Sensible Cash Podcast: Well being Insurance Deadlines and the Finest Automotive Insurance Charges – Yahoo Finance
Welcome to the NerdWallet Smart Money podcast where we answer your questions about real money.
This week's episode begins with a discussion how you can take advantage of the special health insurance registration deadline before the next month.
Then we turn to this week's question from Mya in Rhode Island:
I want to buy a used car with a loan from my bank. The next thing on my agenda is the search for car insurance. I just graduated from college with my first job and no longer on my family plan. I was wondering how to go about finding car insurance and knowing what a good deal is. I know the big online insurance companies and I was wondering what your thoughts and tips are in order to find the best policy. Thank you.
Watch this episode on one of these platforms:
The special registration deadline for the Affordable Care Act exchange ends on August 15th. Check beforehand whether you are eligible for a free or discounted plan. Everyone who has received unemployment benefits this year is entitled to a silver tariff with no premium. And those with an income of 600% of the state poverty line (up to $ 76,560 for a single person or $ 157,200 for a family of four) can qualify for grants.
And when buying auto insurance, you should weigh cost and coverage. Policies with lower monthly rates usually have higher deductibles. But a higher monthly rate with a lower deductible can make it cheaper to repair or replace your car in this case.
Know that prices can vary widely from one company and one person to the next. Auto insurance companies use proprietary formulas when determining what you will be billed, although they usually take into account factors such as age, driving history, and gender.
Price fluctuations make shopping by price all the more important. The more offers you receive, the better your chances of finding the best price for the coverage you want. Compare rates from at least three insurers annually to make sure you are still getting a competitive rate. Don't overlook smaller insurance companies either.
The story goes on
Shopping spree. Once a year, compare offers from at least three insurers to find the best policy.
But don't make price your only consideration. Find an insurer with the types of coverage you want and consider consumer complaints and customer satisfaction ratings.
Give small insurance companies a chance. Regional insurers may have the lowest price for you while still providing great customer service.
Do you have a question about money? Write to us or call us at 901-730-6373. Or you can send us an email at firstname.lastname@example.org. To hear previous episodes, go to Podcast homepage.
Sean Pyles: Welcome to the NerdWallet Smart Money Podcast where we answer your personal finance questions and help you feel a little smarter about what you are doing with your money. I am sean pyles.
Liz Weston: And I am Liz Weston. To get your money questions answered in a future episode, reach out to the nerds. Give us a call or text us on the nerd hotline at 901-730-6373, that's 901-730-NERD, or send us an email at email@example.com.
Sean: In this episode, Liz and I answer a listener's question about how to get the best rates when buying auto insurance. But first, in our This Week In Your Money segment, let's talk about your best and last chance of getting free health insurance, at least for now.
Lisa: There is an ACA deadline. That's the Affordable Care Act Exchanges, also known as Obamacare. And in March, President Biden signed the American Rescue Plan, which essentially extended free health coverage to a lot of people. And I don't think it's being informed enough about it or talked about enough about it, so we wanted to mention it as the deadline is approaching.
Sean: Yes, that's the thing now. The deadline runs in a few weeks. August 15th is the end of that special sign-up period, and after that you will need some kind of qualifying life event to change your health insurance to get it on the ACA exchanges. So, Liz, what do you think people should know about what health insurance is and why it is so much better than what it was before this bill was passed this spring?
Lisa: One of the big changes is that people who have been unemployed and received unemployment benefits even if it was just a check this year will be eligible for free comprehensive health insurance. They're called the silver plans, but they've improved them so much and lowered the deductible to what I believe was $ 177. If you don't have access to any other health insurance, that is, if you don't have another job, if your spouse doesn't have health insurance, whatever it is, you can qualify for one of these free plans. That is why the deadline is so important. If you've lost your job this is what you'll want to check – and you can get started by going to healthcare.gov.
Sean: You have also written an excellent column to which we will link in our show notes, which shows all the details and why it is so important right now. Another important element are subsidies related to health insurance.
