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Thursday, 8 October 2015

Safety Tips for Teen Drivers

Ways to Save When Your Teen Starts Driving:

We hit a milestone in my house this year. My oldest child turned 16 and, in theory, can get behind the wheel of a car and start driving solo.

I'm not sure I'm ready for that and, fortunately, she's not either, so she still has her learner's permit. However, I've been searching high and low for ways to keep my auto insurance rates reasonable once she joins the ranks of independent drivers. Here are tips picked up along the way:

The first years teenagers spend as drivers are very risky. Motor vehicle crashes are the leading cause of death among 15- to 20-year-olds and research shows that more than half of teens who die in crashes are passengers, most of whom are not wearing a seatbelt.

Immaturity and lack of driving experience are the two main factors leading to the high crash rates among teens. Even the best teenage drivers do not have the judgment that comes from experience. It affects their recognition of, and response to, hazardous situations and results in dangerous practices such as speeding and tailgating. Teens also tend to engage in risky behavior—eating, talking on their cellphones, text messaging, talking to friends in the car—and they often do not wear their seatbelts.

While getting a drivers license is an exciting rite-of-passage for teens, it can make a parent frantic. The Insurance Information Institute recommends parents take the following steps to ensure the safety of their teen.

Pick a Safe Car

You and your teenager should choose a car that is easy to drive and would offer protection in the event of a crash. Avoid small cars and those with high performance images that might encourage speed and recklessness. Trucks and sport utility vehicles (SUVs) should also be avoided, since they are more prone to rollovers.

Enroll Your Teen in a Drivers Education Course

The more driving practice the better; experience will give your teen confidence behind the wheel, and he or she will be better able to react to challenging situations on the road.

Furthermore, a teenager who has learned to drive through a recognized drivers education course is viewed more favorably by insurers and may earn a discount. In some states, teens must take a drivers education course if they want to get a license at age 16; otherwise, they have to wait until they are 18.

Enroll Your Teen in a Safe Driver Program

Check whether your insurance company offers a “safe driver” program. Teen participants in these programs sign parent-teen driving contracts that outline the young driver’s responsibilities (for instance, not having teen passengers in the car, being home by a certain hour, etc) and the consequences of failure to meet those expectations. Check whether your insurance company has such a program—if your teenager completes the program, you may be eligible for a discount.

In addition, insurance companies are helping to reduce the number of accidents involving teen drivers by subsidizing the cost of electronic devices, such as GPS systems and video cameras, which can monitor the way teens drive and alert parents of unsafe driving practices by email, text message or phone.

Discuss the Dangers of Drug and Alcohol Use

Advise teens never to drink or do drugs, and not to get in a car if the driver has used drugs or alcohol. Encourage your teen to call you if such a situation arises to ensure they have a safe way home.

Understand the Dangers of Distracted and Impaired Driving

Talk to your teen about the importance of never phoning or texting while driving, and keeping distractions, such as the radio and chatting with friends to a minimum. Teens should also be responsible passengers when in their friends’ cars. New drivers should wait 1,000 miles or six months before picking up their first teen passenger.

Be a Good Role Model

New drivers learn by example, so if you drive recklessly, your teenage driver may imitate you. Always wear your seatbelt and never drink and drive.

Enroll Your Teen in a Graduated Drivers License Program—or Create Your Own

Many states have been successful in reducing teen accidents by enacting graduated drivers license (GDL) legislation. These laws, which include a three-phase program, allow teen drivers to develop more mature driving attitudes and gain experience behind the wheel. New drivers are restricted from certain activities, such as late-night driving or having passengers in the car, until they have had their licenses for a set period. A number of states also restrict the amount of time new drivers may be on the road without supervision. For more information on GDLs, visit www.iihs.org.

Parents should take an active role in their teenagers’ driving practice and expose them to driving in a wide variety of driving conditions to build experience and confidence. If your state does not have a GDL program, you can institute the same policies with your own children. Introduce privileges gradually. Allow independent driving only after continued practice, including night driving and driving in inclement weather.

Keep in mind, teens do not all reach the appropriate level of maturity to handle a drivers license at the same time. Parents should consider whether teens are easily distracted, nervous or risk takers before allowing them to get a license or even a learners permit.

1. Invest in a Good Driver's Training Program

According to the Insurance Institute for Highway Safety, teen drivers are risky drivers. It could be reckless behavior or it could be inexperience, but the fatal crash rate per mile for 16-19-year-olds is three times that of drivers age 20 and older. That means insurance companies are automatically going to see your teen as a claims risk and raise your rates. If your child starts racking up tickets or gets in a fender bender or two, watch your rates head to the stratosphere.

You may be able to keep your premiums lower by helping your teen avoid risky behavior behind the wheel, and that means getting them into the best driver's education program possible. I selected my daughter's school here in Michigan, in part, because it was able to demonstrate statistically that its graduates ended up in accidents at a rate far below the statewide average for all teen drivers.

