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How much can I save by raising deductibles?

Posted on September 19   By Des Toups

How much can I save by raising my deductible? And how high should I raise them?

Compare car insurance quotes now.

You’ve just offered to cover more of any potential comprehensive or collision claim – in other words, a bigger share of the risk. You’re going to save money.

But don’t expect a car insurance miracle.

By far the most common amount selected for car insurance deductibles is $500, chosen by about 74 percent of drivers with collision and comprehensive. The next most common is $1,000. Depending on your state and your carrier, you may be able to go as high as $2,500.

If you pay a lot already for car insurance, a bigger deductible will save you more than it would someone who pays rock-bottom rates. Let’s compare quotes for full coverage at $500 and $1,000 deductibles for Wanda, who drives a 2013 Ford Escape in Biloxi, Mississippi.

$500 deductible

$1,000 deductible

Savings

Company A

 $                  1,776

 $                      1,704

 $       72

Company B

 $                  2,076

 $                      1,884

 $    192

Company C

 $                  2,496

 $                      2,328

 $    168

Compare car insurance quotes for Wanda

She saves anywhere from $72 to $168 a year in return for taking an additional risk of $500. It’s a pretty easy way to save money – as long as you have the cash for your deductible stashed somewhere.

Note that raising deductibles saves her the most with Company B – but if she’s looking for savings she’s better off taking a look at Company A.

If you’ve already compared car insurance quotes through Insurance.com, we encourage you to take a second look at your coverages and experiment with changes. Once you get to the page where carrier’s quotes are displayed, you have the option of changing every coverage level by using the “Custom Rates” menu on the right.

It’s a big calculator, really. You can see the effects not only of changing your deductible, but your car, your address and even your driving record. Think of it as a way to road-test upcoming changes in your life –and when you’re ready to take the plunge, for real, you’re better prepared to shop.

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My son moved out. Can I drop him off my policy?

Posted on September 10   By Des Toups

My son does not own a car. He lives with his girlfriend and drives one of her cars. However, he is still on my insurance policy. He has a poor record. If I could drop him from my policy the savings would be significant. Can I drop him? Or would he become an illegal, uninsured driver under New Jersey law?

You’re asking the right questions.

Typically insurance companies will calculate your premiums based on the records of all licensed drivers under your roof and anyone who routinely drives your cars. If your son doesn’t live with you and does not regularly drive your car, you do not have to list him as a driver on your policy.

You may hit a snag if your son’s legal address (on his driver’s license, for example) is still at your home. To drop him from your policy, you may be asked to provide proof that he no longer resides there or that he is insured on another car owner’s policy. You might even be asked to sign a named driver exclusion – which would mean he would not be insured in your car under any circumstances.

You will save a bundle of money with a problem driver off your policy. Now is the time to do some comparison shopping for car insurance.

One caveat: If your son is dropped from your policy, it’s very likely that his girlfriend’s insurance company will begin charging her rates based partly on his driving record. Any licensed driver at the same address without a policy of his or her own is considered to have access to the car.

Illegal driver? Nope

Insurance follows the car, not the driver, so in most cases your son can drive anyone’s vehicle, with permission, and be insured under their policy. When you lend the keys, you’re lending the insurance as well.

Don’t let widespread use of the term “uninsured driver” fool you:  It’s the car you’re insuring.

Insurance is not a condition for driving in any state except North Carolina, unless you’ve convicted of a DUI or other violation that requires you show proof of insurance to reinstate your license.

But every vehicle owner in the United States is required to have insurance or some other proof of financial responsibility.

  • In many states you must show proof of insurance to register a car.
  • In virtually all states you must show proof of insurance when asked by a law enforcement officer.
  • In New Hampshire and Iowa you must show proof of financial responsibility if you have an accident.
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I scratched my friend's car. Who pays?

Posted on August 28   By Des Toups

My friend made me drive her car, and I scratched it with her in the vehicle. Is it my responsibility to pay?

Actually, there are three separate issues here:

  • Whose insurance would cover the damage
  • Whether she should file a car insurance claim for a scratch
  • Whether you want to stay friends

Let's start with the first issue: Whose insurance pays for the damage? Insurance follows the car, and it covers the car and anyone the insured owner permits to drive it. If your friend has collision insurance -- which pays for damage to the car when the owner or a permissive driver is at fault -- then she could file a claim against her coverage for the damage you did.

Assuming she files a claim, there would be a deductible due. One of you would have to pay that. My vote would be you.

The second issue is whether she should file a claim at all. It's possible that a scratch may cost less to repair than the deductible. (See "The fender-bender: To claim or not to claim.") If so, one of you would have to pay for the repair out of pocket. My vote would be you.

Insurance isn't for everything, just the big things.

You should avoid making small claims against insurance when you can. If your friend already has a claim on her record, even a tiny claim could have big effect when her policy is renewed because multiple claims look like irresponsibility to an insurance company.

If she doesn't have collision coverage, that brings up the third issue: Do you want to stay friends?

Your own collision coverage, if you carry it, will not pay for damage you did to a borrowed car. It's between you and your friend to decide who pays. My vote would be you.

Unless there was gunplay involved in forcing you into the driver's seat, you had an opportunity to say no. Anyone who puts you behind the wheel of their car has a reasonable expectation that you will operate it responsibly. If you feel that you can't do that,  you should refuse.

There may have been extenuating circumstances, but if you two can't settle a difference of opinion, it's a matter for the courts rather than the insurance company.

Before you lend your car, think

When you let another driver behind the wheel of your car, you are lending that person your insurance as well. If that person hits another car while driving yours, then your liability insurance would pay for any damage to the other car and any injuries the other parties suffered.

To repair your own car, you'd need to file a claim against your own insurance. You, the owner, would be responsible for paying the deductible.

At renewal time, it is your insurance rates that would go up, even though you weren't driving.

While the friend who borrows the car might be cited for the accident and morally responsible (in your mind) for making good on damages, none of that matters to the insurance company that just paid your claim.

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Your son cannot borrow your insurance

Posted on August 22   By Des Toups

My son, who is 21, had his license suspended. He drove his car and got into an auto accident. He did not have auto insurance at the time. Can he use our insurance to cover the damages caused to the other driver?

No, your son cannot use your car insurance, and it’s probably a good thing for you.

Insurance follows the car, not the driver.

Had your son been behind the wheel of your car and hit someone, your liability insurance would have paid the other driver. (Your son’s insurance, if he had any, would kick in only after yours was exhausted.) Whether his license was suspended or not usually would not make a difference as long as your son had your permission to drive your car. 

While this sounds like a free pass to drive without a license, it’s not.

That’s because insurance companies treat a conviction for driving on a suspended license very seriously. Let’s say you live in Portland, Oregon, and he drives a paid-off 2007 Mazda 3. With a clean record, he’s pay about $1,604 a year for state-minimum liability coverage, according to rates delivered through Insurance.com’s quote-comparison tool.

With a conviction for driving with a suspended license and an SR-22 requirement for reinstating it, the cheapest premium we found was $2,448. With a $5,000 accident claim added on, the cheapest quote rose to $3,036 a year.

If your son were listed on your insurance policy, your rates would reflect the risk he poses. As it stands, he should expect hefty bills for insurance when he goes to buy another policy of his own.

Even though he is not a listed driver on your current policy, it’s possible that your insurance company may ask you to exclude your son as a permissive driver at your next renewal. That means he would not be covered under any circumstances if he drove your car.

This is a tough lesson for him.

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