Esurance Auto Insurance Review

  • Car Insurance

Esurance is one of the biggest providers of auto insurance in the United States, offering cheap insurance policies for drivers in most states. But how does this company perform with regards to services and prices? In this Esurance insurance review, we aim to find out.

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What is Esurance?

Esurance was founded in 1999. It positioned itself as a direct-to-consumer insurer and was one of the first insurance companies to do this. Within a year, it was offering policies to people across 24 states and was then acquired by the White Mountains Insurance Group.

A decade later, Esurance was purchased by Allstate in a deal worth $1 billion and from there the brand continued to grow. Today, Esurance is available in 43 states and continues to offer direct insurance products. This means that you don’t need to go through an agent or use the telephone and can simply apply through www.Esurance.com.

Esurance Coverage Options

In addition to all the usual coverage options, including liability coverage, collision coverage, and comprehensive insurance, Esurance offers the following features:

Rental Coverage from CarMatch

If you have comprehensive coverage and collision coverage and your car is undergoing lengthy repairs or has been stolen, Esurance’s CarMatch service will provide you with a rental car for up to 6 weeks or to the value of $3,000.

CarMatch will keep you on the road and ensure your life isn’t ground to a screeching halt just because you no longer have access to your car.

Gap Insurance

Gap insurance is often required if your car is financed as it will ensure the entirety of the balance is paid if the car is totaled.

If you purchase your car for $30,000 worth of finance and then total it in 2 years, the insurer will typically pay the value of the car at the time it is destroyed. By that time, the value could have dropped by as much as 25% (new cars depreciate rapidly in the first few years) and thanks to the added interest, the balance may be much higher than its value at the time of the accident.

Gap insurance will cover the remainder and ensure you’re not left to foot the bill by yourself. With Esurance gap insurance, up to 25% of the car’s value will be covered, which should be enough to bridge the gap.

Roadside Assistance

Esurance policyholders can add roadside assistance for a small cost. If they breakdown by the side of the road, they will be covered for services such as tire changes and towing, although this cover has a limit of $75 and every call for roadside assistance is considered an insurance claim.

Drivesense

Drivesense is a mobile app that’s offered in most (but not all) states. It tracks driving habits and allows Esurance to paint an accurate picture of your behavior, including your speed and the time of day that you drive.

By agreeing to this app, you can get an immediate discount on your auto insurance policy. The underwriters will then use the data to tweak your premiums. If you’re a safe driver, you don’t spend a lot of time behind the wheel, and you don’t drive quickly, the Drivesense app is a great way to guarantee low premiums.

Other Types of Insurance

Esurance offers homeowners insurance policies in thirty-one states, with a further twelve states offered home insurance through one of Esurance’s many partners. These policies are comprehensive and cover many of the same things found with other major insurance providers. Esurance also offers a few things not found elsewhere, including additional water damage coverage.

Some of the additional features and discounts offered by Esurance home insurance policies include:

  • Save money if you have safety features fitted, including smoke detectors and alarms.
  • Spend less if you have a new home.
  • Choose to add identity theft protection to your policy.
  • Get cover if you own a house that has been extended.
  • Your first claim will not increase your rates or cause you to lose a no claims discount.

Average Cost of Esurance Across the United States

Esurance insurance rates are generally amongst the top 10 cheapest rates in any given state. In our research, we found that Esurance generally lagged behind the likes of GEICO and, in many other states, Safeco and State Farm, but the rates were consistently cheap enough to warrant including them in your comparison shopping.

To give you an idea of how much Esurance customers can expect to pay, take a look at the following average quotes.

