Here are four situations where a decision to pinch pennies can end in financial chaos, and how you can avoid these setbacks.
If you skimp on uninsured motorist coverage, it can be like not having any coverage at all, says Brian Allred, a sales rep with Liberty Mutual Insurance in Ontario, Calif.
That's because if an uninsured driver hits you in an accident, you'll probably have to pay for your damages.
"In my county, 17 percent of the cars on the road do not have car insurance, and that equates to thousands of cars," Allred says.
Uninsured motorists coverage often costs less than $100 a year, Allred says. But it could save you thousands if you are involved in a wreck with a driver who does not have auto insurance.
You also should purchase underinsured motorist coverage. This type of car insurance kicks in when your damages exceed the limits of the other driver's liability policy.
You may cut corners by purchasing only the required minimum amount of liability insurance on your homeowners policy.
But if someone is hurt on your property – even if they're on the property without your permission – he or she could sue you, says Mark Carrasquillo, an account executive with E.G. Bowman and Co., an insurance broker in New York.
Without adequate liability insurance, you could one the hook for tens of thousands of dollars – or even more.
As a general rule, the more property you own, the more liability homeowners insurance protection you should have. Carrasquillo suggests speaking with your agent and a financial expert to help determine how much coverage you need.
Dying without a life insurance policy could leave your dependents without a financial safety net.
Procrastinating before deciding to buy life insurance also can be costly, Carrasquillo says.
"The younger you are when you buy life insurance, the cheaper it is."
Waiting several years or longer before taking out a policy means the insurance will be more expensive when you finally do buy than it would have been if purchased earlier, Carrasquillo says. Every birthday brings a life insurance price increase.
You may need access to transportation – usually in the form of a rental car – if your car is being repaired after an accident, Allred says.
Auto insurance policies often offer optional loss-of-use coverage that will reimburse you for the cost of car rentals while you wait for your car to be repaired after an accident. Because this insurance is often optional, many people choose not to get it.
However, Allred says the rental coverage option is relatively cheap and could be important to maintaining your schedule while waiting for your vehicle to be fixed. It could take days or even weeks for the parts to arrive and the repairs to be completed on the insured car, he says.
"Basic rental car coverage could be around $30 a year, which would give you at least 30 days of rental car use," Allred says.
If you don't have this policy, expect to pay normal car rental rates if you need a car after an accident.
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Filed under insurance by on Jan 25th, 2011. Comment. 
6 Insurance Myths That Could Cost You a Bundle
CLEVELAND, OH - July 1, 2009 - According to Insurance.com's RateWatch for Car Insurance, average annual auto insurance rates increased in June 2009 to $1,884 after four months of steadily declining rates. The moderate increase is still good news for drivers who had been paying as much as $1,982 in October 2008. However, consumers hard hit by the economy should watch their renewal bills carefully.
"It's unlikely rates will change significantly in the second half of the year," said Sam Belden, Vice President at Insurance.com. "Before rates start to climb, consumers should invest 30 to 60 minutes comparing car insurance quotes. Switching can save thousands of dollars in the long run."
Before shopping for a new policy, Insurance.com offers tips about the most common car insurance myths:
After you get a quote, ask about what's not covered. Are other drivers in your household covered? Will you have auto insurance coverage for your rental car when you travel or have a break-down? Can you add a car on the weekend and be covered? Better safe than sorry.
Not so. While your rate might increase after an accident, a DUI almost always costs more. Your company may decide to cancel your policy, raise your rate or switch you to a company that specializes in "high risk" drivers. And, that leads to higher rates for 3 to 5 years.
15 to 25 percent of drivers go without insurance today, so Uninsured Motorist coverage is more important than ever. And, it costs very little to increase your limit.
A policy has to end some time - and insurance policies always start and end at 12:01 AM in your time zone. One minute after midnight! So, if you receive a cancel notice, get a new car insurance policy before you head out for the night.
Insurance companies check several consumer reports before finalizing your rate, and even a not-at-fault accident might make a difference. Plus, if you don't tell the truth, they don't have to insure you!
There are hundreds of auto insurance companies ready to insure you, and each company has its own "rate formula", which is why auto insurance rates differ. Auto insurance discounts and other incentives vary.
The RateWatch report data is based on the lowest average car insurance rates quoted to consumers in each state. See the complete car insurance rate report.
Insurance.com links consumers directly to the rating systems of fifteen top insurance companies with its proprietary technology. Instant, accurate comparison rates help consumers make smart decisions about auto insurance.
Contact: Sari.martin@icrinc.com, 203-682-8345
Filed under insurance by on Jan 18th, 2011. Comment.
Although the most recent official data from the federal Energy Information Administration shows current month-by-month trends, these are the top 10 states with the highest average monthly gas prices from January 1983 to October 2008.
AlaskaHawaiiVermontNevadaCaliforniaOregonWyomingArizonaNorth DakotaMaineHistorically, gas prices fall along with the leaves. The summer driving season has traditionally been when we see the highest prices at the pump, and gas prices usually drop again at the start of the school year as travel diminishes.
Gas Prices Are Unpredictable.
2008 was an unforgettable year in many ways, and gas prices were no exception. They reached over $4 a gallon in May, but then fell to below $2 a gallon due to the global economic downturn and lower demand. However, renewed worldwide demand and overall level-to-decreased production could cause long-term increases in the price of oil and gasoline. The price of crude oil hit a record high of almost $150 per barrel in July, but fell to under $50 a barrel near the end of 2008. Whether we will see long-term prices rise or fall depends on the energy policies of the Obama administration and other emerging economies around the world.
Should We Lower Gas Taxes?
Federal, state, and local taxes were traditionally a large component of the retail price of gasoline. However, during the 2008 price spikes, taxes accounted for only about 15% of the cost of a gallon of gasoline. Federal excise taxes have held steady at 18.4¢ per gallon since October of 1997, and basic state taxes average about 21¢ per gallon. Unfortunately, since they only add around 40¢ a gallon, lowering gas taxes would not significantly lower the price of gas. In addition, since gas taxes are mostly used to fund road maintenance and public transportation, the reduced tax revenue would have to be raised in other ways. Cities, states, and the federal government would raise the overall tax burden even for those who don't drive. If you still think we're paying too much for gas, consider this: Europeans are paying an average price of around $7.50 per gallon of gasoline, a large part of which is tax.
Some States Add More Taxes.
The 21¢ per gallon is an average figure, meaning some states are adding more tax, and others are adding less. States such as Hawaii which are far from the refineries pay more due to higher transportation costs. And residents of California are saddled with expensive gasoline because the state operates its own reformulated gasoline program with more stringent requirements than federally-mandated gasoline. California prices are historically higher and more variable than others because there are relatively few supply sources for its unique blend of gasoline.
Will Gas Prices Cause a Permanent Shift?
Interestingly, gas prices rose to a point in 2008 that caused Americans to change their driving habits. This caused an accelerated demand for fuel-efficient cars, such as hybrids and economy cars. Nearly all carmakers have hybrids either in production or planned for future release. It remains to be seen, however, if the drop in gas prices at the end of 2008 will cause a return to earlier levels of travel, or if the trend toward less travel will be permanent. Historically, cheaper gas has led to more driving, but people who switched to public transportation, carpooling, and cars with better gas mileage may counteract this tendency.
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Originally posted September 17, 2004.Filed under insurance by on Dec 27th, 2010. Comment.