Guide

You bought a car – congratulations. You’re now looking at dozens of car insurance sites and comparing rates to find out which one is the lowest. If you saw terms such as “no deposit car insurance” you might be misled to think you’ll pay $0 upfront – this is not true. All insurance companies require at least a few dollars to activate car insurance. GEICO and Progressive offer the lowest rates of $5-6 on average for the first installment and an additional $10 activation fee. The lowest you’ll get in states that don’t require deposits are $15-20 activation fees. This is the absolute bare-bones minimum you’ll pay. Anyone telling you otherwise is trying to one-up you. Car insurance is a legal contract you sign with the insurer and the truth is that you’ll always pay money in advance. When companies advertise no down payment, they actually mean they’ll waiver the first month’s coverage, but you will pay other small fees that the company uses as administrative fees. Paying Monthly Vs. Annually If you went for no down payment insurance this means you’re paying by the month and the first month is waivered. The insurer will initially offer you multiple options: you can pay for the year, pay for 6 months or by the month. Most people choose to pay by the month because yearly costs can amount to over $2,000 annually. If you pay upfront you will save 10-20% on average. When you pay by the month you pay more in cumulative charges but this payment option is more manageable because it’s spread out over multiple months and your car insurance is added among other utilities.  Monthly payments also increase charges for auto insurers. Insurers have to process your payments 12 months a year which tasks their employees with extra work and data management. Hence they have activation fees and administrative fees. Those fees are typically low and never exceed $10-15. On your first month, the lowest installation fee (deposit) + activation fee should be $10 for the activation and $5 for the installation. This will increase the next month as the average cost for car insurance is $100-200 a month. However, it’s not guaranteed you’ll get the low installments. Auto insurers can make you pay more money upfront based on your driving record and car type. If you drive an old car you will typically pay less on your first installment. Why Auto Insurers Make You Pay Full Deposits Certain auto insurers won’t offer “waivers” on the first month and you’ll have to pay full price even if the insurer advertises a no down payment policy. This is affected by your past driving record and/or credit score. The following factors determine whether you’ll pay a full deposit on your first month: Bad credit score. If you have a poor credit score the insurer will make you pay the full deposit costs even if you drive an old car. Although a decline in credit score can happen due to reasons … Read More

PLPD insurance, short for “Public Liability + Property Damage” insurance, is bare-bones liability insurance that covers bodily injury and property damage you inflict on other people. This is basic insurance that covers you in case you get in an accident and you have to pay for repair costs and injuries that you inflicted on another person. Public Liability & Property Damage insurance is considered a 3rd party insurance. It only applies to the damages and medical expenses of people which you injured. Remember: PLPD insurance does NOT cover your own damages (both medical injuries and car repairs).  PLPD insurance is popular in Michigan, a state which has some of the most comprehensive auto insurance laws in the country. The minimum PLPD coverage requirements imposed by the state of Michigan are $20,000 per person and $20,000 per accident. However, most law professionals in the state of Michigan recommend purchasing liability of at least $250,000 per person and $500,000 per accident. This will secure a person for maximum damages which might face them with in the event of an accident. Michigan residents can sue you for PLPD damages, and you can sue them if they cause you an accident. How It Works 3rd party coverage. PLPD insures other drivers and not you and your property. It covers you for damages you cause to another person (medical payments and car repairs). Michigan imposes coverage minimums. Minimal coverage in Michigan is $20,000 per person and $40,000 per accident. Lawyers recommend higher amounts between $250,000 and $500,000 to stay on the safe side. Coverage can be increased. PLPD insurers can increase your limits under an umbrella policy. Available nationwide. PLPD is available in all states where it’s known as liability insurance. In Michigan, it’s called PLPD insurance. To get maximum protection, full coverage plans provide both liability insurance and collision insurance. What PLPD Stands For There are two terms that comprise PLPD Insurance, and those insure 3rd party persons against damage caused by you. The two terms that comprise PLPD are “Personal Liability” and “Property Damage”: Personal Liability Personal liability covers 3rd party injuries that you inflicted during a car accident. If a person ends up hospitalized and they require an operation, your insurance will cover the operation costs, hospitalization, drugs, and future rehabilitation costs. Personal liability insurance can be increased for maximum coverage. Property Damage Property damage insurance refers to the cost it takes to repair the vehicle. Certain PLPD providers provide coverage of up to 100% of the property damage (total loss) while others might only cover 80-90% of the property damage. Consult with your provider to determine the exact coverage available under your plan. Is PLPD The Same As Full Coverage Insurance? No. Full coverage insurance covers 1st person claims too. Full coverage provides coverage for the driver and/or any passengers in the car. Full coverage will secure you for the repairs on your car, any medical expenses and possibly financial distress (if you upgrade the plan) – it will also secure … Read More

