Auto Insurance - More Than Wheels

AUTO INSURANCE:
MYTHS, FACTS AND YOU
Auto Insurance:
Myths, Facts and You
Copyright © 2015 More Than Wheels
[email protected]
866-455-2522
15 Eagle Court, Keene, NH 03431
www.morethanwheels.org
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Contents
Welcome From Terri Steingrebe
Myths and Truths About Car Insurance
How to Save Money on Car Insurance
Facts About “Hard To Insure” Situations
Car Insurance and Auto Financing
Car Insurance Companies Other Resources 4
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Welcome
Dear Friends,
W
e hope you will enjoy our free eBook: Auto Insurance: Myths, Facts and You. We
are committed to helping you get the best information about buying, keeping, and
using a car for your financial independence.
Transportation is your key to freedom, and insurance is your responsibility as a car owner.
But car insurance is more complicated than ever before. Understanding the ins-and-outs,
ways that insurance will benefit you, and pitfalls and hidden costs to avoid, are some of your
keys to success.
We’ve collected the most current information about car insurance in this handy eBook. I
hope you enjoy reading it!
Thank you for helping us help you drive forward . . .
Terri Steingrebe, CEO
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Myths and Truths About Car Insurance
According to Consumer Reports, which completed a two-year research project covering more than 2
billion car insurance price quotes in 2015, what you don't know about car insurance could hurt you.
The Biggest Myth: Premiums Are Based On Your Driving Record
One of the many myths about car insurance that Consumer Reports uncovered was the commonly-held
belief that your driving record is the biggest influence on premiums. Most people, when asked, would say
a Driving While Under the Influence (DUI) conviction would lead to much higher insurance premiums.
While your premiums will certainly rise if you are convicted of a DUI, Consumer Reports found out that
they'll rise higher if you have poor credit. Only three states: California, Hawaii, and Massachusetts, ban
this practice. After the 2008 recession, 29 states passed regulations that allowed consumers to request that
their rates not be based on their credit scores if they had extenuating circumstances, like job loss or a forced
relocation. The problem? The information was not publicized so few policy holders are aware of it.
Truth: Price Optimization
It isn't legal in seven states, including Vermont, but "price optimization," a tactic where insurance
companies base your premium quotes on how
high a price you are likely to tolerate can lead to
hundreds of dollars in extra premiums.
Insurance "price optimization" considers such
factors as your shopping habits for big ticket
items like cell phones and daily items like beer
or wine, or whether or not you switch cable or
internet providers based on price. Two companies
surveyed by Consumer Reports, Amica Mutual
and State Farm, said they do not use "price
optimization." Allstate, Geico, Progressive, and
USAA, would not discuss "price optimization"
with Consumer Reports, indicating they may use
the tactic to increase premiums.
Fight "price optimization" by shopping for the best price for coverage.
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Myth: Discounts for Anti-Theft
Equipment
Insurance companies say they offer discounts for
installing anti-theft systems on cars, ranging from
hood locks to tracking devices. The discounts
ranged from $2 to $8 on average. Consumer
Reports concluded, "You wouldn't clip a coupon
for savings" so low.
Myth: Loyalty Discounts
It's common for customers to stay with the same
insurance company for years. While some companies
like State Farm provided discounts ranging from a few
dollars to several hundred for loyal customers, other major
insurers like Allstate and Geico charged more for loyal
customers. Others varied by state and marital status. More
often than not, insurers charge more for long-time, loyal
customers, Consumer Reports learned, with "penalties" of
more than $3,000 (Geico Casualty in New Jersey).
Myth: Big Savings from Bundling Car and Home Insurance
Consumer Reports learned that the savings for "bundling" car and home insurance was less than $100 on
average. The savings vary from state to state. Florida drivers who "bundled" insuranced saved only $31 on average,
while Michigan drivers averaged more than $240 in savings.
Truth: Your Biggest Savings Come from Shopping at Least Three Companies
Because policies and prices vary so greatly, and your situation will be unique, shop at least three different
insurance companies before making a choice. Use our comparison tool on page 16 of this book.
