We are all dummies when it comes to things we don’t understand, there is no shame in that. Auto insurance is one of those subjects that most of us have far from a sure footing. This is because the concepts and even the mathematics behind auto insurance are far from common day. If you are feeling a little humbled by the “dummy” in our title you might want to try this little example. It is an illustration of how statistics can be counter intuitive and as statistics are an integral part of insurance, especially car insurance it is a good illustration of the complications in understanding the main facts in auto insurance.

Picture a game show where you are asked to choose a door out of three. One leads to a million dollar price the other two to a bucket full of  pain falling on your head. Imagine that one of the doors is opened (one you didn’t choose) and it is proven to be one of the bad ones. You still have two doors to open, one of them you chose, one of them is the correct one. Now the game host asks you if you want to choose doors again. If you would like to change your previous choice. Would it affect your chances to win if you changed doors at this time. The surprising answer is yes. Statistics explains why. When you made your first choice you had three doors to choose from and one chance to be right. That gives you a 33.33% of getting it right. Once a door is opened and you have another chance to choose, your chances have increased to 1 in 2 or 50% chances.

This puzzle shows that understanding statistics and problems based on statistics is not always straightforward. What facts should you understand in order not to be a car insurance dummy.

1) Don’t double up insurance coverage.

There is no need to have insurance twice on the same kind of coverage. Sometimes our credit cards, umbrella insurance and employers provide us with insurance. If that is the case make sure your regular car insurance is not a waste of money. If it is not the only insurance cover take it off your car insurance policy.

2) Use deductibles to save money.

Deductibles are a guarantee from the customer to the insurer that the customer will pay for a predetermined amount of each claim. For instance if you contract a $500 deductible you will be required to pay the first $500 of every claim. This shares the risk of a claim with the insurance company reducing the cost of the premium.

3) Make yourself a low risk customer.

Auto and car insurance companies determine the price of an individual’s premium in relationship with the chances of them being involved in a claim. The chances for that to happen are calculated with a statistical study of tremendous amounts of data.

There is no shame in not understanding car insurance, only in not trying. Make the effort to understand the main principles of car insurance and prepare to save money.

Tired of paying more for car insurance than you need to? Scared of reducing your insurance coverage just in case you end up needing it? These are valid worries and intelligent consumers do well to spend time on them. This article will attempt to shed some light on these matters and help you make an educated decision.

Knowing the true price or the fair price of something is not always easy. The very concept of value is quite abstract. For instance how much is a bottle of water worth? In Nicaragua about $0.50 in Spain about $2, in Paris up to $7. These differences reflect the different economies and locations and the effect they have on prices. But what would happen if there were a sever draught and there was no running water. What would happen to the price then? That is a simplistic explanation of what happens to prices depending on the economic forces that drive it.

Auto insurance is especially interesting because it combines a whole variety of driving forces. On the one hand there is the price of providing insurance cover which can change from year to year and customer to customer. On the other hand there is the offer and demand for car insurance and how desperate the auto insurance company is to attract more customers.

Understanding these facts will help you save money on your car insurance. Another factor that will help no end in your pursuit of a good deal is to compare prices with other car insurance companies. Why? Let us analyze some of the most important reasons.

1) Good old competition. Thankfully for consumers there is not a competition on auto insurance and every company is trying to be as competitive as possible. This means that the car insurance companies that need to expand their share on the market will tighten their profit margins to attract new customers.

2) Car insurance companies premium prices change. Car insurance companies are often part of a larger general insurance company. Depending on how the year has worked for the insurance company premiums are priced accordingly. If the house insurance sector of the company has done terribly due to floods in the midwest they will probably have to increase the premiums of other sectors of their insurance cover to offset the losses in the house insurance department and not compromise the profit expectations of the shareholders.

3) It helps you re-assess what auto insurance cover you need. Have you ever noticed what happens when you move home. You realize how much rubbish you don’t need you have. And you find ways to get rid of it. Something similar occurs with auto insurance, you can easily be carrying extra insurance you don’t need or be lacking in key areas of auto insurance cover.

Do you want to have suitable auto insurance cover? Be smart and decide what kind of auto insurance you really need. Then compare prices with at least five major auto insurance companies. You will be surprised with the savings you can make.

When all is said and done what is car insurance for? Depending on your background or view on insurance in general you might have a variety of opinions. You might think that car insurance is for pessimists. You might think that car insurance is part of a government conspiracy with big business to force to pay for things you don’t need. You might think that it is a necessity and that you can’t spend to much for good car insurance.

Let’s analyze these views with the issue of medical liability firmly in the limelight of our discussion.

Car insurance is only for pessimists. It is true that you only need car insurance if you have an accident. And that to plan for an accident might appear to be pessimistic, but the fact is that we are very likely to be involved in an accident, however small. The society we live in is blame driven and even a small fender bender can cost outrageous amounts of money if you go to court or simply in medical expenses.