Temporary car insurance insures the car from one hour up to 90 days – the least an insurer insures will be one hour and the most will be 30 days (certain exceptions extend 30 day plans to 90 days before mandatory long-term contracts kick-in). Same-day car insurance allows you to bypass annual contracts that car insurers typically require from car owners and expire after 24 hours. Most regular auto insurers require you to sign a contract for at least 12 months, and you must pay for the full amount at once or in 12 monthly installments. To bypass that, you can purchase same-day car insurance.  Same-day car insurance allows you to bypass the annual contract and only pay for the amount of time you intend to drive the car. Getting temporary car insurance is fast and the approval procedure is instant if you gather your documents and present them to the insurer. Temporary insurance provides drivers with a short term cover that they can use on the road if they loan a car. This is practical for drivers who drive cars that don’t belong to them. All regular insurers have temporary car insurance under their website where you can inquire for a rate. If you have an insurance plan you can call your existing insurer and inquire as to temporary insurance on another car. Benefits Of Same Day Insurance Temporary insurance carries benefits for day-to-day casual driving and international travel. In essence, it gives you the short term cover you need to insure a car you don’t own. The following benefits are the main reasons to purchase same-day car insurance: Expires after 24 hours. Many insurance companies will be able to offer you insurance by the hour. You could technically insure a car for only 1 hour, although people typically insure for a full day to stay safe (and the costs are reasonable!). Same-day insurance will ensure the car has insurance for the amount of time you agree upon signing the contract.  Extendable up to 90 days. If 1 day is not enough you can arrange 30-day coverage, and you can still extend that up to 90 days on certain providers. Instant approval. If you’ve gathered the documents for the car, your driver’s license and other essential documents, the insurance company will approve your insurance on the spot. Research the individual requirements your insurer asks before approving same-day insurance. Overseas coverage. If you plan to drive your car in Europe for 30 days, you could technically purchase a temporary monthly plan that will cover you for the extent of your trip.  Temporary insurance arrangements are not required for rental cars: rental agents insure their own cars and you’re automatically insured. Temporary insurance is used for private cars. These policies are ideal for emergencies if you have to borrow another family member’s car while your car is being repaired at the dealer. If you need to drive your boss’s car for a while, you can purchase temporary insurance to keep them … Read More

Why should you stay loyal if your insurance company charges you $2,500 and you find an offer for $2,000 – why not make the switch? Insurance companies often take their customers for granted: many times they won’t give you discounts even if you’re a loyal customer with a clean track record. The premium price you pay will be affected in part by the insurance plan and in part by your qualifications (past driving record, the car you’re driving, etc). Example: if you have a traffic violation for speeding you might pay $2,600 average for insurance, but if you pick the right company you could pay as little as $2,000 which is close to what people with no traffic violations pay. There are many reasons to go about switching car insurance. You might find better rates online, your insurer spiked your premiums for vague reasons, you want to buy a new car, you find better coverage for your children/parents, etc. Regardless of the reason, switching car insurance is not a tedious process – it’s an easy and fast process. The following are 6 steps to switching auto insurance in an efficient manner. 1) Do Your Homework Don’t rush to cancel your insurance and look at what other companies are offering in detail. Researching car insurance companies has never been easier and with a few clicks you could have rates by many different competitors in your area – you then narrow them down by price. However, this is not always about price but reliability is a strong factor too. If an insurer has low rates but their reviews are horrible, would you want to rely on them in an accident? What if you purchase low insurance premiums but then find out the negotiators lower the price of your car and do every trick in the book to avoid paying your claim? Prices aren’t an indicator of the stability of an insurance company.  If you enter your specific details (age, zip code, car model), you can analyze the biggest insurance companies and see which one offers the most savings compared to your current plan. To get a full picture, compare plan coverage such as occupation-based discounts (ex. veterans might get discounts), photo filing for claims and more. The big debate will be whether to go for big national insurers or local insurance companies.  Big insurers are the way to go – if you picked one of the top 20 national insurers with the drop of a hat, you may be guaranteed quality customer service and fast payout in case of claims. Dealing with small insurance companies is high risk because they have limited finances and might go bankrupt depending on how many claims they receive a year. Your research should consist of analyzing which big names operate in your area, comparing their premiums and opting for the lowest possible premium. Tip: Don’t use third party quoting services when you look up premium rates online. Most companies will give you a free quote on … Read More