2. Embrace Your State's Graduated driver Licensing Program

All 50 states have enacted graduated driver licensing programs that gradually ease teens into independent driving. Typically, the programs require 30-50 hours of supervised drive time before a restricted license is issued, until a teen's 18th birthday. The IIHS says graduated licensing programs are associated with fewer teen fatalities and fewer insurance claims. But the programs can work only if you enforce them at home. Don't fudge numbers on the drive-time log, and don't turn a blind eye when your teen blatantly violates the restrictions on their license.

Sure, it can be a pain to spend 50 white-knuckled hours in the car with your teen while they are learning, but hopefully your reward will be lower insurance premiums and a child who makes it to adulthood.

3. Avoid Letting Your Teen Have Their Car ...

It can be tempting to buy your teen a vehicle. Then they won't be constantly borrowing yours and potentially making a mess of it. I advise you resist the temptation for these reasons:

Having them drive your car would make them a secondary driver rather than a primary one, a designation that could keep your premiums lower.
Having them share the family vehicle may limit their drive time, which could be a good thing for young drivers who are prone to getting in accidents.
Buying another car means you'll be paying insurance on another car. Need I say more?

4. ... Or Make Sure Theirs Is Cheap(er) to Insure

But maybe you're in a situation in which you really need your teen to have a separate vehicle. I can imagine this would be especially true if your household only has one vehicle currently. In that case, be smart about the type of car you get your teen. Some vehicles are safer and, in turn, cheaper to insure. The IIHS has recommendations as to what it considers the best cars for teens.

5. Add Your Teen to Your Policy

Assuming you will be paying the premiums, it is almost always the better deal to add your teen to your policy rather than purchase a separate one. The insurance company takes into account the driving record of each person listed on a policy. Your good driving should partially offset your teen's potentially risky driving. Plus, your account may come with discounts not available on a teen's policy.

6. Look for Teen Driver Discounts

When you add your teen, ask the insurance company about discounts for new drivers. Students with good grades may be eligible for discounts; those who take an approved safety course may also be eligible. If your teen goes away for school and doesn't take the car, you may be able to get a discount for that, too.

7. Let the Insurance Company Spy on Your Teen

Usage-based insurance is one of the latest fads in the world of automobile insurance. Auto insurance companies send you a device that you plug into a port under your dashboard. It records how fast you drive, how fast you accelerate and how fast you brake, among other things. Then, if the auto insurance gods say you've been a good driver, you're rewarded with a discount on your premium.

These discounts are available to all drivers, but parents might find they are useful for monitoring their teens. Some companies issue reports grading driving skills, and some teens might be inclined to lay off their lead foot if they know someone, somewhere is watching. If you like the idea of monitoring your teen but aren't thrilled with the idea of letting an insurer inside your dashboard, you could also try spying yourself.

8. Consider a Higher Deductible or Lower Coverage

One surefire way to reduce your premiums is to raise your deductible. Just make sure you have enough in the bank to cover it if needed. Similarly, you could see how much it saves to drop collision or comprehensive coverage. However, do the math before making any rash decisions. Unless you can afford a new car, dropping comprehensive coverage could mean you'll be without a set of wheels if your vehicle gets totaled.

9. Shop Around for Better Rates

I was shocked to find out the insurance company, to which I had been so faithful for 17 years, was charging me double what other insurers were quoting. Perhaps it's different for other companies, but my experience was that loyalty doesn't necessarily pay off in terms of cheaper premiums.

Before you blindly add your teen to your existing policy, shop around for better rates. Underwriting policies vary by company, and some may have better pricing for young drivers. In addition, teen discount programs can differ between insurers.

10. Consolidate Your Coverage With One Insurer

Finally, when you find the right car insurance company, consider moving all your policies to that provider. Virtually all insurance companies offer multipolicy discounts, and the more you insure, the greater your discount may be.

Do you have a teen driver in the house? Tell us how you keep your insurance costs down by leaving a comment below or on our Facebook page. Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash.

Distracted Driving

Safety Tips to Reduce Distractions on the Road:

Have you ever texted, spoken on the phone, changed radio stations, or even turned around to talk to passengers while driving? If so, you may be exposing yourself, your passengers, and anybody else on the road to harm. Driver distractions such as these accounted for 10 percent of all fatal crashes, 18 percent of injury crashes and 16 percent of all motor vehicle crashes in 2012, according to the National Highway Traffic Safety Administration (NHTSA).

And of these hazards, cellphones and text messaging were the most common cause of accidents. However, other common habits, such as using a vehicle navigation system, eating and drinking, reading a map, grooming yourself, or even having a phone conversation using a hands-free device can be hazardous, too.

Employers May Be Held Liable

Not only is distracted driving dangerous for individuals, but there is a growing concern among business owners and managers that they may be held liable for accidents caused by their employees while driving and conducting work-related conversations on cellphones. Under the doctrine of “vicarious responsibility,” employers may be held legally accountable for the negligent acts of employees committed in the course of employment. Employers may also be found negligent if they fail to put in place a policy for the safe use of cellphones.

