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Vehicle Tracking Devices: To Use Them Or Not Use Them

Written by Michele Wilmonen. Posted in Research Last Updated: 04/01/2017

The new craze lately is to let your car insurance company use a tracking device on your vehicle, but should you?

We are all looking for ways to save money on our car insurance premium and one of the new ways that insurance companies have come up with to help us do that is by offering to track our driving habits. They offer a device that you plug into your car and records how fast you drive, accelerate, stop, swerve and all other manner of driving habits. It takes all of this information and reports it back to your car insurance company.

In most cases, your car insurance company will use that information to provide a customized discount on your policy.  In other cases, your car insurance company uses the information to determine how much premium you should be paying based on your driving habits.

Downsides

  • You can’t use the device in older cars, therefore you can’t participate in these programs if all you have is older cars
  • Some companies determine the premium from the device and not just give a discount, so you may be better off without the device if you aren’t a safe driver.
  • There is no disputing the outcome, the device calculates the end result and there is usually nothing even an employee can do to change the end result.

Upsides

  • This is a great way to save some more money on your car insurance if you are a safe driver.
  • Discounts can be pretty significant.  At least one company offers up to a 30% discount.
  • The device is easy to use, just plug it in and forget about it until it is time to return it.

For more information about your insurance companies vehicle tracking program, contact your car insurance agent or your insurance company directly.

Car Insurance for Uber and Lyft Drivers

Written by Michele Wilmonen. Posted in Research Last Updated: 04/04/2017

If you drive for Uber or Lyft, you may not have car insurance coverage on your vehicle at all.

Car insurance companies that write personal insurance policies do not like it when the cars that they are covering are used for business purposes. They especially don’t like it when you are using your vehicle to transport people for money, like if you drive for Uber or Lyft. In fact, they dislike this so much that there is a clause in your car insurance contract that states that you will not have coverage if you are transporting people for money. This clause is why Uber and Lyft drivers sometimes have no insurance coverage when they are driving.

Confused? Here is how it works……

Before a driver turns on the app that they are available for passengers their personal car insurance policy covers their vehicle. After they pick up a passenger their coverage through Uber or Lyft then covers them. However, from the time they turn on the app to the time they actually pick up a passenger, there is no car insurance coverage on their vehicle. There is a gap in the coverage.

Insurance companies know about this and some are now introducing coverage that will cover your vehicle under your personal car insurance all the way up to the time that you actually pick up a passenger. This is a special endorsement that has to be added to your policy and not all insurance companies are offering it. To find out if your company is offering this new coverage, contact your car insurance agent.

 

Can Lemonade ‘Revolutionize’ Car Insurance?

Written by Todd Clay. Posted in Ask An Insurance Question Last Updated: 03/07/2017

Lemonade has already upset the traditional insurance model with its ‘Giveback’ to charitable causes and record-setting speed for paying claims. Can the VC-backed startup revolutionize the way car insurance works?

 

Lemonade made quite a splash when it debuted its homeowners’ and renters’ insurance for New York residents in September, 2016. Since then, the radically transparent, upstart “B-corp” has expanded to a nearly nationwide presence, and the firm will soon be offering auto insurance, as well.

 

Can Lemonade auto insurance live up to the hype? And what’s all the hype actually about, anyway?

 

What Makes Lemonade Special?

 

Most insurance companies make their profits by taking more from customers in premiums than they pay out in claims. This creates an adversarial relationship between the company and its customers, and some big insurers have been charged with an unscrupulous strategy of Delay, Deny, and Defend (the “three D’s”).

 

Customers expecting to get the runaround from their insurers are more likely to exaggerate their claims, and insurers anticipating this from their customers become even more obstinate. Lemonade seeks to break this cycle of distrust by better aligning the incentives of everyone involved.

 

How can Lemonade do this?

 

  1. Instead of relying on unpaid claims as the source of company profits, Lemonade takes a flat 20% fee – that’s it.
  2. Individuals insured through Lemonade select a charitable cause for the company’s “Giveback” program. All customers pledging to a particular cause become part of a “peer group.”
  3. Premiums collected above Lemonade’s 20% fee are pooled to pay claims – and whatever money’s left over at the end of the year goes to a charitable cause, not Lemonade’s bottom line.

 

Lemonade is banking on the idea that its customers will be less likely to cheat a good cause than a soulless corporation. That makes sense.

 

The Truth About Dishonesty

 

Lemonade also requires its customers to sign an Honesty Pledge. This may sound trivial, but Lemonade’s Chief Behavioral Officer Dan Ariely, best known for his Ted Talks and the CNBC documentary (Dis)Honesty: The Truth About Lies, has conducted experiments in which he reduced cheating to zero by simply asking folks to recall the Ten Commandments. Since none of the participants could actually name all ten, it’s unlikely they were an overly religious group – and yet, even being asked to think about morality caused them to act more morally.