Sean: People with an income of up to 600% of the poverty line, around US $ 76,000 per year for a single person or US $ 157,000 for a family of four, can now receive health insurance grants.
Lisa: And for people who are already receiving subsidies, the subsidies have been increased. They actually grew. So, if you don't have health insurance and haven't checked the ACA lately, do it because it could really save you some money and keep you away from those catastrophic medical bills that can really turn your life upside down. Even if you're healthy now, as we learned last year, you never know what's going to hit the streets. So, get your health insurance if you don't have one.
Sean: And even if you have health insurance and you think it has nothing to do with me or my life, there is a possibility that there is someone in your life who is not or underinsured who could take advantage of it. So it's worth mentioning when talking to people who say, "Hey, did you know the deadline was coming? It's really important. It can save you a lot of money and make sure you get quality health insurance."
Lisa: Exactly. Be a friend of your friend and he will be a fan of yours for a lifetime. I actually helped a friend do just that. She had been paying for her own health insurance for a while, and I mentioned it when it first happened, but the health exchanges hadn't been updated to reflect the change, so she said, "Yeah, yeah, yeah, whatever. " And then I reminded her and she went back and said, "Holy cow. I have free health insurance." Yes, exactly.
Sean: I think it's important to realize that a lot of people aren't that penetrated by this stuff and may not know what's going on. So if you're feeling a bit annoyed when this person says, "Hey, did you do this? Did you get your insurance? Did you file your taxes on time?" I think that while they may roll their eyes at first, deep down they are probably thanking you too.
Lisa: We have to hope so.
Sean: Yes. If nothing else, I just pat myself on the shoulder and say, "I've done what I can."
Lisa: It's correct. That's it.
Sean: Is there anything else you think people should be aware of?
Lisa: There was also another component, namely the free COBRA coverage. But if you qualified to do this, by then you have probably heard from your former employer.
Lisa: But if you do for any reason, you'll qualify for COBRA – that's when you renew your own health insurance after you've lost your job – but it's super, super expensive.
Sean: Normally yes.
Lisa: Yes, the premiums are supposed to be covered from April to September and your employer should contact you by May 31st. But if you think you might qualify, take a look at it because that is another great help with paying those health insurance bills.
Sean: There is also a deadline for the end of September as far as COBRA is concerned, right?
Lisa: Free coverage ends in late September, but that's your cue if you get this help to switch and sign up for ACA coverage. It will be a special event. What do you call them?
Sean: A qualifying life event.
Lisa: Thank you, a qualifying life event. When your COBRA subsidy ends, you can upgrade to ACA.
Sean: And I'm just throwing in that there are four basic types of qualifying life events, like loss of health insurance. As we mentioned at COBRA, that would be one of them. Household changes like marriage or divorce, changes of residence like moving to a different zip code or county, and then there are other qualifying events like naturalization or changes in your income that would affect the coverage for which you qualify.
Lisa: It's always a good idea to check it out because you might qualify if you don't believe it.
Sean: And you definitely don't want to pay out of pocket when you get coverage help.
Lisa: Amen. Yes.
Sean: OK. Well I think that covers it for now. Do we come to this week's money question?
Lisa: Let's do that. This episode's money question comes from Mya, Rhode Island. Here is your question. "I want to buy a used car with a loan from my bank. The next thing on my agenda is looking for car insurance. I have just finished my studies, have my first job and no longer my family plan. I wonder how I can go back." Find auto insurance and know what a good deal is. I know the big insurance companies online and I wonder what your thoughts and tips are to find the best policy. Thank you very much. "
Sean: Great question, Maja. To answer your question, insurance nerd Kayda Norman is with us on this episode of the podcast.
Lisa: Hello Kayda. Welcome to the podcast.
Kayda Norman: Hey thank you for having me
Sean: Nice to have you Let's start at the beginning, a very good start. How should people go about buying auto insurance?
Kayda: So when you are thinking about buying auto insurance, you want to be prepared with some basic information. You want to know who is on the policy, what driving history they have, and then facts about your car, such as make and model, safety features, and the annual and current mileage of your car.
