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Is Car Insurance Refundable?

Written by Michele Wilmonen. Posted in Research Last Updated: 06/11/2013

You can get a refund on your car insurance if your only vehicle is a total loss, you cancel your policy and have paid ahead on your premium or if you have overlapping coverage.

Cash Being Refunded for Insurance

As unlikely as it may sound, there are instances when insurance companies refund back your money.

Is car insurance refundable?

Because car insurance is not something that you can feel or touch a lot of people ask this question, especially when they never use their insurance.

Unfortunately, there are only certain circumstances where you can actually expect a refund from the insurance company and most involve cancelling your policy.

Refund for Car Insurance Paid in Advance

When you purchase auto insurance it is for 6 months of insurance. You have the option of paying for the coverage term in full, in two payments or monthly. No matter what you chose though you are paying for your coverage in advance.

For the two payment plan you are paying for the first three months when you buy the policy and then the last three months when you are two months into the term. The monthly payment plan is paid from month to month, but you put two months down when you buy the policy and then you are always paying a month ahead for your coverage.

By doing this the insurance companies make sure that they get the premium for the coverage period in advance in case there is a claim. This also means that if you cancel your insurance policy during your coverage term, the insurance company owes you a refund for the future coverage that you paid for.

Refund for Changing Insurance

If you place your insurance coverage with a different company and forget to tell you old insurance carrier, you are entitled to a refund. Because you already have coverage in place in with a new company, your old carrier cannot use the excuse that they cannot cancel your policy to a past date and give you a refund because they would have provided coverage for that time period in the case of an accident. In this situation be prepared to show proof of your policy start date with your new carrier to get your refund.

Refund for a Car that Is a Total Loss

If you only have one vehicle on your policy and it becomes a total loss due to an accident you could be owed a refund for your coverage. As your vehicle no longer needs insurance coverage because it is not drivable your insurance company could owe you a refund of the premium you paid in advance. The refund should be effective back to the day after the accident. This of course depends on the circumstances you are in and you should consult your agent to see if you are owed a refund.

When Car Insurance Is Not Refundable

Car insurance is not refundable if you do not use it. You are paying an insurance company to make a contract with you that they will cover the damages to your vehicle and also the damages you cause to another person. At the same time if you do have an accident, the insurance company could end up paying out a lot more in damages than you have paid in premium.

It is also not refundable if you have a claim and you have paid more premium than the insurance company ends up paying out for your claim.

Motorhome Insurance for Those Who Roam

Written by Todd Clay. Posted in Definitions, Research Last Updated: 04/26/2011

Motorhomes are a unique mix-up of an auto and a home and you have the option of protecting your motorhome with your home and auto insurance or a specialty policy just for recreational vehicles.

Motorhome by a Mountain Lake

Having motorhome insurance protects you and the serenity of your vacation.

Motorhomes are a great way to get out and see the country. You take all of your belongings with you and you get to still sleep in your own bed every night even though you are on the road.

Motorhomes do offer a challenge to insure though as you can insure them on your auto policy and let the little bit of homeowners “off-premise” coverage protect what is inside or you could purchase motorhome insurance in the form of a RV insurance policy.

Insuring the Motorhome on Auto Insurance

There are circumstances that you can simply put your motorhome on an auto insurance policy. It is quick and easy if you already have an active auto policy and it will provide you instant coverage. The only problem is that it also only offers the same coverage as an auto policy and a motorhome is a little more complex than that.

With a motorhome you keep valuables inside and they are not covered by your auto insurance policy unless they are attached to the motorhome itself. Your homeowner’s policy could step in and cover the items inside the motorhome in the event that they are destroyed or damaged, but it is only done so at 10% of what personal belongings coverage you have on your homeowner’s policy as the items are considered to be “off-premise”.

You also have liability issues with motorhomes that are outside the coverage of the basic auto insurance policy.

Specialty RV Insurance for your Motorhome

The best avenue to take in insuring your motorhome is to purchase a specialty policy for it, also known as RV insurance. RV insurance offers coverage beyond the auto policy and also the homeowner’s policy for the motorhome and what is kept inside of it. At the same time it also offers additional insurance for issues that may arise in the use of the motorhome such as:

  • Liability coverage for injuries and damages to visiting parties at campsites
  • Replacement of the items kept in the RV
  • Higher limits for towing coverage
  • Living expenses if you are living in your RV and it is a total loss due to damages
  • Gap coverage
  • Reimbursement for hotel stays and transportation if your RV is incapacitated

These are just some of the additional coverages that may be available on a RV policy for your motorhome. The actual coverages depend on the insurance company that you purchase the policy from.

