Car insurance: 20 ways to cut the cost of cover
Drivers just can't win. While the price of petrol is falling the cost of insuring your car is at record levels – but this is no time for inertia and there are many ways you can reduce your motor cover.


By Liz Dolan
Last Updated: 1:42PM BST 22 Oct 2008
Car insurance: 20 ways to cut the cost of cover
Car insurance: 20 ways to cut the cost of cover

The average car insurance premium has risen by £50 over the past 12 months to an average of £724.28, according to new figures from the AA. Go back to 1994 when the AA began collating premiums the average cost was just £328 a year.

The revelation comes just as motorists thought they had better times ahead with the price of unleaded petrol falling below the £1 a litre barrier at petrol pumps provied by Morrisons and Asda.

Hayley Parsons, Chief Executive of leading insurance comparison website Gocompare.com, says: "Sadly, for motorists today it is a case of; 'what the petrol companies are giving back with one hand, the insurance companies are taking away with the other. While everyone is all too aware of the changes in petrol prices in the last 12 months, insurance costs have been rising in excess of 8 per cent a year for the past 14 years."

She adds: "Insurance providers don't generally go out of their way to point out how much our renewal premium has gone up and as a result, it has largely gone unnoticed. For many, there is no alternative to paying higher petrol prices, but everyone can do something about their insurance premium."

Here are 20 suggestions to get your annual insurance premium down.

1.Shop around. Experts reckon you could shave up to a third of your annual premium simply by scouring the market.

2.Keep your car in a garage or on a drive rather than on the road. This can take between 5 and 10 per cent off the premium.

3.Limit the number of people you allow to drive your car. The more people allowed to use it, the higher your premium. Teenagers are particularly expensive. Remember to take their names off the policy when they leave home or get their own cars. Consider temporary insurance for youngsters – e.g. during university holidays only.

4.Limit the use of your car to "social, domestic and pleasure" and don't use it for work. This is particularly useful for households with more than one car.

5.Low mileage commands lower premiums because cars that are on the road less often are less likely to be involved in an accident. AA Insurance reckons that accepting a 12,000 cap on annual mileage would earn a 5 to 10 per cent discount. A 5,000 cap can earn even more. Once again, useful for households with more than one car.

6.Request a higher excess. Most policies include a voluntary and/or compulsory excess charge (the amount you pay before the insurer has to cough up in the event of a claim). If you're prepared to increase this slightly, you can get a reduced premium.

7.Be wary of soft tops. Convertibles attract higher insurance costs. They are easier to break into, tend to be higher-performance and more expensive than average and occupants are more likely to be injured in an accident. Excesses on normal policies don't normally apply to vandalism, but they do for soft tops.

8.Ask for an introductory discount, even if you don't have a no claims bonus (NCB). You may be eligible if you've driven a company car, or someone else's car, with a no claims bonus on its policy. Some insurers just offer you a discount because they want your custom. If you have built up an NCB, say so.

9.Look for ways of protecting your NCB. Some policies allow you to make a certain number of claims over a set period in set circumstances.

10.Pay in full. Paying in instalments is almost always more expensive.

11.Use direct providers to avoid brokers' commission. Direct Line claims that buying through intermediaries can boost the cost by up to 30 per cent. But shop around.

12.Buy through the internet for cheaper premiums as many providers offer automatic 5 per cent discount for online transactions.

13.Bad risks should seek out specialists. Certain companies can offer a better deal to people considered bad risks by conventional insurers.

14.Consider switching to an older model. Premiums fall once a car is five years old, and again once it reaches 10.

15.Drive a smaller car. Insurance is cheaper for cars with engines below 1400cc.

16.Improve your driving skills. A Pass Plus driving test, or similar qualification, can cut premiums.

17.Think about third party, fire and theft cover. Comprehensive insurance is not necessary for cheaper cars – certainly not for those worth £2,000 or less. People with comprehensive cover can also find themselves footing the bill for accidental damage or break-ins rather than losing a no claims bonus.

18.Take advantage of maturity. Premiums fall in price at ages 21, 25, 30 and 50.

19.Occupation often makes a difference. Accountants tend to pay less than window cleaners, for instance.