Kayda: Another important point to think about is what coverage you will need. For someone like Maya who gets auto insurance with a loan, they likely need to get collision and fully comprehensive insurance. If you don't know what it is, collision insurance pays for damage to your vehicle if you have an accident, and fully comprehensive insurance covers damage to your vehicle from almost everything else except traffic collisions – damage from hail, flood or even through Theft of your car. And then you also need to buy government-mandated coverage. The rest is up to you.
Lisa: I always keep them separate by thinking, OK, collision is when I drive into the tree and comprehensive when the tree falls on my car.
Sean: Not when the tree goes inside you.
Lisa: Exactly. OK, now that people have gathered their information, what's next?
Kayda: Once you have all of this information in hand, it's time to decide how you actually want to compare companies. Depending on the insurer, you have different options. You can get your quotes online, phone an agent, or speak to an agent directly. I personally like to shop online. It's just very quick and convenient. I can do it from home. However, if you have any questions about your coverage or the insurance company, you may want to speak to an intermediary directly.
Sean: I'm kind of breaking the millennial stereotype that I love talking to customer service reps on the phone because I think you can get more personalized attention and better deals. But buying auto insurance is one of the areas I wouldn't want to talk to a broker about. It seems like it's going to take so much longer. Is that the case, or does calling an agent have any particular advantages?
Kayda: I mean, I really think it just depends on your situation. You want to do it quick, "Hey, I have an older car, I don't need that much coverage," then I'd hope it turns out to be a pretty quick conversation. However, if this is your first time getting car insurance or just want to learn more about the company, it may take a little longer. But I think that talking to an agent has many great advantages, because you can ask them about discounts and other savings options while on the phone and really, do I really need this protection?
Sean: And Liz, don't you have someone to do that kind of work for you?
Lisa: Yes. I used to try to do it all on my own, but when you're buying houses and cars and things get more complicated it's really nice to have an independent insurance agent who will ask questions and shop around and get you the best policy.
Sean: And how much do you pay to have someone do this job for you?
Lisa: Well, you don't usually pay with insurance. For this they get commissions. So it's not a free service as the commissions are built in, but it works pretty well for me.
Kayda: Yes, and I just wanted to add that I think independent agents are great for all of these reasons, and definitely when you're someone with a lot of cars, different homes, or for a job. However, you should be careful as in most cases the independent broker is only allowed to sell policies from certain companies. So yes, there could be a better company for you that could be cheaper. And then I wanted to talk a little bit about how the independent agent exists, what it sounds like, Liz, where you're right, you don't have to pay a fee. There are also insurance brokers who may require you to pay a fee.
Lisa: And to be clear, we have a complex situation. We have art and antiques – you know, adult stuff. But if you are only getting auto insurance there is no need to necessarily go to a broker. You can do your shopping online.
Sean: One thing that has always struck me in my shopping experience is that deals vary quite a bit from company to company, around $ 50 or $ 100 per month. Kayda, what do you think is behind the variation in these numbers?
Kayda: Yeah, I think that's really common. One thing I want to point out is how much coverage you are getting. So this is very important, especially with liability, because liability pays for the other person's injuries if you cause an accident. So if you don't have enough coverage, you'll have to pay out of pocket.
Kayda: When comparing offers, should you also think about whether the car insurance has a deductible? Some auto insurance policies, such as fully comprehensive and collision insurance, require this.
Lisa: Let's dive a little deeper. Can you explain exactly how your deductible will affect your insurance bill?
Kayda: A deductible is the amount you pay out of pocket before your insurer pays a claim. If you have $ 1,500 damage and a $ 500 deductible, your insurer will give you $ 1,000. So your deductible affects the price you pay for your insurance each month. Let's say Company A has a cheaper monthly rate, but you have to pay a $ 1000 deductible before your insurer pays a claim. Company B charges you more each month, but only has a deductible of $ 500. So you can basically decide whether you want to pay more now and have a low deductible later or whether you want to save the money on your car insurance by increasing your deductible. But I am really warning you not to increase your deductible unless you are willing to spend more of your own money to repair or replace your car.