 

Dishonesty is a big problem for the insurance industry – on both the customer and the corporate ends. Significantly reducing fraud, even if it can’t be eliminated, would allow insurers to offer much more attractive rates to their customers, and/or pay out legitimate claims with much less hassle. Lemonade has already set an (unofficial) world record by paying a customer’s claim in three seconds.

 

Will Lemonade’s Model Work for Auto Insurance?

 

Lemonade’s homeowners’ and renters’ insurance has been on the market for just over 100 days, but all indications are that the VC-backed firm is in excellent financial health. Nevertheless, selling auto-insurance could present challenges not evident in Lemonade’s existing markets.

 

For instance, 87% of Lemonade’s customers are first-time buyers of homeowners’ or renters’ insurance. This shows the company is reaching a market that traditional insurers have been unable to reach. But everyone has to buy auto insurance, making the market much larger – and more inclusive of “poor risks.” These poor risks may be more willing to exaggerate their claims, even if doing so takes away from a cause. Of course, Lemonade reserves the right to deny coverage to poor risks – and doing so should keep premiums low for the rest of its customers.

 

When Will Lemonade Offer Auto Insurance?

 

We don’t have a specific answer to this question yet, but Lemonade auto insurance should be coming soon – to at least some states.  Insurance is regulated at the state level in the U.S., and this means Lemonade will probably target a few states to begin with, just like they did with their homeowners’ and renters’ insurance.

 

The traditional insurance model has long been in need of a serious shake-up, and Lemonade is at the vanguard of reforming and improving the industry. It’s safe to assume that Lemonade’s auto product will have the same “Giveback” feature as its homeowners’ and renters’ packages, and a flat 20% fee to ensure the company will pay claims on the basis of merit, rather than Delaying, Denying, and Defending.

 

Once Lemonade auto is available, be sure to try out the comparison form available at the top of this page. When you do, be sure to consider more than just the monthly premiums: You may pay less with other insurers, but will they be as quick to pay out claims when they retain, as corporate profits, whatever they don’t pay?

 

Non-standard Car Insurance

Written by Michele Wilmonen. Posted in Research Last Updated: 03/23/2017

Non-standard car insurance isn’t the lowest you can go.

Non-standard car insurance is not a good place to be, it’s not the worst place you can be, but it is not a good place. Non-standard insurance is the lowest level of acceptance in an insurance company before they just flat out tell you that they don’t want your business. This level is usually for those that have a number of car accidents, violations, and bad credit.  It can be a combination of two or more of these or just a really bad level of only one.

Non-standard car insurance policies are also treated differently by insurance companies:

  • They usually have different billing fees if you go with a payment plan
  • They have larger down payments at the time of new business
  • Different coverage options
  • Less optional/additional coverages available to be added to the policy

If you do get a non-standard car insurance policy it would be in your best interest to not do anything to add to your number of accidents or violations or do anything to decrease your credit score. If you do get worse in the car insurance company’s eyes they will DNR (Do Not Renew) your policy and you will end up in the assigned risk pool.  The assigned risk pool is where the government forces insurance companies to take on a certain number of clients that are considered uninsurable. The rates in assigned risk are astronomical and will make you miss the rates you were paying in non-standard car insurance.

 

 

What Does Comprehensive Car Insurance Cover?

Written by Michele Wilmonen. Posted in Research Last Updated: 04/04/2017

Comprehensive coverage is that confusing coverage that usually covers everything else that collision coverage doesn’t.

Comprehensive coverage is also know as “other than collision” coverage for a reason, it covers all of those “other” covered losses that cause damage to your car that are not collisions. For it to be covered under your collision coverage you have to actually collide with something, comprehensive covers things that happen to your vehicle like:

  • Hitting an animal
  • Hail damage
  • Civil disturbances
  • Theft of the vehicle (not of the contents, this is covered under your home policy)
  • Your car catching on fire
  • Vandalism
  • Falling Objects
  • Rocks falling from another vehicle while you are both driving
  • Windshield damage
  • Sandstorm damage

This list, of course, is just a small example of this different things that are covered under your comprehensive coverage on your car insurance policy. What comprehensive does not cover are things like normal wear and tear to your vehicle, maintenance issues or mechanical problems. If your car breaks down, your insurance company will not cover that.

Your insurance adjuster will usually tell you what your damages will fall under and hearing that your damages fall under comprehensive coverage is a good thing, as most car insurance companies don’t rate comprehensive claims as high as collision claims. In fact, some comprehensive claims aren’t even counted against you, at all.

As always, contact your car insurance agent if you have any questions about if a particular type of damage would fall under your collision or comprehensive coverage.

Comprehensive car insurance coverage

Comprehensive car insurance coverage

 

From our friends at Allstate.

 

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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.