Why Is It Required to Have Car Insurance?

In 49 states in the United States, there is some form of compulsory insurance for motor vehicles. Many people ask, “Is car insurance required?” since it may not be immediately apparent if you see yourself as a good driver willing to pay for any potential damages to your car. The answer to “Why is car insurance mandatory?” lies in the type of car insurance. Perhaps you’re looking to why you need car insurance. There are both mandatory and optional coverages to consider.

In this article

Is car insurance mandatory in the U.S.? 

Car insurance isn’t mandatory at the federal level in the United States, though all but one of the 50 states do make some kind of coverage required.

This means that what counts as “state minimum compulsory insurance” in each state will be slightly different. These minimums are what the state considers the minimum you should purchase to cover your liability adequately.

States like Iowa, Ohio, and Wyoming have meager costs. Other states may have high premiums due to the high cost of living in the state, but the minimum coverage is lower, like New Jersey, Michigan and Florida. As a result, the minimum coverage could pay less in a costly accident.

Costs for minimum car insurance are reliant on the amount of compulsory coverage in the state and how common expensive accidents are, and the typical costs of those accidents. States like Michigan have specific laws requiring unlimited personal injury protection coverage that change how much it costs to insure a motorist.

Why do states make car insurance mandatory? 

Mandatory minimum car insurance is liability insurance, making it different from many other kinds of insurance you probably have considered purchasing. If you own a homeowner’s policy, a healthcare insurance policy, or a renter’s insurance policy, those all focus on recouping losses that you experience. You’re buying them to protect yourself or your property.

[ Read: What’s the Average Cost of Car Insurance in the U.S.? ]

However, you don’t drive your house around, potentially harming other people. Car accidents have adverse effects on other people, and liability coverage is mostly focused on the two kinds of harm you can cause if you are at fault in an accident: medical expenses and damage to the other vehicle.

It can be tempting to feel like car insurance should be optional until you consider the results if someone else runs into your car. Suppose you had a big pile of medical bills and a totaled car, all because someone without liability coverage made a careless driving choice. In that case, you probably see why mandatory minimum car insurance gives everyone a base level of protection from other drivers.

New Hampshire, the only state that doesn’t require car insurance, still has it’s own version of liability. You’re allowed to either have the insurance or be willing to pay those costs yourself if you don’t have insurance. It’s not a mandatory insurance policy, but the liability is still there, so most people opt to get coverage.

What happens if I don’t have car insurance? 

Getting pulled over when you do not have car insurance in a state with mandatory minimum car insurance is very costly. Even a first offense of driving without insurance can result in a suspended license, large fines or even having your car impounded in some states. Second offenses are more likely to lead to jail time. All instances of driving without insurance can lead to increases in your insurance premiums in the future when you apply for a policy.

[Read: Caught Driving With No Car Insurance? Here’s What It’ll Cost You ]

If you are caught driving without car insurance because you are involved in an accident, your consequences can become more severe. Rather than a small chance of a warning or a smaller fine, you are much more likely to have your car impounded, and you are likely to have your license suspended. What’s more is that at-fault drivers with no insurance become financially liable for a large variety of costs, especially if the other person in the accident carries none or very little uninsured motorist coverage. You could be forced to pay a large sum or declare bankruptcy.

You may get some reprieve because other motorists carry coverage for underinsured or uninsured motorists. Still, given the high costs of medical bills and car repair, it’s unlikely to cover everything.

How much car insurance is required?

There are a few different aspects of the minimum coverage in each state. Nearly every state will require you to carry some bodily injury liability and property damage liability coverage since those two costs tend to be present in an accident. Most mandated state minimum insurance coverage is abbreviated to a set of three numbers like 25/50/25. The first number is the maximum payout for a single person’s bodily injury in an accident. The second number is the maximum for all individuals harmed per accident. And the third number is the maximum payout for property damage.

Some states structure their minimum coverage to require personal injury protection, where each motorist files with their insurance for damages and medical expenses rather than assigning one motorist as at fault – these states are known as “no-fault states.” Other states have mandatory underinsured or uninsured motorist coverages.

State Minimum Car Insurance Requirement
Alabama 25/50/25
Alaska 50/100/25
Arizona 15/30/10
Arkansas 25/50/25
California 15/30/5
Colorado 25/50/15
Connecticut 25/50/20
Delaware 25/50/10
Florida 10/20/10
Georgia 25/50/25
Hawaii 20/40/10
Idaho  25/50/15
Illinois 25/50/20
Indiana 25/50/25
Iowa 20/40/15
Kansas 25/50/25
Kentucky 25/50/25
Louisiana 15/30/25
Maine 50/100/25
Massachusetts 20/40/5
Michigan 20/40/10
Minnesota 30/60/10
Mississippi 25/50/25
Missouri 25/50/25
Montana 25/50/20
Nebraska 25/50/25
Nevada 25/50/20
New Hampshire 25/50/25, financial responsibility only
New Jersey 15/30/5
New Mexico 25/50/10
New York 25/50/10
North Carolina 30/60/25
North Dakota 25/50/25
Ohio 25/50/25
Oklahoma 25/50/25
Oregon 25/50/20
Pennsylvania 15/30/5
Rhode Island 25/50/25
South Carolina 25/50/25
South Dakota 25/50/25
Tennessee 25/50/15
Texas 30/60/25
Utah 25/65/15
Vermont 25/50/20
Virginia 25/50/20
Washington 25/50/10
Washington D.C.  25/50/10
West Virginia 25/50/25
Wisconsin 25/50/10
Wyoming 25/50/20

Source: Insurance Information Institute

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

What Is FR-44 Insurance?