  • Alabama: Average Cost of Minimum Insurance Coverage = $700; Average Cost of Full Insurance Coverage = $1,400.
  • Alaska: Esurance car insurance is not offered in this state.
  • Arizona: Average Cost of Minimum Insurance Coverage = $700; Average Cost of Full Insurance Coverage = $1,500.
  • Arkansas: Average Cost of Minimum Insurance Coverage = $600; Average Cost of Full Insurance Coverage = $1,500.
  • California: Average Cost of Minimum Insurance Coverage = $700; Average Cost of Full Insurance Coverage = $1,900.
  • Colorado: Average Cost of Minimum Insurance Coverage = $650; Average Cost of Full Insurance Coverage = $1,000.
  • Connecticut: Average Cost of Minimum Insurance Coverage = $800; Average Cost of Full Insurance Coverage = $1,750.
  • Delaware: Esurance car insurance is not offered in this state.
  • Florida: Average Cost of Minimum Insurance Coverage = $1,300; Average Cost of Full Insurance Coverage = $3,000.
  • Georgia: Average Cost of Minimum Insurance Coverage = $900; Average Cost of Full Insurance Coverage = $2,500.
  • Hawaii: Esurance car insurance is not offered in this state.
  • Idaho: Average Cost of Minimum Insurance Coverage = $400; Average Cost of Full Insurance Coverage = $1,000.
  • Illinois: Average Cost of Minimum Insurance Coverage = $600; Average Cost of Full Insurance Coverage = $1,100.
  • Indiana: Average Cost of Minimum Insurance Coverage = $450; Average Cost of Full Insurance Coverage = $900.
  • Iowa: Average Cost of Minimum Insurance Coverage = $350; Average Cost of Full Insurance Coverage = $1,500.
  • Kansas: Average Cost of Minimum Insurance Coverage = $500; Average Cost of Full Insurance Coverage = $1,400.
  • Kentucky: Average Cost of Minimum Insurance Coverage = $950; Average Cost of Full Insurance Coverage = $2,000.
  • Louisiana: Average Cost of Minimum Insurance Coverage = $1,100; Average Cost of Full Insurance Coverage = $3,000.
  • Maine: Average Cost of Minimum Insurance Coverage = $350; Average Cost of Full Insurance Coverage = $850.
  • Maryland: Average Cost of Minimum Insurance Coverage = $1,000; Average Cost of Full Insurance Coverage $1,900.
  • Massachusetts: Average Cost of Minimum Insurance Coverage = $500; Average Cost of Full Insurance Coverage = $1,200.
  • Michigan: Average Cost of Minimum Insurance Coverage = $1,000; Average Cost of Full Insurance Coverage = $2,000.
  • Minnesota: Average Cost of Minimum Insurance Coverage = $700; Average Cost of Full Insurance Coverage = $1,300
  • Mississippi: Average Cost of Minimum Insurance Coverage = $550; Average Cost of Full Insurance Coverage = $1,600.
  • Missouri: Average Cost of Minimum Insurance Coverage = $650; Average Cost of Full Insurance Coverage = $1,500.
  • Montana: Esurance car insurance is not offered in this state.
  • Nebraska: Average Cost of Minimum Insurance Coverage = $550; Average Cost of Full Insurance Coverage = $1,250.
  • Nevada: Average Cost of Minimum Insurance Coverage = $850; Average Cost of Full Insurance Coverage = $2,200.
  • New Hampshire: Esurance car insurance is not offered in this state.
  • New Jersey: Average Cost of Minimum Insurance Coverage = $1,000; Average Cost of Full Insurance Coverage = $1,800.
  • New Mexico: Average Cost of Minimum Insurance Coverage = $650; Average Cost of Full Insurance Coverage = $1,650.
  • New York: Average Cost of Minimum Insurance Coverage = $1,300; Average Cost of Full Insurance Coverage = $2,300.
  • North Carolina: Average Cost of Minimum Insurance Coverage = $400; Average Cost of Full Insurance Coverage = $1,050.
  • North Dakota: Average Cost of Minimum Insurance Coverage = $350; Average Cost of Full Insurance Coverage = $1,150.
  • Ohio: Average Cost of Minimum Insurance Coverage = $400; Average Cost of Full Insurance Coverage = $1,000.
  • Oklahoma: Average Cost of Minimum Insurance Coverage = $700; Average Cost of Full Insurance Coverage = $1,500.
  • Oregon: Average Cost of Minimum Insurance Coverage = $750; Average Cost of Full Insurance Coverage = $1,400.
  • Pennsylvania: Average Cost of Minimum Insurance Coverage = $550; Average Cost of Full Insurance Coverage = $1,350.
  • Rhode Island: Average Cost of Minimum Insurance Coverage = $900; Average Cost of Full Insurance Coverage = $2,300.
  • South Carolina: Average Cost of Minimum Insurance Coverage = $650; Average Cost of Full Insurance Coverage = $1,550.
  • South Dakota: Average Cost of Minimum Insurance Coverage = $400; Average Cost of Full Insurance Coverage $1,450.
  • Tennessee: Average Cost of Minimum Insurance Coverage = $450; Average Cost of Full Insurance Coverage = $1,300.
  • Texas: Average Cost of Minimum Insurance Coverage = $900; Average Cost of Full Insurance Coverage = $1,700.
  • Utah: Average Cost of Minimum Insurance Coverage = $550; Average Cost of Full Insurance Coverage = $1,300.
  • Vermont: Esurance car insurance is not offered in this state.
  • Virginia: Average Cost of Minimum Insurance Coverage = $500; Average Cost of Full Insurance Coverage = $1,300.
  • Washington: Average Cost of Minimum Insurance Coverage = $750; Average Cost of Full Insurance Coverage = $1,500.
  • West Virginia: Average Cost of Minimum Insurance Coverage = $750; Average Cost of Full Insurance Coverage = $1,550.
  • Wisconsin: Average Cost of Minimum Insurance Coverage = $350; Average Cost of Full Insurance Coverage = $950.
  • Wyoming: Esurance car insurance is not offered in this state.

