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Vehicle Insurance: Why, What, & How Much?

Written by Todd Clay. Posted in Research Last Updated: 02/10/2011

The vehicle insurance you have to have, what is available out there and how much it is going to cost you.

A Car Accident is Exactly the Reason for Vehicle Insurance

I hope the person at fault had the required insurance.

For all drivers on the road, vehicle insurance is a necessary requirement (some would even call it a necessary evil).  It is also very confusing.

Some may wonder if they really do have to have insurance to drive or is it just something that the insurance companies push to make more money.  Others have no idea what type of vehicle insurance is available or even how much this extra driving expense is going to cost them.

Do I Have to Have Vehicle Insurance?

Vehicle Insurance (also called car insurance or auto insurance)  is required in most states if you wish to own and drive a vehicle.  Exactly what type you have to have will depend on your situation.

If you own your vehicle and have a clean driving record, the only coverage that you are required to carry on your vehicle is liability insurance.  However, this coverage only pays for the medical bills and damages that you cause to another person.  Liability insurance does not cover any of your own medical bills or damages to your vehicle if you are the reason for the accident.

In the event that you do not own your vehicle and have a loan on it, your lender will require that you also carry comprehensive and collision coverage on your vehicle.  These coverages protect their investment by making sure that damages can be fixed and also that your loan is at least mostly paid off in the case that the car is totaled in an accident.

If you have a bad driving record or have been caught without insurance, the state may require that you carry SR-22 insurance.  This works as both security to the state that you have insurance in place while you are driving and a certain kind of punishment for your past bad driving decisions.

The minimum vehicle insurance required differs from state to state.  You can find out what is required in your state by talking to a local insurance agent or contacting your state’s Insurance Commissioner’s office.

What Kinds of Vehicle Insurance are Available?

Vehicle insurance comes in all shapes and forms.  It can come in the form of a policy that provides coverage for private passenger vehicles that are used for day to day use or it can be created to cover a classic car that is kept in storage most of the year.  Policies are also available for smaller commercial vehicles that are used to transport people (taxi cabs) all the way up to special policies written for large trucks used to transport goods across country.

How Much Does it Cost?

Shopping for vehicle insurance is very similar to shopping for clothes.  Clothes come in different sizes, shapes, colors, material and are put together by different designers.  The price of each piece of clothing depends on what options you choose.  This is the same for vehicle insurance.

The price that you end up paying for vehicle insurance depends on the size of your liability limits and deductibles, the shape or type of your vehicle, how colorful your driving history is and what coverages you need to make up the fabric of your policy.  On top of all that, each company that designs or puts together the policies charge different rates.  Some companies are very cheap and then there are the designer companies that charge an arm and a leg for the same coverage that the cheaper companies offer.

So there is no one price that you can expect to pay for vehicle insurance.  To find out how much it is going to cost you, get quotes from local insurance agents and also to the insurance companies that sell direct. Just make sure that you are getting quotes for the same coverage to get the best idea on the prices.

One tip for shopping: get quotes from multiple carriers is by using the quote form at the top of this page.

Inland Marine Insurance for Auto Accessories

Written by W. Lane Startin. Posted in Research Last Updated: 03/22/2011

Why you need inland marine insurance for aftermarket auto accessories, what inland marine insurance is, how it works, and how it applies to personal and commercial situations.

Anyone can get inland marine insurance for their car, no riverboat needed.

You just got a killer new car stereo with all the accessories. You have the woofers and tweeters. Everything is top of the line. Now you can terrorize your neighborhood with all the latest block rockin’ beats. Congratulations.

The down side is now your vehicle is a magnet for car stereo thieves. Is that new system covered by your auto insurance?

Um, probably not.

Items that are not factory installed and bolted down are typically not covered by standard boilerplate auto insurance. At this point you need inland marine insurance for auto accessories – at least your aftermarket accessories.

What is Inland Marine Insurance?

“Inland marine” is an old term for a very contemporary concept. The term dates to the 19th Century, when it was common to transport goods by rivers and canals. The insurance was originally designed to protect those goods, differentiating it from goods transported across oceans. It all has a very distinct Mark Twain feel to it, doesn’t it?

Today inland marine simply refers to insurance for miscellaneous items, no raft or riverboat required. It can apply to insurance for such things as jewelry, rare coins and artwork. However, in the realm of auto insurance it usually applies to aftermarket accessories such as car stereo equipment, burglar alarms, radar detectors and other non-factory installed items.

How Inland Marine Insurance Works

Inland marine insurance is usually a stated value form of insurance, meaning that it’s based on a given value for a particular item. For example, to insure an aftermarket accessory such as a car stereo one would typically provide a value for the item, a year of manufacture and a serial number. The procedure would be repeated for each separate item. These items would then be placed on the auto insurance policy as endorsements, or amendments, which provides the coverage.

You don’t necessarily need to get top quality stuff to qualify for inland marine insurance. The key test is whether the item is factory installed or not. If it isn’t, inland marine is probably required, even if we’re just talking about a modest car stereo.