Actions have consequences — particularly when you’re behind the wheel.

Causing a little fender-bender will probably leave you with nothing more than an insurance headache, but more serious offenses come with heftier repercussions. Specifically, if you’re caught driving with a suspended license or you get cited with a DUI, you might be court-ordered to have a specific document filed on your behalf.

In most states, this is called an SR-22. It’s a document your insurance provider files with the state proving that you have enough liability coverage to mitigate the high risk you present out on the road. But if you commit a serious driving offense in Florida or Virginia, you might be required to show a different certificate of financial responsibility (CFR) called an FR-44.

What is FR-44 insurance? And how do you get it if you’re required by your state to do so? Floridians and Virginians need to know.

In this article

What is FR-44 insurance? 

FR-44 insurance isn’t a separate insurance policy or a type of coverage. Instead, it’s a document that gets filed with your state proving you have enough liability coverage. Your insurance provider files it on your behalf, showing your state’s driving authority that you have sufficient amounts of the required liability insurance.

As a quick auto insurance refresher, liability coverage steps in if you cause damage on the road. Most states require two types of liability insurance: coverage to pay for any injuries you cause and coverage to pay for property damage.

When you need an FR-44, you’re required to have more of both types of liability coverage than other drivers in your state. It’s your state’s way of making sure you’re not a huge risk when they let you back behind the wheel. With a filed FR-44, you prove that you have enough insurance to protect others.

[ See: How Much Car Insurance Do You Need? ]

All this isn’t to say that Virginia and Florida don’t have SR-22s. They do — but they use FR-44s for their highest-risk drivers. FR-44s have higher liability coverage requirements than SR-22s.

Who needs FR-44 insurance and why?

When you live in Florida or Virginia, you could be required to get an FR-44 if you commit a major driving violation like:

  • A DWI/DUI
  • Driving without insurance
  • Driving with a suspended license

You might find out you need an FR-44 while in court for a hearing about your driving violation. Alternatively, you could get a letter mailed to your house indicating that you now need FR-44 insurance.

Long story short, if you majorly messed up behind the wheel, keep an eye out. Odds are, you’ll be required to carry more liability insurance. And if you do need an FR-44, don’t wait. Talk to your insurance provider right away.

Most insurance providers offer FR-44s. But if yours doesn’t, you’ll need to switch to one that does. Make sure you get enough liability coverage to meet the now-required limits (more on that later) and that your new insurer will file the FR-44 for you ASAP.

What if I don’t own a car? 

If you committed your violation while driving someone else’s car or you sold your car after the fact, you might be stumped by an FR-44 insurance requirement.

[ More: How Are Car Insurance Costs Determined? ]

In this case, your best bet is to get non-owner car insurance. This is liability coverage designed to cover your risk if you drive someone else’s vehicle and while doing so, cause property damage or injure someone.

Getting an FR-44 with non-owner car insurance can be tricky. Not all insurers offer non-owner car insurance, and not all insurers file FR-44s. You can use our list of the best non-owner car insurance to start exploring your options.

On a positive note, FR-44 insurance for non-owners is generally a lot more affordable than standard car insurance policies for FR-44 drivers.

How much does FR-44 insurance cost? 

There’s good news and bad news here.

The good news is that the actual FR-44 is very affordable. Generally, you’ll pay a flat fee of $15 to $25 for your insurer to file the FR-44 for you.

The bad news is that once you require an FR-44, you’ll be seen by all insurers as a high-risk driver. And that means more expensive car insurance.

The exact amount you’ll pay will depend on your overall driving history, the vehicle you drive, your annual mileage and more. But generally, if you need an FR-44, you can expect to pay twice as much (or more, even) than the average driver because of your history of serious driving violations. For example, we’ve found that drivers with a DUI will see a 79% rate increase, on average, once their insurer learns of the violation.

Ultimately, if you need an FR-44, expect to pay significantly more for your auto insurance than your neighbors.

[ For You: Auto Insurance Quotes, Explained ]

Does FR-44 insurance require more coverage? 

Yes. In fact, that’s the whole point of an FR-44.

Here are the minimum coverages needed for an FR-44:

  • FR-44 insurance Florida requirements: $100,000 of bodily injury liability coverage per person, $300,000 of bodily injury liability coverage per accident and $50,000 of property damage liability coverage
  • FR-44 insurance Virginia requirements: $50,000 of bodily injury liability coverage per person, $100,000 of bodily injury liability coverage per accident and $40,000 of property damage liability coverage

These limits are steep. Compare them against what all Florida drivers need: just $10,000 of bodily injury coverage (called personal injury protection [PIP] in this case) and $10,000 of property damage liability coverage.

Even more staggeringly, you can compare these limits against SR-22 requirements in Virginia. Virginians who need an FR-44 are required to carry twice as much liability coverage as Virginians who need an SR-22.

FR-44 insurance vs. SR-22 insurance

FR-44s and SR-22s are the same in many key ways: they’re both certificates of financial responsibility. They’re both state-required after a serious driving offense. They both get filed by your insurer to prove that you’ve purchased enough liability coverage to meet the extra liability limits to which you’re now subject.

But there are some major differences, too. For starters, every state uses SR-22s, while you’ll only find FR-44 insurance in Florida and Virginia. More importantly, FR-44s come with much higher liability coverage requirements than SR-22s.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Can I Transfer My Car Insurance When Moving Out of State?

