Allowing your auto insurance to lapse is never a good thing. Here’s the three main reasons why:

Required by law

Nearly all states require drivers to carry auto insurance at all times. If you have allowed your auto insurance to lapse and are driving, you could face serious penalties.

Financial risk

If you are in an accident and your auto insurance is not current, you could face significant personal financial loss.

Higher premiums

Beyond your on-the-road responsibilities, when you are ready to shop for car insurance again, you will likely find that a lapse in  coverage means paying more for your premium. That’s because auto insurance companies look at how long you have been continuously insured as one of the ways they calculate your rate. Basically, a stable history of having auto insurance coverage is an indicator* to the auto insurance company that you will probably be a stable customer.

Other things to keep in mind:

• When you are shopping for auto insurance, companies will mainly look at the last 12 months when determining whether or not you’ve maintained continuous coverage, with additional years being less important.
• Some insurance companies, in some cases, may ignore a lapse in your auto insurance from the previous year if the lapse spanned less than 30 days – but you should in no way count on this.
• If you are a member of the military or have been driving a company car and did not have your own insurance, you may qualify for an exemption.
• If you have had no lapse in your insurance history, you may actually qualify for a discount with certain auto insurance companies.
• A good way to ensure that you don’t suffer a lapse in coverage? Pay in full up front for your entire premium (which might also get you a discount) and set up an auto-renewal plan.

(*Note: In some states such as California prior insurance cannot be used to set a rate.)

Image

How does auto insurance work when I cross a state line?

Answer:

All auto insurance policies are valid nationwide. If you carry relatively strong coverage in your home state (which we highly recommend), that coverage will most likely go with you throughout your travels. However, if you decide to carry your state’s minimum coverage, when you drive to another state, your coverage may actually be automatically adjusted higher without you even knowing it.

It works like this: if you carry the minimum coverage that your state requires, then you drive into a state that has higher minimum coverage requirements than your home state, your auto insurance company will automatically adjust your minimums to match the coverage required by the state you are currently in.

For example, let’s say you live in Virginia and carry minimum state coverage of $20,000 for property damage. If you were to drive into Kentucky, which has a state minimum requirement of $10,000, your higher coverage from Virginia would stick with you in Kentucky.

Now let’s switch things around and say you live in Kentucky and carry minimum state coverage, then you drive into Virginia. In that case, while you are in Virginia your property damage coverage will automatically become higher (increasing to $20,000 from $10,000) in order to meet Virginia’s state minimum auto insurance coverage requirements.

In other words, your minimum insurance coverage can only increase to match other states’ higher minimum coverage requirements, and under no circumstances will it be lowered as you drive around the country.

Again, we strongly recommend that you carry as much coverage as you can afford whenever possible. State property damage coverage is low – if you are responsible for totaling someone else’s car or other property, it is likely that the damages will exceed state minimums and the money will come out of your pocket.  If you think your current coverage is too low or costing you too much (or both) now might be a good time to do a little comparison shopping for a new rate.

Image

We looked into statistics by the US Bureau of Labor Statistics and found that in all four regions of the United States (Northeast, South, Midwest and West) auto insurance accounted for a smaller portion of consumer expenditure than telephone costs, and only slightly more than what US consumers spend on television & audio.

Take a look at our latest infographic below for more comparisons between what people pay for auto insurance to what they spend on sweets nationwide, meat in Boston, housekeeping supplies in Chicago, gas in Houston and public transit in San Francisco. Are you surprised by these statistics or are they in line with your own expectations and experience? Please let us know in the comments!

Please feel free to share this image (here’s a high resolution version too) wherever you wish!

Embed the above image on your site
<a href="http://www.answerfinancial.com/insurance-center/how-auto-insurance-compares-to-other-household-expenses-infographic"><img src="http://www.answerfinancial.com/insurance-center/wp-content/uploads/2012/04/How-Auto-Insurance-Compares-To-Other-Expenses-Infographic.jpg" alt="How Auto Insurance Compares To Other Expenses" width="792" height="857" border="0" class="alignnone size-full" title="How Auto Insurance Compares To Other Expenses" /></a><br /> <a href="http://www.answerfinancial.com/Auto/Landing">Auto Insurance</a> – AnswerFinancial.com

Is it better to buy my teenager a used car and then add it to my auto insurance or should I just let him/her drive my car?

Answer:

The answer to this question depends on the exact situation, but we will try to limit the discussion to how auto insurance companies view teenagers and what kind of discounts you may be able to leverage to lower you quotes.

