You want your car to be in top condition, so you take care of it with routine maintenance: checking pressure in your tires, having your oil changed regularly, immediately servicing any problems.

This means your car will be far more reliable and will give you many years of good service. But what about your insurance premiums? You get a break on your price for being a good driver; what about for being a good car owner?

Unfortunately, insurance companies do not look directly at how well you maintain your vehicle. After all, it would be almost impossible for them to monitor this type of behavior with any efficiency.

In order to monitor how often you change your oil or have your car serviced, an insurance company would need a much larger infrastructure—resulting in higher prices for everyone.

For this reason, insurance companies tend to assume that you are taking care of your own investment, and do not check on your maintenance habits unless there is some direct reason for them to do so.

However, maintaining your vehicle can have an indirect affect on your car insurance premium, because good maintenance means fewer accidents or problems—things auto insurance companies do look at.

For example, think about your tires. Many people neglect to routinely check the pressure and tread of their tires—with serious consequences.

If you do not check your tire pressure and tread, the chances of a flat or even a blowout increase significantly.

If you suffer a blowout and it causes an accident, your insurance company is definitely going to be interested in why the accident happened. You may find yourself with a higher premium simply because you neglected this routine maintenance.

Another indirect way maintenance affects your insurance rates is when your car is out of commission.

Even if you are having your car repaired, the insurance company still charges you the same premium, although you are not driving the car. If you have to have an engine or a transmission replaced due to poor maintenance habits, your car will be inoperable for some time; however, you will be paying your insurance premiums all the same.

This means you are paying for coverage on a car you cannot drive, and that is not good business.

If you have an accident or a breakdown resulting from poor maintenance, your insurance company will find this out, and it can affect how your payout is handled. If you deliberately neglect a vehicle, the insurance company can often refuse to pay your claim; this depends on the circumstances of the accident or problem.

For example, you may have heard stories of how someone left their keys in the car and the car running while they ran in somewhere “just for a minute.” When they came out, their car had been stolen, and the insurance company gave the person a hard time about paying for the car.

While this is not always true, and insurance companies rarely refuse to pay a claim at all, it means much more problem for the driver than if the car had been broken into.

This same logic applies with maintenance on your vehicle. If you fail to maintain your brakes, for example, letting them run down to the point that they barely function, and then you lose control of your car and hit someone, the insurance company is going to have some questions before paying out a claim.

It is even possible that they could refuse to pay the claim, based on the fact that you knew that your brakes were not working but drove anyway.

The best course is to maintain your car. You will have a better-running vehicle, you will have peace of mind, and your insurance company can safely insure you against true accidents.

If you miss a monthly, quarterly, or bi-annual payment on your car insurance, what happens to your policy? Are you covered during the time the policy was unpaid? If you make the payment quickly, is your coverage reinstated? These are all questions people ask from time to time, if they have missed a car insurance payment by accident or due to unforeseen circumstances.

The answers will depend on the state in which you live, but generally speaking you do not lose your car insurance the day you miss a payment. Most states have laws which require insurance companies to offer a minimum “grace period” for your payment to arrive. An average grace period is ten days, although your grace period may be longer or shorter. If your payment does not arrive by midnight on the due date, you are considered to be in the grace period on your policy.

Once you enter the grace period, if you make your payment, everything goes back to normal, just as if you had made your payment on time. Most states will not allow insurance companies to punish customers for being a day or two late on their payments; in fact, you may have even longer than the grace period to get your payment in, depending on your state.

After the grace period expires, many states send out a “delinquent notice.” This still does not mean that your insurance in cancelled; rather, it means that you have a deadline to get your payment in. Some companies and some states do not have delinquent periods following the grace period; be sure to check with your insurer to find out. Delinquent periods can be as long as thirty days, but may be as short as five. In any case, once the delinquent period ends, your coverage will most likely be cancelled. This leaves you liable for any injuries or damage caused while you are uninsured.