If you’re planning a move across state lines, you’ve likely wondered about updating your car registration and insurance. So what do you do with your car insurance when moving out of state? Do you have to change car insurance when you move states? The short answer is yes — but you may not have to completely overhaul your policy to pull it off. In all cases, your policy will need to be updated — at the very least.

Although it’s possible to transfer car insurance from one state to another, you will need a new policy if your carrier does not offer car insurance in the state you’re moving to. So, not only do you need to update your carrier with your new address, you also need to make sure your new policy meets the minimum requirements for the state you’re moving to. Otherwise, you could end up with coverage that doesn’t meet your needs, and that could cause big problems down the road. Here’s what you need to know.

In this article

Your car insurance grace period 

In most cases, your current car insurance coverage will continue to cover you until your policy renewal date, even when you move out of state. But rather than waiting until you’ve unpacked all the boxes in your new place, the best recourse is to notify your insurance company of your move as soon as your new address is confirmed. This gives you time to work with your agent to get your policy updated or purchase a new one altogether if your current carrier does not provide coverage in your new state.

[ Next: Liability vs. Full Coverage Car Insurance ]

The last thing you want to do is let your old policy lapse or cancel before you have your new policy in place. Not only is driving without liability insurance illegal in almost every state, but you also open yourself up to a huge financial risk if you’re involved in an accident without insurance.

Updating your insurance becomes even more critical when it comes time to register your car in your new location. You should also be aware that it’s considered a form of insurance fraud to misrepresent the location you live in, so your best bet is to update your new address right away with your insurance carrier to avoid any issues.

Changing your policy after a move 

Once you move out of state, you need to start the process of updating your car insurance. There are two different possible scenarios that can occur when you do this.

The first is if your current auto insurance provider extends coverage in the new state you’re moving to. If this is the case, contact your agent and notify them once your new address is confirmed. Your agent should be able to easily update your policy to reflect your new location and new policy.

If your current carrier does not offer coverage in your new state, you will need to purchase a new policy. Whatever you do, do not cancel the coverage on your existing policy until your new carrier’s policy is put in place.

Whether or not you stay with your current provider, moving is an ideal time to receive multiple quote comparisons. This way you know you’re receiving the most competitive price for the coverage you need. And remember, your insurance rates are based on where you live, among many other factors, so changing states will likely impact your rates.

[ For You: How Much Car Insurance Do You Need? ]

For example, if you’re moving from North Carolina, where the average cost of auto insurance each month is $79.13, you may be surprised by an increase if you move to another state like Georgia. Georgia’s average rate each month is $131.15, further illustrating the need to get quotes from multiple providers.

Registering your car after a move

Another reason you have to change car insurance when you move to another state is that most states require you to show updated insurance coverage for the car registration process. And, the requirement in most states is that you register your car within 90 days of moving, which means your auto insurance needs to be updated quickly.

It’s important to keep in mind, though, that the grace period for updating car registrations varies state to state, so don’t assume that you’ll have 90 days to do so. For instance, Texas requires you to register within 30 days and Michigan requires you to immediately register your vehicle after you move. If you do not register within the designated time frame, you risk fines and possible citations.

The cost of registering your car varies by state too. Some states charge a flat fee for registration, while others charge a fee based on the weight of your vehicle. Using Texas as an example, the registration fee is $50.75 per vehicle.

The safest bet is to look up your new state’s Department of Motor Vehicles to confirm the registration deadline and required documents (including insurance coverage), along with the testing required to secure your registration. You can also get a confirmation of expected registration fees by doing this.

Tips for moving out of state 

Moving, especially across state lines, means there are plenty of details to keep track of along the way. Adequate auto insurance coverage is extremely important, and there are a few steps you can take to lessen your chances of any missteps, including:

  • Update your agent on your new address as soon as you confirm it. Your agent can advise on getting your policy updated in your new state and tell you any next steps, since most agents are only licensed in the state they live in.
  • If you must purchase a new policy, do not cancel your current policy until the new policy is in place.
  • Prior to moving, you should confirm the registration information with your new state so you are aware of any grace period or deadlines for car registration. 
  • Once your new policy is in place, you can work with your old agent on the steps to cancel the old policy.
  • Be sure your old insurance company has your new address on file in case you are due a refund and the carrier needs to send you a check. 
  • When you have your updated or new policy with in-state coverage, you can proceed with car registration.

[ See: Why Is It Required to Have Car Insurance? ]

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

What To Do If You Can’t Get Car Insurance

Finding reliable car insurance can be frustrating for anyone. After the carrier who offered your best option for auto insurance denied your application, it can be hard to decide what to do next — but there’s still hope.

Car insurance companies want to insure people whom they think are low-risk. The factors that determine your risk can be improved over time. And some companies are more willing to insure riskier policyholders. If the first or second provider doesn’t work out, you still have plenty of options. Here’s what you can do to find coverage now.

In this article

Why some insurance companies deny applications

Car insurance providers favor people who the provider thinks are less likely to file a claim. To decide who these drivers are, car insurers factor in information like driving record, credit history, age, location and more.

