

In a natural disaster many people will be contacting the agency simultaneously, which will make the process take significantly longer, but it’s important that you report damage as soon as possible, and the earlier you make the claim, the higher on the list you’ll be for processing.

Protect Against Secondary Damage

Secondary damage occurs as a result of the initial damage. For example, if your car window is broken from the hurricane, your car insurance company will cover that damage. However if you don’t cover the window with plastic and subsequent rains ruin the vehicle’s interior, that will not be covered.

Know What Your Policy Covers

Comprehensive coverage protects your vehicle against damage from more than just other vehicles and likely includes flooding and other natural disasters, so make sure you check with your agency to get your money’s worth. If you live in an area with high risk of hurricanes, you are likely already covered in either your auto or home insurance policy. However, if you only have liability coverage and your homeowner’s insurance won’t cover it, you’re not going to get any help.

Ultimately, all of these tips can be put under knowledge (of your claim) and discipline (to act quickly). If you know what your policy covers, how natural disasters affect insurance premiums, and how to deal with the damage, you’re in the best position possible.

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Articles

Do you want a right to repair?

October 9, 2011 – 1:43 am

Go back thirty years and vehicle theft rates were rising steadily every year. It seemed almost anyone with a wire coat-hanger and a screwdriver could open a car door and drive it away in under sixty seconds (if you believe the movie). Then there was a slow revolution as electronic keys and alarm systems came to be standard, fitted by the factories and released into the wild. Then as the GPS satellites were launched, it become possible to fit tracking devices that would enable the owners or law enforcement agencies to track a vehicle and recover it (assuming it had not already been broken for spares. The final development was the fitting of immobilizers. These devices added to the protection offered by electronic keys so that even if potential thieves accessed the wiring systems, they still could not drive the vehicle away. The results have been the steady fall in vehicle theft rates. Although some makes and models remain relatively easy to steal, the majority are now only vulnerable to the more professional thieves.

All this has left one problem. If the vehicle breaks down and the owner leaves the site with the key, how does the repair shop get into the vehicle to return it to the shop for repair? Obviously, it’s also necessary to be able to start the vehicle to diagnose the problem and test whether the repairs have been effective. To make this possible there’s a secure database system open to licensed repair shops, locksmiths, law enforcement agencies and any others who have a legitimate reason for needing to override the vehicle systems. This database contains full details of the all the key and PIN codes to reset the immobilizer and start the engine.

Let’s now move over the Massachusetts which has enacted a law requiring insurance companies to give automatic discounts to all owners who have anti-theft and vehicle-recovery systems in place. At their maximum level, this can reduce the premium rates by 35%. This makes Massachusetts one of the most affordable states in which to insure. On average, local drivers spend less than 3% of their net pay on vehicle insurance. Not surprisingly, the number of uninsured drivers is also low tending to prove the point that, if you make insurance affordable, the majority of people obey the mandate. That said, Massachusetts now proposes to add a “Right to Repair” Bill to its statute books. This would make the currently secure database more widely accessible. All the “authoritative” bodies in the policing and insurance industry are against this proposed law. They believe it will lead to the information about codes falling into the wrong hands and reverse the falling trend of vehicle theft, not just in Massachusetts, but nationally. It seems if the local codes can be studied, it would be possible to deduce a method for cracking the codes in other states.

Fear is now the weapon. Pass this law, the insurance industry says, and the next round of car insurance quotes will be higher. Why higher? Because the rate of vehicle theft will increase and, to cover the claims, the premiums must rise. Who knows which side of the argument is right. The only certain thing is no one wants the car insurance rates to rise.

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Articles

Uninsured motorist cover

October 7, 2011 – 2:27 pm

No matter where you live, there’s an increasing chance the next driver who crashes into you will be uninsured. The national average is about 20% of drivers uninsured. In California, the celebrate because it’s only 15%, i.e. a one in seven chance you will be in an accident with no insurance company to begin covering your losses. This means you either buy your own cover or you must be prepared to pay all your own losses out of your own pocket. This is not to say you can never recover losses from an insured driver. The courts exist. There are laws to enforce payment of damages. But since the usual reason for being uninsured is a lack of money, there’s no point in spending your money on court fees and a fancy attorney if the driver at fault has no cash and does not earn a good pay check to garnish. That’s just adding insult to the existing injury. So the Californians have been carrying out a little research to see exactly how much we have to pay to buy uninsured motorist cover.

The team put together a profile of a single male driver, aged 30. He had no tickets and lived in a modest ZIP code area. They picked a 2010 Toyota Corolla as his vehicle and showed him willing to accept a $500 deductible. All UM policies come with banded cover for personal injuries with the first number being the maximum payable to the first person injured and the second being the total maximum for all medical expenses no matter how many injured. The profile was sent out to all insurers licensed to sell policies in California. The range of the quotes was quite wide with the lowest being $28 for adding 15/30 to the existing cover while the most expensive was $106. If the model driver opted for 25/50, the lowest quote was $60 and the most expensive $148.

California is an interesting state to study because it has a law requiring insurers to quote for UM cover. The lawmakers believe you should always know the cost of rejecting the additional cover. In most other states, you have to ask for a quote. The Californian driver has to opt out of buying the cover. So, given the odds of being hit by an uninsured motorist, is it worth paying a maximum of $148 or $12 per month? Given the cost of hospital treatment it may look a good premium rate to avoid taking the hit on your savings or maxing out your credit card(s). But all this does raise the question why states like California continue refusing to fund effective enforcement of the mandate.