20.Save money on breakdown cover. Check petrol, batteries and tyres before venturing forth to avoid the more common reasons for call-outs. General maintenance is obviously important too.

What is auto insurance?

	Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage: Property coverage pays for damage to or theft of your car. Liability coverage pays for your legal responsibility to others for bodily injury or property damage. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses. An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

What is covered by a basic auto policy?

Your auto policy may include six coverages. Each coverage is priced separately. 1. Bodily Injury Liability This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission. It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings. 2. Medical Payments or Personal Injury Protection (PIP) This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs. 3. Property Damage Liability This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit. 4. Collision This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible. 5. Comprehensive This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer. Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible. 6. Uninsured and Underinsured Motorist Coverage This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

Can I drive legally without insurance?

NO! Almost every state requires you to have auto liability insurance. All states also have financial responsibility laws. This means that even in a state that does not require liability insurance, you need to have sufficient assets to pay claims if you cause an accident. If you don’t have enough assets, you must purchase at least the state minimum amount of insurance. But insurance exists to protect your assets. Trying to see how little you can get by with can be very shortsighted and dangerous. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident since accidents may cost far more than the minimum limits mandated by most states. If you've financed your car, your lender may require comprehensive and collision insurance as part of the loan agreement.

What if I lease a car?

	If you lease a car, you still need to buy your own auto insurance policy. The auto dealer or bank that is financing the car will require you to buy collision and comprehensive coverage. You'll need to buy these coverages in addition to the others that may be mandatory in your state, such as auto liability insurance. Collision covers the damage to the car from an accident with another automobile or object. Comprehensive covers a loss that is caused by something other than a collision with another car or object, such as a fire or theft or collision with a deer. The leasing company may also require "gap" insurance. This refers to the fact that if you have an accident and your leased car is damaged beyond repair or "totaled," there's likely to be a difference between the amount that you still owe the auto dealer and the check you'll get from your insurance company. That's because the insurance company's check is based on the car's actual cash value which takes into account depreciation. The difference between the two amounts is known as the "gap." On a leased car, the cost of gap insurance is generally rolled into the lease payments. You don't actually buy a gap policy. Generally, the auto dealer buys a master policy from an insurance company to cover all the cars it leases and charges you for a "gap waiver." This means that if your leased car is totaled, you won't have to pay the dealer the gap amount. Check with the auto dealer when leasing your car. If you have an auto loan rather than a lease, you may want to buy gap insurance to protect yourself from having to come up with the gap amount if your car is totaled before you've finished paying for it. Ask your insurance agent about gap insurance or search the Internet. Gap insurance may not be available in some states.
Do I need separate rental car insurance? Properly insuring a rental car can be confusing, frustrating and downright daunting. Unfortunately, many consumers do not even think about car rental insurance until they get to the counter, which can result in costly mistakes—either wasting money by purchasing unnecessary coverage or having dangerous gaps in coverage. Before renting a car, the I.I.I. suggests that you make two phone calls—one to your insurance agent or company representative and another to the credit card company you will be using to pay for the rental car. Insurance Company Find out how much coverage you currently have on your own car. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car, providing you are using the car for recreation and not for business. If you have dropped either comprehensive or collision on your own car as a way to reduce costs, you will not be covered if your rental car is stolen or damaged in an accident. Check to see whether your insurance company pays for administrative fees, loss of use or towing charges. Some companies may provide an insurance rider to cover some of these costs, which would make it less expensive than purchasing coverage through the rental car company. Keep in mind, however, that in most states diminished value is not covered by insurers. Credit Card Company Insurance benefits offered by credit card companies differ by both the company and/or the bank that issues the card, as well as by the level of credit card used. For instance, a platinum card may offer more insurance coverage than a gold card. Credit cards usually cover only damage to or loss of the rented vehicle, not for other cars, personal belongings or the property of others. There may be no personal liability coverage for bodily injury or death claims. Some credit card companies will provide coverage for towing, but many may not provide for diminished value or administrative fees. Some credit card companies have changed their policies, too, so you may not have as much coverage as you thought. To know exactly what type of insurance you have, call