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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.

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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.

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    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—

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    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.

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    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.

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      Published on July 4, 2018

      Top 10 Recommendations on Money Management Apps

      Top 10 Recommendations on Money Management Apps

      Don’t want to overspend your budget, swipe your credit card too many times, and feel like a financial mess? Instead of beating yourself up for the bad financial decisions you’ve ever made, create a new plan!

      The solution is simple, save more and spend less. But, we all know it’s easier said than done.

      One problem is finding quality apps that save you time and money, and aren’t just hype.

      Luckily, there’re many great money management apps available at your fingertips. Here are 10 reliable money management apps that can help you save money, and crush debt.

      1. Personal Capital

        When was the last time you’ve tracked your net worth? Probably months ago or maybe never. Personal Capital allows you to easily track your net worth and plan for retirement.

        Here are some of its main features:

        • Sync many investment accounts, and expenses (mortgage, credit cards, etc.) in one place
        • Discover hidden fees and how much they’re affecting your retirement plan
        • Wealth management for investors requiring a long-term strategy

        With Personal you’re free to track your expenses and net worth.

        Available for: iOS and Android

        2. Mint

          If your smartphone could only install a few apps, Mint would be one of them. Why? Because Mint tracks all your balances and bills in one place.

          Here are some of its main features:

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          • Effortlessly track all your bills and balances in one dashboard
          • Categorized expenses to understand where you spend your money
          • Uncover hidden fees, and determine your investment style with sophisticated retirement tools.

          Feel at ease with managing your money by a reputable company that isn’t going anywhere.

          Available for: iOS and Android

          3. YNAB

            Everyone needs a budget, there’s no way around it. YNAB (You Need A Budget) is an easy to use app that will change the way you think about money. Their motto is to “give every dollar a job”, and you’ll quickly discover why.

            Here are some of its main features:

            • Easily sync all bank accounts in one place
            • Visually see your debt paying progress with eye-catching charts and notifications
            • Customized categories setting saving goals

            The best part about YNAB is the community that comes along with it. You can hop on the YNAB forum to receive support, listen to the YNAB Podcast or stay tuned for their weekly videos.

            Available for: iOS and Android

            4. Wealthfront

              Albert Einstein once said “compound interest is the eight wonder in the world”, and for a very good reason. The problem is, most people are scared or unwilling to learn the basics of investing. This is why Wealthfront is the perfect solution for the hands-off investors.

              Here are some of its main features:

              • Variety of investment account options including IRA, Roth IRA, and more
              • Your portfolio composed of 7 different asset classes
              • Automatically rebalanced portfolio
              • Daily tax loss harvesting

              Wealthfront is perfect for people requiring investment guidance, or prefer a hands-off solution.

              Available for: iOS and Android

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              5. Clarity Money

                If you’re staying on top of your budget but want to take your finances to the next level, Clarity Money can help you. Clarity Money helps you stay under budget and build a personalized savings plan.

                Here are some of its main features:

                • Easily cancel subscriptions with one click
                • Synchronize bank accounts fast
                • Transfer money effortlessly between different accounts

                Clarity Money isn’t an app that does it all. But, it does make transferring money and canceling subscriptions fast and efficient.

                Available for: iOS and Android

                6. Acorns

                  What if there was a way to quickly gain confidence in investing your money, without too much risk? There is, and Acorns is your solution. With Acorns’s technology, you’re able to make investments as small as $5.

                  Here are some of its main features:

                  • Automatic contribution option
                  • Customized portfolio tailored to your needs
                  • Low management fees ranging from $1-$2 per month

                  Stop wasting dollars on expensive coffee. Instead, invest them towards a brighter financial future.

                  Available for: iOS and Android

                  7. Albert

                    Do you budget by only subtracting your expenses from your income? If so, how would you discover any overpayments or extra money you could save? This is where Albert shines, and it does it all free.

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                    Here are some of its main features:

                    • Receive notifications for overpayments, hidden fees, and low balances
                    • An Automatic budget that’s built around your spending and income
                    • Easily track debt and set new financial goals

                    While Albert does offer a paid option, most of its core features are FREE. So, what better option to save?

                    Available for: iOS

                    8. Prism

                      Have you recently forgot to pay a bill because life got in the way? Prism automatically tracks your bills and syncs your bank accounts in one place.

                      Here are some of its main features:

                      • View all your account balances in one glance
                      • Bill due dates are automatically pulled and tracked
                      • Receive early reminders for upcoming bills

                      If your budget is on “fleek” but can’t seem to stay on top of your bills, Prism is your go-to app.

                      Available for: iOS, Android, Windows, Amazon

                      9. Mvelopes

                        Remember hearing about people using envelopes to budget their money? Well, Mvelopes is the new envelope system for this generation. Easily create monthly budgets and track your saving goals.

                        Here are some of its main features:

                        • Connect unlimited bank accounts
                        • Real-time budgeting with auto transaction syncing
                        • Low monthly $4 fee or $40 annual

                        Mvelopes can help you crush debt, save more, and help you stop overspending. With its low monthly fee, it’s worth a try.

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                        Available for: iOS and Android

                        10. Wallaby

                          Most people don’t have time to track their credit card’s changing rewards and interest rates. Because of this, you need help reaping the most of your credit card’s rewards. Wallaby is the app that will help you do just that.

                          Here are some of its main features:

                          • Automatic recommendations for the best credit card to use for each transaction
                          • A friendly user interface, displaying credit cards with their corresponding images
                          • Free to use

                          If you’re using the same credit card to make your purchases, you may be leaving money on the table. Give Wallaby a try if you’re ready to maximize your credit card’s rewards.

                          Available for: iOS and Android

                          Take control of your finances and experience financial freedom

                          Picture yourself staying on budget and saving more money than you’d ever imagined.

                          It took hard work and dedication but you’d finally learned how to manage your money. You have to start taking control of your spending and saving habits.

                          You now have a list of reliable apps that can help you build better money habits, what are you waiting for?

                          Featured photo credit: Pexels via pexels.com

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