A Closer Look at GAP Insurance, Part Two

Posted on Jan 12th, 05:57 pm, under Improve Your Auto Insurance Rate

We conclude our inside look at guaranteed auto protection (GAP insurance) this week. (If you missed our first article, you can read it here)

There are three general variants of GAP coverage:

The first is GAP insurance. You can only get this from licensed insurance agents and companies, though not all will offer them. Conversely, many other companies offer GAP insurance even if your auto policy is with another firm. If you want to get GAP insurance directly, check here)

Next, we have GAP waivers. This is essentially an agreement that you make with your dealer or lender to waive the difference between your actual car value (ACV) and your loan balance, should you lose the vehicle in an accident. Do note that this does not replace an actual insurance policy, and you still need one to back up your GAP waiver. You'll also have to pay interest on your GAP waiver if you add it to your auto loan.

Finally, there are GAP endorsements. This simply refers to an additional amendment or rider that is appended to your insurance coverage if your primary auto insurance policy doesn't yet cover the aforementioned gap. (Some insurance firms offer a similar-looking feature called loan/lease payoff coverage. Be aware that this will only pay out a fixed percentage of your ACV, and it is not equivalent to GAP coverage).

As we mentioned before, you should look into purchasing GAP coverage as soon as you buy a car. It's still possible for you to buy GAP coverage up to 12 months later, but sooner is always better. It's usually available on most new, used, and refinanced vehicles, but it can't be transferred to another car, loan, or person.

However, you won't be able to avail of GAP coverage on a loan of over $100,000, one with an annual percentage rate (APR) of over 12.5 percent, or one with a balloon payment. You also won't be able to get GAP coverage for vehicles you plan to use commercially, or those bought with a credit line or mortgage loan.

What you actually end up paying for GAP insurance depends on several variables. Unless you cancel it, your GAP coverage will last for the duration of the entire loan. 

When buying this form of coverage, watch out for dealers who try to convince you to buy GAP insurance the moment you purchase your car -- make sure you do comparison-shopping first to get the best price. In addition, some dealers tell you to buy GAP coverage even when your primary insurance plan already has it, thereby making you pay extra for something you don't need.

Like all types of insurance, GAP coverage is a form of protection that you hope you'll never have to use. If your car is stolen or destroyed early in its lifetime, however, then GAP insurance could potentially save you thousands of dollars and a lot of anguish. 

More Tips For Lowering Your Auto Insurance Premium

Posted on Jan 7th, 03:49 pm, under Improve Your Auto Insurance Rate

Last week, we gave you several tips on how to lower your insurance premium costs. Here are five more proven money-saving methods that all prudent buyers should consider:

1. Change your car.

What you drive affects what you pay (as we discussed before in a previous article). Insurance companies assess vehicles based on several factors, including price, crash test rating, repair costs, and even how often that particular model gets stolen. To lower your premiums, avoid buying newer vehicles, sports cars, luxury vehicles, and models that aren't near the top of the safety ratings (typically smaller cars). You can check safety ratings at the National Highway Traffic Safety Administration (NHTSA) website here. 

2. Use a car alarm or anti-theft device.

Show your insurance provider that your car is equipped with an anti-theft security measure, and you may get a discount. 

3. Lower your insurance levels.

Simply put, the more coverage you have, the more you pay. If you've got an older car, you might be able to save on insurance by eliminating collision and comprehensive protection. However, keep in mind that your state requires a minimum level of liability coverage, so check your state laws before reducing your insurance level. In addition, don't go too low; avoid going down to the minimum level, since you may find yourself in a bind if you actually get into an accident. Read more on how to optimize your insurance levels here

 4. Boost your credit score. 

These days, insurance companies are taking more things into account in their risk assessment, and they've started to inspect their customers' credit history. If your credit score is good, you might be able to get a more favorable rate. (Do note, however, that this is not allowed in California). 

5. Show your loyalty.

The insurance industry is highly competitive, and actually landing a customer costs insurance firms a lot of money in advertising. That's why they give lots of incentives to loyal customers who stick with them through the years. Most firms offer a percentage off your total premium each year you remain with them. If you stay with one company long enough, you'll probably be hard-pressed to find a better deal elsewhere.

Five Tips for Lowering Your Auto Insurance Premium

Posted on Dec 16th 2009, 07:15 pm, under Improve Your Auto Insurance Rate

When you're shopping around for auto insurance, the premium cost is probably one of your key considerations. You may feel that the first price you see is a take-it-or-leave-it offer, but you'd be wrong. In fact, there are many things you can do to lower your auto insurance premium. Read on and find out:

1. Pay in cash up front.

If you've got the funds for it, you might find it better to pay for a full year of insurance up front instead of opting for a monthly payment scheme. You'll save more money in the long run, and on top of this, many insurance firms offer discounts for up-front payment. Even if you decide to switch insurance providers later on, you don't need to worry, because all insurers are required to pro-rate your bill and refund you for the time you aren't covered by their policy.

2. Drive carefully.

How well you drive is still one of the most important factors that insurance providers consider. Most companies look back at least three years, while some go back five or more. They'll check your records of major traffic violations and whether you've been in an accident. Any significant blemishes on your record could seriously raise your premium.

3. Drive less.

The less time you spend on the road, the lesser your chances of getting into an accident, and that's just how insurance providers want it. If you've moved closer to your place of work, or if you cut down on your mileage through other ways, ask your insurance company if you can get a discount. Some firms have programs that let you pay by the mile; if you don't drive a lot, you may want to look into this, since it could potentially save you a lot of money.