the toll-free number on the back of the card you will be using to rent the car. If you are depending on a credit card for insurance protection, ask the credit card company or bank to send you their coverage information in writing. In most cases, credit card benefits are secondary to either your personal insurance protection or the insurance offered by the rental car company. If you have more than one credit card, consider calling each one to see which offers the best insurance protection. At the Rental Car Counter Since insurance is state regulated, the cost and coverage will vary from state to state. Consumers, however, can generally choose from the following coverages: Loss Damage Waiver (LDW) Also referred to as a collision damage waiver outside the U.S., an LDW is not technically an insurance product. LDWs do, however, relieve or “waive” renters of financial responsibility if their rental car is damaged or stolen. In most cases, waivers also provide coverage for “loss of use,” in the event the rental car company charges the renter for the time a damaged car can not be used because it is being fixed. It may also cover towing and administrative fees. Waivers, however, may become void if the accident was caused by speeding, driving on unpaved roads or driving while intoxicated. If you already have comprehensive and collision coverage on your own car, check with your personal auto insurer to make sure you are not duplicating coverage you already have. Should you decide it is necessary, this coverage generally costs between $9 and $19 a day. Liability Insurance By law, rental companies must provide the state required amount of liability insurance. Generally, these amounts are low and do not provide much protection. If you have adequate amounts of liability protection on your own car, you may consider forgoing additional liability protection. If you want the supplemental insurance, it will cost between $7 and $14 a day. An umbrella liability policy, however, may be more cost-effective. Umbrella liability insurance is so named because it acts like an umbrella, sitting on top of your auto and homeowners (or renters) liability policies to provide extra protection including accidents while driving your own car or one that you rent. These policies, usually sold in increments of a million dollars, cost as little as $200 to $300 annually for a million dollars worth of coverage and another $50 to $100 for each additional million. Those who do not own their own car and are frequent car renters, can also consider purchasing a non-owner liability policy. This not only provides liability protection when you rent a car, but also when you borrow someone else’s car. Personal Accident Insurance Personal Accident Insurance offers coverage to you and your passengers for medical and ambulance bills for injuries caused in a car crash. If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance. It usually costs about $1 to $5 a day. Personal Effects Coverage Personal Effects Coverage provides insurance protection for the theft of items in your car. If you have a homeowners or renters insurance policy that includes off-premises theft coverage, you are generally covered for theft of your belongings away from home, minus the deductible. If you purchase this coverage through the rental car company, it generally costs between $1 and $4 a day. If you frequently travel with expensive items such as jewelry, cameras, musical equipment or sports equipment, it may be more cost-effective to purchase a personal articles floater under your homeowners or renters insurance policy. With such a floater, your valuable items are protected at home as well as while traveling anywhere in the world and the coverage is broader. Other Things to Consider States have minimum age requirements for renting a car and most major rental car companies refuse to rent a car to someone who is under 21 and in some cases under 25. In addition, some rental car companies now investigate your driving record and/or credit history so check with the rental car company before picking up the car. If you are planning to rent a car abroad, contact both your insurance agent and travel agent to find out what you need to do to be properly insured. Those driving a rental car from the U.S. into Mexico may find it progressively more difficult to rent a car as U.S. rental car companies are increasingly concerned about the rising crime rates in that country. The minimum required insurance coverage to drive in Mexico is civil liability insurance which covers you in case you cause injury or damage. Your American liability insurance is not valid in Mexico for bodily injury, though some American insurance policies will cover you for physical damage—check with your agent or insurance company representative. You can also buy Mexican car insurance in several American border towns; there are generally several storefronts selling Mexican car insurance near the border. Is there a difference between cancellation and nonrenewal? There is a big difference between an insurance company canceling a policy and choosing not to renew it. Insurance companies cannot cancel a policy that has been in force for more than 60 days except when: You fail to pay the premium You have committed fraud or made serious misrepresentations on your application Your drivers license has been revoked or suspended. Nonrenewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days notice and explain the reason for not renewing before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don't get a satisfactory explanation, call your state insurance department. The company may have decided to drop that particular line of insurance or to write fewer policies where you live, so the nonrenewal decision may not be because of something you did. On the other hand, if you did do something that raised the insurance company’s risk considerably, like driving drunk, the premium may rise or you may not have your policy renewed. If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company.

