I am a lucky girl. Throughout high school and college, my parents kept me on their car insurance policy. I was an expensive item to add! I kept the cost as low as possible by earning the good student discount, driving a 14-year-old Subaru, never having a speeding ticket and being born a girl. However, when my fiancé James and I were preparing to get married, one of the financial conversations we had was about the car insurance policy. My parents gave me the title to the car (they owned it) and it became my responsibility, my car -- and my turn to get insurance.I plugged in my price to see what coverage options were available. Company B's most highly recommended package cost less than Company A's basic option. I didn't feel
Teens ages 16-19 are three times more likely than drivers older than
20 to be involved in a fatal crash (or any crash, for that matter)
according to the Insurance Institute for Highway Safety. It's not too
surprising, then, that teen drivers tend to have high insurance
premiums. For parents, this can mean a big jump in insurance premiums
once you add your teen driver to your policy. However, there are ways to
reduce your costs right out of the gate, even for very inexperienced
drivers. Here are some ways to keep policy costs at a minimum.comfortable enlisting in the most basic
option because I don't yet have a fully stocked emergency fund in case
of a serious accident.Choose the Right Car It's simply a matter of economics. There are some cars that cost more
to repair and replace than others. There are also some cars that are
more likely to be stolen and others that protect passengers better in a
crash. Combined, these three characteristics have a lot to do with how
much you'll pay for the collision and theft portions of your policy,
says David Goldstein, the author of Insure Your Car for Less: A Practical Guide to Saving Money on Automobile Insurance.
There are several ways to choose the least expensive car to drive. First, check the Insurance Institute for Highway Safety's Top Safety Pick awards and the National Highway Traffic Safety Administration's 5-Star Safety Ratings
to see which cars scored the best in crashworthiness. You'll also want
to check the National Insurance Crime Bureau's list of Hot Wheels: cars that are most commonly stolen.Your insurance broker or company can also help you find the best
rate for the cars you're considering, says Goldstein, who has worked as
an insurance and claims adjuster. "If you're considering several cars,
call and ask for a rate quote on each," he suggests.Midsize family cars are generally the cheapest to insure, says
Jeanne Salvatore, senior vice president and chief communications
officer at the Insurance Information Institute, a nonprofit information
service. "You want a car that's easy to drive and highly protective.
Those are the cars that are going to keep your teen safe and cost the
least to insure," she says.
You may also want to consider a car that doesn't need collision
insurance, which will cut your rates considerably, says Salvatore, and
either way, the age of your car may lead to more discounts.
"Some companies offer a utility discount for cars older than a 2002
model year," she says. That said, make sure any older car you purchase
has a solid crash rating and all of the safety features that a newer
car might have including airbags, an antilock braking system (ABS),
daytime running lights and (for SUVs) electronic stability control.Adjust Driver AssignmentsWhen you call the insurance company to add your child to a policy,
the representative will ask you to designate which car will be driven
by each member of your family most often.You can save money by designating and having your child drive the
car that's the least expensive to insure. The trick is finding out
which car that is, says Goldstein. "Driver assignment can really affect
your rates," he agrees.If you get someone on the phone who is willing to work with you, he
or she can take you through all the different scenarios. "Occasionally,
I'd quote rates for four people and four different cars: two parents
and two kids. If we played around with it, we could often save money,"
Goldstein says.
Look for Alumni Discounts or Resident-Student DiscountsOne of the perks of going to college is that many schools ink alumni
deals with large organizations, such as insurance companies. While the
discount is usually around 5 or 10 percent, it's still worth looking
into. Geico, for instance, offers an 8 percent discount for DePaul
University students and alumni. Liberty Mutual offers special rates to
those who attend Arizona State University.If your child goes away to college and doesn't take a car along, you
can save a lot on your premium. Allstate, for example, offers a 35
percent discount off premiums for students who live at a school that is
more than 100 miles from where their car is garaged. "There's an
assumption that they are only going to be driving on weekends and school
vacations," says Salvatore.
Finally, all full-time high school and college students who get good
grades can benefit from their diligence. Most companies offer up to 25
percent discounts for good report cards. You'll also see rates drop as
your child advances in school. Seniors in college have better rates
than freshman, so if your child takes college credits over the summer or
in high school, let your insurance company know when he or she reaches
the next college milestone, says Goldstein.Wait an Extra Year Before LicensingSome teens may not like this idea, but you can save a lot of money
simply by having your son or daughter wait an extra year to get a
driving permit"Wait until they are as old as possible before they get their
permit," says Goldstein. "For instance, in some states you can get your
learner's permit as early as 16 but you're probably not going to be
driving [without restrictions] until you're 18. Why pay for insurance
those two years unless you have to?"
