Avoid Car Insurance Rip-Offs!
Florida is the car insurance rip-off capital of the world. Be wary of cheapie car insurance agencies with stupid TV or radio ads claiming to be the lowest price. When I was young and stupid, I went through 10 car insurance companies in 5 years, because they all low balled me. A month after signing, you get a letter saying your policy is $200 more due to a "Company Rate Error". This is known in the insurance industry as "Low Balling". It happens all the time, and it happened to me 4 different times until I wised up and started to deal with classier companies like State Farm and Travelers. Your state legislators do nothing to stop these low balling losers, so the only way to protect yourself is to stay away from them, and their stupid free coupon and film developing vouchers that they hand out to you to make it look like you're getting something for your money. The ones I got were expired. Once I became business savvy, I discovered the best way to evaluate an car insurance company is its A.M. Best rating, which tells you its ability to payoff. The more A's in the rating the better their ability to pay off. Many little companies go under, and what good was a cheaper policy if they can't pay off? Always ask a company what their rating is, and look for it in writing to back it up. I try to only buy car insurance from companies with "A" ratings. You can also go with "B" ratings, but I would go no lower than that. one last tip, stay away from the sleazy little insurance offices that try to make it look like they are "THE Tag Agency". They care more about reeling you in under the pretense of handling the paperwork for your license. My wife used one to get her car title and they went out of business after they took her money. If you need your tag or title, get it from the source, the real tag agency.
Types Of Car Insurance Coverage
Car insurance is very confusing, and if you don't understand what the different types of coverage mean, you could be leaving yourself financially exposed. I always tell people to get as much car insurance as you can afford, to make sure you are covered for anything that comes along. If you get in even the smallest of wrecks and damage your front right quarter panel, and take out a fancy sealed beam headlight, that repair could cost over $1000, and over one week in car rental fees. So choosing the right coverage is essential. If you finance a car through a bank or car dealer, the lender usually requires some sort of full coverage. They do verify it with the car insurance company and if you fall short of their limits or take out no coverage at all, they will buy it for you and send you a bill for an unbelievably jacked up amount for insurance. This could be up to $4000, nearly 3 times the normal amount that most of us pay, so make sure your car is insured. Most car dealers won't allow the car to be driven off the lot without calling it into the car insurance company and setting it up first. Your current car insurance may cover you, but you must tell your insurance company immediately that you bought a new car to ensure you have coverage.
Bad Credit Causes You To Pay More For Car Insurance
Many car insurance companies run credit checks on you before the application is signed. Some online companies bypass this by allowing you to supply a self reported credit rating from a pull down menu. The reason for the credit checks is that there is a higher underwriting risk not only in terms your ability to make payments and keep policies in force, but the higher claims/loss ratios of folks with bad credit. A 40 year old man with a couple of late payments and no tickets, accidents or major violations might very well qualify for a preferred policy.
Don't fall into the gap!
If you owe more on your car than it is worth, if you lease, or if you put down less than 20%, you should get Gap Coverage from your car insurance agent. Most people refer to it commonly as gap insurance". Don't even bother buying it from dealers, they charge $500-$700 when you can get it online directly from the source for less than 1/2 the car dealers. If you owe $20,000 on your car, but it's only worth $16,000, you're upside down. You total the car, or it's stolen, your car insurance company gives you $16,000. You must still come up with $4000 to pay off the bank, plus your $500 deductible! Gap coverage protects you against this. The better ones cover up to $500 of your deductible.
Why you must get a copy of your driving record
I highly suggest you get a copy of your drivers license record BEFORE shopping for car insurance. Many of us have errors in our driving report that drive up our car insurance rates. I once paid a traffic ticket and attended driving school, but they never credited my driving record! How did I find out? Allstate canned me! That's not the way you want to find an error on your driving record. In the newspaper, a clerk of the court admitted they had a 20% error rate, and shrugged it off as normal. So lucky 20% me had my license suspended by mistake. Don't let this happen to you! Trust me, you don't want to go through what I did to fix it. If you go to driving school or pay fines, keep the receipt in your wallet for 3 years or until you renew your license! If you get pulled over by the police, it's your only salvation from being arrested for driving with a suspended license. Just like your credit history determines your car loan approval, your driving record determines how expensive your car insurance will be.