Sean: It seems like a higher deductible basically means a gamble that you won't have any kind of auto accident problems in the future that you just don't know.
Lisa: So I think people will be tempted to get the cheapest policy no matter what. Is this a good idea?
Kayda: Unfortunately, not. I'm sorry to say. This is definitely a very popular trail, but yes, not the best choice. After all, you buy insurance primarily for this security. It's an interesting product because you get insurance and really hope you would never use it, but when you have to use it you want to make sure it works and covers what you need. One thing to think about beyond price is consumer complaints and customer service ratings. When a company has a lot of customer complaints it can be a big warning sign of the quality of service you may be getting. If you go for this cheaper auto company and don't do the research, you could run into conflict with your insurer when you need to pay a claim.
Lisa: So where do people find a company's complaint record?
Kayda: We look at JD Power. Every year they publish a study on customer satisfaction with auto insurance and home insurance, both for claims and for the shopping experience when buying. So they are not only broken down by major insurer, but also by region. And another thing I would do is go to NerdWallet and look at reviews because we give a star rating – one to five – to give you a quick indicator of how good a company is.
Sean: I want to go back to the price. I wonder if you can tell me how auto insurance determines what I, Sean, get billed compared to you, Kayda, or Liz?
Kayda: Insurance pricing is very unique in that the tariff you pay is always specific to you. Insurance companies take into account a number of factors such as age, location, make and model of car, and driving history to determine your rate. In addition, insurance companies all use their own unique formula to weigh all of these different factors. Therefore, unfortunately, you don't know which company is best for you unless you compare prices. Let's say you have a current DUI and are looking for the cheapest tariff. Company A, it might charge you 5% more than someone without this DUI on their record. And then Company B charges 3% more – they're a little more forgiving. But again, you won't know until you actually compare these quotes.
Sean: It's their company-to-company secret sauce.
Kayda: Another thing I should keep in mind is that your listing can be further personalized even after it is received. The final price you pay may therefore change from the original offer you received.
Sean: Are there average car insurance costs that people can expect?
Kayda: Yes. So I can definitely give you this basis. NerdWallet did a study of the average car insurance rates across the country and we saw drivers pay $ 1,592 per year or $ 133 per month for full coverage. Remember, when you get minimum insurance, you pay less.
Sean: And this is also a good opportunity to bundle your insurance. If you own a home or are a tenant and have tenant insurance, you may be able to save. I've done that and I'm happy every time I pay a little less for my insurance.
Lisa: Insurance premiums do not stay the same. Sometimes they want more market share, so they lower their prices. Other times they will decide they have too much attention and they will raise their interest rates. So you don't do this just once, right, Kayda?
Kayda: Exactly. You definitely want to compare the tariffs of at least three insurers at least once a year, and there is even something called price optimization, where the insurers charge higher tariffs based on the likelihood that a person will not buy at a lower price.
Kayda: So basically you always hear about insurance companies rewarding loyal people, which I think can be true. There are these loyalty discounts out there. But this price optimization basically penalizes people for staying true to their company.
Kayda: I mean, I'm not saying you don't have the cheapest rate, you could do your research and find out, great, I still have the cheapest rate. I am happy. Wonderful. Or, you may even find that there is a slightly cheaper company out there, but that doesn't offer everything you want.
Sean: It seems like price optimization is another term for your insurance company basically thinking you're a fool.
Kayda: Yes. I mean, I don't want to say that, but.
Sean: Well, no matter what you seem to be planning, it is just an excellent reminder of the importance of shopping in the area.
Kayda: Exactly. It's such an important step that you don't want to skip. Again, the more offers you receive, the greater the chance of finding the lowest tariff for the coverage you need.
Lisa: Another important factor in most states is creditworthiness. Kayda, can you tell us how your credit can affect your premiums?
Kayda: Yes. Credit is an important factor in auto insurance. I am glad you brought that up. Believe it or not, it can end up costing you more for having bad credit than having a current DUI.