Car insurance is just an excuse to pass our hard earned money to big business. Admittedly few people actually believe this but many act as if insurance is a waste of time and practically useless. I have friends that have no qualms in driving their car without insurance, just taking their chances. This is crazy. Skydiving is a walk in the woods compared to this. 1) Because skydiving is fun, being involved in an accident without insurance is not. 2) Skydiving is safe compared to driving. The chances of crashing when driving are much higher.

To convince yourself of the importance of carrying car insurance, picture this scenario. You are driving down the road and stupid kid runs right in front of you. You have no time to break and you crash into him. There was no chance you could have seen him, he came right behind a parked truck. However he did run over a pedestrian crossing and you are in the wrong. You go to court and you are deemed responsible for 500,000 dollars for medical expenses and long term disability. Your car insurance covers you up to 250,000 $ you are still a quarter of a million dollars in the red. Could you cover that cost? Me either. Car insurance does not seem that silly anymore, does it?

If you think car insurance is a necessity you are completely right. This does not mean you should pay silly money for it.

Medical liability is an important aspect of car insurance and one of the reasons it is so vital. Cars being such dangerous machines it only makes sense to have some protection in case you, your passengers or other people are injured. At least this way you have some chance of getting medical attention and being able to return to normal life. In countries without a social insurance medical assistance it could mean the difference between life and death, or between quality of life and none at all.

Choosing your auto insurance is one of the most important decisions you will make in relation to your car and even one of the most important financial decisions. Driving a car is dangerous. It is a danger we have learn to accept and not a reckless activity, but nevertheless a dangerous activity that can cause damages to property, injuries and even death to you, your passengers and others. Your car insurance is the only protection between an accident and all the expenses related to it. Even a simple fender bender can cost you an absolute fortune if you hit the wrong car and cause several cases of “whiplash”

Avoid all the headaches and even financial ruin that can come from not having insurance or not having the right insurance. This article will help you by pointing you in the right direction over what insurance you need and where to buy it. You never know if you follow our suggestions you might even get some extra cash to spend.

The main piece of advice this article has to offer is to shop online. Shopping is for many people not only the purchasing of items by exchanging pieces of paper with symbolic value. It is a social interaction well all kinds of feelings and trust issues are involved. We often have our favorite shop or shopping mall and go back to it over and again even if the prices are not always the cheapest. Why? Well humans are creatures of habit and it is nice not to have to make calculated decisions about everything. Another reason is trust. If we are treated well and feel that the staff is kind and honest we are attracted to a certain establishment.

These attitudes toward shopping that we all have, have to a certain degree kept auto insurance customers away from buying their car insurance policies online. Many people understand how important and technical car insurance is and prefer to deal with a human being face to face than an automated server somewhere overseas.

However although this is a valid worry it is happily not something you should worry about. All major insurance providers have an online branch that will enable you to enjoy the online perks and savings.

But why should you prefer to get a car insurance online?

1) The price. Online car insurances are cheaper. The reason is clear. It is cheaper to provide the service for online business because they cut out so many expenses by selling online.

2) The speed. Forget queues and long trips downtown. Just switch on your laptop and you’re good to go.

3) Get all the information you need. By shopping online you don’t need to take the word of the insurance broker you can do your own research and find the best deals available. It can be difficult to spend all the time you need to read the insurance policy you wish to buy. By shopping online you can take your time understanding your policy without someone looking over your shoulder.

As you can see shopping online for car insurance has many advantages. Why don’t you go online and ask for some quotes on the car insurance you now carry. You will be surprised the savings you can make.

Too often we contract auto insurance like we are buying cereal at our local corner stone. “Yes, that one looks good, it says it is healthy, help you lose weight and is full of chocolate”. Just like it is a good idea to compare prices when you are shopping for a house, a car or an engagement ring, car insurance is an expensive and vital part of the life of any driver. Car insurance is not a tangible asset but can save all your other assets. Without good insurance you could lose everything you have if you are liable for an accident and you don’t have suitable protection. On the other hand, if your protection is great but you are paying a high premium, you might be spending more on insurance than your car is worth. As the Spanish proverb goes: “You don’t kill flies with cannon balls” you want to get the right tool for the right job. This article is all about how you can do that without losing too much money and time in the process.

As with any worthwhile endeavor, one  must plan ahead for it to be successful. In the case of auto insurance this will mean deciding what your priorities and auto insurance needs are. If you are not sure what we mean by this I recommend you read our other articles on this blog that give more information on specific types of coverage. Here is a brief summary. There are three main kinds of auto insurance coverage.