PIP Insurance, short for Personal Injury Protection, is a type of auto insurance that secures the welfare of an individual in addition to car damages: Medical expenses and lost wages. PIP is optional and can be added to a car-insurance policy. Exceptions apply in 16 states which require mandatory PIP coverage in addition to regular auto insurance. PIP Insurance provides identical coverage as health insurance or Medicare, and although this is considered an overlap it’s legal to combine multiple insurance policies at the same time. The difference is that PIP insurance only activates on car-related accidents while medical insurance covers you for all other medical problems regardless of how they were caused.   PIP insurance is referred to as no fault insurance and it covers you and any loved ones injured in an injury. PIP insurance extends to all passengers in the car and not only the main driver. If you’re injured in an accident when someone else is driving, you’re covered under a standard PIP policy. PIP insurance is similar to bodily injury liability but the difference is that it only extends to at-fault car accidents, while liability insurance pays for everyone in the other cars if you’re at fault. PIP insurance provides additional security to an existing medical insurance plan because it covers policies that are typically not written under standard health insurance. PIP insurance can be more extensive than Medicare Insurance and provides coverage for everyone in your car. Benefits Of Personal Injury Protection (PIP) Insurance PIP insurance is catered towards individuals who rely on their cars for transportation and spend a lot of time in their cars. PIP is not for everyone; however, if you fit the profile of a car-dependent person the following benefits will apply to you: Coverage for all passengers All passengers in your car will be insured – PIP extends all medical/wage loss benefits to the passengers in your car. You will protect your spouse, children, parents or any person that drives along. They’re all insured.  Additional medical insurance If your health insurance plan is not satisfactory, PIP will provide extra medical coverage that will cover all your hospitalization/rehabilitation needs + the repair damages for the car and financial distress. Financial compensation If you’re incapable of working for the time being, the insurer will compensate you by paying out your wage. There are certain regulations in terms of how much you’re entitled to (for ex. some cap salary compensation at $10,000). Financial compensation will also include things such as house cleaning and childcare if the parent is incapable of performing those duties as a consequence of the accident. Worst-case scenario compensation If someone passes due to an accident the insurance company will cover their funeral costs. How Much Does PIP Cover? PIP coverage costs depend on the insurer + the mandatory state-imposed regulations. Most states assign mandatory minimums for insurance companies and this reflects in the final PIP coverage. For example, Florida mandates that all PIP insurers must cover at least 80% … Read More