It’s no secret that teenagers are considered the most dangerous drivers on the road by auto insurance companies. So, regardless of whether you add your teenager to your auto insurance policy as a part-time or full-time driver, you will see a significant increase in your rates.

So let’s look at the first option: buying a used car for your teenager and insuring him/her on it. Setting aside maintenance and repair costs for an additional vehicle, from an auto insurance perspective, your teenager now has his/her own car and will be considered as a full-time driver on that car. That means that you would have to add the additional car to your auto insurance policy with your teenager as the primary. Generally speaking, this route is going to cost you more in additional auto insurance premiums than the next option.

This second option would be to have your teenager drive one of your family cars. Assuming that your teenager would not be driving your car all the time, you could then list them as a part-time driver, which will generally give you a lower rate than buying another car and listing your teenager as a full-time driver. However, if you drive a high-value car, you may not get much of a reduction after all – again, it all depends on your exact circumstances.

Regardless of your choice, there are a few potential discounts that might be available to you that may help you save on car insurance if you have a teenager on your policy. Potential discounts include a good student discount, driver training discount, and a loyalty discount if you’ve been with your auto insurance company for a number of years (that said, adding a teenager to your account is a great time to shop around for better rates). Also, if you have not yet looked into bundling your auto and home insurance together, you could also receive a significant overall discount from that as well.

Image

The vehicle: 2010 Honda CR-V EX

Today we are looking at auto insurance quotes for a 2010 Honda CR-V EX in California. We’ll run a few different quotes for different locations and other variables, so that you can get a sense of what you might end up paying. As always, there are a number of possible discounts or surcharges that might apply to your specific situation. The rates below are based on common driver and car profiles, other than the variable factors described.  The rate range is based on the two least expensive quotes supplied by our comparison shopping engine, which offers quotes for over twenty top auto insurance companies.

Let’s start with a single male driver in San Francisco, aged 50-59. If this driver were to put between 7,501-10,000 miles on his CR-V EX, and had one accident in the last three years, he would see a range of quotes of $154-$200 per month for standard coverage ($50,000 / $100,000 bodily injury, $50,000 property damage with a $500 deductible for comprehensive and collision) and $161-205 for premium coverage ($100,000 / $300,000 / $50,000 with a $500 deductible).

Compare those rates to a married woman in San Diego, aged 30-49 with a clean driving record, driving the same 2010 CR-V EX and the same mileage, and we see a lower rate range: $83-$135 per month for standard and $86-$140 for premium coverage. If  we were to add the woman’s husband into the equation (also aged 30-49 with a clean driving record) the rates would increase to $136-$205 per month for standard insurance. However, if we add just one ticket in the last three years to the husband’s driving record, the rates go up substantially to $226-$278 per month for standard, and a range of $234-$288 for premium coverage.

As you can see, there are many variables that can affect your quote. If you are looking to switch auto insurance companies to save money, take a few minutes to get a quote for yourself using our auto insurance comparison shopping engine.

Image

Editor’s Note: This is the first article in a new series we’ll be publishing called “Agent’s Corner” where you’ll get advice directly from one of our agents on the call center floor. This week, we’re hearing about SR-22′s from Charles Stark. 

I receive a lot of questions about an SR-22. An SR-22 is simply a financial responsibility form proving that you have insurance coverage. The insurance company files this form with the state on your behalf when you set up your insurance policy. Make sure you notify the insurance company that you need an SR-22, because not all companies provide this service.

When an SR-22 is required, it is usually required for three consecutive years. This can vary by state, and for the reason it was required. You will want to check with your Department of Motor Vehicles (DMV) to confirm how long it is required for your specific case.

An SR-22 requirement can be issued by the state or a judge. There are a variety of reasons that they can become required. Two of the most common times they are required is after receiving a ticket for DUI/DWI or driving without insurance.

Another version of the SR-22 is an FR-44. This serves the same function as the SR-22 but it requires the driver to obtain a higher level of insurance coverage. The FR-44 is usually required in cases where a driver has not kept up their SR-22 requirement.

What many people do not know is that when you cancel an insurance policy, that company will immediately notify the state that you are no longer covered and your SR-22 form will be rescinded. It is critical that if you are cancelling your policy because you are changing insurance companies, that you set up the new policy with an SR-22 before canceling your previous policy. Otherwise, your three year requirement starts from the beginning.