1) The coverage you receive for damages to your car when it is your fault, what is called Collision Damages coverage. This coverage is rather expensive because it binds the auto insurance company to cover your damages even though it might be your own fault for bad driving and insurance companies always like to involve the policy holder in sharing the risk and making them responsible for their own actions as much as possible. It is a good idea to think how much your car is actually worth. If it is a new car it might be a good idea to place some importance on this coverage. If it is a second hand car that is not worth much more than 2000$ it might be cheaper to save money on this type of coverage.

2) The coverage of any liability for damages caused to others. This is the most important type of insurance as it can save you from bankruptcy. Any personal and material damages you cause with your vehicle are your responsibility and without this coverage you are in serious trouble. Make sure this insurance coverage is at least over the minimum set by the state or country you live in, and as high as you can reasonably afford.

3) Medical coverage will pay for any medical expenses that you incur in an accident even if you are at fault. This type of coverage is important as you or your passengers might not be able to afford treatment without it.

Plan ahead, ask for premium estimates with the options you decide you need and enjoy your ride with the peace of mind that good insurance brings.

It seems that nowadays there is an insurance for everything. When you ride a bus, a percentage of the ticket price is to fund your insurance. When you take a flight a large part of the cost of flying is spent on insurance. Going to school, buying at your local supermarket, riding a roller coaster, manufacturing and selling anything all require generous dosages of insurance.

Auto insurance is no exception, nearly every driving activity has its own special insurance. You need liability insurance to even own a car legally If you drive outside the country you are going to need extra insurance. If you own any accessories in the car or you can’t afford to buy another car if yours is stolen, you need insurance for theft.

There are so many kinds of insurance for so many eventualities that you might be surprised to find there is a gap protection insurance also. A gap between what? Can they fit any more insurances? The answer is yes. Although it is true that our “developed” world has no shortage of insurances it is also true that it has no shortage of caveats, clauses and lawyers. Auto insurances provide a service, a very useful service, nevertheless they are out there to make a profit. Profits aren’t made by paying for every claim that is made.

There are also ocassions when insurance although claimed and approved does not supply the funds necessary to cover the loss. This is the raison d’etre of Gap protections. This is better explained with an example. Imagine you have  adequate insurance, you are a planner and you always plan for every eventuality. This is why you have a fully comprehensive insurance. Unfortunately you crash straight into a brick wall totaling your three year old car. The ice on the road was not your fault but you can’t blame anybody else either. Your insurance will pay for your damage but only up to a percentage (this varies between policies, typically around 80%). That is great. You paid 14,000 dollars for your car 3 years ago, you still half to pay for 8,000 dollars and the market value of the car is 6,000 dollars. The insurance company might pay 80% of the market value, 4,800 dollars. That leaves you with 8,000 dollars minus your super settlement of 4,800 dollars. In other words you are out of pocket by 3,200 dollars. That is assuming you don’t have a deductible on your damages insurance. If you do, add that to your out of pocket figure.

Gap protection would have avoided that. Gap protection will cover the gap between the amount you receive in settlement for your claim, the deficiency balance with a total loss, and will pay for the deductible on your insurance. Add to this any delinquent payments like taxes and past due charges which are also settled by the Gap insurance. Most Gap insurances also include theft insurance, making it a nice piece of insurance if you haven’t spent all your income on the other 20 insurances you have.

When should you claim on your auto insurance? How should you go about applying for cover from your auto insurance? These questions are vital if you want to use your car insurance which is after all why you bought it. Many people view auto insurance as a necessary evil in order to be able to drive. It is much more than that, it can save your bacon when you have suffered an accident and you are under fire from those involved in the accident. This is especially the case if you were at fault in the accident.

When should you claim on your auto insurance?

1) You should claim when your auto insurance covers the claim you are making. As you know car insurance as all kinds of insurance have clauses and fine print which often qualify the coverage the insurance company provides. Before you make your claim re-read the insurance policy and make sure your insurance covers the damages you caused or received. For instance, heaven forbid it, but if you were driving under the influence of alcohol when an accident occurred you auto insurance might very well not cover your claim. You might be without cover if you were driving outside your country without contracting extra auto insurance. As you can see it is very important to understand what you are covered for and what you aren’t insured for as it could mean the difference from having to undergo some paperwork and mild discomfort and economic disaster and even bankruptcy.

2) You cannot claim from your insurance if the cost of the claim is lower or equal to your deductible. A deductible is a cap you place on your auto insurance coverage to reduce the cost of the premiums. What deductibles do is share the risk of insurance between you and the auto insurance company. The deductible can be set at any level, 100 dollars, 1,000 dollars or higher. This will mean that the first 100, 1,000 dollars or whatever amount you decided as your deductible will be paid by you, anything over and above might be covered by the auto insurance company.

3) Even if you are covered by your auto insurance and the cost is above your deductible it still might not be worth your time or money to claim. This is so when the cost of the claim is only marginally larger than the deductible but will affect your no claim bonus, increasing your next year’s auto insurance premium.