While being uninsured is a terrible worry, you also have other problems if your insurance coverage is cancelled. When you obtain a policy, you are not the only one bound by the terms of the agreement; the company is also “on the hook.” Even if you speed or have an accident, your company must continue to insure you for the full coverage period agreed upon. If your insurance is cancelled, however, the company is not obligated to take you back. If you have a spotty driving record, this can present a problem in finding other insurance at a reasonable rate.

Even if you have a clean record, your company does not have to take you back if you miss payments. If the company feels that they will always be chasing you to pay them, it is very possible they will refuse to reinstate your policy after a cancellation. This means that you will have to search for new coverage, and will lose any customer loyalty or long-term discounts you may have had with your old company.

If the company chooses to reinstate you, they can, in many states, insist on a more structured payment plan.
For example, if you miss a bi-annual payment, your company may insist on quarterly or monthly payments. In many cases, this causes you to lose discounts associated with a “paid in full” policy. You may end up paying more in processing and handling fees with monthly payments, as well.

It is always wise to make your payments on time whenever possible. Even if you can only pay half of the premium, the company will often give you thirty days to get the other half; many companies offer this service to their regular customers, and do not consider it to be a “non-payment.” Talk to your agent or your company to find out options if you are having trouble making your payments.

Buying car insurance is expensive, even if you’re over the age of 30 and have never had an accident or even a ticket. Even with good driver discounts, memberships in automobile clubs, and other membership savings, insurance can take a bite out of a budget.  And for those who have blemishes on their driving record, credit report or have to insure high-risk drivers such as teens, the cost can be astronomical.

This is why some look for ways to shave their premiums down. Stating they only drive 12,000 miles a year, when in actuality, they drive 15,000. Reporting their car is garage-kept, when it actually stays parked in front of the house. Even “forgetting” to include the 17-year-old new driver on the insurance policy – these are ways people try to save money on auto insurance.

But it’s a bad idea, folks. And here are a few reasons why.

1. Insurance companies always find out. If you take your car in for an inspection, and you your odometer reading doesn’t match the mileage you gave your insurance company, they will know you lied. For example, if your car has 100,000 miles on it, and you told your insurance company you only drive 12,000 miles a year, that’s an average of 1,000 miles a month. So, let’s say in June, you take your car in for its annual inspection. The odometer reads, 107,500. If you were really only driving 1,000 miles a month, the reading would be 106,000, give or take a few miles. That difference of 1,500 miles could be enough to trigger a further inspection of your insurance policy, and if it found that you lied about the mileage, the insurance company can cancel your policy.

2. Payback. Let’s say you “forgot,” and didn’t add your teenage daughter to your insurance policy. And let’s say your teenage daughter is answering a text, loses control of the car, and sideswipes five parked cars. You now have two issues: an uninsured driver was driving your car, which means your insurance company does not have to pay to repair your vehicle. But the bigger issue is that because she lives in your house and you didn’t include her on your auto insurance, the insurance company does not have to pay to repair the cars she hit either, and is also well within their rights to cancel your policy.

3. You don’t save anything. One of the reasons insurance premiums are so high, are because un- and under-insured drivers cost insurance companies billions of dollars each year. Auto insurance companies lost $15.9 billion in 2008 due to uninsured or improperly insured drivers. Insurance companies have to recoup those losses from somewhere, so they raise rates for drivers. So, by lying, you are just causing the rate that you are trying to pay as little of as possible, to increase. Which means you try to find something else to lie about to lower the rate.  The lies create a vicious cycle.

So, the next time you’re tempted to lie on your policy — think again. It’s not worth it.

We all know why people pay their car insurance premiums monthly.  It’s easier on a tight budget.   Most people don’t have enough money for an upfront payment for 12, 6 or even 3 months of auto insurance.

Monthly insurance is also easier to cancel, and makes it easier to switch agents, but it’s not always the best option when paying for car insurance.  There are many fees associated with paying a monthly insurance premium, and if you miss a check, you’re car insurance is automatically cancelled until you reinstate it.