Delaying the process is more common than you may think, according to
several recent studies. The AAA Foundation for Traffic Safety reports
that just 44 percent of teens get their licenses within 12 months of
the minimum age and only 54 percent get their licenses before they turn
18.
However, if you go this route, make sure teens know that they'll
still need the practice and supervision that a graduated driver
licensing program affords.Tracking for Discounts and Better Driving Habits
In recent years new devices that connect to a car's computer and use
GPS technology to track driving habits and routes have flooded the
market. While they can be very useful for parents who want to make sure
that their teen isn't speeding or driving outside an approved area,
they're also being used by insurance companies to help set rates for
drivers of all ages in an approach called use-based insurance.
Snapshot, a program by Progressive Insurance, is one such option
that uses a pocket-size telematics device that transmits car data using
cell-phone technology. The device plugs into a car's onboard
diagnostic port and measures driving habits such as how and when
someone drives, tracking behaviors like mileage, time of dayand if the
person performs hard braking maneuvers."Our Snapshot program gives all consumers, including teens, more
control over their car insurance costs by offering personalized
discounts based on their actual driving behavior," explains Jeff Sibel,
a spokesman for Progressive Insurance. "People who drive less, in
safer ways and during safer times of day are most likely to receive a
discount."Some companies are offering the device for parental tracking, but
without an immediate insurance discount. Its use could result in lower
rates going forward, says Rebecca Hirsch, a spokeswoman for insurer
USAA. "We're offering the device for free and parents get the
monitoring for a year free," she says. "Parents can get text messages
if their teens are doing things like hard braking. It enables the parent
and the teen to have a conversation around safe driving habits. The
first few years are so critical. Anecdotally, we've seen that the
devices help build better driving behaviors."Take a Class
Adults and teens alike can save money by taking a six-hour driving
safety course either online or in person. Some insurance companies are
offering teen-specific courses that can help reduce the number of
crashes that involve teens by providing realistic driving simulations.
Liberty Mutual, for example, offers something it calls teenSMART, a
program that focuses on the six factors that most commonly cause teen
car accidents. The company says teens who complete the program may get
"special savings" on their auto policies, but doesn't offer any
examples of what those savings might be.
State Farm offers a program called Steer Clear for drivers under the
age of 25 or new drivers with less than three years of driving
experience. It requires drivers to watch a video, sign a safe driving
parent/driver agreement and complete a certain number of supervised
trips of 15-30 minutes over the course of a month, filling out a log
after each trip. By completing the program, drivers can get a discount
of up to 15 percent on their coverage, says State Farm spokeswoman
Rachael Risinger.Finally, driver-training classes — so-called driver's ed — can also
help lower your premiums by up to 10 percent, depending on your
insurer.Make Smart ChoiceEven if they apply every discount imaginable, most people will find
there's no getting around the fact that rates will go up with a teen
driver on the policy — at least for a little while. And while it might
be tempting to simply "forget" to inform your insurance company that
Junior has his license, take note: Doing so can have serious
consequences if your child is in an accident.
You'll also want to make sure you have enough insurance coverage.
"Don't go for the minimum limits," suggests Burl Daniel, a former
insurance agent and corporate risk manager who testifies as an expert
witness in insurance cases. "You're exposing yourself to potential
problems, if your kid does have a wreck and seriously injures someone.
Don't take the bait now just to save a few hundred dollars when it
could end up costing you a lot down the road."
So I compared the mid-range option at Company B
with what I could get from Company C.I was impressed. The premium Company C package offered more and cost
less than the equivalent from Company B. The same was true of the
mid-range package. Continuing my research, I called upon several
important sources: my mom, Google (GOOG),
and the insurance company agent (in that order). I needed to clear up
some confusing lingo I was experiencing and get an opinion. I'm
generally skeptical, and believe that if a deal sounds too good to be
true, it probably is.Says InsuranceQuotes.com (we'll call them "IQ" for short), the insurance
industry has a "'Secret' Report That Affects What You Pay for
Insurance." It's called the "CLUE" report, which stands for
"Comprehensive Loss Underwriting Exchange," and essentially, it's a
database keeping track of every insurance move you make. When you call
your insurer to report damage to your home or auto, that goes into the
CLUE database. What's more, even when you simply call your insurance
agent to ask about whether a certain incident is covered by your
insurance -- that goes in there, too.Homeownership is often used as a factor in determining risk when setting
auto insurance premiums. Even though the two aren't directly related,
there is an assumption that homeownership implies a higher level of
responsible actions (assuming you pay your mortgage on time) and
therefore that you pose a lower risk in other endeavors -- including
your driving habits.
