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Car insurance guide

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FINDING THE BEST RATES

Comparing premiums is easier than ever, thanks to online services such as Quicken Insurance (www.quicken.com/insurance) and InsWeb (www.insweb.com). While you can also use the Yellow Pages to canvass local insurance agents for quotes, online services let you compare multiple price quotes in minutes.

You should make this price comparison at least once a year. Still, it may not be a good idea to switch companies too often or arbitrarily. Sometimes loyalty pays. For instance, if you’ve been with one company several years and maintained a clean driving record, you may qualify for a safe-driver discount, which substantially lowers your premium. But if you’re contemplating a switch, the new company may be willing to classify you as a safe driver. In addition, you can often get a discount for insuring more than one vehicle–or your home–with the same company.

To get an accurate quote, you’ll need to provide information on the car or cars that you intend to insure: the make, model, year, trim line, and the vehicle identification number (VIN). You’ll also need to give the age, sex, and recent driving record of all potential drivers. Some companies may also ask where you normally park your car, and inquire about any aftermarket accessories you may have installed to prevent theft. The insurer may independently check your driving history using public documents such as police records, and your insurance history through your current and former insurers.

BUY THE RIGHT AMOUNT

Car insurance is meant to protect you against catastrophic losses, such as a major accident or the theft of your car. Be prepared to absorb minor losses yourself, and you’ll save a lot. Here are tips on separating the essentials from coverage you can probably live without.

Coverage you must have

Bodily injury liability. Should you cause an accident, the “liability” part of your insurance coverage pays the medical, rehabilitation, and, if necessary, funeral bills of your passengers, the other driver, his or her passengers, and any pedestrians involved. It also covers pain and suffering awards as well as legal costs.

Buy coverage that will pay at least $100,000 per person and $300,000 per accident. If you have sizable assets, consider increasing those limits to $250,000 per person and $500,000 per accident. Such added coverage will raise your premium at least 10 percent. We recommend that people with a high net worth have a separate “umbrella” policy to insure against a lawsuit seeking an amount beyond their auto policy’s limits. You may need to buy higher insurance limits to qualify for an umbrella policy.

Property damage. This coverage pays to repair or replace another person’s vehicle or other property damaged by your car. States typically require only $10,000 to $25,000. We suggest buying coverage of $100,000.

Uninsured and underinsured motorist coverage. This covers medical bills, rehabilitation, and funeral costs, as well as losses for pain and suffering for you or the passengers in your car when an accident is caused by a hit-and-run driver or someone who has little or no insurance. Get the same amount of this coverage as you do bodily injury coverage. That way, if someone who has no insurance hits you, your medical costs will be covered.

Coverage you’ll probably need

Collision and comprehensive. Collision coverage pays to repair or replace your car no matter who or what caused the accident. Comprehensive pays to repair or replace your car if it’s stolen or damaged as a result of a storm or other natural event. Coverage kicks in for the amount above your deductible. Choose the highest deductible you can afford to pay out of pocket–at least $500. Once the cost of this coverage equals 10 percent of your vehicle’s book value, you might want to cancel it, since you will collect no more than your vehicle’s market worth. Antique vehicles or cars with collector value sometimes are insured through a separate rider; or you may have to find a separate, specialty insurer.

Personal-injury protection. PIP reimburses you for lost wages and in-home care needed as a result of an accident. If you have separate health and disability policies, you can buy just the state-required minimum for PIP. The other policies should cover the balance of your needs.

Medical-payments coverage. Sometimes called med-pay, this covers medical bills for you and your passengers, regardless of who’s at fault. When this coverage isn’t automatically included in your policy, its costs are minimal. You may not require any if you have good health insurance. To protect passengers who may not have their own health coverage, you may want to carry at least $5,000 of this coverage.

Additional types of coverage

Roadside assistance. This coverage pays to have your vehicle towed. If you already have an auto-club membership or your car’s manufacturer provides this service for free, don’t buy this extra coverage.

Rental reimbursement. This coverage typically costs $30 per year and pays for a rental car–usually for up to 30 days–if your vehicle is stolen or is in the shop for repairs sustained in an accident. There’s usually a cap on the amount you’re reimbursed per day and per occurrence.

MONEY-SAVING TIPS

Ask for the top tier. Insurers sort customers according to their likelihood of filing a claim, then assign them to one of several categories commonly referred to as tiers. Top-tier customers who have had few or no claims in the past several years and live in neighborhoods where auto-theft rates are low, for example, can easily save 15 percent or more off the standard rate. But simply because you qualify initially or improve your driving record doesn’t mean you automatically get top-tier status.

Check rates before you buy a car. The difference in premiums between one car or truck and another can be substantial. Much of that has to do with the cost of repairing collision damage, which can vary greatly even among seemingly similar vehicles.

Get equipment discounts. You may qualify for extra discounts if your car has current safety equipment such as air bags or antilock brakes. Also check about anti-theft equipment such as an alarm system, which can get you a break on the comprehensive part of your coverage.

Group your policies. Most insurers will give you a multiple-policy price break if you let them write your auto, home, and personal-liability coverage.

Improve your driving skills. Completing a certified defensive-driving course can reduce your premium in some states.

Kid factors. If you have children who drive, you’ll save if they get good grades or if they attend a school located more than 100 miles from your home and don’t use the car there.