Less Budgeting after the Insurance Is Paid

A monthly payment may be easier to afford, but once the insurance is paid for 6 or 12 months, you can essentially forget about it and save the extra money.  You’ll no longer have to budget for your auto insurance.  It’s already paid, and therefore frees up money for the duration of the policy.  It’s a great way to lower overall monthly bills.

Cheaper

Paying an insurance policy up front is also cheaper.  Many insurance agencies require a deposit when you start your plan on a monthly basis, and they charge monthly service fees.  These can range from a $1 a month to several dollars a month and adds up over the life of the policy.  A deposit can be as much as the first month’s premium.

Neither of these fees is incurred when you pay your entire insurance policy up front.  It makes the overall cost of the policy cheaper.  In the best-case scenarios, you could save as much as $50 in service fees on your policy by paying for the entire thing up front.  That takes a $350 policy down to $300.  When paying the entire policy, you actually don’t have to come up with your monthly payment multiplied by the number of months on the policy.  It’ll be less than that.

Cancelling

Paying for yearly insurance can be a hassle when you wish to change automotive insurers.  However, if you cancel your policy before the due date, you’ll actually receive money back.  Once you get that “extra” money, you can apply it to your new insurance policy.  It’s like receiving a windfall when you need it most, or like getting an instant discount on your next automotive insurance policy.

Insurance Lapses

Insurance lapses are more common with monthly payment plans that with a premium that’s paid entirely up front.  This is because many people forget to make the payment especially if they’re manually writing the checks.  It could also happen if the individual is set up for automatic drafts, doesn’t have the money and isn’t signed up for overdraft protection.  If you miss a monthly payment on your automobile insurance policy, the policy is automatically cancelled.  Once the policy is cancelled, it has to be reinstated just like a new insurance policy.

The first car insurance policy I got on my own as an “adult” after I graduated college was through a local agent in my hometown.  He was, in stereotypical insurance salesperson fashion, loud, obnoxious, and completely overbearing.  Before I wised-up, he cajoled, intimidated, and ruthlessly steered me towards years of unnecessary coverage and policy upgrades.  Obviously, the internet and online insurance shopping has eliminated many of the issues that I faced as a younger driver, but buying insurance online is still a challenge for the unprepared.

Make Sure You Research Your Provider

If you are like most people, you probably know more about fictional caveman and CGI rendered lizards than you do about the actual company that they represent.  While most policies and companies may seem homogeneous, there are actual differences beyond the nature of their marketing campaigns.  A great jingle or clever mascot is going to be little consolation in the event of an accident if the nearest agent is located hundreds of miles from your house.

Additionally, many insurance companies offer discounts for a number of reasons, including occupation, current military status, and for having a home insurance policy with the same company.  While most companies are going to use a similar software algorithm to determine baselines insurance rates, it is the hidden costs, and benefits, that often make all of the difference.

Understand What Impacts Price Variation

While it is obvious to most people that the amount of coverage in a particular policy affects the overall monthly cost of the policy, it may not be as obvious when it comes to evaluating the things about them personally that impact the overall cost.  Both driving record and personal credit score have a direct impact on the total monthly rate.

One of the most common deceptive, yet totally legal, practices that companies engage in when providing an online quote is that during the initial stages of the application process they will provide consumers with a generic quote that doesn’t include their personal driving information or credit score.  Once the consumer signs off on a particular company and becomes invested in the application process, pow! The actual, individually calibrated rate is revealed.

Understand What’s Being Compared

One of the biggest advantages of shopping for car insurance online is that it is easy to examine quotes from several different companies at the same time and make a decision based on a real-time comparison.  However, not all insurance policies are created equal.

Discrepancies in coverage amount and type can lead to a comparison that is not as accurate as the raw data may imply.  Whether it is a result of the data being entered into the quote generator or simply a flaw in the software itself, this type of issue can make it difficult to accurately compare providers.