You can affect some factors, but others are beyond your control. If your application was denied, the insurer might not tell you why. But you can always call and ask. Here are a few of the reasons why some car insurance companies commonly deny applicants:

  • Driving record: If you have moving violations or at-fault accidents on your record, it will affect your car insurance cost. If you’ve experienced many violations or accidents, then some car insurers may deny your application.
  • Location: Car insurers commonly draw on location-based crime statistics to determine risk in a policy. If you live in an area that experiences high levels of property crime, such as theft or vandalism, then the insurer may be less willing to insure your vehicle.
  • Previous lapse in coverage: A red flag car insurers commonly look for is a lapse in coverage. If you’ve allowed your car insurance to expire in the past without getting a new policy, it could make it more difficult to find insurance.
  • Credit history: Some car insurers may deny applicants who have a spotty credit history. The insurer could use this as an indication that you have trouble keeping up with monthly payments.
  • Type of car: If you have a car model that’s known to be dangerous on the road, it could make car insurers wary. Some car insurers might stay away from insuring certain types of cars.
  • Outside coverage area: Many car insurers only offer coverage in certain states or areas. If you live outside the insurer’s area of coverage, they won’t be able to provide you with insurance.

[ Read: Non-Owner Car Insurance: What Is It and Who Needs It? ]

What to do if your car insurance application was denied

Having a car insurance application denied is never fun. But it’s not the end of the road. It’s always a good idea to ask why you were denied so you can get an idea of how to improve your profile for future applications. If you’re having trouble finding traditional auto insurance, here’s what to try next.

Short-term options:

  • High-risk car insurance: Some insurance providers offer policies specifically catered to high-risk drivers. If your preferred carrier won’t cover you, a high-risk provider might be able to help. Keep in mind these policies can be more expensive than standard policies.
  • State-run high-risk insurance: Some states have insurance pools for drivers who can’t find insurance with a regular provider. For example, Maryland Auto Insurance is state-run insurance for Maryland drivers who can’t find coverage elsewhere.
  • Family member’s insurance policy: If you can’t find insurance, a family member might be able to add you on to their existing insurance policy. Many providers only allow this if both people live at the same address. But some make exceptions for college students.

[ Read: The Simple Guide to Car Insurance ]

Long-term options:

  • Improve driving record: If you can stay accident- and moving-violation free for a year or more, it could improve your chances of qualifying for standard auto insurance.
  • Improve credit score: If you can boost your personal credit by paying off debt and staying on top of your monthly payments, then it could also help you find auto insurance from a standard provider.
  • Check again in six to 12 months: Companies often shift their guidelines, and your chances of getting approved could change in the future. After six months or a year apply again.

Where to get car insurance when standard companies won’t insure you

People often ask, “can car insurance companies deny coverage?” And unfortunately, they can. If the standard car insurance carriers are not doing the trick, there are high-risk insurers who can help. If you get approved for high-risk insurance, it will probably be more expensive than a standard policy. Here are a few places to try:

[ Read: What’s the Average Cost of Car Insurance In the U.S.? ]

  • State Farm: This well-known provider offers car insurance policies of all kinds, including policies for high-risk drivers. They also have many discounts available, which could offset the generally higher cost of coverage.
  • The General: This provider has specialized policies just for high-risk drivers. If other companies deny you coverage, this company should be able to help. You can even get a quote through their website.
  • Bristol West: This provider is run by Farmers Insurance, and Bristol West had dedicated policies just for drivers who’ve been denied by standard providers due to a driver’s higher risk.
  • State-run insurance pool: If no private insurers will agree to give you coverage, check to see if your state offers an insurance pool for high-risk drivers. This is generally the last option to try.

How to get better deals on auto insurance

If your monthly insurance premium is high, there are many ways to offset the cost. Most car insurance providers offer discounts for a variety of things, and it’s always worth a phone call to see what you might qualify for.

[ Read: How to Switch Car Insurance Companies ]

A few of the most common discounts include a bundling discount for multiple policies such as combining car and home/renters insurance, a discount for setting up auto-pay, a loyalty discount for using the provider for a certain amount of time, and a paperless discount for having your policy and payment details emailed to you.

Another option is shopping around for a new car insurance provider. Getting quotes is now fast and easy using provider websites or a mobile app. Many of the larger car insurers have online quoting tools that you can use to get a quick estimate of how much your monthly premium will cost.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Does Car insurance Cover Flood Damage?

Flood damage is no fun at all, especially when it comes to your car. But you have car insurance, so the damage should be covered, right? Well, it’s not quite that simple. Flooding isn’t one of the most common issues that car owners face, so it’s not necessarily included in every car insurance policy. Don’t worry; you have options, and we’re here to help. Ahead, we’ll discuss what kind of car insurance you’ll need to cover floods and how to file a claim for a flooded car.

In this article

Does car insurance cover floods?

In short: possibly. If you have comprehensive insurance, your car should be covered for flood damage. If your car is leased or financed, you should have comprehensive insurance already, as it’s required on a car that’s still being paid for. If you aren’t making payments on your car, you might still consider comprehensive car insurance, especially if you live in a state prone to flooding, like those on the coasts, in the flat Midwest, or anywhere near water.

Flooding can cause serious damage to your car. Some of the most common problems with flooded cars are down to the electrical system inside the car, but it will damage just about everything, both under the hood and inside your car. Flood water will even wreck your interior, so if you’re worried about flooding, get that comprehensive insurance so you’re covered.

[ Read: The Best Cheap Car Insurance for College Students ]

Tips for filing your flood damage auto insurance claim

Take plenty of pictures 

The most important thing you can do if you have flood damage is to document it. Take pictures of every single angle of your car and every place that’s damaged. Take close-ups, wide shots, interior pictures, under-the-hood pictures and everything else you can think of. These should be pretty easy to take on your phone, just make sure you don’t lose track of them. Back the photos up on the cloud or your computer, just in case.