Protecting What’s Inside your Motorhome

The valuables that you keep inside your motorhome should be treated just the same as the valuables that you keep inside your home. You need to keep high priced items tucked away out of the sight of would be thieves and you have to take extra care in making sure that breakable items don’t shift around and break while you are in transit.

Another good practice is to inventory everything that you keep inside your motorhome. You can use a video camera to record everything or you can simply write it all down. Don’t forget to include the make, model and serial number of the items and if you are adding higher priced items, keep all the receipts. You are completing this inventory in the case that your motorhome is destroyed or stolen so that you have a record of everything to provide to your insurance company for compensation.

Should I Drop Full Coverage?

Written by Michele Wilmonen. Posted in Research Last Updated: 04/26/2011

You should drop full coverage on your vehicle when the premium exceeds the amount the insurance company would pay for your vehicle or you simply cannot afford the premium of full coverage.

Woman Pondering if she Should Drop Full Coverage

Dropping full coverage from your insurance policy is something that needs to be carefully thought about.

An insurance policy that has full coverage is a policy that has comprehensive and collision coverage on the policy in addition to the mandatory liability coverage.

Having full coverage on your vehicle protects you from financial hardships if you are in an accident and your vehicle is damaged. This coverage will pay for most damages to your car and all you have to pay out of pocket is your deductible.

Before you make any changes to your policy always consult your insurance agent as there are times that keeping the full coverage on your vehicle is mandatory or will save you more money in the long run than what you would save if you dropped the coverage. But, if you feel that having full coverage on your vehicle may not be what you need right now, you need to ask your agent: “should I drop full coverage?”

Vehicle is Not Worth Much

If your vehicle is an older model and not in very good condition or the vehicle just does not have a high value the premium that you may be paying for full coverage on your older vehicle may be more than the insurance company will ever end up paying out for it. Instead it may be a good idea to cancel the full coverage on your vehicle and just put the money that you would be paying for the insurance aside to cover any damages that may happen to the vehicle.

If you are good at not spending this money, you will even have a down payment for a new vehicle if you older vehicle is totaled in an accident.

You Have the Cash to Pay for Damages

If you can afford to pay out of pocket for any damages that may happen to your car or a down payment on a new car if your vehicle is totaled, it makes no sense to pay an insurance company to do something that you can do yourself. If you never get into a car accident and the insurance company never has to pay out on any claims, you basically just wasted your money

You Cannot Afford Full Coverage

Sometimes no matter how hard you try the ends just don’t meet. To save money in your monthly budget you may want to consider dropping your full coverage on your vehicle as you only need the liability coverage to legally drive. However, if you were to get into an accident you are on your own to get your vehicle fixed and if your vehicle is declared a total loss by an adjuster you will have to find a different mode of transportation to get where you need to go until you can get the money together to get a new vehicle.

So keep in mind the consequences if you do drop full coverage on your vehicle and consider if the risk is worth the money you will be saving each month.

Who Sells Gap Insurance?

Written by Todd Clay. Posted in Related Stuff Last Updated: 04/26/2011

Gap insurance covers the difference in the value of the vehicle and the balance of the car loan; it can be purchased from car dealers, auto financing companies and your insurance agent.

Gap Insurance protects your finances if your new vehicle is a total loss.

Gap insurance is a special insurance coverage that is available for your new vehicle to protect you from financial hardship in the event of your vehicle being a total loss in an accident.

It is a coverage that is only offered in certain circumstances and can vary in price depending on who sells gap insurance. If your new vehicle qualifies for Gap coverage it is best to shop around for the coverage and not accept the first offer.

What is Gap Insurance?

If you were to get into a car accident and the damages to your vehicle exceed a certain percentage of the value of the vehicle (usually 80%) the insurance company will total out your vehicle and pay you for the value of the vehicle instead of fixing it.

Sometimes though the amount that they pay your does not meet the amount that you may still owe on your car loan. For example, the insurance company may pay you $8,000 for your vehicle, but you still owe the bank $10,000. This $2,000 dollar gap is exactly where gap insurance comes in handy.