Leasing a new car? Typical lease requirements require at least $300,000 in accident coverage which is supplied by most major auto insurers. Leasing is ideal for people who want to replace a car model every few years and don’t want to drive outdated cars. If you enjoy cars that have the latest technological bells and whistles, leasing is an excellent option to upgrade your car. You won’t actually own the car but the benefits are immense. Drivers who lease don’t have to worry about maintenance costs and the payments are lower than those of car mortgages. Leasing has serious requirements that might not be suitable for all people. The main consideration is the auto insurance requirements you’ll have to purchase when you’re leasing. Auto insurers have separate insurance plans for people leasing cars than those of people who own cars. This guide will distill the benefits/negatives of leasing, the lease car insurance requirements and picking the right coverage from your auto insurer. Leasing 101: The Basics Leasing is, for the most part, for new car models – it is a contract the lessee signs with the dealership that allows them to pay a certain amount of the car cost and return the car once the contract expires. Drivers have the option to purchase the car at the end of their lease term or upgrade it to a new model. When you buy a car without leasing, you pay for the full cost in advance and then the car is yours. Many people get a mortgage to buy cars and then pay monthly payments to the bank – this is not leasing. In the conventional way of purchasing cars, you own the car once you’ve paid off the car loan.  Pro Tip: Leasing is more similar to renting. You essentially borrow the car from the dealership and you pay for the depreciation value between the time you borrowed it and the time you bring it back to the dealership. You make payments the same way you would to a bank if you took out a bank loan, but you still don’t own the car. Once the lease expires, the dealership allows you to return the car or purchase it. The contract will include arranged miles which are the miles you’re allowed to drive the car (or you’ll have to pay more). If the car is damaged upon return, this can also increase the final price you pay. Pros And Cons Of Leasing Advantages of Leasing Save money. The monthly payments on a lease will be a lot lower than if you purchased a car with a bank loan. The difference can be significant. Brand new car. You can drive a car off the dealership in spanking new condition. The lease will also give you leeway to get a car that you couldn’t afford to purchase the conventional way. Warranty for lease duration. The lease gives the car a warranty for the entire duration of the contract you sign. Option to purchase … Read More

Full coverage insurance is the annual insurance rate you pay for the insurance package that protects you against all accidents on the road. The price varies based on the car and the driver’s age and driving record. The shinier and newer the car is, the higher the premium on that car is going to be. The older the car, the lower the premium is going to be. Example: Lamborghini Huracan costs $5,000 a year to insure, while a Toyota Corolla can be under $2,000 a year. Age is a significant factor in the price of full-coverage insurance as younger drivers are deemed high risk by auto insurers. The highest premiums are paid by 16-year-olds: $2,593/year is the highest nation-wide average. The lowest premiums are paid by 55-year-olds – $494/year is the lowest nation-wide average. Teens and early 20s drivers pay the highest rates! Auto insurers aren’t keen to insure 16-year-olds at low prices because they’re deemed high risk. Young drivers tend to drive recklessly and get in many car accidents. Drivers over age 25+ are considered lower-risk and consequently pay lesser premiums. However, prices spike after drivers reach 65+ years. The average cost of full coverage car insurance across the board for all ages is $200/month or $2,400/year. Each state will have their own mandatory requirements in terms of how much the insurer is supposed to cover clients for – there are minimums in liability coverage. This can spike the average price of auto insurance in a state. Only 7 states offer insurance without a down payment/first-month pre-payment. Full-coverage is the most expensive auto insurance because it covers all state-imposed mandatory coverage plus additional coverage for all car damages. For example, the car will be insured even if a tree falls on it and the damage was done off the road. Full-coverage plans will vary by the state and the insurer, however, the average cost seems to be in the $2,000 range or $150-200/month. $2,000/year is a very high amount, but auto insurers offer the ability to add multiple people under a single auto insurance plan. This allows you to insure your spouse, children, parents and/or any person who drives your car. Adding named drivers increases the price but it provides coverage for the whole family. Inquire with your auto insurance provider for the ability to add named drivers to bring down the total cost of your insurance. Full Coverage Vs Regular Auto Insurance Full-coverage insurance can be three times more expensive than average insurance. Example: if full-coverage insurance in your state costs $200 a month, you could probably get insurance for your car for under $60 a month. The term full coverage entails that the policies in the coverage are going to exceed the minimum requirements that your state imposes in terms of liability coverage. The added protection provides safety for the other person’s vehicle damage and not just the policy holder’s – it extends the liability to both parties. Typical full-coverage plans include personal injury protection which covers … Read More