Play with the Numbers

The best thing about technology is that now, everything happens instantly, with virtually no hassle.  In the dark ages of pre-internet insurance shopping, understanding how minor shifts in coverage amount affected the overall cost of the policy involved an extremely grumpy agent.  With the ability to instantly update policy details and costs it is possible to quickly decide exactly how much a specific reduction in coverage amount is worth relative to the bottom line.

When I was a kid, my father used the same insurance carrier and the same insurance agent for his entire life.  They say it was a different age, and I agree; it was an age where people didn’t know any better, so they paid twice as much as they should have for coverage and services that they didn’t need.  Comparison shopping and cutthroat competition have driven prices to historic lows, as long as you know what it is you are paying for. So let’s make sure you do know what car insurance covers.

Liability: What People Who Care about Other People Need

Liability insurance, of any type, is protection against unforeseen damages.  When it comes to car insurance, this obviously translates into any damage that you cause because of an accident or reckless driving.  Liability insurance doesn’t do anything about the damage that you may have caused to your car or to yourself. Instead, it makes sure you can do the right thing by covering any damage you cause on one of those mornings from hell when nothing goes right. If, however you don’t give a damn about the damage you might cause, the government does. Almost every state requires that you carry this insurance.

Collision: What People Who Care about Their Stuff Need

Collision insurance covers all of the damage that is done to your car in the event of an accident.  Barring incredible personal wealth, or a car so crappy it doesn’t warrant replacing, most people decide to carry some amount of collision insurance in addition to the state mandated minimal amount of liability insurance, because, even if it is their fault, they want to be able to repair their car. This coverage can be pricey, so sometimes it makes sense to keep a nest egg worth the value of your car instead.

Comprehensive: What Paranoid People Need

At the risk of explaining the self-explanatory, a comprehensive policy covers everything that could happen to your car other than an accident.  While it provides incredible piece-of-mind, it’s also relatively pricey and usually unnecessary.  Window glass coverage is the most convenient feature of this insurance.

The average person is going to have approximately no bears attack their car, and, over the course of their life, be caught in, on average, zero total sinkholes. Sure, your car could be stolen if you live in a bad neighborhood and /or can’t remember to lock your doors. Over five years, you could save enough money for a car worthy of your neighborhood instead of paying for comprehensive. If you own an expensive car, it makes sense to carry this type of insurance, but if that’s the case, you probably have enough money to buy a new one instead.

Uninsured Motorist Protection: What Victims Need

As shocking as it may be for some people to learn, not everyone follows the law or cares about the property rights of other people.  If you are worried about being involved in an accident with one of these social miscreants, than uninsured motorist protection is for you.  Luckily, this type of policy is relatively cheap compared to the amount of piece-of-mind that it provides.

Personal Injury: For People That Care About Themselves

If you listen to the media, you would think that people who are injured in car accidents are instantly awarded million dollar settlements.  Unfortunately, even in the event of a clear-cut case of fault, legal proceedings can take years.  If you get hurt in an accident, and don’t have personal injury insurance, or high quality personal health insurance, you could be stuck paying a ton of medical bills while you wait for your court awarded novelty check.

When shopping for auto insurance it pays to pay attention.  There are some questions you should ask and warning signs you should heed when shopping for auto insurance.

BBB

It’s always a good idea to check the Better Business Bureau before accepting a car insurance plan, and it’s even better if the insurance agency is BBB accredited.  Businesses that are BBB accredited have to pass certain standards to become BBB accredited.  Those standards involve being in business for at least 12 months,  meeting all licensing and bonding requirements pertinent to the industry, meet all advertising and selling standards, honor promises, protect customer privacy and have integrity when doing business.  If the business doesn’t meet those standards, they will not have BBB accreditation.

If the company is not accredited by the BBB, it’s a good idea to research the BBB database to see any complaints have been lodged against them.  The idea is to be fully aware of the practices and past issues of the insurance agency you’re about to do business with.

