Advertising
Advertising

Things to Remember When Shopping for Car Insurance

Things to Remember When Shopping for Car Insurance

Like your real neighbor, State Farm is there to make money. All those shiny geckos, cavemen, jokes, and jingles are in your head because Warren Buffet’s Geico pays a LOT of their hard-earned money to put them there. When you buy a car, the law requires certain levels of insurance, and, depending on who, how, when, what, and where you are, you will pay different amounts for this insurance. It’s all so confusing and annoying–can’t we just pay someone to figure that out for us?

You actually do, and that’s all rolled into the price of your insurance (along with marketing money, operations, etc). A lot goes into determining your insurance premium, and, lucky for you, I spent the majority of my 20s working in at insurance tracking company, and I’m happy to teach you all the ins and outs they don’t want you to know behind the curtains of Oz. Here are a few things to remember when shopping for car insurance.

Advertising

We all live in a yellow submarine. A yellow submarine? A yellow submarine...

    We all live in a yellow submarine. A yellow submarine? A yellow submarine…

    If You Have a Loan, You Need Insurance

    Anytime you take out a collateral loan (house, car, RV, boat, motorcycle, etc), you have to buy insurance on it. It’s called Collateral Protection Insurance, and it’s not much different than a store or phone warranty. If you don’t voluntarily purchase insurance, you’ll be saddled with the bank’s inflated Force-Placed Insurance. Assurant (a company also owned by Warren Buffet) ironically has subsidiaries that underwrite both Force-Placed Insurance and cell phone insurance (which is why you’ve never heard of them, despite probably paying money to them).

    Liability insurance is usually standard (meaning the accident’s your fault) for any vehicle. If you don’t own the vehicle, the banks will require certain levels of collateral and collision insurance. Some states are beginning to pull this market-share from the banks, so who’s forcing you to pay varies by state, but you’re paying it either way.

    Advertising

    Force-Placed Insurance Ruins Lives

    While we’re speaking of the dark underbelly of insurance, it’s important to know that the high price of force-placed insurance is largely responsible for the majority of repossessions and foreclosures nationwide. Basically what happens when you run into financial trouble is you stop paying on your insurance to keep up your rent/mortgage/car/utility/food payments.

    When you avoid that $100-$1000 bill, your bank punishes you by backdating a more expensive policy (4-10x more expensive), and forcing you to prepay the next year’s premium as well. In addition, an analysis will be performed on your loan, and your car or mortgage payments will double or triple. That’s all it takes to push many honest and hardworking people to lose their home and their car within a year. Even if you recover, it’ll take years, as your credit will be ruined, and it’ll take more and more money to get back above water.

    Avoid all of this by keeping up on your insurance, and, when the banks erroneously accuse you of not having insurance, just because you were price-shopping online and the insurance company mailed them a letter to let them know, be vigilant and stern in correcting their mistake immediately. Hold them accountable. Speaking of which—

    Advertising

    Insurance Agents Are Everywhere–Price Shop

    There’s no reason not to price shop. If you’ve ever travelled on an airline, you know you can use aggregate services like Priceline or Hotwire to get basic prices, but the best deals are always on the airline’s actual site. This works the same way in insurance—no matter how honest a company seems, they really want you to use their service. They may sometimes show a competitor is cheaper, but they’re there to make money as well, and you’re not a part of their family. The very least you can do for yourself is check every company’s website, no matter how many times you’re forced to enter all your info again.

    You May Already Have Insurance

    A lot of insurance companies, such as Erie, Traveler’s, Lloyd’s of London, etc. offer umbrella policies, which can cover your home, vehicles, recreational vehicles, and more. When looking for insurance, check with the company you already have. It doesn’t even have to be a full umbrella policy, car insurance sometimes covers the driver, so you can drive other cars you don’t own without paying extra. Some provide car rentals in case of an accident and/or cover damage to the rental car itself. See what you have before you buy more.

    Advertising

    Whenever you don't trust a cop, take a picture...

      Whenever you don’t trust a cop, take a picture…

      Extreme Couponing

      Every insurance company has discounts that can be obtained in different ways. Remember your agent is just a sales person. No matter how local they seem, their policies are underwritten by someone bigger than they are, who in turn is underwritten by someone bigger until you get to one of the big guys. If you’re not insured by that structure, you’re borrowing from a legitimate loan shark/bookie/drug dealer, and you’ll probably be brutally killed for not making your payments.

      Because they’re salespeople, agents offer discounts for good grades, reaching a certain age, being born a certain sex, and things like that. They’re not offering these discounts—a billion dollar research project analyzed consumer data and determined how much to charge you to make as much profit as possible while still undercutting the competition. The real deals your agent is offering you are discounts for watching a video, taking a class, or some other menial task—they do that because they’re good sales people, and know it’s subsidized by the government to make the streets safer. Since the government is run by taxes, ultimately, you’re always footing the bill.

      It’s About Who You Know

      If you work in the government, you can get a great deal with USAA. Like credit unions, many insurance companies started as coops. Even Geico stands for Government Employees Insurance Company. By the time you heard of them, they were already huge. That’s the thing about insurance companies—despite what you think from their public face, they hide in the shadows making money. If you’re a teacher, work for a non-profit or tech firm, you may be able to obtain cheap insurance from your occupation. Look into it.

      Long-time customers are valued in any business, so whoever you do pick to insure your car, stick with them as long as you can. They may experience ups and downs, but they’ll appreciate you sticking with them in the long run, and you’ll often be surprised at how much local agents will go out of their way to help long-term customers. Don’t shop for insurance by the flashy ads or from whoever’s offering the best deal up front. Look into their track record, check to see if loss ratios are in line with the competition. Ask friends and family how their company and agency treats them. With a little elbow grease, you can find the right car insurance for you.

      More by this author

      7 Ways To Make Exercise Fun For Everyone Say Goodbye to a Skinny Body: How to Gain Weight Fast 24 Easy Ways To Make Money On The Internet What 500 Calories Really Looks Like in Different Foods 20 Awesome Screensavers that Make your Desktop Delightful

      Trending in Money

      1 Life Insurance: A Secure Way To Protect Your Future. 2 How To Save Money On Groceries: 13 Quick Tips 3 10 Investment Tips For Beginners 4 Top 6 Hacks on How To Build Credit Fast 5 Want to Get Free Product Samples Like Bloggers and Beauty Gurus Do? Read This.

      Read Next

      Advertising
      Advertising
      Advertising

      Last Updated on March 29, 2021

      Life Insurance: A Secure Way To Protect Your Future.

      Life Insurance: A Secure Way To Protect Your Future.

      Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

      Importance of getting a life insurance

      No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

      Advertising

      On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

      Choosing the right insurance plan

      If you’re about to select an insurance plan, you should consider some important factors:

      Advertising

      • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
      • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
      • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

      Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

      Differences between life insurance plans

      Here’s a short brief of some plan categories you can choose according to your needs:

      Advertising

      • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
      • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
      • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
      • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
      • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

      Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

      So what are you waiting for? Plan for your future and live a happier and carefree life today.

      Advertising

      Featured photo credit: aryehsampson.com via aryehsampson.com

      Read Next