Insurance.com undertook a survey to see if homeownership does indeed correlate to safer driving habits, as measured through the total number of claims filed. From 2012 to mid-2014, online questionnaires from 700,000 respondents were collected and analyzed by age group, home state, and homeownership status.
The results do show some correlation between homeownership and fewer filed claims, although the reasons are highly debatable. The survey does not attempt to address an underlying cause for these results, but it is worth noting that the age of the driver seems to play a consistent role. Perhaps the survey is picking up remnants of generally riskier behavior at younger ages.CLUE Me In According to IQ, a whopping 82 percent of Americans surveyed have never even heard of the CLUE database (at least not by that name). Only about 7 percent of insurance customers say they are at least "somewhat familiar" with the concept of the CLUE report. These people may be aware of the bare outlines of the system -- for example, that CLUE tracks loss dates, claims for losses and monies paid out for insurance claims for up to seven years.
And yet, only 1 percent of us say we're "very familiar" with how the database works. The vast majority of Americans have no clue at all, for example, that the database:
Insurance.com undertook a survey to see if homeownership does indeed correlate to safer driving habits, as measured through the total number of claims filed. From 2012 to mid-2014, online questionnaires from 700,000 respondents were collected and analyzed by age group, home state, and homeownership status.
The results do show some correlation between homeownership and fewer filed claims, although the reasons are highly debatable. The survey does not attempt to address an underlying cause for these results, but it is worth noting that the age of the driver seems to play a consistent role. Perhaps the survey is picking up remnants of generally riskier behavior at younger ages.CLUE Me In According to IQ, a whopping 82 percent of Americans surveyed have never even heard of the CLUE database (at least not by that name). Only about 7 percent of insurance customers say they are at least "somewhat familiar" with the concept of the CLUE report. These people may be aware of the bare outlines of the system -- for example, that CLUE tracks loss dates, claims for losses and monies paid out for insurance claims for up to seven years.
And yet, only 1 percent of us say we're "very familiar" with how the database works. The vast majority of Americans have no clue at all, for example, that the database:
Records denied claims as well as claims paid out -- so that your
insurance rate may be raised after you've made a claim, even if you got
no money out of it.Includes not only claims made by you, the customer, but also claims
made on the same property by its previous owners. Thus, you can be
penalized for insurance claims made by the person from whom you bought a
car or house.If you simply ring up your insurance agent to discuss a claim you
might want to make -- but ultimately decide not to make -- that
discussion can also go into your CLUE report, and be used by an insurer
to raise your rate.Instead, "when speaking with an insurance company or an agent ... be
clear [that you are] only making an inquiry. If you need to ask about
what potential issues may or may not be covered under your home
insurance policy, say so" at the very start, and make it clear that you
are not making a claim for, or even asking about, a specific incident that has already happened.Planned Rollout It appears Google will roll out their comparison service in California
in the first quarter of 2015, before expanding to other states that may
include Illinois, Pennsylvania and Texas. If Google is successful in
these test markets, they could quickly expand to sell insurance in more
markets in the United States as they have already obtained licenses to
do business in more than half of the 50 states.At the same time, speculation has also been growing that Google may take
over CoverHound, which already provides the comparison service Google
hopes to grow. If this proves to be true, Google could be in the
business of auto insurance comparison faster than the current estimated
plans. This should be welcome news for most consumers looking to save
money on auto insurance.It should be noted that Google will not be providing this service out of
the kindness of their hearts. Instead, Google will likely earn a
commission on each policy they sell depending on their arrangement with
each individual insurer. This could lead Google to show the results
based on how much money they would make off each sale rather than based
on which policy is truly best for the consumer.Finally, relying on Google to provide yet another service in our lives
could make some consumers weary. Voluntarily giving Google even more
information about us will allow them to target advertising even more
precisely, in addition to any commissions Google may earn for selling
insurance on the behalf of other companies.
While Google's entrance to the U.S. auto insurance market has not yet happened, it could be right around the corner. Once the service rolls out nationwide, the auto insurance shopping process could be greatly simplified, while saving consumers a great deal of money at the same time.
However, the U.S. version of Google Compare could face headwinds if insurers do not work with Google. Only a small handful of insurers have granted Google authorization to sell insurance policies on their behalf at this time. If the big insurers do not jump on board, the comparison tool may not be seen as robust enough for consumers to make a valid comparison. When age is taken into account, the discrepancy between renters, homeowners, and those still at home with their parents is largest among 18- to 24-year-old drivers. Those who lived with their parents filed auto insurance claims at a 24.4 percent rate, compared to 19.7 percent of those who rented and 17.6 percent of those who owned homes. This does seem to make sense, since there should be far fewer homeowners at that earlier age, and those who do own homes that early in life likely had to exhibit highly responsible behavior to be able to afford them.