File early 

File a claim on your damaged car immediately. You’ll want to contact your insurance company as soon as is safely possible, depending on what you’re dealing with flood-wise. Get in touch and let them know the situation with the flood and how much damage you’re dealing with with your car. You already have your pictures handy, which will help back up your story. But the sooner you file your claim, the sooner the insurance company can start processing it and help you.

Check for hidden damage 

You may not be able to see all the damage under the hood right away. If your car is driveable, you might take it to the local body shop to have a professional look for further damage. If it’s not driveable, see if you can have a mechanic come to your house and look for further damage. Do this early so you can include it in your claim.

[ Read: The Coolest Car Insurance Mobile Apps ]

What to do if a flood totals your car 

If the insurance company determines that the cost to fix your car is more than the car is worth, they might consider it totaled. The damage doesn’t even have to be considered 100 percent totaled, depending on what state you live in. In some states, 75% of the value is enough to be considered totaled. An insurance company may also total your car if it’s determined that it’s simply not safe to fix it and drive again. If this is the case, the insurance company will pay out what you’re owed, depending on the car’s value and your insurance policy. Be prepared here, though, to have your own information backing up the value of the car, as your insurance company might rely on you to have this information or might not come back with a value that you agree with.

If your car is not totaled in a flood 

If your car is damaged in a flood and the insurance agency determines that it can be fixed, you’ll first have to cover the deductible, whatever it is on your policy. The insurance company will cover the cost of the damage after that, but be prepared for this process to not be quick. There is a lot of paperwork and planning in this process to ensure the repairs are made in a way that the insurance company allows. Also, most likely if your car was damaged in a flood, others in your area were as well, which means the insurance companies are busy with claims, and the mechanics and autobody shops in your area are busy with repairs.

[ Read: When Should You Downgrade Your Car Insurance? ] 

How to prevent and prepare for auto damages in a flood

  • Get comprehensive car insurance: The first and most important thing to do is make sure you have comprehensive car insurance. This car flood insurance is the key to your protection.
  • Park your car on higher ground: If you know a storm is coming, move your car to higher ground if possible. This way it’s less likely to get caught in a flood.
  • Seal the doors and windows: Not that this will save you in a total flood, but make sure the doors and windows are properly sealed, as it can help keep some of the water out.
  • Avoid puddles: If you’re driving while it’s raining and starting to flood, avoid driving through puddles or standing water. For one, these are obvious pools of water, which can breach your car. For two, you don’t actually know how much water might be in that puddle, and it could flood your car.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Should I Bundle My Car and Home Insurance?

The older you get, the more you have to insure. First, it’s your car, then your home, then your life and the list goes on.

These are all valuable things worth protecting, but the costs can add up. Americans saw their rates for homeowners insurance rise by more than 45% from 2008 to 2017, according to the Insurance Information Institute.

Home and auto insurance policies are two of the most common types of coverage, and it can be an expensive headache to find the right policies. But there is a way to simplify and save — bundling insurance.

When you bundle home and auto insurance policies together with the same carrier, you can lower your premium significantly.

In this article

What is bundling?

Any time you group together more than one type of insurance policy from the same insurer, you are bundling insurance policies. When you do this, most insurance companies offer bundling discounts, also known as a multiline or multipolicy discount.

The reason for bundling discounts is simple — insurers want more of your business! If insurance companies can persuade you to bundle home and auto insurance policies that you currently have with other providers, they’re getting a larger monthly premium from you than they would for just one policy, even if it’s discounted.

Providers will usually allow you to bundle any policies they offer. Car and home insurance bundles are the most common, but many insurers offer discounts for bundling renters and car insurance policies, as well as combinations of life, boat, RV and other specialty insurance offerings.

Savings for bundling insurance can vary — and will usually increase as you bundle more policies — but typically range between 10% and 25%. Most companies advertise savings of up to a certain percentage, but the best way to find out what you can save is to get a few quotes and compare your bundling discount options.

[ Read: The Simple Guide to Car Insurance ]

Pros and cons of bundling home and auto

Pros 

  • Discounts: More often than not, your insurance provider will offer you a discount of 10% to 25% for bundling home and auto insurance. Some insurers even advertise up to 29% savings on some policies when you bundle.
  • Convenience: When you bundle car and home insurance — and any other policies — with the same company, it’s one less bill to manage. You don’t have to call different agents for insurance claims since the entire process is simplified and streamlined under one provider.
  • Security: If you frequently make claims on any policy, you are in danger of having your insurance company drop you. The more policies you have with one provider, the less likely this is to happen. If you tend to get into a lot of car accidents, it may be smart to bundle your car policy with home and life insurance to reduce your risk of losing coverage.
  • Combined deductibles: Some insurers will even combine your deductibles when you bundle. That means a claim involving more than one policy wouldn’t be subject to multiple different deductibles. A storm, for instance, could easily damage both your home and your car. In that case, a combined deductible could significantly lower your out-of-pocket costs.

Cons 

  • You could miss out on savings: Because it’s simpler to combine policies with one insurer, you may be less likely to shop around for the best rates. In some cases, you may find lower rates by getting a variety of home and auto insurance quotes and picking the ones that offer you the lowest rate outright.
  • It may be less convenient than you expect: Some insurers bundle policies through affiliate providers, which still gets you a discount but removes some of the convenience of dealing with one agent. When you’re making home and auto insurance bundle comparisons, be sure to ask about how you’ll make claims for each of your policies.
  • Your discounts may erode over time: Discounts for bundling insurance are designed to build loyalty, so it’s easier to set it and forget it. This may be convenient, but if you don’t pay attention, your insurance provider can gradually raise your rates with each renewal and chip away at your savings.

