Category: Auto

Auto insurance can be a large expense in a family’s budget, and it makes sense to look for ways to reduce the cost. In addition to shopping for a better deal, some car owners may look at all the coverages they’re paying for and wonder if they need them all. One coverage that often has a big price tag is collision coverage – the coverage that pays to repair or replace a vehicle that has collided with another car or object. If the owner still owes money on the car loan, the bank will require her to keep collision coverage. Once that loan is paid off, does is make sense to drop the coverage? The answer depends on several factors.

First, how much is the vehicle worth? Several resources are available to help answer this question. Check the classified ads in the newspaper to see what sellers are asking for vehicles of the same age and model. Publications like the N.A.D.A. Guide and Kelley Blue Book can suggest a starting point for determining value. Web sites like Edmunds.com offer calculators that take into account the vehicle’s mileage and condition.

How much does collision coverage cost? This information should be clearly stated on the insurance policy’s information page. Since many auto insurance policies run for terms of six months, the annual cost may be twice the amount shown on the policy. Compare the annual cost to the vehicle’s value. How many years of premium payments would equal the vehicle’s value? If the answer is a low number, dropping the coverage may make sense. Keep in mind two things: Collision premiums decrease as a vehicle ages, stabilizing when it’s several years old. Also, in the event of a total loss, the insurance will pay less than the vehicle’s value because the policy’s deductible will apply.

The amount of that deductible is also a consideration. This is the amount that the vehicle owner must pay out of pocket even when the insurance applies. If a collision destroys a car worth $3,000 and the policy features a $500 deductible, the most the insurance company will pay is $2,500. Therefore, an accurate estimate of the cost of collision coverage must include both the premium and the deductible. The premium decreases as the deductible increases, making the insurance more affordable and the loss less so.

Perhaps most important, the vehicle owner must determine what she can afford to pay out of pocket if a loss occurs. If she has a sizeable emergency fund in the bank, she may decide to skip the coverage and add the savings to the fund. If savings are skimpy and buying a replacement vehicle unexpectedly would present a financial hardship, keeping the coverage may be more prudent. Dropping the coverage also imposes other costs on the owner, such as time spent finding a replacement and negotiating its purchase, finding alternate transportation in the interim, and possibly renting a substitute.

Finally, dropping the coverage may mean the loss of associated coverages. For example, some companies offer rental reimbursement and towing and labor coverage only to customers who buy comprehensive and collision coverage. Some companies may also offer other benefits like “concierge” claim service to those customers. The vehicle owner must decide how important these are to her before she makes her decision.

Ultimately, each vehicle owner must decide how much financial risk she can bear on her own versus the certain cost of the insurance. An insurance agent can provide information on alternative deductibles and offer guidance. However, only the owner can decide whether the cost of the coverage is worth the potential benefit.

Late for an early morning business meeting, you grab a cup a coffee and rush out the door—only to discover your car’s windshield has been smashed to bits. Your heart immediately plummets and your hands begin to shake with anger. Now what? Although you may be tempted to burst into tears or launch into a fit of rage, it’s important to take a few deep breaths and focus.

Fortunately, if you have comprehensive coverage, your auto insurance should cover the damage to your car. However, to ensure you receive the money you need for repairs, you will need to follow a few specific steps:

Notify the police

If your car has been vandalized, you should contact the police within 24 hours of the vandalism. It’s important to file a police report so that you have an official record of the incident. This record will help your auto insurance company resolve your claim.

Call your insurance company

You should also contact your auto insurance company to file a claim. Don’t delay—most insurance companies say you must file your claim as soon as possible in order to receive benefits.

Your insurance company may request a police report, personal statements and other documentation. Additionally, if any items that are protected under comprehensive coverage were stolen from your car (such as an aftermarket car stereo), they may ask for receipts for these items. Try to provide your insurance company with as much documentation as possible because this will help them resolve your claim more quickly.

Prevent further damage

Some insurance policies require you to take measures to protect your car from additional damage after vandalism. For example, if your window has been broken, you will need to cover it with plastic or another protective material as soon possible. This will ensure that the interior of your car is not further damaged by rain, snow, wind or other elements. Your insurance company may reimburse you for the materials you buy to protect your car, as long as the expenses are within reason.

If you knowingly leave a broken car window uncovered, and your car interior or electrical systems are damaged by weather, your insurance company will not cover this damage. This is why it’s so important to take measures to protect your car as quickly as possible.

