Tag Archives: insurance

How Much Do You Need To Save To Switch Insurance Companies?

Posted by in Autos, Insurance • 8 Comments

I’ve had Progressive insurance for the past year and a half, but my car insurance policy is now up for renewal. I have not gotten into any accidents, so as expected, my 6 month premium has decreased a little each renewal period. I like that, but as a good personal finance blogger (and reader) should do, I checked out the competition to see if I could get a better deal.

Not Spending Is Different Than Saving

I’m not going to pretend I saved $400 on car insurance, the ads that many auto insurance companies put out are quite misleading. Very rarely do people actually save that much on their car insurance. Rather, people choose not to buy from the company that offers the higher price, which isn’t really saving, it’s just spending less (and there’s a big difference). Plus, choosing less coverage will also reduce your rate; that is just comparing apples to oranges. What’s worse, with this math, all car insurance companies claim to save their customers hundreds of dollars. That’s very unlikely!

New Customers Get The Best Rates

I know from my previous job at one of the major insurance companies that users who request quotes more than 6 months apart will be offered better rates. Why? Because new customers are offered lower rates as a way to try and get them through the door, and at least at our company, a “new” customer was defined as someone who hadn’t requested a quote in the past 6 months. Yes, that one day really could make a difference in your rate.

I waited the required 6 months and a day and then contacted several other companies, including GEICO. It turns out that for comparable insurance (actually, slightly more coverage), I am able to save $43 over the 6 month term.

$43 over 6 months is not a lot of money. It’s just over $7 a month, which isn’t much to write how about, but the whole idea of paying a lot for insurance drives me nuts. I know I need it, but I’ve never used it before and the only way I’ll get my money’s worth is if I get into a big accident. Unlike phone insurance, we’ve got no choice here. Seems like a lose-lose situation there, doesn’t it?

In order to save $86/year on my car insurance, I spent about 10 minutes (who needs 15 minutes these days?) typing in my information, getting my quote, adjusting coverages, and purchasing. It was a very easy process, and anytime I can spend 10 minutes to effectively earn $86, I will!

How Much Do You Need To Save To Switch?

At what amount of savings will you switch your car insurance? For me, it’s around $40 for the 6 month term. Car insurance is one of the easiest things to switch, you simply receive a new card in the mail and stick it in your car, but the same cannot be said about cable or Internet service. For those, the hassle of returning equipment and setting up new service is quite often more costly than the difference in price.

5 Things We Need To Buy, But Hate To Spend Money On

Posted by in Spending • 17 Comments

In life, there are needs, and then there are wants. I need to pay my rent, my utilities, and buy food; and while you might debate what constitutes wants vs. needs, I could survive without spending money on my iPhone (and the accompanying data plan), a gym membership, and dinners out.

In life, there are things that just about everyone spends money on, whether we like to or not. These are the types of expenditures many of us forget about or even resent. Here are things I consider to be the worst offenders on this “need to buy” list (whether I currently need them or not).

1. Tires

If you own a car, then at some point you’re going to have to replace your old tires. Even the cheapest tires for a small sedan cost around $50 each – then you have to pay for installation and disposal of your own tires. Buying these low-grade tires – with a lifespan of maybe 20,000 miles – will virtually ensure that you’ll need to buy them again sooner rather than later. Suck it up and get a good pair of tires and you won’t have to worry about them again for awhile.

2. Insurance

Car insurance is a must, and you don’t want to get in an accident and suddenly owe thousands of dollars because you didn’t get full coverage, so I don’t suggesting getting just the minimum.

You don’t really need to buy life insurance if you’re single; even if you’re married, it’s not a necessity. But once you start a family, having a life insurance policy moves squarely into the “needs” category. What’s worse than spending hundreds of dollars a year to insure your own life, knowing that in order to cash in on the policy you’d have to die? Talk about a buzz kill…

3. Passport

Admittedly, you don’t have to travel outside the United States. But if you do, you must secure a passport from the U.S. State Department before you go. The fees for this document are rather astounding. First-time applicants who need a passport book and card must pay a $140 application fee and a $25 execution fee, a grand total of $165. Then, you’ll have to pay another $140 in fees to renew your passport every ten years, whether you used it during that time or not, whether you changed your name (like through marriage or divorce) or not, whether you changed your address or not.