[ More: The Average Cost of Home Insurance ]

Compare home and auto bundles, by insurance company 

Insurance Company Advertised Bundling Discount Other Available Bundles
Progressive 12% on average Any combination of two or more policies
Allstate Up to 10% on auto and 25% on home Life and renters
Esurance Up to 10% None advertised
Farmers 20% on average Life, umbrella, small business and specialty
Nationwide Up to 20% Auto, boat, renters and life
Travelers Up to 10% Renters
Amica Up to 25% Life
State Farm Up to 17% Renters, condo and life
USAA Up to 10% Renters
American Family Insurance Up to 29% on auto and 20% on home Life, auto, RV, condo, boat, umbrella

Tips for bundling home and auto insurance

All bundling is not created equal, and sometimes you may not get a great deal. However, there are a few things you can do to make sure you get the most out of bundling car and home insurance. Here are a few tips:

Shop around

Whether you’re bundling or not, you’ll never know if you’re getting the best rates unless you shop around. Compare auto and home insurance quotes — both as individual policies and bundled — and be sure you are getting a deal you’re happy with.

Ask about affiliates

If convenience is a priority for you, then don’t forget to ask your agent about any affiliates or third parties that would be involved in your policy. It might not make sense to go through all the effort of combining policies for a small discount if you won’t also save yourself time and headaches when you make claims.

Don’t bundle more than you need

Insurance companies always want you to buy more, and bundling discounts are a big incentive they use to encourage that. But that life insurance policy might not make sense if you’re just out of college with no dependents and a starting salary. Only pay for what you need — and reevaluate those needs regularly.

Check in regularly 

Your insurance needs, along with your rates and potential discounts, change over time. You should check in with your agent frequently — and compare prices with other insurers — to make sure you’re getting the best available premiums. Renewal time is usually a good reminder to check in and make changes.

[ See: Best Cheap Insurances ]

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

How to Get Cheap Car Insurance

How to Get Cheap Car Insurance – SmartAsset

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For many people, car insurance is a major expense category in the household budget. And because it’s against the law to drive without car insurance, it’s not a budget item that can be eliminated unless you’re willing to go car-free. That doesn’t mean, though, that you’re stuck paying sky-high rates. Here’s how to get cheap car insurance. 

Learn about personal loan rates. 

How Insurance Companies Set Car Insurance Rates

Like health insurance, car insurance comes with both premiums and deductibles. The premiums are what you pay the insurance company every month to maintain your coverage. The deductible is what you’ll pay when you start making claims, up to a certain annual cap of, say, $1,000.

It’s worth noting that most people who say they want cheap car insurance mean that they want car insurance with low monthly premiums. But, as with health insurance, there’s a risk to having a policy with low premiums and a high deductible. In the event of a serious accident, you’ll have to meet that deductible. So, one way to get lower premiums is to opt for a higher deductible, but this is only a safe strategy if you have enough liquidity to cover your deductible in the event of an accident.

When car insurance companies set insurance premium rates they take several factors into account. These include applicants’ age, gender and driving history, as well as the type of car the applicant drives and the driver’s state of residence. While you can’t change your age, there are other steps you can take to get favorable rates from car insurance companies.

Types of Coverage

Insurance companies charge more for comprehensive car insurance than they do for basic coverage. In most states you’re required to have liability insurance to cover any damage you do to another car or driver. The extent of that coverage requirement varies by state. In most states, you’re not required to have insurance to cover damage to your own car, or injuries you might suffer in an accident.

If you choose to add insurance coverage for yourself, you can opt for comprehensive coverage or collision coverage. Collision coverage, as the name indicates, covers damage from an accident with another car or an object, and in the event that your car flips. Comprehensive coverage covers things like theft, vandalism and natural disasters, too.

So, while you’ll almost definitely need to buy liability coverage to cover other drivers’ damages, you might not need to buy physical damage coverage for your own vehicle. It will depend on the terms of your lease if you’re leasing a car, and on your own assessment of the risks you face.

If you’re buying a valuable new car, you’ll probably want comprehensive coverage. If you’re paying cash for an older, used vehicle, you can probably get away with a more basic level of coverage. Whatever insurance option you choose for yourself, be sure to comply with state laws relating to liability insurance for any damage you might do to another driver. Once you have a car insurance policy, carry proof of insurance with you in your vehicle at all times. 

How to Get Cheap Car Insurance Rates

In the long term, one of the best ways to get cheap car insurance is to be a safe, responsible driver. The worst drivers have high rates because the insurance company needs financial compensation for the high likelihood that it will have to pay out in the event these drivers get in an accident. If you have a spotless driving record, keep it up. If you have some accidents or tickets in your past, they shouldn’t drive your rates up forever. If it’s been a few years since your last incident, you can try calling your insurance company and asking for a lower rate, using your recent, safe driving record as a bargaining chip.

Another way to get cheap car insurance is to use the same insurance company for more than one type of insurance and get a discount for your loyalty. For example, you can contact the insurance company that provides your homeowners insurance, life insurance or motorcycle insurance and ask if the company can give you a good deal on car insurance. If you have more than one car, you can bundle the insurance coverage on both vehicles.