Tips for Safer Travel

Keep these safety tips in mind when driving:

Pull Off the Road – Don’t drive while calling or texting; pull off the road to a safe location.
Use Voice-activated Dialing – If you must dial from the road, program frequently called numbers and your local emergency number into your phone and use voice-activated dialing.
Never Dial While Driving – If you must dial manually, do so only when stopped or have a passenger dial for you.
Take a Message – Let your voice mail pick up your calls while you’re driving. It's easy—and much safer—to retrieve your messages later on.
Know When to Stop Talking – If you must make or receive a call while driving, keep conversations on brief so you can concentrate on your driving. If a long discussion is required or if the topic is stressful or emotional, end the conversation and continue it once you are off the road.
Don’t Take Notes While Driving – If you need to write something down, use an audio recorder or pull off the road.
Know Where You’re Going – Study the route before you leave or have a passenger read the map. And if you’re using a navigation system, program in your destination before you start driving and use the audio setting to avoid having to look at the screen for directions.
Don’t Eat or Drink While Driving – Eating takes both your hand off the wheel and your eyes off the road, so don’t do it. Furthermore, spills can easily cause an accident. If you have to stop short, you could also be severely burned.
Groom Yourself At Home – Shaving, putting on makeup, combing your hair or other forms of preening are distractions and should be done at home, not while driving.

While everyone should follow these rules, it is particularly important to review them carefully with teen drivers. Motor vehicle crashes are theleading cause of death among 15- to 20-year olds, and in 2012, 10 percent of all drivers in that age group involved in fatal crashes were distracted at the time of the crash, according to NHTSA. Talk to your teen about safe driving habits and, most importantly, model good behavior on the road. And for more information on distracted driving, see our Distracted Driving backgrounder.

At the Scene of an Accident

Know Your Role If You Get Involved In A Car Accident:

No one wants to get into a car crash. But knowing what to do if you are involved in an accident can save lives, reduce injuries and make the claims process simpler and easier.

Be Prepared

Keep your registration and auto insurance papers, as well as any relevant medical information for you and your family, in the car.
Make sure you have the right amount of auto coverage to fit your needs.

Immediately After an Accident

Assess the Damage. If possible, pull the vehicle to the side of the road to a safe place to see if anyone is injured, and the extent of the damage to the vehicle.

Call the police or highway patrol, if you are in a serious accident. Let law enforcement know if anyone is hurt and the extent of injuries. The police will notify the nearest medical unit. If the police can't come to the scene of your car accident, you can head to the nearest police department (or their website) to file an incident report yourself. Having an official report can help in case the other driver decides to sue for damages or medical injuries, or there is more damage done to your car than initially thought. If the police do come to the accident scene, get the officers’ names and badge numbers and ask where you can get a copy of their report.

Collect as much information as possible. Get the names and contact information of everyone involved in the crash, including witnesses. Ask the driver (or drivers if you are involved in a multi-car accident) for their license, car registration and insurance ID card. Get the make and model of the cars involved. Lastly, make note of the location of the accident, time of day and the weather conditions. You can use your smart phone or other device to document this information, as well as the accident itself, but it’s also a good idea to always keep a pad of paper/pen in your glove compartment. It may not be high-tech, but it is an easy way to record important information. When talking to others, keep to the facts. Do not discuss who was at fault, or how much insurance you have, with other drivers

Don’t leave the scene of the accident. If you run into an unattended vehicle, try to find the owner. If you can’t, leave a note containing your name, address and phone number. Record the details of the accident, including the make and model of the car and the address where the accident occurred.

Get the claims process started. Notify your insurance professional as soon as possible—the longer you wait, the harder it will be to remember the details. Many insurance companies now use mobile apps to get the claims process started. These apps allow you to report a claim, check the status, upload photos, check your deductible, schedule an appraisal, reserve a rental car, and request reimbursements for towing and glass claims. Some apps even allow you to notify the insurance adjuster what happened by visually re-creating the events and circumstances of your car accident. When working with your insurance company, make sure that you get the name, title and contact information of everyone you speak with. You will likely also receive claim forms to fill out. Make sure that you do this as soon, and as accurately, as possible. If you have any questions, don’t be afraid to ask the claims adjuster for assistance. Your insurance company wants your claims experience to be as pleasant and efficient as possible.

Finally, keep a file of all of your notes and any claim forms. The more organized you are, the simpler and easier the claims process will be.

Air Bag Safety

Air Bag Safety & Benefits

Air bags save thousands of lives each year, according to The National Highway Traffic Safety Administration (NHTSA). In frontal crashes, air bags reduce deaths among drivers by about 30 percent and among passengers by 27 percent.

Air bags, however, can be dangerous. If small children sit unbelted in the front seat, they can be catapulted into the path of a deploying air bag, which inflates with great force. This risk also applies to small adults—who must sit close to the steering wheel in order to reach the pedals—pregnant women and the elderly. Infants in rear-facing safety seats on the passenger side can be severely injured because their heads are in the direct path of an inflating air bag. If your airbag is stolen or it deploys, you must get a new one, but you will be reimbursed under the comprehensive portion of your auto insurance policy.

Preventing air bag injuries

Drivers should have all children sit in the backseat wearing a safety belt. Infants should be placed in rear-facing car seats and put in the backseat. Small adults should move the seat back so that their breastbone is at least 10 inches from the air bag cover.