Remember, depreciation is typically not covered in any auto insurance policy, therefore as the equipment ages the actual coverage level drops. Also bear in mind any new items purchased must be placed on the policy as well; their inclusion is not automatic.

As with full coverage insurance, a deductible can be assigned to inland marine insurance, but many choose a zero deductible. Inland marine coverage in and of itself is often quite reasonable, even with a zero deductible.

Inland Marine for Fleet Vehicles

Inland marine insurance is at least as important for commercial or fleet vehicles (see: fleet insurance) than it is for personal vehicles, if not more. In commercial settings inland marine insurance is used for tools and equipment and is therefore of vital importance for general contractors and others in construction-related industries. It can also be used for larger aftermarket commercial items such as generators and winches.

The application and coverage process is much the same for commercial inland marine as it is for personal inland marine. Exact requirements may vary from company to company, but for the most part stated value, serial number and date of manufacture are required.

Teen Drivers: What’s the Deal?!

Written by Todd Clay. Posted in Research Last Updated: 01/29/2011

Why teen drivers have higher insurance premiums, tracking their driving activity, teaching them responsibility, and getting a lower rate when you add them to your policy.

Teen Driver: Behind the Wheel

Ever seen a scarier picture than this?

Nothing makes a parent cringe like the thought of their teen drivers.  Them getting behind the wheel of a vehicle, you not being there to control the situation – not to mention the huge jump your insurance premiums are about to take.

But, there are things that parents can do to keep their teen driver responsible and while the insurance increase is inevitable there are ways to make it more manageable.

Higher Rates for Teens

Statistics have shown that teen drivers have a higher chance of getting into an accident than any other group of drivers.  This is due to the lack of experience that teens have behind the wheel and teen drivers are more likely to engage in risky driving behavior – often to show off for friends.

Car insurance for teens is high for a reason. Because the likelihood of an accident with a teen driver is higher, the insurance companies charge a much higher premium to try and offset the cost of an accident if one were to happen.  The more premium that they can collect, the less money they will lose if the teen is in an accident.

Tracking Teen Drivers

Some insurance companies have started programs that allow parents to track a teens driving behavior.  This tracking is made possible by a tracking device that is attached to a teen driver’s vehicle, it can even be placed in such a way that the teen doesn’t know that it is there.  This device can track where a teen driver goes, any erratic and dangerous driver, and also if they go over the speed limit.

If a parent agrees to use a tracking device, the insurance company may decrease the premiums of the teen driver.  Of course, the availability of these programs are different from one insurance company to another, as is the cost of the device and any discounts that the insurance company would allow.

Making Teen Drivers Responsible

Pro-active parenting can go a long way in making sure that teen drivers act responsibly.  First, if you are planning on buying your teen their own car to drive, make them pay for at least half of the vehicle themselves.  Having to work and get the money to pay for something out of their own pocket makes anyone more appreciative of the item that they had to pay for.

With a teen, they are less likely to engage in behavior that could possibly damage or even destroy the vehicle that they had to buy.  It brings a whole different attitude than if you paid for the car and they did nothing to earn it.  It also makes them more likely that they will form the mindset that you will just buy them another one if they destroy the first one.

Make your teen driver pay for their own insurance also.  There is no unwritten parenting law that states a parent must pay for the insurance on their teen driver.  If a teen wants to enjoy the privilege of driving, they are going to have to learn sooner or later that they also have to pay to be able to have this privilege.  This is something that they should learn while they are living with you and you can help them.

Teen Driver on the Cheaper Car

With insurance the insurance coverage follows the vehicle, but insurance rates are based on both the vehicle that is being insured and the drivers on the policy.  With some insurance companies, they base the insurance rates on each vehicle according to which driver is driving it the most.  If your insurance company bases their rates this way, make sure that your teen driver is listed as driving the oldest and least expensive of the vehicles that you own – assuming your company will go for that. Your premium should be lower than it would be if the teen driver was assigned to the most expensive vehicle.

Collector Car Insurance and Why You Need It

Written by Todd Clay. Posted in Definitions, Research Last Updated: 03/23/2011

What qualifies as a collector car, how is the car insured, and the restrictions that may apply.

Collector Car Insurance: Interior or 50's Car

Why you may need a special policy for your classic car.

What is collector car insurance?  It is an auto insurance policy that is specifically designed to cover cars that are not used for everyday transportation and are considered a collector item or a hobby – like classic car insurance.

Collector car insurance is specialty insurance and it is not offered by all companies.  If your current insurance company does not offer this specialty insurance, you may have to seek out coverage with a company that specializes in this type of policy.

What Qualifies as a Collector Car?

Muscle cars, antiques, imports, rare vehicles and street rods all make up part of the list of cars that can be considered for collector car insurance. The vehicles that people pay beaucoup bucks for because they are rare or that they spent years restoring are the most frequently insured vehicles under this type of policy.

Because the term ‘collector car’ can mean so many different things to different people, it is best to contact your insurance company for more information as to whether your car would qualify as a collector car.