Kayda: Definitely something to keep in mind when shopping. And that's just one more reason why you should compare different companies because they won't tell you, "Hey, we're more forgiving." If you have bad credit or not, all you have to do is compare prices. One thing you can do is use a comparison tool site like the one we have at NerdWallet. That way, you can simply fill in your information and get prices from a number of different companies at the same time.
Sean: Isn't it actually illegal in some states for auto insurance companies to use your credit information to determine your rates?
Kayda: It's illegal in some states, including California, Hawaii, Massachusetts, and Michigan. There are other states that are examining how creditworthiness affects your car insurance rate. Washington is looking into this, although there has been some backlash, but they recently passed law on it. Also beyond creditworthiness, with gender, I just wrote an article about it, different states have also used gender in their tariffs, and they say that certain people are discriminated against when they use credit as a factor. Gender etc. So different groups are trying to support that and change these laws. But as you might expect, it's pretty slow.
Sean: Another thing that I think would be helpful is the difference between minimum coverage and full coverage. Can you explain that one by one, please?
Kayda: I think one thing people don't realize is that full coverage isn't a specific type of policy. It is a combination of types of coverage. Taken together, fully comprehensive insurance can be worthwhile for a number of different situations, such as: B. Damage to your car and someone else's vehicle if you've caused an accident, and it also includes fully comprehensive insurance if your car is stolen or damaged by hail, flood or other weather. Then the minimum coverage is now at the other end of the spectrum. It is probably exactly what you think it is. This is the minimum amount of insurance you need to drive a car and is determined by your state. So it really depends on your location.
Sean: Correct me if I'm wrong here but some people may not be eligible for full coverage depending on the car. I have a friend whose car is technically totaled but still running and her insurer will not give her full coverage due to the condition of her car. It's the classic thing on a Honda Civic with the engine running forever, but then everything else falls apart and so the car is worthless. I had one of those cars in college.
Kayda: Oh wow And you've found the same thing or just haven't tried?
Sean: I didn't take care of the insurance at the time.
Sean: That was my mother. But yeah, it was a nice '93 Honda Civic hatchback that only had the engine working. Everything else fell apart.
Lisa: So they're basically giving her liability insurance but not collision insurance?
Sean: Because the car is just not worth it.
Kayda: Yeah, I find this interesting, because NerdWallet, we definitely don't recommend getting full coverage if you have an older car that isn't worth much. I think I am in some ways impressed that the insurance company is not trying to get more money where it can.
Sean: Yes. I wonder if part of it is that if something else happens to the car, they don't want to pay because it is a total write-off. I am not really sure.
Kayda: I mean, the way I look at it, let's say this car is worth $ 500, you have a $ 1000 deductible, I think in that sense the insurer would win. And that's why we say you are not getting full coverage. If your car isn't worth the amount you'll be paying for your deductible, it doesn't make any sense.
Sean: On top of that, it also seems that the coverage you want depends only on personal preference, right?
Kayda: Yes, definitely. I think that's fair. Let's say Liz, you might be interested in a company that you can easily interact with and that has a seamless technical experience.
Kayda: But I know a lot of people right now who don't drive that much during the pandemic, so they might want to try out pay per mile insurance. And here your tariff is based on the number of kilometers driven. So yes, not every company will have the option you want. So you really need to double check that they have what you need before proceeding with them.
Lisa: And the pay per mile, they actually let you pack something in your car to keep an eye on you, right?
Kayda: Yes. So you have an app or a plug-in device and then the kilometers traveled are recorded. But it depends on the company you go with how it is tracked. Another option that is a bit similar to pay-per-mile is pay-as-you-drive, which tracks hard braking, speeding, and your general driving style as you go.
Lisa: Oh, I'm judged for how I drive Interesting.
Kayda: Yes. So if you are scared of it, this may not be for you.
Sean: Nein, ich habe einen Bleifuß, also werde ich das nicht machen.
Lisa: Äh-huh. Sean, warte einfach, bis du ein Elektroauto hast, dann kannst du das Gaspedal durchdrücken und wie 60 fahren. Es ist großartig.
