The following ten vehicles account for the lowest dollar amount of losses for insurance companies:

1. Ford Five Hundred 4WD (now the Ford Taurus)
2. Buick Rendezvous 4WD
3. Buick Lucerne/Buick Rainier 4WD/Honda Odyssey
4. Ford Freestyle 4WD/Subaru Outback 4WD
5. Buick Rendezvous/Honda Pilot
6. Chrysler Town & Country
7. Honda Pilot 4WD
8. Buick LaCrosse/Chevrolet Uplander/Ford Escape/Volvo V70
9. Dodge Grand Caravan/Ford Freestyle 4WD
10. Ford Explorer 4WD/GMC Sierra 1500 4WD/Toyota Highlander/Toyota Sienna

(Source: Insurance Institute for Highway Safety, based on 2004-2006 models)

Insurance companies update their data and change their premiums frequently, so check with your particular agent to find out what cars are inexpensive (or expensive) to insure!

By Michelle O’Connor (Edited by LeeAnn Shattuck)

So, you’re shopping around for auto insurance. Did you know that there are at least 11 ways that you can save money?

1.  Multiple Policy Discounts – Do you have just one insurance company for both your auto and homeowners (or renters) insurance policies?  If the answer is no, you are probably paying too much for both policies.  By having both of these policies with the same insurance company, you could qualify for a multi-policy discount of 10% or more.

2.  Good Driver, Good Price? – It’s no secret that the better your driving record, the less you will pay for auto insurance.  Most people actually qualify as “good drivers” and are eligible for discounted premiums, but do not know to ask about them.  Make sure you are getting the best discount for your driving record. 

3.  The Beauty of the Bus - Do you drive to and from work? If you do, you are literally paying a premium to do so. Insurance companies charge significantly higher premiums if you drive to work. If mass transit is available where you live, consider it taking advantage of it.  Not only will you save money on your insurance, but on gas and parking costs, too!

4.  Low Mileage, Low Price – People in the United States drive an average of 12,000 to 15,000 miles per year.  If you drive fewer miles than average, you may be eligible for low-mileage discounts offered by some insurers.

5.  High-Profile, High-Cost – The type of car you drive is a major factor in what you pay for insurance. Is your vehicle a magnet for thieves or more costly to repair than most cars? If so, then you will pay a higher premium.  So, ask your insurance agent for a quote before you splurge on that sports car. 

6.  Raise Your Deductible – The deductible is the amount of money you must pay out of pocket before your insurance kicks in when you have a claim.  The lower the deductible you choose, the higher the monthly premium.  If you have liquid assets, you can probably afford to absorb at least $250 to $500 if you have a claim.  Make sure your deductible amounts are set appropriately for your risk tolerance level.

7.  Drop Unnecessary Coverage – If you have an older car that is not worth very much, it may not make sense to have collision and comprehensive coverage on that vehicle.  (Liability coverage is required by most states.)  As a general rule, any car worth less than $1,000 should not have collision and comprehensive coverage.  How much is your car worth?  Contact Women’s Automotive Solutions for an estimate!

8.  Discounts, Discounts, Discounts – Many auto insurance companies offer other discounts based on the safety features of the vehicle.  For example if the car has automatic seat belts, air bags, anti¬lock brakes, or anti-theft devices, you may be eligible for additional savings on your premiums. 

9.  Taking the Defensive – Many insurance companies offer discounts to customers who complete a defensive driving course from an authorized driving school.  These courses teach you to be a better driver and help keep you and your family safe on the road!

10.  Low-Cost and High-Cost Areas – Are you planning to move? If you are, you should take into account the cost of insurance in that area. In general, the more urban the area, the higher the premium.  Rates also vary significantly from state to state.  States like New Jersey, Massachusetts and Hawaii have higher rates, while North Dakota, South Dakota and Idaho have lower rates.

11.  Credit Where It Is (Or Is Not) Due – Is your credit record better than your driving record? If you have a good credit record, you could be eligible for discounted premiums from several auto insurance companies.  Many insurers now use your credit history as a major factor in determining what to charge you for auto insurance. You could save money by shifting your business to an insurer that uses credit as a rating factor – even if you have a so-so or poor driving record.

When buying a car, you should always shop around to find the best deal.  The same is true when shopping for car insurance.  But, don’t just look for the best price.  You also need to make sure you have all the coverage you need and that the insurance company and agent provide top quality customer service.

The reader assumes all responsibilities for his/her own actions in regards to any items discussed in this article. Adherence to all applicable laws and regulations, federal, state and local, governing the use of any product or service described in this article in the US or any other jurisdiction is the sole responsibility of the reader. The publisher and author assume no responsibility or liability whatsoever on the behalf of the reader of these materials. The reader is encouraged to consult directly with his/her insurance professional.

Michelle O’Connor is the owner of O’Connor Insurance Associates, Inc., an independent insurance agency located in Charlotte, NC.  Michelle can be reached at 704-510-8884 or michelle@oianc.com.  Visit them on the web at www.oianc.com.
 

An extended service contract (also called an extended warranty covers the cost of certain repairs after the vehicle’s original manufacturer warranty expires.  It is essentially an insurance policy against repair bills.  Extended warranties can be purchased for both new and used cars (depending on the age and mileage). 