For example: After two years of being with the same company that has an SR-22 filed on your behalf, you decide to switch companies. You let your policy lapse on a Tuesday and set up a new policy on Wednesday with an SR-22, that one day lapse in coverage can cause your three years start over from the beginning. Most states will not “give you credit” for the previous two years. If you need an SR-22, find out for sure how long you are required to have it. If you change insurance companies make sure that you set up the new policy with an SR-22 before canceling your previous policy.

Image

While a bit morbid, protecting your family or relatives from having to pay for your funeral expense should be something that you consider. This coverage usually is very inexpensive and offers benefits between $5,000 – $15,000 depending on the auto insurance company.

That said, there is probably a better method to covering funeral expenses with your auto insurance policy: add medical payments coverage to your policy. While slightly more expensive (depending on your coverage limits of course), medical payments coverage not only covers you for medical expenses to another party as a result of your negligence, but the coverage will most likely also cover your funeral expenses as well in the event you perish in a car accident of your own doing.

As such, medical payments coverage is a more practical choice than accidental death coverage. Of course, you could also add a life insurance policy, part of that could be used by the beneficiary to cover your funeral expenses as well.

Image

In some states and with some insurance companies, certain endorsements are mandatory and others are elective. Home insurance elective endorsements might include coverage for valuables including jewelry, golf clubs, antiques and other itemized household objects. Rates for insuring these valuables are often higher in urban areas, for a number of reasons including higher crime rates.

There are many other kinds of endorsements as well. If you operate a business out of your home in California, for instance, you are required to have an endorsement for workers’ compensation (in case employees injure themselves while on your property). Another kind of home insurance endorsement exists in states that have a large mining industry – such as West Virginia. In those states, the endorsement provides a ceiling for coverage in case a home sinks into the ground (as a result of mine subsidence).

Finally, endorsements can also be used to actually take away coverage from a policy as well. For example, if you own a dog, your insurance company many have an endorsement that says that it will not cover you – or have a low limit on coverage – for dog bites.

So, whether elective or mandatory, when getting home insurance, make sure to think about endorsements.

Image

Basically, if you have a joint car loan with someone you live with (and you both have current driver’s licenses), your auto insurance company will almost certainly require that both you and your co-signer be listed as drivers on the policy. However, if you and your co-signer do not live at the same address, you have other options. The person that doesn’t drive the car could choose to be listed as “Additional Insured” on the policy, or could decide not to be listed on the policy at all. Let’s explore these two options.

If you are listed as “Additional Insured” on an auto insurance policy, the primary driver (the “Named Insured”) only needs to provide the name and address of the Additional Insured – nothing else is required, including driving and credit checks. This means that the auto insurance rate will be solely based on the Named Insured’s information and not on the Additional Insured’s. The auto insurance company will use the address to mail notifications on the policy, including payment due notices and claim information. This option may allow the co-owner of the vehicle to be protected from liability in case the driver of the vehicle is the cause of a serious accident. If you are a co-signer on a vehicle and do not reside with the primary owner we strongly recommend that you choose this option.

Your other option, however, is not be included on the auto insurance policy at all. As we have said, if you are not listed on the policy, you will not receive any notifications regarding the policy, so if something goes amiss with payments or anything else, the insurance company will not notify you – you will need to rely on your co-signer to inform you of any issues.

Doesn’t sound like that big of a deal right? Well, it could be. For instance, if your co-signer is perhaps your college-aged son or daughter, they might get into a situation that they do not want to tell you about (for example, forgetting to pay the policy or getting into an accident) and the insurance company would not notify you. Also, if someone decides to sue you, the insurance company has no obligation to defend you, even if they did decide to defend the policyholder. Both issues would be solved if you are listed on the policy, so again, if you are a co-signer, we strongly recommend that you be on the auto insurance policy for that car.

You be the judge. How does this data compare with your personal experience? Please let us know in the comments!

Please feel free to share this image (here’s a high resolution version too) wherever you wish!

Embed the above image on your site
<a href="http://www.answerfinancial.com/insurance-center/crash-the-most-often-damaged-auto-parts-in-collisions-infographic"><img src="http://www.answerfinancial.com/insurance-center/wp-content/uploads/2012/03/CRASH-The-Most-Often-Damaged-Auto-Parts-in-Collisions.jpg" alt="CRASH! The Most Often Damaged Auto Parts in Collisions" width="792" height="612" border="0" class="alignnone size-full" title="CRASH! The Most Often Damaged Auto Parts in Collisions" /></a><br /> <a href="http://www.answerfinancial.com/Auto/Landing/">Auto Insurance</a> – AnswerFinancial.com

*Note: Window/windshield glass was not included in the data.