If this is not possible, air bag switches can be installed so that the vehicle owner has the option of turning the bag off or on, depending on the situation. In January 1998, NHTSA allowed auto dealers and repair shops to begin installing air bag cut-off switches. Before the switch can be installed, vehicle owners must complete a four-step process:
Obtain an information brochure and request form from NHTSA, dealerships or repair shops
Return the form to NHTSA
Receive authorization from NHTSA after it reviews the case
Take the vehicle to the service shop along with the authorization from NHTSA which certifies that the owner has read the brochure and met one of the four eligibility classifications:

rear-facing infant seat can be in the front (necessary if the vehicle has no back-seat)
driver's seat cannot be adjusted to keep more than 10 inches between the driver and the steering wheel
putting a child 12 or under in the front seat can not be avoided
having a medical condition that puts them at risk of injury when an air bag deploys.

What Are Direct Repair Programs and Generic Auto Parts?

Helpful Auto Insurance Q&A That Will Help You To Get Better Insurance Policy:

Auto insurance is a highly competitive business. To help policyholders with the auto repair process, some insurance companies offer direct repair programs so that their customers have easy access to a recommended body shop. Some also offer one-stop shopping where a damaged car can get dropped off and an adjuster handles the claim, the car is fixed and often a replacement rental car is provided. When a car is damaged, an auto repair shop may provide a choice between original equipment manufacturer (OEM) and generic replacement parts. When navigating the claims process, it is important to understand the different options, and what choices are available to you under your policy. These frequently asked consumer questions can help guide you through the process.

Q. What is a Direct Repair Program?

A. A Direct Repair Program (DRP) is a network of auto repair shops and dealerships approved by an insurer.

Q. Why do auto insurers offer Direct Repair Programs?

A. DRPs help auto insurers provide their customers with quality repairs at a reasonable cost.

Q. Are DRP auto repair shops reliable?

Auto repair shops and dealerships that participate in the program are carefully vetted by insurers to ensure they provide quality repairs and service to policyholders. Insurers also offer customers a lifetime guarantee on workmanship decides to use the DRP shops.

Q. May I use an auto repair shop of my choice for insured repairs?

A. Yes. Consumers have the right to go to the auto shop of their choice. If their insurance company offers a direct repair program, they do not have to use one of their auto repair programs. Policyholders should talk to their insurance company about their specific procedures.

Q. What are generic crash parts?

A. There are two types of crash parts: original equipment manufacturer (OEM) parts, which are supplied by auto manufacturers, which sell them under their own name; and generic, or aftermarket, crash parts. Generic parts are frequently produced in the same factory as the OEM parts, but are also produced by independent manufacturers. They are generally limited to the cosmetic parts of the car that form the outside “skin” frequently damaged in an auto crash such as fenders, hoods and door panels.

Q. Are generic parts safe?

A. Yes. Studies show that these exterior generic parts do not compromise the safety of a vehicle. Auto insurers only want safe cars put back on the road—not only will they be insuring these cars, they are also committed to auto and highway safety. In addition, the independent, non-profit organization Certified Automotive Parts Association (CAPA) rigorously inspects generic auto parts and guarantees that their quality meets its standards.

Q. Do I have a choice of generic or OEM parts?

Some auto insurance companies offer their policyholders a choice between generic and OEM parts. Some policies actually specify that only original equipment manufacturer parts must be used for repairs, while others require this only when repairing recent model cars. A few states mandate that insurance companies must offer generic parts when they exist. These requirements and options will be included in your auto policy—read it carefully and speak with an insurance professional to best understand your coverage.

Q. Can my insurance company require me to use certain types of auto repair parts?

A. No. Insurance companies cannot require a policyholder to use only certain kinds of auto repair parts. However, if the company’s rates are based on using a certain type of part, the insurer can ask you to pay the difference if the part you prefer is more expensive.

Q. What if the parts don’t fit?

A. A generic part is no less likely to fit a vehicle than an OEM part. In the unlikely event that either type of part does not fit the vehicle, the insurance company will often pay to replace the part at no extra cost.

Q. How can I find out if generic parts are used in repairing my car?

A. Many states require that estimates prepared by auto body shops disclose whether the repair job will use generic parts. Insurers are also required to disclose that they are using parts “at least equal in the kind and quality in terms of fit, quality, and performance to the original manufacturer parts they are replacing.” If in doubt, ask your auto body repair specialist what types of parts are being installed.

Q. Will the use of generic parts reduce the value of my car?

A. No. Diminished value could occur if your vehicle has a significant collision history. However your car would not be diminished further in value by the use of generic parts.

Q. What if I lease my car?

A. Lease agreements clearly spell out what type of parts may or may not be used when a car is repaired.

Q. What are the benefits of using generic parts?

A. There are many benefits to using generic parts. First, they are 26 to 50 percent less expensive than OEM parts and often have longer warranties. The introduction of aftermarket parts has also forced down the price of OEM parts by creating competition in the marketplace.

What should I do if I am having trouble settling my claim?

Tips On How To Settle Insurance Claim:

If you are not satisfied with how your claim is being handled, there are steps you can take.