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How to Save Money on Car Insurance
Janet Johnson, a mother of 9, recently re-entered the workforce with a job installing computers in
Maryland. She told the Washington Post that although insurance companies report that premiums for
lower-income, safe drivers have declined 14 percent in the past 5 years, it doesn’t seem that way to her. She
pays $137.62 a month, or $1,651.44 a year to insure her 2001 Hyundai Sonata.
We’ve already told you about the #1 way to save money on car insurance: shop at least three different
companies to get quotes. If you don’t like the prices from the first three -- keep going! Different companies
specialize in serving different customers, and the prices vary from state to state, so a company that could be
the most affordable in Massachusetts might not be the best in New Hampshire.
Consumer Reports’ survey covered every county and hundreds of millions of price quotes over two
years, and could provide some helpful tips as well. Also, take the services of an individual agent into
consideration. Some independent insurance offices could be able to get discounts that are superior
to telephone or internet quotes. Again, this will vary depending on your circumstances, area, and the
insurance company.
Compare Insurance Before You Buy a Car
Take the cost of insurance
into consideration before you
buy a car. Insurance premiums
are based on a variety of factors
related to the model, age, and
type of car. You will find that
some cars are much more
affordable to insure than others.
The Insurance Institute for
Highway Safety recommends
that you price policies for
different models by calling the
insurance company before you
buy, not after.
Kelly White, Resident Service Coordinator, Keene Housing Authority
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Reduce Coverage, Increase Deductible
One of the most obvious ways to reduce insurance premiums is to raise your deductible amount to
$1,000. According to the Insurance Institute for Highway Safety, you could save 40 percent or more by
this method. If you choose this option, you should have enough savings put aside to provide the necessary
amount in case you have an accident or other claim. If your car is older and you do not have to have
comprehensive or collision coverage, consider dropping this coverage. If your car is worth less than 10
times your annual premium, then consider this option.
Special Discounts
Consumer Reports’ survey discovered the hidden
truth: some advertised discounts don’t amount to much,
like anti-theft device discounts or “bundling” auto and
home insurance. Others are worthwhile, like discounts
for taking defensive driving or other driver education
courses. Good student discounts (generally a “B”
average or higher) can also lower premiums, and do not
neglect to ask for low-mileage discounts. If you drive
less than 200 miles a week or 10,000 miles a year, you
may even be eligible for some newer insurance programs
Disa Nowack, AmeriCorps VISTA
that charge per-mile premiums. New per-mile-driven
policies from established companies, and companies specializing in only this type of insurance could offer
significant savings.
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Facts About “Hard To Insure” Situations
Driving without car insurance is illegal in all states except New Hampshire, and if you have an auto loan,
you know that you need insurance even in New Hampshire.
Teen, Young Adult, or Newly-Licensed Drivers
If you have a teen, young adult, or newly-licensed driver of any age in the family, you know that they “cost
more” no matter what. However, there are some steps you can take to reduce premiums in addition to
shopping for the best price.
1) Have one family car: The first tip may seem obvious, but insurance premiums will be lower for
younger or high-risk drivers who share a car with another, lower-risk driver.
2) Drive safely: Also an obvious choice, but if your higher premiums come from several speeding
tickets or more than one accident, avoiding these problems will result in lower premiums. Some companies
are offering “accident forgiveness” immediately; others will keep premiums high for three to five years
following an accident. Another general rule is that customers must have no moving violations within three
years.
3) Get good grades: most insurers offer “good student” discounts for younger drivers who are
attending school and receiving grades of “B” or above – including young adults attending college.
4) Attend driver safety and road safety courses: some insurers give discounts for attendance at insurer
or government-sponsored safety courses. In some areas, the classes are called “driver retraining.”
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DUI, Speeding, or Multiple-Accident Drivers
A DUI conviction, speeding tickets, or serious accidents, will result in a “hard to insure” situation.
Different insurance companies specialize in insuring different “hard to insure” drivers, so calling around
to find the company which is best for your situation is a “must” if you fall into this category. Other special
circumstances can apply in these cases, including the SR-22 certificate requirement, and “non-owner”
insurance.