Do you want to add a spouse, brother-in-law, roommate or children to your existing plan? It’s possible to insure the entire family on a single car insurance plan by adding your immediate relatives: spouse, children, and parents. This can bring down the costs of car insurance because each individual member doesn’t have to purchase separate insurance. Everyone can be insured under your main plan. This is called “named driver insurance” or “additional drivers insurance”. When you add additional people to the main car insurance they’re called “named drivers”. Adding a second person to your car insurance won’t double your premiums, but the increases are determined based on the age and license of the named drivers you’re insuring.  The difference between the main policy-holder and named drivers is that named drivers do not have the same coverage as the main policy-holders. Example: if the plan’s medical coverage is capped at $500,000 theirs could be $50,000. The difference in price is noticeable too: some insurers will increase your premiums significantly depending on their age, driving record, and more. Each policy will have varying limits for coverage based on the insured’s car (if the car is newer the premiums will be higher). How To Go About Adding A Driver To Car Insurance? There are discounts and increases depending on the named driver. Certain demographics can lower your existing premiums (mature drivers). Others will increase it: if you add a child under 26 your premiums will increase significantly. If you add your parents without a bad driving record, your premiums will decrease. Teenagers between the ages of 16-19 have the highest car insurance policies because they are the most high-risk group on the road. In general, youth drivers under 26 years old are considered dangerous by insurance companies and although prices drop after they turn 20, they don’t stabilize until a driver is in their 30s. Parents will have to pay higher insurance premiums to add their children to their policy. If you’re a young driver you can add your parents to your insurance policy and this will actually make you pay less on your yearly premiums. Benefits Of Adding A Driver To Car Insurance Can share a car. The whole family can use the same car. Can add non-siblings. You could technically add your roommates or employees to your insurance plan. Can save money on premiums. You can lower your premiums if you add your parents to your plans. The Costs Of Adding A Driver To Car Insurance If your car insurance premium is $2,000 a year, how much would adding a driver increase your costs? The following factors will determine whether your policy premium increases or decreases: The age of the named driver The marital status of the named driver The relationship to the policy-holder (if they’re an immediate relative or a friend) The car status of the named driver (if they own a car and have separate insurance) There are discounts for people who own their own cars The type of … Read More

If you have a car insurance lapse you will automatically be labeled a potential high risk by most auto insurance companies. Auto insurers consider lapses as potential dangers and treat them similarly to getting in a car accident – consequently, client rates will be higher in the future. How much will your rates increase and what steps to take to minimize the damage on your lapse? We break down the essential information below. What Is A Lapse In Car Insurance? Car insurance “lapse” is any time your car is left without car insurance – it only applies for registered cars; if the car is sitting in your lot unregistered you have nothing to worry about. A lapse can occur for many reasons. The most common reasons for a lapse are the following: Policy running out. If it’s time to renew your policy and you fail to renew on time – your policy is lapsing. Renew it 30 days in and it stops lapsing. Missed payments. If you missed a payment on your auto insurance it might be canceled and this creates a lapse. Losing the ability to drive. If your driver’s license was taken away or you are incapable of driving for any other reason but the vehicle remains under your ownership.  Military deployment abroad. Deployment abroad means you no longer have to use your car and you also have a lapse. Note: There are exceptions for military personnel. Is Car Insurance Lapse Illegal? A lapse is not illegal. Regulation extends on the state level – most states, however, do require auto liability insurance and this is why lapses are undesirable. State laws require that you have auto insurance liability – not for yourself, but to protect fellow citizens. If you damage someone’s automobile, cause damage to property damage or endanger someone’s life – you’re at fault and you will need liability insurance to cover the other individual’s needs. If you are without insurance you are essentially violating the law – there are stiff fines for people who drive uninsured and cause traffic accidents. What Happens If You Have A Car Insurance Lapse? Unless you have a very legitimate reason for canceling your car insurance such as being an inexperienced youth driver or deploying with the military abroad – lapses can be very dangerous for your credit score and financial well-being. The most dangerous form of lapse is due to financial bankruptcy – if you couldn’t renew your insurance on time or if you failed to make your monthly payments, you are still likely driving your car to work. In that case, you may experience serious financial difficulties if you get in a car accident, even if you are not at fault. Note: There are even penalties for people who no longer drive their cars, but remain the owner of the car. This is what may happen if you have a car insurance lapse: You risk financial ruin as a consequence of an accident without coverage (if you’re held liable … Read More