Let your agent or company representative know that you are unhappy.
If the agant or representative is unable to solve your problem, get the name and phone number of the head of the insurer's claims department. Your insurance company may also have a consumer complaint department that can help.
Be prepared to support your case.
Send documents and a letter explaining why you are not satisfied and make sure you have the figures to back up your argument. Be certain to include your address, claim number, day and evening phone numbers and any other important identifying information.
Review your auto insurance policy.
Most companies offer either arbitration or appraisal services to help settle differences and disputes. Your insurance policy will explain these options.
Contact your state insurance department.
Explain the reasons for the disagreement to a consumer services representative at the department.
Contact an arbitrator to hear your case.
An independent arbitrator with experience in insurance matters can decide if the settlement you were offered is fair. Your insurance company may suggest an arbitrator or you can get your own from theAmerican Arbitration Association at 212-484-4000.
Consult an attorney.
As a last resort, consult an attorney who specializes in auto insurance. Each state’s bar association offers a free legal referral service, which will give you names of qualified candidates. Attorneys work either on an hourly rate or on a contingency basis, depending on the type of case. Get the attorney's fee structure in writing. You can remain current on the progress of your claim by requesting that you receive copies from your attorney of all correspondence. Your attorney must have your agreement before committing to any settlement.

After your claim has been settled, take time to re-evaluate your auto insurance coverage to make sure you have adequate protection to cover you against any future damage or liability claims.

What are my rights when filing a claim?

Know Your Basic Rights To File A Claim For Your Insurance:

As a policyholder, you have certain rights. Every state has laws protecting consumers. Your policy is a legal contract between you and your insurer. It defines your rights and obligations as well as the rights and obligations of the insurance company.

If you have any questions regarding your rights under the policy, talk to your insurance agent or company representative. You may also contact your state insurance department, state attorney general's office, or your state's consumer affairs department.

If I file a claim, will my premium go up?

The Insurance Premium Fact:

You may be reluctant to file a claim because you fear that your premium will go up or your insurance will be canceled. Practices vary from company to company. In general, an insurer will increase your premium by specific percentages for each chargeable claim made against your policy above a specific dollar amount. A chargeable claim is one the insurer considers primarily your fault. The percentages and ceilings vary from company to company. These increases generally stay on your premium for three years following the claim.

Your company may also decide not to renew your policy if your driving record gets markedly worse or you have several accidents. Different insurers have different rules about what constitutes an unacceptably bad driving record. But some accidents, such as those caused by drunk driving, will probably trigger a nonrenewal from virtually every insurance company.

If you have an accident but don‘t report it to your insurer, you are taking a risk, even if the damage seems minor. If the other driver sues you weeks or months later, your failure to report the accident might cause your insurer to refuse to honor the policy. And even if they do honor the policy, the delay will certainly make it harder for the insurer to gather evidence to represent you.

Understanding Your Insurance Deductible

Understanding the role deductibles play when insuring a car or a home is an important part of getting the most out of your insurance policy.

A deductible is basically the amount “deducted” from an insured loss. Deductibles have been an essential part of the insurance contract for many years and represent a sharing of the risk between the insurance company and the policyholder. When repairing your home or replacing personal possessions, the amount of the deductible would come out of your own pocket.

A deductible can be either a specific dollar amount or a percentage of the total amount of insurance on a policy. Generally speaking, the larger the deductible, the less a consumer pays in premiums for an insurance policy. Deductible amounts can be found on the declarations (or front) page of standard homeowners and auto insurance policies.

Here is how it works: if you have a $500 “dollar deductible,” that $500 would be deducted from your claim. So, if your insurance company has determined that you have an insured loss worth $10,000 you would receive a claims check for $9,500.

Percentage deductibles are calculated differently. They are based on a percentage of the home’s insured value. So if your house is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from the amount you are reimbursed on a claim. In the event of the $10,000 insurance loss, you would be paid $8,000.

Deductibles in many parts of the country have been going up. In hurricane prone states, where there is a greater risk of a major catastrophe, special deductibles may apply for homeowners insurance claims when the cause of damage is attributable to a hurricane. These deductibles are generally higher and may take the form of a percentage of the policy limits.

Deductibles for property damage work differently than, for example, a typical health insurance policy where there a single annual deductible for the policy. With an auto or homeowners insurance policy, the deductible applies each time you file a claim. The one major exception to this is in Florida, where hurricane deductibles specifically are applied per season rather than for each storm.

Hurricane deductibles have helped to make more private insurance coverage available in coastal communities at a lower price. This means more choice for consumers. So, consumers who reside in states where competitive markets exist can often shop around for coverage and usually find that they have a selection of insurance policies to pick from that offer a variety of different premiums, coverages and deductibles.

Here are some other important things to know about deductibles:

Raising Your Deductible Can Save Money

One of the best ways to save money on a homeowners or auto insurance policy is to raise the deductible. For example, for auto insurance, increasing the dollar deductible from $200 to $500 can reduce collision and comprehensive coverage premium costs by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. But, remember that if you have a loss, this amount will be deducted from your insurance claim and that you will be responsible for the difference.

