Monday, March 11, 2013

How much will my car insurance rates rise after adding my teenage driver?

If you plan to allow your newly licensed teenager to drive your car even occasionally, then you will need to add them to your auto insurance policy. And, yes, unfortunately your rate will go up, but just by how much is the question.  If you fail to add them to your policy then it could mean that if there’s an accident and they are driving, there is no coverage and you could be liable for out of pocket expenses and damages to the other party, as well as your own property damage.   

So, back to the big question of how much will adding the teenager to your policy affect your car insurance rates.  This question really depends upon many factors including what kind of car they will drive, whether it’s for your son or daughter (no myth here, it does cost more to add a male than a female youthful driver), whether or not he or she completed a driver’s education course and even their grades – teens with GPA’s above 3.0 may qualify for a good student discount.
According to a recent study completed by carinsurance.com, your rates will rise anywhere between approximately 90% to a whopping 250%.  They took a typical couple in their mid to late 40’s with a good driving record and two average vehicles and then added a 16 year old to the policy. Then they compared increases in 25 cities spread out across America. The average dollar increase was $1,014 every six months.  This is because your teenager is considered a high risk driver out of the gate. It’s a known fact that new teenage drivers are 3.7 times more likely to be involved in an accident and 1.8 times more likely to get a traffic ticket compared to the average insured adult. Learn more about teenage driver crash statistics in California here.
There’s not a lot you can do to minimize the impact of a new teen driver on your policy. However, the good student discount we talked about above can lower your rate by as much as 15%.  In this case, it really does pay or save to get the good grades!
A final suggestion to lower your overall cost of adding your teen to your policy would be to increase your deductibles and lower your coverage amounts, but since a teen is more likely to cause liability damage in an accident, it may not be appropriate and often should only be considered as a last resort. 
If the cost is simply too prohibitive, hold off on the driving and the driver's license until you can find a way to afford it. If a child is away at college, he generally won't have access to your car anyway. This is probably the least popular means of dealing with the car insurance conundrum.

Other than these few suggestions, there isn't much other than time and a good driving record that can help to lower this cost. Remember, many factors are involved in your policy premium, some of which may not be mentioned in this article.  It’s always recommended that you speak with a licensed insurance agent in your state. S/he should be most qualified to consulting with you regarding policy decisions.

Sunday, March 3, 2013

Do you need rental car insurance?

You’ve probably been at the rental-car counter, listening to the representative ask if you want to purchase the company’s insurance. And the thoughts start racing through your head. “Is this a rip-off? Doesn’t my regular auto policy cover me? What about my credit card? Why didn’t I figure this out before I left on my trip?”

At Pacific Preferred Insurance Agency in Oxnard, California, we are here to help. And while not every situation is the same, we’ve got some general tips that will help you make an informed decision the next time you’re standing at that counter.

1. Know your personal auto policy.

Because insurance policies vary, it’s a good idea to give us a callbefore you rent a car — to make sure you have the coverage you need. In many instances, your personal auto policy will provide coverage for a rental car — but that coverage may be limited to the value of the car you own, rather than the one you’re renting. Of course, if you don’t have a personal auto policy, you’ll need to purchase coverage from the rental company.

And keep in mind that in the event of an accident, many rental companies will charge fees beyond repair costs. They may assess a loss-of-use fee for each day the car is unusable, as well as charge you because the value of the car has decreased. Not all insurance policies cover these fees.

2. Also know your homeowners or renters policy.

If you’re traveling with expensive electronics or other valuable items, you probably want to consider what coverage you’ll have in the event they are stolen. Your personal auto policy and/or credit card coverage likely won’t provide protection for this scenario.

3. Check your credit card protection.

Most credit cards will also provide some coverage, but often payment is limited to reimbursement of your personal auto policy deductible (after that policy pays for repairs). Generally, loss-of-use and other fees are not covered, but it’s important to check with your credit-card provider to determine their policies. And while some cards may offer additional protection for a fee, usually coverage is limited to damage to the car, not liability for any injuries to others. Remember, to receive any sort of benefit from your card, you must use that card to pay for your entire car rental.

4. Consider any unique circumstances.

Are you renting a car in a foreign country, or for more than a week? You’ll definitely want to get confirmation of coverage from both your insurance carrier and credit card company because different rules might apply. Also, no matter where you are, vehicles such as trucks, RVs or exotic sports cars often aren’t covered under standard agreements. And if you’re using a car for business purposes, your personal coverage might not apply. Finally, if multiple people will be driving the car during your trip, make sure your coverages will apply to them.

5. Learn about the insurance offered by the rental car company.

According to the Insurance InformationInstitute, rental companies offer four main types of coverage.

A Loss Damage Waiver (LDW) relieves you of responsibility if your rental car is damaged or stolen. This may also provide coverage for loss of use.

Liability Protection provides protection from lawsuits if you are sued after an accident.

Personal Accident Insurance covers you and passengers for medical bills after an accident. You may not need this if you have adequate health and auto coverage.

Personal Effects Coverage protects you if items are stolen from your car. You generally are covered for this under your homeowners or renters policy, but keep in mind that the loss must exceed your deductible for you to receive payment. If you have a high deductible, it may make sense to purchase this coverage from the rental company.

When you go on vacation, you don’t want to stress out about insurance. So give us a call at 805-351-3851 before you leave. Then, when you head over to the rental-car counter, you can stop worrying about your coverage — and start enjoying your trip!