Your credit score will also affect your car insurance rates, just like it affects the rates you’re offered when shopping for a mortgage. If your credit has improved since you last bought car insurance, you may be able to negotiate your way to cheaper car insurance. And if you pay your car insurance premiums and bills on time and in full, you’ll build up goodwill with your insurer and might qualify for promotional rates.

If you don’t drive very much during the year, you might get cheaper car insurance from a usage-based plan than you would from regular car insurance. Track your mileage before you start shopping for car insurance and see if your low mileage makes you eligible for a better deal.

If you’re under 25, you’ll pay higher premiums, all things being equal. That’s because insurance companies judge young drivers to be riskier drivers. You can get lower rates by joining your parents’ plan, or by using your good grades to get a discount on rates, if your insurance company offers that option. Once you reach your mid-20s there’s no reason to keep paying the high rates that insurance companies levy on young drivers. You can ask your insurance company to lower your rate, or shop around for insurance from another provider.

Finally, the type of car you drive can affect your car insurance rates. Big, powerful and flashy cars are more likely to trigger high car insurance rates because the insurance company assumes you’ll be more likely to speed in that kind of vehicle, and that the vehicle will be a target for theft. Vehicles with high repair costs (such as foreign-made cars) may be more expensive to cover, too. In some states, having a used car will mean lower rates because rates are affected by your car’s replacement value. But in other states, rates are based on vehicles’ safety features, so having an older car won’t necessarily help you get cheap car insurance. If your car has special safety and/or anti-theft features, you may qualify for cheaper car insurance on that basis.

Bottom Line

If you don’t have a vehicle or you’re thinking about getting a new (or used) car, it may be worth doing some research to find out which kinds of cars will get you the lowest car insurance rates. And if you’re paying a lot for car insurance now, you may be able to get cheaper coverage by negotiating your premiums or switching providers.

Photo credit: ©iStock.com/andresr, ©iStock.com/ipopba, ©iStock.com/kate_sept2004

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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Source: smartasset.com

How Long Does A VA Loan Take To Close?


Thomas Short

Posted on: December 12, 2020

There are plenty of myths associated with VA loans, many of which are completely untrue and unfounded. One of these myths is that VA loans can take forever to close.

While the average VA loan takes longer than other loan programs to close, they don’t take forever to close – in reality, according to Ellie Mae’s October 2020 Origination Report it took an average of 54 days for a VA loan to close. This includes everything, from applying for a mortgage to getting the keys to the home.

In terms of home buying, 52 days is hardly forever. Overall, all purchase loans took an average of 51 days to close in the same 90-day period. When you’re getting some of the best rates available while avoiding a downpayment, one extra day is hardly a concern.

But why does a VA loan take longer, and is there a way to speed up the process? Here are some of the factors that could speed up — or slow down — your VA home buying experience.

Check today’s VA rates.

Getting preapproved

The first thing any home buyer should do is get prequalified and preapproved. These two are similar, but they play different roles. Prequalification is the first step in the process, and it gives you an estimate on how much home you can afford.

Preapproval is more in-depth than prequalification. After finding the right lender, you’ll provide them with some more information and they’ll give you an accurate estimate of how much home you’ll be able to afford.

One thing to keep in mind is that you should try to shop below what your preapproval is. This will keep your finances from straying into a dangerous territory, and it can save you stress and time down the road.

Finding a home

The unfortunate reality of today’s housing market is that there just aren’t enough homes to keep up with demand. This can stretch your home buying process on for a long time, and it can be discouraging.

You should have a good idea of what your price range is after you get prequalified, and, if you shop well, you can have a decent list of possible homes ready by the time you get preapproved. You may even have a home in mind before you begin the entire home buying process, which can also save you some time.

But there’s guarantee that any home will work out. Bidding wars are too common, and every bidding war has a loser. If you miss out on a home, this is going to set your timeline back.

Agreeing on a timeline with the seller

After you agree to buy a home from a seller, you will agree on a purchase date and a move-in date (which could be the same).

One misconception with home buying is that people selling their homes are ready to move out now. While some are, plenty are not. You might agree on a price with the current homeowner, but you could end up having to wait an additional week or two – and possibly longer – until you actually get the house. If you’re set on a specific property, understand that this might happen.

Click to begin the home buying process.

The VA appraisal

There are plenty of horror stories surrounding VA appraisals. It’s true that your appraisal can be slow and horrible, but that isn’t always the case.

To be safe, expect the VA appraisal to take around 10 days to complete. Your lender is going to hire a VA appraiser, and not all appraisers are approved for VA homes. Also, the VA has tighter standards for what’s acceptable in an approved home. A seemingly perfect home can get slowed down by the VA appraisal. Because this is all out of your control, the best thing to do is plan for the worst.

Required fixes

The worst case scenario with a VA appraisal is that the home requires fixes. Fixes take extra time and money, two things you’re trying to avoid.

Financially, you can always as the seller to reduce the cost of the home to cover the required repairs and fixes. You can also pay for these yourself – likely the quickest way to get through the process. If the repairs are extensive, this could mean a lot of money and plenty of time. You can always walk away from the home if it isn’t right.

The length of your VA loan could take longer than most

While Ellie Mae’s average time to close is 54 days, that means plenty of homes take longer to close. With some factors completely out of your control, you should prepare for the possibility of a longer loan.

On the flip side, your loan could close much quicker than the 52 days. To increase your chances of this, be sure to have everything ready. Prequalification and preapproval are important steps, and the sooner you begin those, the sooner you can begin your journey toward a new home.

Click to begin the preapproval process.

Source: militaryvaloan.com

What Is Gap Insurance, and What Does It Cover?