4. Expensive Drinks at a Bar

I don’t go out nearly as much as I used to, but that doesn’t mean I’m able to avoid every happy hour or birthday party that takes place at a bar. And while I don’t mind spending $10 for a 6 pack to bring to a friend’s house when we watch a game, the thought of dropping $10-$15 on a single drink at a bar makes me cry a little on the inside.

I’m not going to be the cheap person who holds out (or brings a flask to a bar), so I pony up and sip that beer so it lasts just a little longer so I don’t end up getting too many of them. But looking at the menu will always make me cringe. Maybe the best idea is to order blindly and not look at the final bill?

5. Gas

I drive about 15 miles each way to work. I end up filling up my tank about 3 times a month, that’s another $130-$150 a month that I need to spend. It’s a bad feeling paying $45-$50 and putting something in my car that I know is so temporary. This one definitely feels like wasted money, but it’s absolutely a necessity. Without it, I’d be going on a grueling bike ride for about 4 hours a day. Not a realistic option at all.

Reader, what things do you hate to buy, even if you “need” to?

 

Think Hurricane Sandy Doesn’t Affect You? Think Again

Posted by in Money • 3 Comments

I live thousands of miles from the devastated East Coast, where Hurricane Sandy wrought historic destruction. With that in mind, it’s easy to think the storm won’t affect me or my neighbors – but that would be a huge mistake. The fact is, Hurricane Sandy – and it’s estimated $50 billion price tag – could hit all of our bottom lines, whether you live in the storm’s path or not.

The Good

Let’s start with the silver lining of Hurricane Sandy – a tough feat when you look at those omnipresent pictures on the evening news. But there is a positive economic impact from Hurricane Sandy: the post- storm rebuilding efforts.

I’m not talking about the communities coming together to support one another, or even politicians temporarily putting aside bipartisan bickering to reach across the aisle all in the name of storm relief. Instead, I’m talking solely about the boost rebuilding from Sandy could give to GDP. As Business Insider explains, “In the near-term the hurricane-impacted high frequency data and seasonal adjustments may be off for a couple of months. Longer term however, the impact on the overall economy should be minimal… Although we may see some weakness within the first month or two, the economy seems to be stable six months out.” Using data from JPMorgan, the article compares the GDP – and other economic indicators – for major storms like Hurricane Katrina, Hurricane Andrew, and Hurricane Irene. The results are promising; in every case, GDP grew in the six-month period following landfall, as rebuilding efforts got underway. Although this kind of growth is not a given (many economics argue we could see GDP fall in the short term), at least some experts believe it’s a possibility.

This could also have a positive impact on unemployment, at least regionally, as construction workers – often seen as one of the hardest hit economic sectors in the Great Recession – are put to work to rebuild hard-hit communities.

The Bad

Of those estimated $50 billion in losses caused by Hurricane Sandy, only a fraction of those losses – between $10 and $20 billion – were insured. That means thousands of property owners could be looking at covering their expenses completely out of pocket, or fighting long-term battles with their insurance providers, like we saw in the aftermath of Hurricane Katrina.

But it doesn’t stop there. Although New Jersey Governor Chris Christie signed an executive order last week preventing insurers from levying huge deductibles on homeowners, you may not be so lucky. While some states – like Florida – have laws in place that don’t allow private insurance companies from hiking your rates to cover losses elsewhere, not every state has such protections.

What does that mean for you? When insurers are forced to pay out large sums of money – that eat away at their capital reserves – they try to find ways to recoup their losses. That often turns into insurers turning to state regulatory boards, asking for permission to increase insurance rates and your premiums. Hurricanes and other large-scale natural disasters often give insurers leverage in getting their rate increases passed.

The Ugly

In times of trouble, we’ve come to depend on charities like the Red Cross and Salvation Army to do what the federal government cannot – give regular citizens a chance to lend a hand to people hundreds or even thousands of miles away.

Scammers put all that in jeopardy.

New York’s attorney general has already reported many scammers targeting storm victims – everyone from unlicensed contractors to fake charities. Even if your charity is legit, it’s worth noting exactly what percentage of your donation is going to the people who need it most. Everyone should be contributing more to charity, and sites like Charity Navigator can help you bridge that gap; the site provides you with data on just about every charity out there, helping you make a more informed decision about your charitable contribution.