Group discounts. Insurers award discounts to low-risk consumers who share a common affiliation such as a membership in an employee group, a company pension fund, or an alumni association. These so-called affinity discounts can be sizable, so if they apply to you, it pays to take advantage of them. Ask your insurer if any groups to which you belong qualify for such a discount. Alternatively, ask representatives of the groups if they work with any insurance companies.

Keep repair options open. Some insurers insist you use generic replacement parts or encourage you to bring your vehicle to certain body shops in an effort to cut claims costs. While this arrangement may lower your premium, you may want to preserve your flexibility by insuring with a company that lets you decide which parts are used (original equipment or aftermarket copies), and who does the repairs. In tests a few years ago, we found none of the aftermarket replacement bumpers tested fit as well as factory-original bumpers or stood up as well to low-speed impacts. We also had trouble making generic fenders fit properly.

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Most Stolen Cars

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The Highway Loss Data Institute has updated its list of the most popular (and least popular) U.S. cars for thieves to steal.

The most stolen cars are:

 

  • All four versions of the Cadillac Escalade (10.6 are stolen per every 1,000 cars on the road)
  • Ford F-250 crew 4WD (9.7 are stolen for every 1,000 cars on the road)
  • Chevrolet Silverado 1500 crew (9.2 stolen per 1,000)
  • Ford F-450 crew 4WD (7.9 stolen per 1,000)
  • GMC Sierra 1500 crew (7.3 stolen per 1,000)
  • Chrysler 300 (7.1 stolen per 1,000)
  • Ford F-350 crew 4WD (7 stolen per 1,000)
  • Chevrolet Avalanche 1500 (6.4 stolen per 1,000)
  • GMC Yukon (6.4 stolen per 1,000)
  • Chrysler 300 HEMI (6.3 stolen per 1,000)On the opposite end of the spectrum, some luxury vehicles are among the least likely to be stolen:
  • Audi A6 4WD (0.5 are stolen for every 1,000 cars)
  • Mercury Mariner (0.5 stolen per 1,000)
  • Chevrolet Equinox (0.6 stolen per 1,000)
  • Volkswagen CC (0.6 stolen per 1,000)
  • Chevrolet Equinox 4WD (0.6 stolen per 1,000)
  • Lexus RX 350 (0.6 stolen per 1,000)
  • Saturn VUE (0.6 stolen per 1,000)
  • Chevrolet Aveo (0.6 stolen per 1,000)
  • BMW 5 series 4WD (0.7 stolen per 1,000)
  • Mini Cooper Clubman (0.7 stolen per 1,000)The data come from insurers representing about 80 percent of the market for privately insured vehicles. Thefts of cars that aren’t insured or are insured by nonreporting companies are not included.
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Buying Used Car

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Used Cars. A simple term that has a less than positive meaning for most car buyers. Conventional wisdom says that buying a used car is buying someone else’s problems. However, as new car quality has gone up, the risk of buying a late model used car has gone down. In fact, the automotive industry doesn’t even call them used cars anymore. The term to look for now is Certified Pre-Owned, or CPO.

“There is a growing market in this country for used vehicles that have been put through a Certified Pre-Owned program. CPO vehicles give the consumer a chance to buy the latest models, often only two or three years old, at a big savings over a new car. So, when you buy one, you’re really doing yourself a favor,” says John Davis, host of MotorWeek, the longest running weekly automotive show on television.

More than a third of all late model used cars and trucks sold last year — nearly 1.2 million vehicles — came with a Certified Pre-Owned designation. They are typically vehicles that have low mileage, and have been put through a battery of tests to make sure they are in tip-top condition. Vehicles that fall into this category are mostly just off-lease, secured from factory executive car auctions, from rental fleets, or the very best trade-ins.

“A new car depreciates by 15 to 20 percent the moment you drive it off the lot,” says Davis. “If you buy one that’s Certified Pre-Owned, you avoid taking the initial depreciation, yet have an almost new car with a strong warranty and in some cases a better warranty than a new one. Smart consumers can think of these vehicles as the best and brightest in their class.”

According to CNW Marketing Research, Inc., one can expect to pay a premium of between four and seven percent for a vehicle with the Certified Pre-Owned designation. “They may cost a little more than you’d expect to pay for a used car, but when you look at all the checks and balances performed and the extra warranty, it’s easily worth it,” says Davis.

Among the benefits, not just some, but all vehicle parts that are even moderately worn have been replaced. Many Certified Pre-Owned cars come with new brake pads, hoses, accessory belts, wipers and batteries. Their engines and transmissions have been checked and overhauled if necessary; minor exterior damage — like nicks, dings and tattered trim — is repaired or replaced; carpets and seat upholstery are shampooed or cleaned, and if they look less than new, are replaced.

Beyond that, certified programs provide additional warranties, often up to 100,000 miles, and may also include perks like car-club style roadside assistance. This kind of warranty actually exceeds the coverage offered by the factory when it was new. “Certification programs increase consumer confidence about the quality of a used vehicle,” says Scott Weitzman, senior director of retail programs for the noted automotive polster, J.D. Power and Associates.

But, don’t just buy any vehicle that is labeled Certified Pre-Owned. The best CPO programs are found only at new car dealers, with repair requirements and warranties backed by the factory. Also, ask to see the checklist on the car or truck of your choice so you will know exactly what has been serviced.

“Simply put, purchasing a Certified Pre-Owned vehicle is really a win-win situation for everyone. Manufacturers make money on vehicles they had in fleets or on lease, dealers increase their income percentage compared to new car sales, and customers walk away feeling better about some of the built-in guarantees,” says Davis.