What Is Gap Insurance, and What Does It Cover? – SmartAsset

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When purchasing or leasing a new car, you have several insurance coverage options. When selecting coverage, you will likely know if you want to have collision coverage or not, but will you know what gap insurance and whether to select that option? If you are driving your owned vehicle or a leased one, and it is totaled, your collision coverage insurance will cover your vehicle’s cash value. The coverage will help you to purchase a another car. However, what if you owe more on your car than it’s worth? That is where gap insurance comes in. Here’s what you need to know about this type of coverage.

What is Gap Insurance?

Gap insurance protects you from not having enough money to pay off your car loan or lease if its value has depreciated, and you owe more on your car than it is worth. It is optional insurance coverage and is used in addition to collision or comprehensive coverage. It helps you pay off an auto loan if a car has been totaled or stolen, and you owe more than its worth. Gap insurance might also be known as loan or lease gap coverage, and it is only available if you are the first owner or leaseholder on a new vehicle.

Some lenders require individuals to have gap insurance. In addition to collision and comprehensive coverage, gap insurance helps prevent owners and leasers from owing money on a car that no longer exists and protects lenders from not getting paid by a person in financial distress.

How Gap Insurance Works

If you buy or lease a new car, you may owe more on the vehicle than it is worth because of depreciation. For example, let’s say you purchase a new car for $35,000. However, a year later, the car has depreciated and is only worth $25,000, and you owe $30,000 on it. Then, you total the car. Comprehensive insurance coverage would give you $25,000, but you would still owe $5,000 on the vehicle. Gap insurance would cover the $5,000 still owed.

Without gap insurance, you would have had to pay $5,000 out-of-pocket to settle the auto loan. With gap insurance, you did not have to pay anything out of pocket and were likely to purchase a new car with financing.

What Gap Insurance Covers

Gap insurance covers several things and is meant to complement collision or comprehensive insurance. Gap insurance covers:

  • Theft. If a car is stolen and unrecovered, gap insurance may cover theft.
  • Negative equity. If there is a gap between a car’s value and the amount a person owes, gap insurance will cover the difference if a car is totaled.

Gap insurance also covers leased cars. When you drive a new, leased car off the lot, it depreciates. Therefore, the amount you owe on the lease is always more than the car is worth. If you total a leased car, you’re responsible for the fair market value of the vehicle. If you lease, you can purchase gap coverage part way through your lease term, although many dealerships require both comprehensive and collision coverage and strongly recommend gap coverage.

What Gap Insurance Doesn’t Cover

Gap insurance is designed to be complementary, which means that it does not cover everything. Gap insurance does not cover:

  • Repairs. If a car needs repairs, gap insurance will not cover them.
  • Carry-over balance. If a person had a balance on a previous car loan rolled into a new car loan, gap insurance would not cover the rolled-over portion.
  • Rental cars. If a totaled car is in the shop, gap insurance will not cover a rental car’s cost.
  • Extended warranties. If a person chose to add an extended warranty to an auto loan, gap insurance would not cover any extended warranty payments.
  • Deductibles. If someone leases a car, their insurance deductibles are not usually covered by gap insurance. Some policies have a deductible option, so it is wise to check with a provider before signing a gap insurance policy.

Reasons to Consider Gap Insurance

There are several situations you should consider gap insurance. The first is if you made less than a 20% down payment on a vehicle. If you make less than a 20% down payment, it is likely that you do not have cash reserves to cover them in case of an emergency and that they will be “upside down” on the car payments.

Additionally, if an auto loan term is 60 months or longer, a person should consider gap insurance to ensure that he or she is not stuck with car payments if the vehicle is totaled.

Finally, if you’re leasing a car, you should consider gap insurance. Although many contracts require it, the vehicle costs more than it’s worth in almost every situation when you lease.

Is a Gap Insurance Worth It?

Gap insurance keeps the amount that a person owes after buying a car from increasing in case of an emergency. Therefore, if someone does not have debt on his car, there’s no need for gap insurance. Additionally, if a person owes less on his car than it is worth, there’s also no need for gap insurance. Finally, if a person does owe more on a vehicle than it is worth, he may still choose to put the money that would be spent on gap insurance every month toward the principal of his auto loan.

If a person owes more on his car than it is worth and would be financially debilitated by having to pay the remainder of his car payments if his vehicle was totaled or stolen, then gap insurance might be a saving grace.

If the extra cost of gap insurance strains your budget then consider ways to keep your vehicle insurance costs down without skipping gap insurance.

The Takeaway

Gap insurance covers the amount that a person would still owe on a vehicle after it is stolen or totaled, and after comprehensive insurance pays out. It prevents people from continuing to owe on a car that no longer exists. While it doesn’t make sense for everyone to purchase gap insurance, it is often smart for people who have expensive vehicles that are worth far more than a person owes. It is also something to consider when you are leasing a vehicle.

Tips for Reducing Insurance Costs

  • If you need a little additional help weighing your insurance options, you might want to consider working with an expert. Finding the right financial advisor that fits your needs can be simple. SmartAsset’s free tool will match you with financial advisors in your area in five minutes. If you’re ready to learn about local advisors to help you achieve your financial goals, get started now.
  • You may want to consider all the insurance options available that are suitable for your unique situation. By doing so, you save money. A free comprehensive budget calculator can help you understand which option is best.

Photo credit: ©iStock.com/ljubaphoto, ©iStock.com/Kileman, ©iStock.com/gustavofrazao

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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Source: smartasset.com