Deductibles Differ by Company and by State

Insurance is state regulated. And insurance companies must follow strict state laws. This also applies to the way deductibles are incorporated into the language of a policy, and how they are implemented. In many states a range of deductibles can be found. So if you are shopping for insurance, you should always ask about deductibles when comparing policies. For homeowners or renters insurance policies, most insurers offer a minimum $500 dollar deductible. However, raising the deductible to $1,000 or more can save upwards of 20 percent on the cost of an insurance policy.

Deductibles Do Not Apply to Liability Claims

There are generally no deductibles for the liability portion of a homeowners or auto insurance policy. Instead, the deductibles apply to property damage. So, on in an auto policy, there is a deductible for the optional comprehensive or collision coverage, but not for the liability portion. And, in a homeowners policy, deductibles apply to damage to the structure of the house or personal possessions but not if a homeowner is sued or a medical claim is made by someone injured in the home.

Flood Insurance Offers a Range of Deductibles

Flooding is not covered by standard homeowners insurance policies but is available from the National Flood Insurance Program (NFIP) and from some private insurance companies. The NFIP offers separate policies for the structure of your home and for your personal possessions, along with a variety of deductibles. You can choose one deductible for the structure and another for the contents of your home. Mortgage companies, however, may require that your deductible be under a certain amount. Flood damage to a car is covered by the optional comprehensive portion of an auto insurance policy.

Percentage Deductibles Apply to Earthquakes, Hurricanes and Hail

Earthquakes: Deductibles for earthquake coverage can range anywhere from 2 percent to 20 percent of the replacement value of the structure. Insurers in states like Washington, Nevada and Utah, with higher than average risk of earthquakes, often set minimum deductibles at around 10 percent. In most cases, consumers can get higher deductibles to save money on earthquake premiums.
California residents also can purchase earthquake insurance through the California Earthquake Authority (CEA). The standard CEA policy includes a deductible that is 15 percent of the replacement cost of the home. The basic policy covers only the house (other structures such as garages, pools, etc. are not covered). Personal possessions are covered up to $5,000 and “loss of use” expenses, the additional cost of living elsewhere while repairs are made to the home, are covered up to $1,500. Recognizing that some people want more comprehensive coverage, the CEA also offers a 10 percent deductible for other structures, personal items coverage up to $100,000 and $15,000 in “loss of use” coverage.
Hurricanes and Hail: There are two kinds of wind damage deductibles: hurricane deductibles, which apply to damage solely from hurricanes; and windstorm or wind/hail deductibles, which apply to any kind of wind damage. Whether a hurricane deductible applies to a claim depends on the specific “trigger” selected by the insurance company. These triggers vary by state and insurer and usually apply when the National Weather Service (NWS) officially names a tropical storm, declares a hurricane watch or warning, or defines a hurricane’s intensity in terms of wind speed. Due to these differences, homeowners should check their policies and speak to their agent or insurance company to learn exactly how their particular hurricane deductible works. In some states, policyholders have the option of paying a higher premium in return for a traditional dollar deductible. However, in high-risk coastal areas insurers may not offer this option, instead making the percentage deductible mandatory.
Hurricane Deductibles Are Not New: The first hurricane deductibles were introduced into policies over 20 years ago. After Hurricane Hugo hit South Carolina in 1989 and Hurricane Andrew hit Florida in 1992, insurers realized they were far more vulnerable to huge weather-related losses than they had previously thought. In order to be able to continue getting reinsurance (basically insurance for insurers), and thus continue to offer homeowners insurance in high-risk areas it became necessary to require policyholders to share some of the cost by including hurricane deductibles in policies.

Consider Percentage Deductibles When Purchasing a Home

When looking for a new home, it is important to consider the cost of insurance. Coastal properties and other locations at higher risk for a natural disastermay cost more to insure than other locations, and you must add to that a separate deductible for earthquake or hurricane damage. Remember, you will be paying for insurance the entire time you live in your home—if you are a prospective buyer and feel you cannot afford the insurance, then it may be time to consider a different home.

Will My Insurance Pay for a Loss In My Car’s Value if it Is Damaged In a Collision?

Diminished Value Explained

What Is Diminished Value?

After a vehicle has been involved in a major accident and has been repaired, depending on its age and condition, the resale value may be less than if it had not been damaged. In other words, potential buyers may believe the repairs, even if they meet the highest standards, have not restored the vehicle to its pre-accident condition and will be unwilling to pay as much for it as a result. This perceived financial loss is known asdiminished value.

(In fact, older model cars that have been damaged and repaired may actually be worth more because new parts have been substituted for many of the old parts.)

Diminished value claims generally apply to auto insurance policies but can also pertain to a property insurance policy covering real estate.

Will My Insurance Policy Pay for Diminished Value?

An insurance policy is a legal document, a contract between the policyholder and his or her insurance company. Whether an insurer can be expected to compensate an auto insurance policyholder for diminished value depends on state legislation or state court rulings and who was to blame for the accident.

What If an Accident Is My Fault?