A request for an SR-22 or “certificate of financial responsibility” may be issued by a court in order
for a driver to legally drive if they have been convicted of a DUI or other driving infraction. Although
some companies advertise “SR-22 Insurance,” it really is just a certificate provided by the insurer to the
Department of Motor Vehicles. An SR-22 certificate should cost no more than $25. Some states will
require that all insurance be paid in full before a certificate is issued.
If you do not own a car, but drive for work or school, you may also be able to get insurance to drive when
you need to do so. This is called “non-owner” insurance.
Lapses or Breaks in Coverage
Some people have breaks in their insurance coverages, only to learn they will be charged extremely high
premiums (in some cases, even more that their monthly take-home pay) when they try to start coverage
again.
Here are some recommendations from lessons learned by More Than Wheels clients: at least 6 months
before you will need auto insurance, get non-owner insurance that allows you to drive a car you do not
own. Or, save up for a down payment for your insurance. The cost will go down after you are continuously
insured for six months.
What if You Just Stop Driving?
If you receive a notice that you are required to file an SR-22 in order to drive, or that you must provide
other proof of insurance following a DUI conviction, accident, or other violation, you might be tempted
to just stop driving for three years. In this case, try to find the most affordable insurance or basic coverage
that you can and continue to drive as-needed, legally. Why? Because many states will require you to
provide the extra insurance and coverage even after three years of not driving and your premiums could go
even higher.
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Car Insurance and Auto Financing
If you finance your car purchase, the lender and you are co-owners of the vehicle. Because lenders want
to protect their investment, they will have requirements for lower deductibles than are required by state
law. If you own your car outright, you can choose a high deductible, for example, $1,000. Most car loans
will require a deductible of $500 or less.
What if you start off with a lower deductible and raise it later to lower your premiums? That won’t work:
you are required to inform your bank about any changes in insurance coverage. The lender is listed as a “loss
payee” on the insurance information, and will be notified in case of any change in coverage.
Important Steps to Take When Financing a Car
Before you decide to buy and finance a car,
speak with both the lender and the insurance
company. Ask for as much information
as you can ahead of time. Most insurance
companies can quickly provide estimates of
monthly insurance prices for different car
models and deductible amounts. The lender
will be able to give guidelines for the required
deductible amounts and coverage.
The first step in checking the insurance
premiums is to make a list of the car makes,
years, and models you are interested in buying. You can use an easy online tool such as the one offered by
NerdWallet to make a quick estimate of your average premiums for different companies and your local
area.
Comprehensive and Collision Coverage
You can forego comprehensive and collision coverage if you own your car outright, but it’s unlikely you’ll
be able to do without it if you have a car loan. It’s not hard to tell what “collision” coverage means -- it covers
damage to your car from accidents. Comprehensive coverage refers to other types of damage, including
fires, hail, or floods. Comprehensive coverage also covers theft or other types of damage, such as vandalism.
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Coverage Exclusions
Be sure to read the fine print in your policy. Comprehensive coverage often has exclusions: some
common ones are GPS systems that you’ve added to the car, or damage you have caused yourself. While
most people understand this to mean that you can’t deliberately damage your vehicle, then file an insurance
claim, if you accidentally damage your vehicle with your own garage door, you might not be covered.
Another common exception is “livery conveyance,” which means you are using your car to provide taxi
services, such as being a Lyft or Uber driver, or as a pizza delivery driver. While you can get coverage to do
these exact things, if you do it without knowing whether or not your insurance is covering you, you may end
up having to pay off a car that you can’t get repaired or replaced.
New York Times “Your Money” reporter Ron Lieber advises, “Drivers should ask insurers, point blank, if
they are covered during the period” when they are either looking for passengers or waiting to deliver pizza.
One More Than Wheels client chose not to drive for one of the taxi services when she called her
insurance company and learned that her premium would be more than she could reasonably expect to earn.
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Car Insurance Companies
Over the years we’ve found that some insurance companies tend to offer better rates than others, so here’s
a list of our findings. Also, we recommend calling at least 3 companies to compare quotes.