In every case it is a good idea to contact your broker. He is your friend in these matters because he / she is highly motivated to keep you as a happy customer. Auto insurance brokers like all insurance brokers receive residual commission every time you renew your auto insurance. If you are unhappy with your auto insurance company and cancel your coverage y0ur broker loses his commission. He / she cannot authorise your claim approval but he can help you make the right moves to increase your chances of getting your claim approved.

Saving money on insurance is seen by many a specialty skill much like wine tasting and quantum physics. The truth is that anyone can save money on their car insurance. Actually, I challenge you not to save money on your car insurance by carrying out the suggestions this article includes.

The first step to save money on your car insurance is to understand how car insurance works.

When you buy car insurance policy it is like you are buying a lottery ticket. It is likely that they will never to claim any large amount from the insurance. But the chance does exist. Now would you expect a lottery that has hundreds of numbers to be the same price as a lottery that has thousands of numbers if the prize was of the same amount? Of course not. We know that the larger the jackpot and the smaller the pool of “players” the more expensive “playing” is. This is a simple example of the effects of probability on a business situation.

Not surprisingly car insurance companies, and any insurance company for that matter, don’t like playing the lottery with their investment. That is why they calculate the odds of having to pay a jackpot to any of their customers. The more likely a customer is to claim from the insurance the riskier he is and the pricier his policy premium is going to be. How can you save on your car insurance? There are two main strategies:

1) Lower the jackpot, make your potential claim less risky.

Following our lottery illustration we should expect to pay less or more for a lottery ticket depending on the prize you are “playing” for. If the prize is a “scooter” or a Ferrari Testarrosa the price of the ticket will reflect it. You can lower the cost of your claim by reducing your coverage in areas you don’t need.  For instance :

- If you already carry medical coverage why include it in your car insurance. Or if you do, why not reduce it?

- If your car is not very expensive, lower than 2,500$ it might be more expensive to pay insurance than the actual risk of total loss. A good solution is to limit coverage on the damages to the car and keep your liability coverage. This can actually reduce your premium from 40 to 60 per cent without affecting your coverage if you have a BIG accident and are liable to paying compensation.

2) The other method to save your money is to lower the risk you pose as a client. If we follow our illustration it would be like increasing the number of players in a lottery. The chances of winning fall and so should the price of the ticket. You can do this by:

- Being a safer driver. Take special courses to increase your skills.

- Buying safety features on your car like ABS and anti-theft devices.

- Live in an area where crime is low.

- Having a good driving record.

These are smart ways of saving money on your auto insurance every one can carry out with little or no effort.

Saving money on your auto insurance online is really rather simple. After all the bells and whistles the only difference between shopping for your auto insurance online and through traditional methods (i.e. walking to an office or over the telephone) is that online you can reach more companies you could possibly dream off and that the running costs of online auto insurance companies are lower. This of course means that the prices of the premiums you pay are likely to be lower also. Therefore the suggestions we make in this article will generally apply to both methods, although they will be more efficient when you do it online, for the simple reason that you reach more companies in less time for less money.

How to find the insurance? This is the easy part. Switch your computer on, switch your modem on, open your favorite browser and choose your preferred search engine. Type in auto insurance and select one of the many auto insurance companies. Select at least five companies to get a broad sample of the prices in the market. You can also go straight to an auto insurance search engine you might know. These sites often offer good discounts which will further reduce the cost of your policy.

Saving Tip 1. Shop around.

Simple but effective. The internet really comes into its own element with these broad searches in a short time. It is best to use an insurance search engine that will search for insurance based on your requirements.

Saving Tip 2. Know your car.

Knowing the real value of your car is useful when insuring it. If the price is low (or high for that matter) it is important that you know so and can adjust the type of cover you receive. It is important to understand that if you have an accident the insurance company will only pay the value of the car as a maximum for the damages incurred in an accident.

Saving Tip 3. Raise the deductibles.

Increasing the deductible on your insurance will reduce your monthly premium. For example if your increase your deductibles by around 300 dollars your insurance can drop by up to 30%. Deductibles are the sum of money a policy holder agrees to pay before the insurance company must cover a penny. These deductibles are great to share the risk with the insurance company and therefore reduce the expense.

Saving Tip 4. Careful with excessive coverage.

There is only one thing worse than having too much coverage, not having enough. However knowing how much is enough is an interesting question to answer. If the accident insurance covers more money than the car is worth it could be risky for the owners.

Saving Tip 5. Keep your record up to date.

It is important to keep up to date your insurance. If you don’t do so you might lose out on savings or discounts. Changes include, getting married, living in the suburbs, and so on. These small things will reduce your expenditure on insurance policies and focus your income on the accidents we could not afford to fix up by ourselves.