Wednesday, October 13, 2010

Car Insurance Savings Tactics

Beyond the old saws of non-smoker, student driver with good grades, and more doors = more savings, here’s a list of other ways to save in the insurance game…and believe me, it’s a game. Here are some other tips you may not know about:

· College degrees pay off big
· Teachers get a break
· Military members get big breaks through GEICO
· Seniors get big breaks through AARP
· Insurer website use can garner breaks
· Multi-car or car/house combinations can garner breaks

And some other lesser-known tactics include:

· Know how your car’s valued after a total loss—insurers don’t use standard yardsticks like Kelley or NADA value guides, but rather rely on proprietary software formulas and schedules to determine your car’s worth at the time of estimation. If you have maintenance records that prove adequate upkeep, or have special or custom equipment installed and insured on the vehicle, get independent estimates of the car’s worth BEFORE the loss. Relying on insurance estimating software can over-estimate the true after-loss value of the vehicle, raising your insurance costs on remaining vehicles or new policies to cover the difference in value. Worse, it can under-estimate the value, resulting in an inadequate payout.

· You may be eligible for sales tax and registration fees for a new car—29 states require auto insurers to reimburse these items for a new or used replacement vehicle for your totaled car. Don’t count on being told this—you have to ask for it. The sales tax will be calculated on pre-loss value.

· You may be eligible for a diminished-value claim—14 states allow you to file a claim for lost value. Diminished value is when no matter how well a car is repaired, the value is never going to return to pre-loss levels. Diminished value claims can serve to re-set (lower) your car’s value for insurance policy purposes.

· Stacking UIM/UM (uninsured or under-insured motorist) coverage—some states forbid this practice, others either allow this or fail to address it one way or the other. Read the fine print to discover your state’s practice (allowed or not). If you have multiple vehicles with UM/UIM coverage on one insurance policy, you can file a claim for the limit of this coverage from as many covered vehicles as you need to for recovering damages. Another method—if you have UM/UIM coverage on more than one policy with more than one insurer, you can make a claim under each policy until you’ve recovered damages.

New: Get a C.L.U.E.--this stands for Comprehensive Loss Underwriting Exchange

A free C.L.U.E. copy is available at Lexus-Nexis.

The C.L.U.E. Personal Property report provides a five year history of
losses associated with an individual and his/her personal property. The
following data will be identified for each loss: date of loss, loss type,
and amount paid along with general information such as policy number,
claim number and insurance company name.

The C.L.U.E. Auto report provides a five year history of automobile
insurance losses associated with an individual. The following data will be
identified for each loss: date of loss, loss type, and amount paid along
with general information such as policy number, claim number and insurance
company name.

This report acts very much like your FICO score would--it tells an insurer what kind of risk you are, and a lower-risk individual costs less to insure.

An obvious one, but with a twist:

· A claim could increase your rates—the usual industry standard is to increase rates by 40% after the first accident, but some insurers have a “forgive the first accident” policy. Ask if your insurer has one, and how to qualify.

Other obvious ones include:

· Waiting until your teenager is licensed before adding him/her to the policy.

· Officially canceling your old policy when you decide to switch carriers, otherwise a new premium payment bill will be generated from the old company, and they “technically” covered you.

· Keeping a clean credit record to lower your “insurance risk score” (which is derived from your credit score).

· Paying annually or semi-annually instead of monthly. Monthly billing incurs service charges.

· Checking makes and models with insurance company before purchasing—ask what specific models are cheaper to insure.

· Do not let an uninsured friend drive your car—any property damage or medical claims will come directly to your policy. Driving your car without your permission is considered theft, and you are not liable.

· Personal property in your vehicle is not covered. To make a claim, it will have to be done with homeowner’s insurance. Best bet: don’t leave anything in the car that you can’t replace out of pocket.


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