Quick Mortgage Tips for Home Loans, Equity Loans, Reverse Loans, Cash-Out Loans and Refinance Loans

by: Chris Robertson

If you're considering a mortgage loan, you might be wondering what options are available. Today, there are many options besides the conventional methods of obtaining a mortgage. Whether you're applying for a home loan for a new home, a refinance loan, an equity loan, a HELOC, or a reverse loan, you should be aware of what each loan entails.

Buying a New Home

When buying a new home, you'll need to be approved for a new home loan through a lender, or ask the seller to finance the home for you. Before applying at a lending institution, research your options. Determine how much "house" you can afford. Use online mortgage payment calculators to figure what the payments would be for different home loan amounts. Then, you'll know what price range you can shop within, and whether or not you can afford the payments. Remember, your income/debt ratio must fit within the lender's guidelines to qualify for a conventional loan.

Healthy and "Not-so-healthy" Credit Scores

If you have an excellent credit score, then your income/debt ratio along with the investment capital you have available will be the main factors in determining home loan availability. However, if there are flaws in your credit history due to non-payment or repossession, you will be limited in the type of home loan you can obtain. But don't lose heart. Many homebuyers whose credit is "not-so-great" do qualify for non-prime loans. Non-prime loans can be a bit higher-priced than prime loans or have higher interest, but you might still be able to buy your dream home!

Creative Financing

Don't settle for conventional loans if you don't have to. There are many creative ways to finance a new home loan. If you do not have the needed investment capital or a down payment, some lenders will finance the down payment for you as well as the closing costs. If not, the seller might be willing to finance part of the loan to cover these costs. This can work even if the seller doesn't have extra "money to lend!"

Explain to the seller that it could be advantageous to him because of income taxes. He might much rather claim an income of $100,000 than $120,000! Spreading out payments for $20,000 of the loan amount over a period of five or ten years could make a huge difference on his taxes due for that year. Consult with an accountant to find out if this could work in your situation.

Unusual Types of Home Loans

If you're worried about budgeting with a new home loan payment each month, try a FlexPay loan where several monthly payment options are available to you every month. These options include interest only payments, full-amortized payments, and minimum payments. There are also bi-weekly mortgages for paying more toward your premium each year through a bi-weekly payment schedule.

Hard Money loans are also available when there is a large amount of equity built up in a home. The loan approval is based more on the home or property's value than the borrower's credit history or job/salary history.

Refinance Loans

If you plan to refinance your home, there are several options. A refinance means you are re-evaluating the terms, payments and interest of your loan. You might refinance to simply get the interest rate or payment lowered. Or, you might want to keep a little cash out for yourself as well. This is called "Cash-out" refinancing. Cash-out loans are made when you want to refinance your home for more than is owed on it. For instance, you owe $60,000, but want to refinance for $80,000. You'll pocket the additional $20,000 to use for home repairs, remodeling or whatever else!

Reverse loans are available for those over 62 years of age who own their home free and clear or have much equity built into it. They can receive a monthly payment, a lump sum or a line of credit. This does not have to be repaid until the borrower moves or passes away. Then, the estate can be sold to pay the note.

Another option for leveraging your home equity is to create a HELOC (home equity line of credit) that is secured by the equity in your home. HELOCs can be used to pay debts, make purchases, or anything else. Be aware, however, that the interest rate can fluctuate monthly.

Now that you are armed with many options for obtaining a home loan or refinancing your mortgage, check with an online lender to find out what plan will work best for you. Use the available tools and calculators to do some budgeting on your own as well. You'll be moving in that new dream home in no time!

Three Auto Insurance Secrets

by: Steve Gillman

Want to learn something new about auto insurance? Something that can save you a lot of money or get a claim paid? Forget the usual tips. Check out these secrets.

1. Demand the legal policy minimums if you have no assets. Do you really need a lot of liability coverage if you have no money in the bank? Insurance companies will tell you that you do because you can be sued regardless. It's possible. I can't promise you that you won't be sued and end up paying a chunk of your paycheck to someone for life.

However, honest insurance salesmen admit that people without assets are rarely sued. Lawyers work on a commission in these cases, and won't take a case where there is no money to be collected. In fact, having a bigger liability policy can be an invitation to sue, and it won't protect you from personal liability, because they always sue for more than the policy limit anyhow.

