Everybody knows about that huge head ache with all the insurance hustle: whenever you buy a new (or used) car, the state law requires you to get a certain level of insurance. And here’s where it all gets really interesting about car insurance: depending on the state you currently live in, you’ll have to pay different amounts. The price also varies depending on when, how and under what circumstances you made the purchase. Yep, it’s pretty confusing and frustrating; now, wouldn’t it be great if somebody could take care of all that for you? Well, fortunately, there is a “magical method” to take all that trouble off your plate, and it’s called buying car insurance.
Car Insurance: Knowledge Is Power
It goes without saying that there are tons of factors that determine your insurance premium and you gotta know your way around them all if you don’t want to end up with a ridiculous bill at your door-step. Unfortunately, that’s a very common scenario here in the United States when people simply don’t know anything about car insurance and the companies use that to their own advantage, forcing the owners to pay staggering amounts of money. Lucky for you, I’ve been learning my way around insurance for a while now and have some knowledge to share with you. Experience and knowledge are crucial to striking a successful deal, so, check out the following “rules of engagement” and try to keep a cool head.
No Loans Without Insurance
Remember: anytime you go for a collateral loan (say, on the house, the boat…the car) you automatically sentence yourself to buy insurance on it. This system is called CPI (Collateral Protection Insurance) and it’s actually a lot like your regular warranty. And there’s no way around it: if you try to skip it and not buy that insurance, the bank will charge you with (or, rather, burden you with) inflated Force-Placed Insurance; so, you better be a good citizen and pay up first :). As for car insurance shopping, it’s generally pretty standard for any car (that’s when the crash and/or accident is your fault). On the other hand, if you’re not the owner of the vehicle the banks will, again, charge you with all kinds of collateral and collision insurance. In some states the banks don’t have the right to do that; but the government does, so, it doesn’t matter who’s telling you to pay – you’ll have to do it anyway!
Force-Placed Insurance – The Big, Bad And Scary Monster
I have to say it up-front: the high pricing of force-placed car insurance is arguably the biggest reason why there are so many foreclosures and repossessions here in the United States. Yep, now you know what the enemy looks like. So, basically, when you have financial problems you simply stop paying on that insurance to be able to buy food, pay for the rent, gas for the car, et cetera, et cetera. When you “go rogue” and neglect to pay that 100 to 1000 dollar bill, the bank goes ahead and punishes you by introducing a far more expensive policy (like 4 to 10 ten times more expensive!) and forces you to pay in advance the next year’s premium as well. That’s not all! Your loan will be deeply analyzed and, depending on that assessment, your car/mortgage bills will double or even triple!
Yeah, that’s all it takes for the American system to make honest citizens lose their houses and their cars in a year. Even if you – by some miracle – manage to get back on your feet, your credit will be so far down the pitfall that it will take huge amounts of money to get it back up. So, you can avoid that horrible fate by keeping up with your insurance. Yes, you’re better off not buying that new toy for your kid in order to pay that bill; otherwise you’ll be run over by all kinds of bills and charges.
Watch Out For Multiple Insurances
The majority of insurance companies, Traveler’s and Erie’s included, offer so-called “umbrella policies”: they cover your house, your car, your RV, etc. However, when checking out various offers, first check with the company you’re already paying for insurance. It doesn’t always have to be an umbrella policy and vehicle insurance does sometimes cover the driver (that’s you). That means you can freely drive all kinds of cars you don’t own without having to pay additional bucks. Some companies provide car rentals in case of a traffic accident or cover damage to the car. So, make sure to always see what you have going on before you buy more.
Car Insurance Shopping: The Real Truth About Discounts
Every insurance company out there has certain discounts that you can obtain – one way or the other. But keep in mind that your agent is just a pawn. He might be a good guy, but he’s just doing what the boss tells him to do: they’ve got strict rules and policies that they have to follow if they wanna keep their jobs. So, don’t think that you’ll be granted a discount just because you’re friends with the guy. On the other hand, if you happen to be working for the government, you can get a pretty sweat deal with USAA. A lot of insurance companies started out as coops. If you’re, say, a teacher, you’ll have better changes at getting a solid, cheap insurance if you go work for a tech/non-profit company.
Stick With One Car Insurance Company For Life
As for the long-time customers, they’re well respected in any business, so, it would be a very good idea to stick with the car insurance company you’re currently involved with for as long as you can. Sure, they may go through some rough times, but, at the end of the day, they’ll appreciate your loyalty and will do everything in their power to ensure your happiness and contentment. Yep, even in a dodgy world like insurance loyalty has a very strong value. And finally, don’t be fooled by a flashy ad on the TV or the Internet – don’t buy insurance from a company that promises you the best deal on the market. Go with a solid company that you know will be around at least for a couple of decades.
Take a look at their track records and check whether the loss ratios are similar to those of the competition. Next, ask your friends/relatives about their agents. All in all, it’s not that hard to find the right insurance company – you just gotta be patient and not be fooled by any suspicious offers. And that’s pretty much it! Keep a cool head, learn about all the available offers and try not to exceed any time limits on your insurance bills. Stay frosty and be safe!
Check out this video now: Understanding 5 Types of Car Insurance Coverage.