The effect smoothes out over time, but the same order remains up to retirement. For example, in the 45-54 age group, the numbers of claim-filers were 15.2 percent for those living with parents, 14.1 percent for renters and 13.4 percent for those owning homes. For ages 65-99, the numbers were equal for renters and homeowners at 14 percent. Only 11 percent of those aged 65-99 and living with their parents filed an auto insurance claim -- but how many of the 700,000 respondents could possibly fall into that category?
In general, renters filed more claims than homeowners did, and the five highest discrepancies were in diverse states (Nebraska, Oregon, Maryland, South Carolina, and Utah). Four states (Indiana, Oklahoma, Michigan, and Louisiana) found that homeowners filed more auto claims than renters did.Understanding CorrelationThe managing editor of Insurance.com, Des Toups, suggests that the related income and stability of homeowners may play a role, but adds, "we can't look at this data and claim that to be true." It would have been interesting to see the correlation using responsible homeownership and renting -- in other words, weeding out respondents with multiple missed payments, foreclosures, or other red flags in the housing history – but that was beyond the scope of this particular survey.
Given some evidence of a correlation, insurance companies are not likely to change their beliefs on homeownership and driving risk assessment anytime soon –- although they may make some minor adjustments based on localized data
This could well be a spurious correlation that makes enough intuitive sense that nobody questions it, yet it could be like the infamous correlation between the number of people who drown annually by falling into swimming pools and the number of films that Nicolas Cage appears in during that same year.
Homeownership doesn't always imply responsible behavior in other areas of life ... and Nicolas Cage is not that bad of an actor.Consumers in the U.S. could potentially save hundreds of dollars a year by using Google Compare. Imagine comparing hundreds of car insurance companies by filling out just a few simple questions rather than calling dozens of companies or filling out hundreds of different quote forms
While Google's entrance to the U.S. auto insurance market has not yet happened, it could be right around the corner. Once the service rolls out nationwide, the auto insurance shopping process could be greatly simplified, while saving consumers a great deal of money at the same time.
However, the U.S. version of Google Compare could face headwinds if insurers do not work with Google. Only a small handful of insurers have granted Google authorization to sell insurance policies on their behalf at this time. If the big insurers do not jump on board, the comparison tool may not be seen as robust enough for consumers to make a valid comparison. When age is taken into account, the discrepancy between renters, homeowners, and those still at home with their parents is largest among 18- to 24-year-old drivers. Those who lived with their parents filed auto insurance claims at a 24.4 percent rate, compared to 19.7 percent of those who rented and 17.6 percent of those who owned homes. This does seem to make sense, since there should be far fewer homeowners at that earlier age, and those who do own homes that early in life likely had to exhibit highly responsible behavior to be able to afford them.
The effect smoothes out over time, but the same order remains up to retirement. For example, in the 45-54 age group, the numbers of claim-filers were 15.2 percent for those living with parents, 14.1 percent for renters and 13.4 percent for those owning homes. For ages 65-99, the numbers were equal for renters and homeowners at 14 percent. Only 11 percent of those aged 65-99 and living with their parents filed an auto insurance claim -- but how many of the 700,000 respondents could possibly fall into that category?
In general, renters filed more claims than homeowners did, and the five highest discrepancies were in diverse states (Nebraska, Oregon, Maryland, South Carolina, and Utah). Four states (Indiana, Oklahoma, Michigan, and Louisiana) found that homeowners filed more auto claims than renters did.Understanding CorrelationThe managing editor of Insurance.com, Des Toups, suggests that the related income and stability of homeowners may play a role, but adds, "we can't look at this data and claim that to be true." It would have been interesting to see the correlation using responsible homeownership and renting -- in other words, weeding out respondents with multiple missed payments, foreclosures, or other red flags in the housing history – but that was beyond the scope of this particular survey.
Given some evidence of a correlation, insurance companies are not likely to change their beliefs on homeownership and driving risk assessment anytime soon –- although they may make some minor adjustments based on localized data
This could well be a spurious correlation that makes enough intuitive sense that nobody questions it, yet it could be like the infamous correlation between the number of people who drown annually by falling into swimming pools and the number of films that Nicolas Cage appears in during that same year.
Homeownership doesn't always imply responsible behavior in other areas of life ... and Nicolas Cage is not that bad of an actor.Consumers in the U.S. could potentially save hundreds of dollars a year by using Google Compare. Imagine comparing hundreds of car insurance companies by filling out just a few simple questions rather than calling dozens of companies or filling out hundreds of different quote forms
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