Coverage for Collector Cars

Collector cars are not insured according to a certain value that is found in a book.  Collector cars can be rare and the value of the vehicle is generally not something that can be determined to be the same as every other vehicle that was made in the same time period, especially of that time period was a long time ago.

Instead collector car insurance policies use a stated value or an agreed value to determine the worth of the vehicle in the event of an accident.  Stated value is the value of the vehicle that is determined at the beginning of the policy minus any depreciation during the course of the policy up to the time of the accident.

Agreed value is the more popular method of insuring with collector car policies, at the beginning of the policy the person buying the policy and the insurance company “agree” on the value of the vehicle at the time the policy is written.  If there is a car accident and the agreed value was $53,000, then $53,000 is what is paid if the car is totaled, there is no depreciation with this type of value.

Regulating Collector Car Use

How you use your collector car is strictly regulated by the insurance company. This is why they are able to keep the lower rates that you pay for your collector car insurance down.  Driving restrictions include not being able to use the car for everyday use or commuting to work.   More specifically, your insurance company may place an annual mileage limit on your vehicle, usually around 2500 miles a year.

How you store your collector car is also important. You must keep it in an enclosed garage or storage facility that has a lock on it to keep it safe. You also cannot leave it out on the street or in parking lots for long periods of time when you drive it around.  This is to protect the car from theft or vandalism.

In addition, to make sure that the insurance company has a lower chance of having to pay out on a claim they allow only good drivers to start collector car policies with them.  The driver of the collector car has to have been driving for a minimum amount of years and can only have so many at-fault accident and tickets.

Car Insurance Search

Written by Todd Clay. Posted in Research Last Updated: 01/24/2011

Knowing what car insurance is, understanding different coverages, using local agents, and the internet to search for auto insurance.

Car Insurance Search: Detective with Magnifying Glass

Looking for car insurance can be a pain - but it doesn't have to be.

Looking for car insurance can be a frustrating process.  You are looking for something that is not tangible (you can’t touch it), you are being forced to buy it (by the state), it can be expensive, and you may not understand what the insurance salesman is telling you. Not exactly a walk in the park.

So where exactly do you start with the whole process?

Understanding Car Insurance First

Before you start the car insurance search, it is in your best interest that you understand what you are looking for.  You can start your education by checking out our car insurance definitions.

Learn the insurance lingo and know what an agent means when they say that the policy has 100/300/50 limits of liability coverage or what rental car coverage is.  If you don’t understand what they are talking about, don’t be afraid to ask.  It is better that you understand what you are buying and that it is a right fit instead of blindly buying something.

Don’t automatically buy the policy with the cheapest rates.  This usually means that you are buying the cheapest coverage as well. It might not provide you with enough coverage if you were in an accident.

For example, when we talked about the 100/300/50 liability limits above, that is the coverage available to cover the damages for the other person if you were to cause an accident.  The 100 is actually $100,000 in coverage for bodily injury (per person) and the 300 is the $300,000 limit that your insurance company will pay for all injuries to the other parties in the accident.  Finally, the 50 is the $50,000 limit that your insurance company will pay up to for damages to property caused by you in the accident.

So if you were to buy a cheap policy because the price was lower and the policy only had 25/50/25 liability limits, if you hit a person that was driving almost any new car out there right now, your $25,000 in property damage coverage would probably not cover the damages.  This means that you are left paying the difference out of your own pocket.

Also by knowing what you are looking for and what is available for insurance coverage, you can make sure that you are comparing policies with the same coverage.  This way you don’t mistake a lower priced policy as being the best value, when it is only the lower price because it offers less coverage.

Local Insurance Search

One way to search for car insurance is through local agents in your area.  This will help you in three ways.  First, they are in your area and you can physically go to their office and talk to them.  This is extremely helpful when you have been in a car accident and have someone there in town on your side instead of just a voice on the other end of the phone.

Second, a local agent knows the laws and coverage requirements for your state.  They will be able to make sure that you are purchasing at least the state minimums and have everything in place for your state.

Third, when you get your first quote for your car insurance a local agent will sit down with you and explain all of the coverages and answer any questions you may have.  They can also get you a quote immediately in writing so that as you go and get your other quotes, you have something in hand to compare it to.

You can also contact an insurance company through a toll free number that they offer on their commercials or print ads.  The phone numbers offer an insurance agent to talk to on the phone that can answer your questions. Bear in mind, these agents are not in your area to offer you local support and assistance.

Using the Internet to Search for Car Insurance

The internet is a great way to conduct your car insurance search.  Quotes can be obtained on your computer screen and you don’t have the pressure of an agent wanting to make a sale.  You also don’t have an agent there to answer any questions you may have or to explain any of the coverages.

We recommend searching for auto insurance through the internet first. It’s faster than calling a bunch of phone numbers, it lets the agents come to you (if you use a quote service like our above quote form), and it’s less hassle than keeping up with company websites or phone numbers.

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