Read the Quote

Once you decide on an actual insurance agency and receive the quote, read it in its entirety.  Sometimes there are hidden fees in the billing statements and deductibles before any insurance payment is paid out in the event of an accident.  It’s important to know those hidden fees prior to signing the paperwork and to fully understand the deductibles.  A $5,000 deductible doesn’t do you any good if you don’t have $5,000 in the bank no matter the cost of the monthly insurance, and chances are good that if it’s a really low quote, it has a really high deductible or doesn’t cover everything you need it to cover.  Remember, insurance is for what you can’t afford to replace, and if the deductible is for more than the car is worth or more than you can afford to pay out of pocket, the insurance policy doesn’t do you any good.

Check License

Make sure the auto insurance company you’re about to do business with has a current license.  It is illegal to sell insurance without a license, and you’re almost guaranteed that the company is fraudulent if they don’t have a license.  To make sure they are legitimate, also check with your states insurance department to make sure the insurance company you’re about to do business with is registered.  If they aren’t registered, they aren’t legitimate and you should avoid them at all costs.

Outline Hidden Charges

The last thing to ask your insurance agent about is any hidden fees.  Do they charge a processing or transaction fee?  Do they charge to accept checks?  Is it cheaper to have an automatic debit or to make manual payments?  These are things you need to know before you sign the paperwork.  Hidden fees and charges can add between $5 and $10 a month to an insurance bill.  It’s also imperative to ask what they do with overpayments.  Occasionally, insurance companies will reassess your insurance policy and determine if you owe more or less than you’re currently paying.  Ask what they do with overpayments and how they handle underpayments.

Insurance companies make a profit by collecting more in premiums than they pay out for claims. Customers who are at a high risk of getting into an accident, or whose vehicles would be expensive to repair in the event of a claim, pay higher premiums to compensate for the cost.

In order to determine what rates to charge, insurance companies rely heavily upon statistics, especially in instances where data for a specific driver is unknown. Insurance companies invest a lot of time into collecting claims data and compiling the information, and look at everything from the age of the driver to the times of a day a person drives or the amount of traffic in a driver’s city.

Types of Statistics Considered

Insurance companies cannot discriminate against a driver based on ethnicity, race, or disability. Gender and age do affect insurance premiums, however, as does credit score.

Credit score affects insurance premiums not just because people with poor credit may not pay their premiums on time, but also because people with poor credit are more likely to file claims than those with good credit. People with poor credit may not be involved in more accidents, but they’re less likely to have extra income on hand to pay for repairs, and insurance companies recognize this statistical correlation.

Teen Drivers

Drivers under age 25 have much higher premiums than older drivers. There are several reasons for this:

·         Young drivers do not have any driving history go base premiums on, so the company relies heavily on statistical data.

·         61 percent of teenager passengers who die in car accidents are passengers in a vehicle driven by another teen.

·         Teens are at a high risk of driving under the influence; 25 percent of teen auto accident fatalities involve alcohol.

Once a teenager has driven for several years and proven himself safe, his rates will be decreased. Teens can enjoy some relief from high premiums by taking additional driver’s education courses, as these encourage safe driving habits and are seen positively by insurance companies.

Geographic Considerations

In addition to demographic information about a driver, insurance companies also take a driver’s location into consideration when deciding on rates. More accidents happen in cities and congested areas than in rural areas, due to the number of drivers and the likelihood of accidents occurring in heavy traffic. People who live in highly populated states will tend to pay more in insurance than those who live in sparsely populated areas, as do people who live in big cities as opposed to suburbs or small towns.

Insurance companies rely on statistical information to determine base rates for policies, but drivers are always able to save money on car insurance by driving safely, taking advantage of company discounts, or increasing security on a policy. Overall, statistics serve as a baseline for an insurance company; specific rates are always changing to reflect your driving record. By making safe choices and utilizing discounts, you can counteract the effect of statistics on your insurance rates.

There is an old saying that you get what you pay for. In car insurance, that could mean the difference between having your car repaired quickly and painlessly and waiting for weeks to speak to an agent while your car sits broken in your driveway. Grabbing the cheapest car insurance is tempting during these times when every penny counts, but in the long run, it could cost more than it’s worth in time and frustration.