Suppose you, as the policyholder, are backing out of a parking lot and ram the car into a lamppost. In most cases, you would not be compensated for diminished value. If you have purchased the standard, optional collision coverage, your insurer will pay for repairs to the car, minus the deductible. Except in a very few states, the language in the collision section of the standard auto insurance policy clearly excludes coverage for diminished value. This exclusion has been affirmed by courts in many states.

What If an Accident Was Clearly Caused by the Negligence of Another Driver?

In all states except Michigan, if an accident is the fault of another driver, you would receive compensation for diminished value because legally the third party has an obligation to make the victim of the accident “whole” again; in other words, to restore the victim’s car to its pre-accident fair market value. This means repairing the vehicle and paying the difference in the car’s resale value before and after the accident, the cost of which is usually covered by the at-fault driver’s liability insurance policy.

If the at-fault driver is uninsured and cannot pay for repairs, receipt of payment will depend on whether you have purchased uninsured motorist’s coverage, the portion of an insurance policy that protects a policyholder against losses due to uninsured and hit-and-run drivers. About half of the states allow recovery for diminished value under this coverage. (Drivers are required to purchase a liability insurance policy in all states except New Hampshire, which only requires drivers to have sufficient financial assets to pay for whatever harm they may cause. Some states, including New Hampshire, also mandate the purchase of uninsured motorist coverage.)

When the law allows the policyholder to recover the amount by which the car’s value has been diminished, whether under the at-fault driver’s liability policy or under the policyholder’s own uninsured motorist or collision coverage, it is always the policyholder’s responsibility to prove the repaired vehicle is worth less than before the accident. Payments may be reduced by the degree to which the policyholder was to blame for the accident.

State Court Rulings

In most states the language in the collision section of the standard auto insurance policy clearly excludes coverage for diminished value. This exclusion has been affirmed by courts in many states. However, a landmark decision in a Georgia case found coverage for diminished value.

The oft-cited case is State Farm Mutual Automobile Insurance Company v. Mabry, decided by the Georgia Supreme Court in 2001, in which the court said the insurance company not only has a contractual obligation to pay for diminution in value in first-party physical damage claims but also that it has a responsibility to establish a procedure for handling diminution of value claims. In response, State Farm developed a formula (“17c”) by which diminished value claims could be measured. Since then, insurers have used this as the basis for creating their own formulas.

In 2011 the Georgia Supreme Court was asked to decide whether the decision in State Farm v. Mabry applied to property, in this case damage to a building. In May 2012, in the case Royal Capital Development v. Maryland Casualty Company, the high court said that “Mabry is not limited by the type of property insured, but rather speaks generally to the measure of damages an insurer is obligated to pay.” In Georgia, therefore, a policyholder’s property insurance policy covers the diminished value of the damaged real estate in addition to the cost of repair.

Resources

Property Casualty Insurers Association of America (PCI)

INSURANCE:Determining Your Car's Value and Cost of Repair

Determining Your Car's Value and Cost of Repair

There are several standard guidelines for determining the value of your car for insurance purposes. You and your insurer can refer to one of the books that list the depreciated value of all new and used cars. One of these books is published by the National Association of Automobile Dealersanother is published by Kelley Blue Book.

When you file your claim, your insurance company will refer you to a claims adjuster. The adjuster will verify the loss and determine what it will cost to repair the car. The adjuster’s estimate can serve as a benchmark to which to compare your own mechanic’s estimate.

No good adjuster or insurance company will expect you to sign an agreement accepting the insurer’s estimate as the total claim payment until you’ve established, to your own satisfaction, that it will cover the cost of repair. The insurer will expect you to get your own estimate from your mechanic, garage or car dealer. Don’t allow yourself to feel pressured into accepting the insurer’s estimate of repair costs without getting at least one estimate of your own.

Your insurance company can’t require you to have repairs done at a particular shop. But they can insist that you get more than one estimate for the work to be done on your car. Just as you want to make sure that your car is adequately repaired, the insurer wants to make sure it doesn’t pay a grossly inflated repair bill.

Don’t be surprised if your insurance company opts to pay for the lowest bid. You don’t have to accept that bid if you believe the low bid won’t adequately repair your car. Don’t hesitate to argue with the adjuster if you really believe his repair estimate is too low based on what your mechanic has told you.

One factor that could reduce the amount of your claim for a repair job is what insurance companies call betterment. If your old car is repaired with brand-new parts, your insurer may argue that the repairs have actually enhanced the car’s value and therefore they can legitimately reduce your claim by the difference between a used part and a new one.

It is up to your insurer to decide whether to pay for repairing your car or to declare it a total loss and pay you its book value. Most standard auto policies will not pay to repair a vehicle if the repairs cost more than the cash value assigned to the car. There won’t be any dispute about whether to repair the car if it was completely totaled. But you may argue about what the pieces of the car were worth when they were assembled as a car. For you to get a settlement higher than the book value of your car’s make and model, you will have to submit evidence such as mileage records, service history and affidavits from mechanics to show that your car was worth more. You’re entitled to the market price of the car you just lost. You shouldn’t get more or less than what you are due.