Generally, once the police have taken any evidence they may need from your car and say you can move your vehicle, you should immediately take steps to protect your car from further damage. You do not need to wait for your claims adjuster to assess the damage before taking these steps.

Let your insurance company resolve the claim

Once your insurance company assesses the damage to your car, they will tell you whether or not the damage will be covered. If it is covered, they will give you a few options for repairing your car to its pre-vandalism condition. If your window was broken and your dashboard was damaged, they will be repaired. If your car stereo was stolen, the insurance company will give you a new one comparable to the one you had.

If you have any questions or concerns about your claim, do not hesitate to contact your insurance company. They understand having your car vandalized is an invasion of privacy, and they want to help you through this difficult time.

There are many reasons to consider a change in auto insurance carriers. You may be unhappy with the service provided by your current insurer, or you may have found another insurer that offers better rates or service. If you review your coverage annually, you can be sure you continue to receive the best bang for your premium dollar.

It pays to shop around because in some states there can be a wide spread in the premium for the same coverage. That’s because insurers base premiums on the number of claims incurred from a particular coverage group. A coverage group can be drivers of the same age or who own the same type of vehicle. If the number of claims for your coverage group increases during a calendar year, your rates will also increase. If that happens, it makes sense to check with other carriers to see if better rates are available.

Canceling your old policy is usually a matter of writing your carrier and specifying the date coverage should be terminated. In some states, your new insurance agent will notify your former carrier for you. You will receive a cancellation request form that you must sign and return to your former insurer. Some companies will also request that you return the policy with the cancellation form. Be sure that you cancel your coverage in writing. Otherwise, the insurer will assume that you are still covered and when you fail to pay your premium, it will terminate coverage and report this to your state’s Motor Vehicle Department and the credit bureaus.  This can hurt your credit rating and your ability to obtain a new policy.

Before you cancel your old policy, be sure you have a replacement. Since most states require drivers to carry a minimum level of coverage, your former carrier will require you to provide proof of insurance before canceling your existing policy.

If you do plan to switch companies, the best time is when your old policy is up for renewal. In this way, you will avoid paying printing and start-up expenses associated with the renewal process. The renewal notice is typically sent out one month before the new policy period begins. Most states allow approximately one month after renewal to switch policies without penalty. However if you miss the deadline, you could be liable for a cancellation fee.

Keep in mind that standard auto insurance policies have a provision that allows you to cancel at any time. If you plan to cancel before your policy is up for renewal, the best time is at the end of a payment period. In this way, you won’t have to concern yourself with recovering the unused portion of your premium.

Most people know that the federal government enforces certain safety standards for new cars. However, these are only the minimum standards a car manufacturer must satisfy in order to have its vehicles considered safe. Many automakers offer safety features beyond the required federal minimums. When shopping for a new car, you should look for a vehicle that offers the maximum safety features in your price range.

The following list of safety features should be considered when you are shopping:

·   Crashworthiness – This rating indicates the level of risk of death or serious injury if a crash occurs. Log on to the Insurance Institute for Highway Safety’s web site at www.iihs.org/searchresults.aspx?q=crashworthiness for more information about the various models.

·   Structural design – Look for a structural design that has a strong occupant compartment. The vehicle should have front and rear ends that buckle and bend in a crash to absorb the force of the crash. This keeps the occupant compartment from collapsing. If the occupant compartment collapses, the likelihood of injury increases significantly.

·   Size and weight – Larger and heavier cars are safer than lighter and smaller models. In crashes where smaller and larger vehicles collide, the larger vehicles drive the smaller ones backwards, which increases the forces in the smaller vehicles.

·   Restraint systems – Shoulder belts, airbags and head restraints are designed to work together with a vehicle’s structure to protect people in crashes. Shoulder belts keep you in place, reducing the possibility of your body slamming into something hard or being ejected from the vehicle. Airbags reduce the risk of the head and upper body hitting some part of the vehicle’s interior. They also distribute crash forces more evenly across your body. Head restraints keep your head from being violently snapped, which would injure your neck in a rear-end crash.

·   Anti-lock brakes – Conventional brakes may cause wheels to lock if you brake too hard. This can result in skidding and possible loss of control of the car. Anti-lock brakes pump brakes automatically many times a second to prevent locking and keep you in control. While anti-lock brakes help you maintain steering control, they don’t necessarily help you stop more quickly.