The cost of the warranty depends on the type of car, its age and mileage, and the level of coverage.  Warranties for Asian cars (Honda, Toyota, etc.) are the cheapest, and warranties for high-line, European cars (BMW, Mercedes, etc.) are usually the most expensive due to both repair costs and reliability.  Three “tiers” of extended warranties are typically offered, depending on the level of coverage you desire.  The lowest tier covers the basic, power train components, such as the engine, transmission and drive axle.  The middle tier typically covers your brakes (including ABS), A/C, steering and basic electrical components (not including navigation or DVD systems).  The top tier is usually a bumper-to-bumper warranty that covers almost everything except normal wear-and-tear components (tires, wiper blades, etc.) and after-market parts.  Coverage for navigation and DVD systems may be extra.  Contracts known as “wraps” are common for vehicles like Hyundai and Kia, which have longer factory warranties for their powertrain components.  These wraps extend the “bumper-to-bumper” warranty to equal the term and mileage of the longer powertrain warranty.

Every warranty is different, so be sure to get a comprehensive list of what is covered, what is excluded, and any deductibles and proof-of-maintenance requirements before you sign.  Some contracts cover the cost of towing, rental car and even hotel stays, but others do not.  Some contracts have a per-part or per-incident deductible of $50, $100 or $200, others have no deductible.  Also check where you can get the repairs done, and how the shop will be paid.  A good warranty will have many authorized repair shops across the country, including both independent shops and franchised car dealers.  The repair shop should contact the warranty company for authorization prior to making any repairs, and the shop should bill the warranty company directly for the repair costs.  Finally, the company that backs the service contract (and the re-insurer who backs them) should be financially sound and have a strong track record in the industry.

But, are extended warranties worth the money?  That depends on several factors.  People who buy and trade cars frequently or lease should pass on an extended warranty. There’s no need to purchase one if you only plan to keep the car for three or four years since repairs are covered under the car’s original warranty.  If you plan to keep the car longer and you don’t like surprise expenses, then an extended contract might be a good option - but only if you don’t pay too much for it!  Women’s Automotive Solutions offers service contracts through third party vendors that are comparable to the top quality warranties offered at dealerships, but at a significant discount. 

While you should not select a warranty solely on price, if the coverage and quality are the same, why not save some money!  And you don’t have to rush your decision.  Most warranty companies allow you to sign up after you have purchased your new or used car or even after the original manufacturer warranty has expired.  However, it is significantly cheaper to buy an extended warranty before the manufacturer warranty expires.  If you prefer to buy the warranty from the dealer, then negotiate the price as a part of the deal. 

Don’t get forced into buying an extended warranty!  If a warranty company calls you and tries to pressure you into buying a warranty on the spot - beware!  Some of these companies are not legitimate!  Always check out warranty companies with the Better Business Bureau and research them online before you buy.  Buying an extended warranty is your decision and yours alone.

Nothing is worse than being in an accident that totals your beloved car.  Except perhaps the shocking realization that you owe more on the loan than your insurance company is willing to pay! 

Owing more on the loan or lease for a vehicle that it is worth is called being “upside down”.  Thanks to rising automobile prices, longer loan terms, and zero down payments, most people are upside down on their current vehicle.  The vehicle depreciates in value faster than you are paying it off. 

As we discussed previously in the newsletter (see “How Much is Your Trade REALLY Worth” – March 2007), the market value for your car is influenced by several factors:  year, make/model, mileage, condition and “the market”.  The older it is and the more miles you have driven, the lower the value.  If the car is dirty, has dents and scratches, has been in a prior accident or has not been maintained properly, it will be worth less than a more pristine counterpart.  The “market” for a particular type of vehicle will also affect its value.  Some cars just hold their value better than others for quality and reliability or simply “desirability” reasons.  Hondas, Toyotas and BMWs traditionally hold their values much better than their American counterparts.  Vehicle values may also be affected by external market factors.  For example, high gas prices have tanked the market for large SUVs.  Consumers are selling their gas-guzzlers in droves in exchange for smaller, more fuel-efficient vehicles.  As a result, the supply of Suburbans and Expeditions far exceeds the demand, and prices plummet.  
 
The realization that you are upside down is depressing enough when you go to trade in your vehicle, but still owing money after your car is totaled in an accident (especially if it wasn’t your fault!) can be devastating.  “But my insurance company has to pay to for my car!” you exclaim.  Not exactly.  Your insurance company must pay you what it feels is the current, fair market value of your vehicle based on year, make, model and mileage.  They insured the vehicle itself.  How you financed it, and how much you still owe on the loan, is your problem.   Fortunately, there is a simple and relatively inexpensive solution – Gap Insurance.

Gap insurance is an endorsement to your personal automobile policy that “fills the gap” between the amount you owe on your loan or lease and the actual cash value settlement paid by your insurance company in the event of a total vehicle loss.  For example, let’s say you total your 2 year old car that you originally financed for 72 months.   Your insurance company generously gives you $15,000, but you still owe $19,500 on your loan.  The gap insurance will pay the $4,500 difference, possibly less a small deductible.

Gap insurance has a relatively small, one-time cost and must be purchased at or close to the time you purchase your vehicle (usually within a week or two).   It can be purchased whether you are financing a new or pre-owned car.  Most leases today have gap insurance built into the lease, but be sure to confirm that with the dealer before you sign the lease papers.  Gap insurance is offered by car dealers, online vendors and some insurance companies, and the price typically ranges from $400 - $700.   Women’s Automotive Solutions also offers gap insurance with prices ranging from $260 - $360, depending on the length of the loan.   If you finance your new or pre-owned vehicle for more than 48 months and/or you do not make a significant down payment, then you need gap insurance.  It’s a small price to pay for the amount of risk that it mitigates.  And, for your peace of mind.