Maine
Amica 1-800-242-6422
Progressive Insurance 1-800-776-4737
Geico 1-800-861-8380 email: [email protected]
Not generally good for those with poor driving records
Ford Agency
207-439-2500
Massachusetts
Amica1-800-242-6422
Progressive Insurance1-800-776-4737
Kaplansky InsuranceBrookline 617-738-5400
Geico 1-800-861-8380email: [email protected]
Not generally good for those with poor driving records
Thomas Black
Roslindale 617-325-5522
Boston
617-443-9100
South Boston 617-268-4050
Weeks & Devonish Dorchester 617-282-5889
American Consumer Insurance Agency, Inc
Cambridge 1-866-238-1137 or 617-876-5300
The Commerce Insurance Company
1-800-221-1605
New Hampshire
Amica1-800-242-6422
Progressive Insurance1-800-776-4737
Geico1-800-861-8380email: [email protected]
Not generally good for those with poor driving records
Ford Agency
Dover/Somersworth 207-748-0028
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New Hampshire, cont,
Nationwide Agents
Frazier Insurance
Claremont 603-543-0156
Keene 603-355-4400
State Farm (Agents)Mike Estrada OR Mike Testa
Lebanon 603-298-7834
Laconia 603-524-7733
Keene 603-352-3458
Concord Group1-800-852-3380
FW Putnam Ins. Brattelboro, VT 802-254-4414 (serves New Hampshire)
Clark Mortensen1-877-352-2121
Keene 603-352-2121
Hinsdale 603-336-5353
The Insurance Source
Keene 603-357-2219
Kapiloff Insurance – Jen Stevens
Keene 603-283-2212
Downy Northland Insurance Group
Shari Tenofsky-Beteau
Keene 603 439-2022
Vermont
Amica1-800-242-6422
Progressive Insurance1-800-776-4737
TS Peck Ins 877-379-9572
Geico 800-861-8380email: [email protected]
Not generally good for those with poor driving records
Nationwide Agents
Frazier Insurance WRJ 802-295-7551
Windsor 802-674-5506
Concord Group1-800-660-3838
FW Putnam Ins
802-254-4414
The Richards Group1-800-222-6016
Bellows Falls 802-463-4533
Brattleboro 802-254-6016
Wilmington 802-464-5353
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Other Resources
Good News Garage (New England)
www.goodnewsgarage.org
Good News Garage repairs as many donated cars as possible in order to provide them to low-income
families who need transportation to gain access to employment, shopping, school and medical facilities.
Uber (Boston, MA & Manchester, NH)
https://www.uber.com/cities/manchester-nh
Uber riders and drivers find each other using a smart phone app for ride-sharing services. The average ride
is roughly ten percent cheaper than a taxi in Manchester.
Working Cars For Working Families
http://www.workingcarsforworkingfamilies.org
Working Cars for Working Families is a coalition of organizations across the country dedicated to
helping low-income families obtain, keep and use a vehicle to support their ability to find and retain
employment.
AAA
http://www.northernnewengland.aaa.com
AAA has many free transportation resources available on its website, including auto buying, AAA
approved repair locations, driving resources and more.
2-1-1 Info Line
211 is a free information and referral service. Simply by dialing 2-1-1, a toll-free number throughout each
state, callers can reach knowledgeable, multilingual staff and get information, referrals or seek help in a crisis.
2-1-1 operates 24 hours a day, every day of the year. Each individual state 211 program has a website of
information, too.
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PRINTED WORKSHEET
Automobile Insurance Comparison
Comparison shopping is important.
This worksheet will help you compare the costs of different automobile insurance
policies to help you find the best value.
Name of Company
Phone Number
Policy Number
Total Policy Premium
BENEFITS:
Liability
Medical Payments
Underinsured Motorist
Uninsured Motorist
Personal Injury Protection
Collision Loss
Collision Loss Deductible
Comprehensive
Comprehensive Deductible
Towing and Labor
Rental Reimbursement
Other:__________________
Insurance
Company A
Insurance
Company B
Insurance
Company C
More Than Wheels Financial Fitness ©
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