·   Daytime running lights – These are usually high-beam headlights at reduced intensity or low-beam lights at full or reduced power. These lights prevent daytime accidents because they increase the contrast between the vehicle and its background, which makes the car more visible to oncoming drivers.

·   Miscellaneous factors – Other design characteristics can influence injury risk. The structure of some small utility vehicles and pickups make them more likely to roll over during a crash. High performance cars tend to have higher-than-average death rates because drivers, especially young ones, speed when they are behind the wheel. You should examine the design features of any new car you are considering to be sure that they are appropriate for everyone who will be driving the car.

With rear end collisions, there is always the possibility of the victims suffering from whiplash. That’s why head restraints are so important to your safety provided they function properly.

Although the primary purpose of a head restraint is to prevent injury to your neck during a rear end crash, there are significant differences in the way head restraints are made. Some are adjustable, while others remain in a fixed position. Some adjustable restraints can be locked into position, but others are not manufactured to lock. There are also variations in height as well as the distance from the back of a person’s head.

The Insurance Institute for Highway Safety recently conducted a study of the seat/head restraint combinations in 44 current model SUVs. Only six of the models tested received a passing rating for protection against whiplash injuries in rear end crashes.

According to the study, if a seat/head restraint is well designed, it should keep the head and torso moving together during a rear end collision. When a car is struck in the rear, the seats push the occupants’ torsos forward. If the occupants’ heads are not supported properly, they will remain behind as the torso moves forward. This difference in motion between the two body parts results in the neck being snapped back. The faster the torso moves, the more sudden the movement, and the greater the forces exerted on the neck, which makes the possibility of whiplash more likely.

A head restraint needs to extend at least as high as the center of gravity of the tallest occupant’s head. A restraint should be located close to the back of an occupant’s head so it can provide support at the point of impact.

The Institute evaluated the seat/head restraints with a two-part test. First, the restraint geometry was measured to determine its height and distance from the head of an average-size man. Seats/head restraint combinations that flunked the geometry test were immediately given a poor rating because they cannot provide protection for enough different body types in rear-end crashes.  If the seat/head restraint combination was rated either good or acceptable for its geometry, it was then tested to see how it performed while in motion. The testers used a movable platform and a dummy to measure forces on the neck. This test, known as a sled test, simulates a collision in which a non-moving vehicle is struck in the rear end by a vehicle of the same weight traveling at 20 mph.

In general, the researchers found that four out of five SUV seat/head restraint combinations tested were marginal or poor in terms of whiplash protection. This was the first time the Insurance Institute for Highway Safety had tested SUV seats using a dummy to measure forces exerted on the neck during a rear-end crash.

The SUVs whose seat/head restraint combinations received an overall good rating were the Ford Freestyle, Honda Pilot, Jeep Grand Cherokee, Land Rover LR3, Subaru Forester, and Volvo XC90.  SUVs with poor ratings included such popular models as the Chevrolet TrailBlazer, Ford Explorer, and Toyota 4Runner.

Wherever you find disaster, you almost always find someone attempting to profit. Following hurricanes Katrina and Rita in the summer of 2005, thousands of water-damaged vehicles showed up in car lots all across the southern United States, many with no visible problems.  They were sold outside of the hurricane’s heavy-hit areas, to avoid suspicion of flood damage.  Though in excellent physical condition, these refurbished cars could still be prone to problems, which is why concealing their disastrous history is against the law.

A “flooded” vehicle is one that has been submerged or partially submerged in water to the extent that damage to the body, engine, transmission or differential occurs.  However, even though physical damage is visible within hours of the flood, it could take weeks or even months for the car to exhibit symptoms of damage with the transmission, on-board computer or electrical systems within the dashboard, anti-lock brakes, airbags, and other safety functions.

Even though most state laws require that the buyer be informed in writing of previous flood damage to a vehicle, there are still several cases each year where the buyer believed they were getting a great deal on a great car.  Despite a flawless exterior, there are other ways to spot a flood-damaged vehicle.

To prevent yourself from being taken advantage of in this situation, here are some basic guidelines in spotting a flood-damaged car:

·        Check the engine, trunk, glove compartment, and the floor beneath the carpeting for signs of sand, silt or moisture.

·        Examine all of the computerized and electrical components of the vehicle, including lights, gauges, air conditioning, wipers, turn signals, radio, etc.

·        If you suspect the car may be flood-damaged, ask the seller directly. 

·        If you are still unsure, have the car examined by an independent mechanic.