There’s no doubt we would all find our auto insurance quotes falling if all 47 states with a mandate enforced the law. Yet every time the question of funding the centralization of record-keeping comes up, the agencies ask for millions to make their computer systems compatible. When police cannot routinely check whether a driver has valid insurance, you know the system is broken. So until politicians get a little backbone and force uninsured motorists off the road, our auto insurance quotes will continue arriving on the high side.

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Articles

Selling on the secondary market for life settlements

October 6, 2011 – 5:36 pm

Insuring your life is something most people approach as a matter of duty. No one actually wants to think they are going to die in the near future but, if you are going to do the job properly, you have to start with the assumption you could die at any time from next week onward. That way, you can work out how much money would be needed at each point in your life to fill in the likely loss of your income. With the math all done, people then put the policy away somewhere safe and never feel they have to think about it again. Years pass. The possible deaths never happen. You remain disgustingly healthy and active. Finally, you decide you’ve had enough and shuffle off the mortal coil. Those who remain pick up a good sum of benefits and all remember you with kind thoughts.

This is the good life. Unfortunately, as the current recession demonstrates all too clearly, not everything follows a smooth and predictable path. The unexpected can put a very sudden strain on your financial planning. It can be loss of a job in later life or you find retirement more expensive than you had expected. It could be a medical problem that brings a big bill when you were least expecting it. No matter what the reason, there’s often little choice once you’ve maxed out the credit cards. You look around. With luck on your side, there may be the family home, now free of a mortgage. But do you really want to borrow using it as collateral or, worse, think about selling it? What about stocks? Well if the recession is still hanging over us, you may be looking at losses on that front as well. At this point you come to the insurance policy.

If you talk to the life company, it’s likely to talk about the cash surrender value (CSV), assuming you have a policy with an investment component. This cancels the policy and allows you to claw back some of the payments you’ve made over the years. Needless to say, the CSV offers very poor value. The second option depends on the terms of the policy you bought all those years ago. Some policies allow you to withdraw a part of the investment element. Others allow you to use the value of the policy as collateral for a loan. Beware a loan. The interest is added to the policy and, if you don’t repay the money borrowed, you can lose a lot of the remaining value of the policy to unpaid interest. If you must borrow money from the insurer, start paying it back as quickly as possible.

The best strategy is to sell the policy on the secondary market for life settlements. This has been the preferred option in Europe for decades and is now developing in America. If your life insurance policy is worth at least $250,000, there are many willing buyers who pay far more than the CSV. Ignore all the propaganda put out by the insurance industry. It’s just sore it loses a big opportunity for profit. This secondary market is not a scam. You can get a good price for your life insurance policy.

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Articles

Life insurance and buying an annuity

October 4, 2011 – 11:04 pm

Not so long ago, there was a group action by several Insurance Commissioners against the Nationwide Life for its failure to create an effective regime for the supervision of agents selling annuities. The action was settled for $2 million so it wasn’t considered a major problem, but it does give us the chance to talk about annuities and what can go wrong. The traditional policy for your life accumulates value over the years and, when the moment comes, there’s a payout of a lump sum to your family and dependents. But, if you want, you can either buy an annuity or convert your life policy to an annuity. This starts in the same way. You pay regular installments and build up value. Then, when the due date arrives or you exercise the option, the policy starts to pay out a regular income. It’s one of the ways in which you can save for your retirement and the monthly amounts add to your other pension amounts and keeps your head above water.

To protect you from exploitation, only insurance companies are allowed to sell annuities and each state’s Insurance Commissioner has the responsibility of looking out for your interests. Should a Commission discover the insurer is giving you a short measure, it can step in and order changes. In bad cases, the insurer can be faced with a heavy fine. The reason for this supervision is that the premium payments are tax deductible and it’s the responsibility of the states to ensure you get the best possible value for your money. The Commissioner also ensures you are not using the annuity policy for some avoidance purpose that would be unlawful.

You should approach these policy with some degree of care. Although there are tax savings, the investment returns are often not impressive. Most people benefit from a consult with an independent financial advisor. An experienced advisor will know which companies front-load their policies with big fees and management commissions. You should also have someone do the math to check the minimum guaranteed returns are reasonable.

During the first phase of the policy, you pay into the insurer. All benefits are delayed until the fixed date or you trigger the option after a minimum number of years has passed. At this point, the insurer starts paying the monthly amount either to you or to the person you nominated. Now comes the interesting part. Are the payments to continue for a fixed period of time or during the remaining years of your life? Further, will there still be benefits payable when you finally give up on life? Never buy a policy unless you understand exactly what the insurer is offering and how much each option costs.

Life insurance policies can be quite complicated documents both in their language and the way they calculate the benefits. Independent advice is essential. If you decide to go-it-alone and later find the insurer missold the policy, complain to the Insurance Commissioner. Assuming the Commissioner agrees with you, you usually find you are fully compensated for all your losses. This is not advising you to be passive when someone sells you a financial product. The Commissioner is not going to be sympathetic if you bought a life insurance product without making a reasonable attempt to understand it.

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