Esurance Car Insurance Discounts

Discounts are offered by most car insurance companies and are a great way to bring those rates down and save a few bucks on your premiums. Esurance, like all good auto insurance companies, offers a wide spectrum of car insurance discounts, including:

  • Safety Discounts: If you have anti-theft and safety devices installed in your vehicle, you can save a substantial amount on your car insurance policy. Such features include airbags, anti-lock brakes, car alarms, and tracking devices.
  • Bundling: Also known as a multi-policy discount, this is provided to policyholders who purchase homeowners insurance and car insurance together.
  • Good Student Discount: Maintain at least a B average to collect on this student-centric car insurance discount.
  • AutoPay: By selecting AutoPay, going paperless and paying upfront, you could shave a few percent off the total cost of your premiums.
  • Multi-Car: If you have several drivers and vehicles in your household, add them to the same policy and you will save a huge amount of money compared to purchasing those policies separately.
  • Good Driver Discount: If you have no traffic violations or claims, you will be offered much lower rates in general.
  • Homeowners Discount: Homeowners and married policyholders will pay less than single renters.
  • Driver Course Discounts: Complete a driver safety course or defensive driving course to save on your Esurance policy.

Esurance Expert and Customer Reviews

Esurance has a poor score for claims satisfaction, with JD Power giving it a Below Average score overall. It also has a higher rate of complaints than many of its competitors, despite the fact that it scores surprisingly well for customer satisfaction.

​It seems, therefore, that the majority of customers are very happy with the process of applying for auto insurance, as well as the low cost of these policies. But as soon as they need to make a claim, Esurance drops well below the average satisfaction rates and there are a few red flags.

Although this is a concern, there’s nothing to suggest that Esurance is not paying out the amounts that it should. Instead, the majority of the complaints concern minor delays. Esurance also has a high financial strength rating from companies like AM Best, which is not surprising when you consider the reputation of its parent company.

Esurance Auto Insurance Review: Summary

Esurance is not as old as the likes of GEICO and State Farm and it also falls a little short in terms of the benefits and products it provides, with most of the additional options provided by partners.

However, if you’re looking for a low-cost direct insurance provider that doesn’t require you to go through insurance agents and streamlines the application process, look no further.

Source: pocketyourdollars.com

What to Do When You Owe More on Your Car Than It’s Worth

A negative equity car loan — also referred to as being “upside down” or “underwater” on a loan — means you owe more on a vehicle than it’s worth, and it’s a more common scenario than you might think.

Nearly one-third (31.4%) of car owners currently have a negative equity car loan, according to a J.D. Power Automotive forum on March 22. And USA Today reported something even more concerning: “The percentage of car owners facing negative equity is expected to hit a 10-year high in 2016.”