The Temptation of Paying as Little as Possible

Cheap insurance is not too hard to find right now. Several national insurance companies offer web-based coverage for a song. It’s easy to sign up online, and you’re guaranteed to spend less than you would spend for an insurance company that offers more personal service. You will enjoy the satisfaction that comes from saving money on your insurance as you send off your lower premium payment every month. You’ll stay in compliance with the legal minimums while you pay as little as possible. In fact, you won’t notice any difference between your inexpensive insurance company and any other insurance company until you need to file a claim.

Potential Problems with Poor Service

When something happens and you need your insurance company, you might begin to wish you had spent a little extra on the policy. Cheap insurance costs less because the insurance companies generally invest less in service. You might find that your policy is handled by an agent who covers three or four states. You might spend weeks trying to contact an agent about a claim without ever reaching the agent in person. Some inexpensive insurance companies use call centers to interact with any customer call, which means that you might have to go through several layers of phone calls to reach a person who will be able to help you with your claim.

The Personal Touch is Worth a Little More Money

Avoiding bad service from a cheap car insurance company doesn’t mean you have to spend top dollar on your policy. Customer service can improve dramatically for just a few dollars more each month. That extra expense can be worth it if you ever need to file a claim for damages to your car. A good insurance company will handle your claim in a timely manner so that you can be on the road again as quickly as possible. The time and hassle you save by using a reliable company is worth paying for.

Striking a Balance Is Best

The key is to find good service at an affordable price. Do a little research before you commit to a new insurance company. Look online for customer review forums to see what kind of experiences previous customers have had with the company. It’s important to compare more than just price with insurance coverage. Remember, these are the people you’ll need to call when something bad happens to your car. When that day comes, you want the personal support that some of the cheapest companies simply can’t offer.

One of the best features that most credit card companies offer is car insurance coverage for rental cars. The rental coverage is free for most cardholders, and it covers you for almost any problem you might have while you are driving a rental car. While the credit card car insurance coverage is a great deal, there are some loopholes you need to be aware of before you rent your next vehicle.

Areas Not Covered by Your Policy

Most credit card insurance policies cover you in all 50 states and most foreign countries. There are some exceptions, however. Many typical rental policies do not offer coverage if you drive in Ireland, Israel, Italy, Jamaica, New Zealand, and Australia. Every company is different, however, so check with your credit card to find out where you are covered and where you aren’t.

Certain Vehicles not Covered

Credit card rental car insurance is limited when it comes to what kind of car you are renting. Pickup trucks, sports cars, and large vans are typically not included in most policies. Your best bet is to rent a standard passenger vehicle. If you get to the rental agency and they ask you to upgrade to an SUV, van, or pickup truck, check with your credit card company to be sure the upgrade is covered.

Limited Rental Period

Although the rental company will have no problem with you making an extended rental agreement, your credit card company might not offer the same flexibility. Many credit card rental car insurance policies stipulate that they only cover the car for a limited amount of time. If you keep the car longer than the insurance policy covers, you will be liable for any damages that might occur while you are driving the rental. Be aware of time limits and plan accordingly so that you are not left with a big bill at the end of the rental.

Unexpected Exclusions

It makes sense that rental insurance coverage does not cover damages that happen if a car is being used for illegal purposes or as a commercial vehicle while it is rented. Other exclusions are not so obvious, however. Some rental insurance will not cover damages that occur when you drive on roads that are not paved. If you plan to rent a car in a rural area, you should make sure the insurance would take care of you on dirt or gravel roads as well as city streets. Other unexpected exclusions may apply depending on your credit card company. It is important to be aware of these exclusions before you begin to drive your rental car.

Using Free Points or Special Offers

Some credit card rental insurance will only provide coverage if the card is used as the primary payment method for the rental. That means that you could go uncovered if you use special discounts or other promotional payment types when you rent the car. You need to make sure that the credit card pays the entire base rate of the rental so that it can be used for rental insurance. If the card is only paying for taxes and fees, you are probably not covered by the rental insurance.