Filing an Auto Insurance Claim

To file a claim, follow these steps:

Call your insurance agent as soon as possible, regardless of who is at fault. Find out whether you're covered for this loss. Even if the accident appears minor, it is important that you let your insurance company know about the incident.
Ask your agent or company representative how to proceed and what forms or documents are needed to support your claim. Your insurance company will require a “proof of claim” form and, if there is one, a copy of the police report. Increasingly, companies allow you to monitor the progress of your claim on their web site.
Supply the information your insurer requests. Fill out the claim form carefully. Keep good records. Get the names and phone numbers of everyone you speak with and copies of any bills related to the accident.
Ask your insurance agent or company representative the following:
- Does my policy contain a time limit for filing claims and submitting bills?
- Is there a time limit for resolving claims disputes?
- If I need to submit additional information, is there a time limit?
- When can I expect the insurance company to contact me?
- Do I need to get repair estimates for the damage to my car?
- Will my policy pay for a rental car while my car is being repaired? If so, how much?
Remember, each state has its own laws governing the claims process. If you have any questions, call your agent, company representative or your state insurance department.

Insuring Your Classic Car

SPECIAL AUTO INSURANCE PROTECTION FOR CLASSIC VINTAGE EDITION CARS

A classic, collectible or antique car is no ordinary car—and regular auto insurance is not sufficient to protect such a vehicle against damage or loss. Unlike everyday vehicles, which depreciate over time as you add miles to them, classic cars may, in fact, gain value over the years. Your insurance needs to match your special vehicle’s value—and you’ll need to adjust your coverage if its value appreciates.

The first step in insuring your classic car is for you and your insurer to reach an agreement on the value of the vehicle. This value will be specified in your policy and your car will be covered up to that value without depreciation.

Most classic car policies will take into account the importance of using a specialized repair or restoration shop. Make sure your policy gives you the flexibility to bring your vintage Mercedes, Ferrari or Corvette to a specialist—even if the rates may be twice, or three times, what a traditional auto body repair shop would charge.

Moreover, classic car policies generally offer coverage for towing and spare parts coverage to replace valuable vehicle components, such as wheels, transmissions, and engine parts.

In addition, your classic car policy will include provisions found in standard auto insurance policies, notably property damage and bodily injury liability coverage.

What Types of Vehicles Need Special Insurance?

There is no uniform definition of a classic car. If a car’s value exceeds its original selling price, then it might be considered collectible and a candidate for specialized classic car insurance. Vehicles that warrant classic car auto insurance include:

Antique and classic cars, usually at least 25 to 30 years old.
Hotrods and modified vehicles.
Exotic and luxury autos—think James Bond.
Muscle cars.
Classic trucks.

You might also seek specialized insurance for vintage military vehicles, classic motorcycles and antique tractors.

Qualifying for Classic Car Coverage

Simply owning an old car is not enough to qualify for specialized classic car insurance. While requirements differ from company to company, most cars would need to meet the following criteria in order to qualify for specialized coverage:

Limited Use—Your classic car cannot be used for everyday commuting or errands, and the conditions of your policy may include mileage limitations and proof the car is being properly garaged if you do travel with it. In some cases, insurers may require that you also own a primary car for everyday use.
Car Shows and Meetings—The ‘limited use’ provision of a classic car policy allows for travel to car shows and auto club meet-ups; however this coverage may be restricted by some insurers. If this is the case, there are insurers that can provide specialized coverage for car shows and meetings. Before choosing a classic car insurer, it’s worth checking whether they have travel restrictions if you plan to take your car on regular, multi-day, high mileage drives.
Secure Storage—When not in use, your special vehicle must be stored in a locked, enclosed, private structure, such as a residential garage or storage unit.
A Clean Driving Record—You may be disqualified from classic auto insurance if you have serious offenses on your driving record, such as reckless driving, repeat speeding violations or driving while intoxicated.

Note too that not every vehicle, however special, will meet the qualifications of every insurer. For instance, some insurers may not cover vintage off-road vehicles. Insurers may also decline to insure vehicles that are in poor condition or have been previously damaged.

Will my insurance cover renting a car after an accident?

Many drivers don't think about their insurance coverage until after they have an accident and call their insurance company to file a claim to help pay for car repairs, a rental car and other expenses.

Unfortunately, many insured drivers are surprised to find out that their auto insurance does not automatically cover the cost of a replacement rental car after an accident. Since the average car is in the repair shop for two weeks after an accident, it can cost as much as $500 to rent a replacement car. But, some insured drivers pay little or nothing to rent a car because of an inexpensive but often overlooked option known as rental reimbursement.

Rental reimbursement coverage is available for only $1 or $2 a month with almost every auto insurance policy, but it is bypassed frequently by those who believe they will not have a car accident or those shopping only for the lowest cost premium. The cost of a rental replacement car adds up fast, so even if you don't have an accident for eight or nine years, the coverage pays for itself when you need it most.

Sometimes working out the details of a claim with the auto insurance company can take time. Even if the accident is the other driver's fault, you may have to wait several days or longer to get the other insurance company to agree to pay for a rental car. With your own coverage, there is no waiting.

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