4. Buy multiple policies from one insurer.

If you've got several assets that need insurance, then it's best to buy coverage from a single company. Almost every insurance company offers big discounts to customers who buy multiple policies, whether it's auto, home, or life insurance. When comparing insurance quotes, you may find that some companies with high single-policy premiums are better deals over-all when it comes to multiple coverage.

5. Increase your deductible.

You might be able to reduce your total premium by up to 25 percent if you take out a bigger deductible. If you don't have comprehensive or collision coverage, or if you own an older, lower-value car, then taking out a large deductible might be the smart thing to do. Read more on how to pick the right deductible level for your budget here.

Next week, we'll have even more tips for you on how to lower your premium, so be sure to come back to check them out.

Getting Auto Insurance With A Poor Driving Record

Posted on Nov 8th 2009, 10:30 am, under Improve Your Auto Insurance Rate

The best way to get a good deal on your auto insurance is to keep a clean record. But no matter how poor your driving record is, you still need to get auto insurance. If you have a less-than-perfect personal history behind the wheel, you can probably expect your premiums to be high as a result of your past recklessness (or misfortune; even a collision where you weren't at fault can still hurt your record). But don't lose hope just yet. There are still ways for you to save money on your auto insurance, even with a bad record. 

First of all, try reducing the amount of insurance you carry. This can be achieved by driving a less expensive car, for example (no SUVs or sports cars, please). In doing so, you can afford to dispense with some of the less essential components of insurance, such as collision coverage (which covers any damage your car sustains by hitting another object), and comprehensive coverage (which protects against damages to your vehicle from non-collision causes, such as fires and floods).

Although you should never drive without liability coverage, you may choose to reduce the amount you carry, as long as you do not go below the minimum requirement required by your state. When reducing your liability insurance, be especially careful if you own other assets, such as a personal business or a home. If a serious and costly auto accident exceeds your liability coverage, you might lose those vital assets.

In addition, the sooner the improve your driving record, and the longer you keep it that way, the lower you can expect your coverage to cost. Insurance firms won't hold your past mistakes against you forever. Still, you must never lie about your driving record when applying for insurance. All applicants are thoroughly investigated, and getting caught lying will make it even harder for you to get insurance.

Finally, always search for the best deals possible online. Though some companies claim to specialize in insuring high risk drivers, you can never go wrong by checking sites that offer multiple quotes for your comparison

The Link Between What You Drive and What You Pay

Posted on Oct 31st 2009, 01:30 am, under Improve Your Auto Insurance Rate

If you're dead set on owning a Ferrari or a top of the line SUV, then expect to pay dearly for it, both at the car dealership and at your insurance company. The calculation of your insurance premium is based on a variety of factors; among these, your vehicle’s price is one of the most important.

Why? Simply because if your car is stolen or totally wrecked in an accident, it will cost more to replace. Pricey cars also have a higher repair costs than the average car. Surcharges may also apply to car types that are frequently stolen, or that are often involved in accidents.

If you want to get an insider look at how insurance companies might value your car, look it up at the Highway Loss Data Institute (HLDI) [www.carsafety.org]. An affiliate of the Insurance Institute for Highway Safety (IIHS), the HLDI offers comprehensive information on theft rates by vehicle model, injury claims, and average collision repair costs. Both of these institutes are fully supported by auto insurance firms.

The HLDI lists show that the lowest injury claims come from with large vehicles, such as pick-up trucks and SUVs, while the highest claims are associated with smaller two- and four-door cars. Along with sports cars, small cars also have the highest collision costs. Therefore, if you're looking to buy the latest sports car model, you can expect a high insurance premium to go with it. 

But don't assume that SUVs are off the hook, either. Though some models have relatively low insurance costs, SUVs are more expensive than other cars. Worse, they are one of the most common targets of car theft. (The Nissan Maxima currently runs a close second to the Cadillac Escalade in the list of most-stolen cars.) In addition, SUVs cost a lot to repair, especially if the four-wheel drive is damaged in an accident.

In the end, however, rates still vary widely, and companies still set them based on their experience and individual policies. What we've described above are just the general trends in premium pricing. This is why you still have to do your research and shop around for the best rates.

Eight Elements That Influence Your Auto Insurance Rate

Posted on Oct 31st 2009, 01:19 am, under Improve Your Auto Insurance Rate

There are many factors that indirectly affect your car insurance rate, and they are all related to the amount of risk the insurance agency will undertake, should you choose a certain policy. When you're shopping around for the best auto insurance price, you must know what the sellers will be taking into account, so you can realistically adjust your expectations.

1. Where you live: If you live in a large city where the traffic volume is much greater, then there's obviously a higher chance of car accidents. Therefore, expect a higher insurance rate.

2. What you drive: Insurance companies have extensive statistics that show which vehicle types are more likely to get into accidents (in fact, even the color of your car influences the chance of collisions). Higher rates are set for owners of more accident-prone vehicles.

3. Your driving record: If you've got a lot of speeding tickets and moving violations in your history, you're a greater risk for the car insurance company.

4. How much you drive: The less time you spend on the road, the better. If you use your car for long daily trips or regular weekend getaways, you're a bigger risk than someone who uses the car only to buy groceries.

5. Your age: Statistics have shown time and again that younger drivers are more accident-prone than older drivers. As a result, the latter can expect more favorable rates from auto insurance companies.

6. Your gender: This factor isn't skewed the way you might think. According to statistics, males under the age of 25 are more likely to be involved in car accidents than young females due to the greater aggressiveness at the wheel. Fortunately for the men, gender as a factor is disregarded if the applicant is over 25 years old.

7. Your marital status: If you're single, you can expect to receive a slightly higher rate from insurers than a married individual.

8. Your record of accident claims: If you've filed a lot of accident claims before, it's highly likely that you'll get a higher rate than someone who has not, since you'll be perceived as a greater risk.