How do people get into a negative equity situation with cars? For one, brand new cars lose an average of 11% of their value the minute they’re driven off the lot. So say you take out a loan for $25,000 on a new car valued for the same amount. Just a few minutes after you drive off the lot, your car may only be worth $20,000, meaning you now owe $5,000 more than the car is worth.

Having negative equity isn’t always terrible, but it can mean added expense if you’re looking to sell or trade in your vehicle, and it can cause you a lot of grief in the event of a wreck or a theft. Let’s explore what you can do if you find yourself with a negative equity car loan, and things that may help you get out from underwater.

What a Negative Equity Car Loan Means for You

Barring extenuating financial circumstances (like missed payments), having a negative equity car loan usually just means you’ve purchased a car that’s value depreciated faster than you’ve made payments and you need time to catch up. Cars — especially new ones — depreciate a lot (20-30%) in the first few years, and then depreciation tends to level off, according to Edmunds. If you have no plans to sell or trade in your vehicle, your situation is tenable.

But, if you’re trying to purchase a new car with a new loan and want to trade in or sell your current car, a negative equity loan will be a complication (read: added expense). You’ll either have to roll over the negative equity into your new loan or pay it off (and if you could do that, you probably wouldn’t be underwater in the first place). Purchasing a new car while underwater on your current one is a choice, of course, and individual buyers will have to weigh their options to decide if they want to take on the added financial burden.

Some situations you may find yourself in while underwater on a loan can be quite expensive. Getting into a car wreck that results in a total loss, or having your car stolen, can mean that not only will you not be compensated for vehicle replacement, you might actually owe your lender money.

Using our previous example of the $25,000 car: if you’ve only paid off $2,000 of the vehicle (through either down payment or loan payments), and the vehicle is determined to be worth just $20,000 at the time of a total loss, you’ll owe your lender $3,000. Not a fun situation to find yourself in, to be sure, but this is a time where guaranteed auto protection (GAP) insurance can be helpful.

Ways to Get Out From Underwater

  • Make larger monthly car payments (as your budget allows).
  • Keep the car you’ve got until you’re above water (until the car is worth more than you owe).
  • Roll the negative balance into your new car loan — this costs you nothing out of pocket, but be aware that you’ll likely be making higher monthly payments and you’ll still have to pay off the negative balance.

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If you’re really underwater on a bad loan (the interest payments are quite high) or you’ve missed payments, and your monthly bill is high, but you still won’t pay off the loan for a long time, selling the car and taking the financial hit might be something to consider. Be sure to carefully calculate expenses and get help from a financial advisor if you can. Refinancing your loan is another option, but be sure to use a reputable lender.

Be Wary of Certain Types of Loans

One of the best ways to help you avoid a negative equity auto loan in the first place is to make a large enough down payment. This is why it may be helpful to determine an appropriate down payment before going car shopping and make sure you’re buying a car you can actually afford. (To give you an idea of whether you might qualify for the best rates on your car purchase, take a look at your free credit report summary on Credit.com.)

Be wary of loans with little to no down payment and extended loan lengths (like those reaching 84 months), Michael Harley, chief analyst at Auto Web, explained. If loans like these are all you qualify for, or all you can afford, you may want to consider less expensive options.

Some loan advice to consider:

  • Try to keep car payments less than 20% of your take-home pay.
  • Aim to finance cars for no more than five years.
  • Try to put 20% down.
  • If you’re getting a used car, it may be better to finance it for three years with about 10% down.
  • More financing tips — for both new and used cars — can be found here.

GAP Insurance: How it Can Help

If you have negative equity, for whatever reason, GAP insurance might be a good choice. GAP insurance may be a good option if you’re paying less than 20% down on a new car or rolling over a negative equity loan. This way, if you experience a total loss or a stolen car while you have negative equity on your loan, you’ll have coverage.

Keep in mind: GAP insurance doesn’t cover negative equity in the event that you want to replace your current vehicle with a different one — if you’re underwater in that case, you’ll have to make up the difference with either cash or an even bigger new car loan.

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The bottom line: If you have negative equity on a car loan and you can afford the payments and have an end in sight, the best thing to do may simply be to ride it out: keep making payments and put off trading in or upgrading your car until you’re in a more secure financial position.

More on Auto Loans:

Image: Pixland

Source: credit.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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