If you have no assets to protect, why buy auto insurance? Because it is a legal requirement. In that case why not just buy the minimum coverage required? But be careful. My own insurance guy lied for years, claiming I had just that, when in fact I was paying for "company-recommended minimums." You might have to push the point, and may even have to sign something saying you understand how risky it is to be "under-insured."

2. Claim diminished value. If you have a collision policy, your insurance company will pay for the repairs after an accident. However, is the financial damage really fixed? Not necessarily. A car that has been in an accident and had the body fixed may look the same, but it won't sell for the same price. Would you pay the same for a car that has been in an accident?

A car that has been in an accident might be worth $2,000 less than a similar un-damaged car. This is called "diminished value," and may be covered by your policy. However, diminished value is often not paid unless you push the point. Get a car dealer to do an estimate of the diminished value if necessary, and present this to the insurance company. You pay for insurance to have your losses covered, and they aren't covered if you aren't paid for this.

3. Lower your premiums by removing kids from the policy. You may have already discovered that you pay a lot for insurance as long as you have driving-age children at home. Even if they are off at school, if their legal residence is your house, you pay more.

However, there is a little-known exception to this rule. If your children are at a college that's more than 100 miles away, you can have them taken off the insurance policy. This can dramatically reduce your premiums. The catch? They are excluded drivers, so you can't let them drive the car when they come home to visit.

These are just a few examples of the auto insurance secrets that insurance companies probably don't want you to know.

Bad Credit Rating High Auto Insurance There Is No Appeal

by: Terry Z. Voster

Believe it or not whether you pay your bills on time can make a hefty difference in your car insurance premiums.

The adage of an experienced home contractor was that “If the yard is neat you will have no trouble being paid. If the yard is messy then you will have trouble being paid for the home repair job.

It seemed in this case that a neat lawn showed an organized person who could asses priorities and follow through with projects. A messy lawn’s inference was that if the person could not take of their lawn - the same in most cases would be true of their finances and their ability to take care of the money – including paying bills – whether it was for the contractor, a mortgage or car payments or even home or income taxes.

Car insurance premiums are assessed in the same way by auto insurance companies. In the majority of states in the United States and in the provinces of Canada a key factor. taken into account. In the algorithm of the calculation of a motorist’s auto insurance premium is the individual’s credit rating and credit history. It is estimated that up to 90 % of vehicle insurance firms use credit ratings as a standard factor in the determination of the premium rates assessed on individual motorists and the other vehicles in the families fleet of vehicles – whether they be car , truck , can or SUV.

Amazingly there are laws to provide the individual with their credit rating, credit rating and history – as long as the individual asks for it, in the steps required by law. And the credit reporting agency.

Forewarned and informed and individual can take corrective action on credit problems – whether they be missed payments or debts. As well an informed consumer is the know to identify and proceed to correct mistakes in their credit history. Not so with a motorist’s auto insurance vehicle risk score. Not only will they not know that they are being dinged for a poor auto insurance risk score, because of a poor credit history so that their premiums will be much higher than they need be, but once a high premium rate is assessed it may stay in place for many years to come – on not one but a number of vehicles.In addition it is as if the insurance industry reporting system has tentacles in the insurance industry. Should you go to for a quote to a competitive auto insurance firm your poor credit rating has been attached already to your auto insurance risk calculations. Most likely you will find that you will have the same high assessed insurance premiums whoever you go to get a quote. There is no appeal process for this.

What is the message? First of all pay your bills on time. Whether you are irresponsible, disorganized or downright dishonest you should appreciate the fact that your credit rating is more than important to you. Sure you may think that there is nothing wrong in missing a payment – for a charge card, a bank loan or a home mortgage. The higher premiums that you may receive for your auto insurance are just one example that it does matter. On top of that bad business procedures and tactics on your part, on a business long ago dissolved may still sit on your credit history as unresolved debts and liens. You may even be named on such a financial document even though you left a company long ago and are not even employed by them. Check your credit rating for credit problems, that can be resolved and also for downright mistakes and inaccuracies on your credit history. It never hurts to be thorough and it never hurts to pay cash.