If you purchased gap Insurance on your new vehicle, it would step in and pay for that $2,000 left over on your car loan so that you were not still paying on the loan even after you no longer had the car. Gap can only be purchased on new vehicles and certain used vehicles depending on the insurance company and the coverage always has to be purchased within a certain frame right after buying the new vehicle.

Car Dealers Sell Gap Insurance

When you purchase a vehicle from a car dealer and sign the finance papers with them, one thing that they will offer to you is gap insurance. It is part of the paperwork that they go through with you when they are trying to get you to add warranties, extra interior packages and whatever else they may be able to throw in to increase the price of the vehicle.

If you add gap coverage at this time it will be added into the total amount of your vehicle that you are going to finance. Even though the gap coverage does not seem like a lot when you break it down into your monthly car payments, the total amount that you are paying is quite high and you could possibly get gap insurance cheaper from other sources.

Finance Companies Sell Gap Insurance

Just like when the dealership sets up the financing with you and offers gap insurance so do auto loan financing companies. If you plan on getting a loan through your bank or other source and purchasing your vehicle that way, they too are going to offer you gap insurance when you sign the loan papers. Again, just like with the car dealerships the price that they offer their gap insurance for could probably be found at a lower price elsewhere.

Insurance Companies Sell Gap Insurance

The least expensive way to purchase gap insurance is to purchase it through your insurance agent. The gap coverage can be added to your current insurance policy when you add your new vehicle to the policy. The cost to do this is considerably less expensive than adding it to your car loan. For more information and to find out the requirements to have this coverage, contact your insurance agent.

Insurance Underwriters: Keeping The Company Profitable

Written by Michele Wilmonen. Posted in Definitions Last Updated: 05/02/2011

An insurance underwriter is responsible in deciding what risks the insurance company should take on that won’t result in a large claim that has to be paid out later.

An Underwriter Looking Over Numbers

Underwriters analyze data to determine if an applicant is a good insurance risk.

While agents are essential to gaining clients for an insurance company so that the company can make money, it is the insurance underwriters who keeps the insurance company from making bad insurance investments and losing money on clients.

Underwriters are a vital part of an insurance company and a larger part of peoples insurance than they realize as the only parts of the insurance company that most people have dealings with are their agent and a customer service agent. While there are underwriter’s in all fields of insurance, we are going to concentrate on what an auto insurance (personal and commercial) underwriter does.

What is an Underwriter?

An underwriter is an employee of an insurance company that decides whether the company should insure certain people and situations. First, they gather all of the information about the person applying for insurance, such as their driving record with the Department of Motor Vehicles, their CLUE report that contains their claims history with past insurance companies and also their credit report.

Next, they look at the information and statistics of the field they have their business in (for commercial insurance), the area that they live in (for weather claims, theft rates, ect) and any other pertinent information that may need.

Finally, after they have gathered all of the information that they need, an underwriter makes a decision as to the level of risk that this potential insured presents to the company. Level of risk just means how likely the applicant would end up filing a claim that the insurance company would have to pay out on and also the extent and monetary value of how much would end up being paid out for a claim.

If the risk is low, the underwriter approves the application and the premium. If the risk is too high, the underwriter denies the application and the person applying for insurance either has to make certain changes before they are approved or they move on and apply with another insurance company.

While no one can ever predict the chance of a claim being filed, it is very important that an underwriter be vigilant and make the best decisions possible in who the insurance company insures or it could cost the insurance company a lot of money in claims later down the road.

What Is Required To Be An Underwriter?

The requirements to become an underwriter all depends on the insurance company. One requirement that is usually seen with all companies though is that the applicant has at least a Bachelor’s Degree and experience working with computers. Other education that is helpful to obtain a position and also advance in the field once you are hired there are courses through the Insurance Institute of America and also The American Institute for Chartered Property and Casualty Underwriters.

Where Are Underwriters Located?

Underwriters are usually located in the main corporate and regional offices of insurance companies, but as technology continues to advance, more and more they can also work from their homes. Because everything is being stored on computers all that an underwriter now needs is a computer and a desk to be able to do their job.

For simple underwriting situations, underwriters can even be a piece of computer software that makes a decision based on the records of the person applying for insurance and also the statistics.

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Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.