Sean: Oh ja, noch eine Geldstrafe.
Lisa: Ich hoffe, mein Versicherer hört nicht auf das. Okay, viele Kunden werden zu den großen Versicherern gehen, weil sie viel Geld für Werbung ausgeben, aber kleinere Versicherer könnten besser sein, oder?
Kayda: Ich denke, es liegt in der Natur des Menschen, sich zuerst zu diesem großen Versicherer zu bewegen. Es ist ein bekannter Name und er hat ein gewisses Maß an Vertrauen. Aber kleine Versicherer haben oft günstigere Tarife, und nicht nur das, sie können auch bessere Noten im Kundenservice und weniger Verbraucherbeschwerden erzielen.
Sean: Ich habe noch eine letzte Frage an dich, Kayda. Wie können die Leute die "beste" Politik finden?
Kayda: Leider habe ich keine todsichere Antwort darauf, da es wirklich von Ihrer eigenen Situation abhängt. Sie müssen sich nur fragen: "Brauche ich die billigste Police, damit ich mir andere Rechnungen leisten kann, oder sind Seelenfrieden oder Benutzerfreundlichkeit ein Faktor, der groß genug ist, dass ich bereit bin, dafür zu bezahlen?" Abgesehen von der Überprüfung der Versichererbeschwerden und der Kundendienstunterlagen denke ich, dass es einfach wirklich wichtig ist, über Ihre eigenen individuellen Bedürfnisse nachzudenken. Wenn der günstige Versicherer, den Sie finden, keine mobile App hat und Sie nach einem Unternehmen mit einer benutzerfreundlichen technischen Erfahrung suchen, ist dies nicht das beste Unternehmen für Sie.
Sean: Richtig. Nun, Kayda, vielen Dank, dass Sie mit uns gesprochen haben.
Kayda: Ja, vielen Dank. Das war großartig.
Sean: Kommen wir also zu unseren Takeaway-Tipps und ich kann loslegen. Zuerst stöbern Sie herum. Vergleichen Sie einmal im Jahr Angebote von mindestens drei Versicherern, um die beste Police zu finden.
Lisa: Als nächstes machen Sie den Preis nicht zu Ihrem einzigen Entscheidungsfaktor. Suchen Sie nach einem Versicherer mit den gewünschten Deckungsarten und berücksichtigen Sie Verbraucherbeschwerden und Kundenzufriedenheitsbewertungen.
Sean: Und schließlich geben Sie kleinen Versicherungsunternehmen eine Chance. Regionale Versicherer haben möglicherweise den günstigsten Preis für Sie und bieten dennoch einen hervorragenden Kundenservice.
Lisa: Und das ist alles, was wir für diese Episode haben. Haben Sie selbst eine Geldfrage? Wenden Sie sich an die Nerds und rufen Sie uns an oder schreiben Sie uns Ihre Fragen unter 901-730-6373. Das ist 901-730-NERD. Sie können uns auch eine E-Mail an firstname.lastname@example.org senden. Besuchen Sie nerdwallet.com/podcast für weitere Informationen zu dieser Episode und denken Sie daran, uns zu abonnieren, zu bewerten und zu bewerten, wo immer Sie diesen Podcast erhalten.
Sean: Und hier ist unser kurzer Haftungsausschluss mit freundlicher Genehmigung unseres netten Rechtsteams bei NerdWallet. Ihre Fragen werden von sachkundigen und talentierten Finanzautoren beantwortet, aber wir sind keine Finanz- oder Anlageberater. Diese nerdigen Informationen werden zu allgemeinen Bildungs- und Unterhaltungszwecken bereitgestellt und gelten möglicherweise nicht für Ihre spezifischen Umstände.
Liz Weston: Und damit, bis zum nächsten Mal, wenden Sie sich an die Nerds.
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Liz Weston schreibt für NerdWallet. E-Mail: email@example.com. Twitter: @lizweston.
Sean Pyles schreibt für NerdWallet. E-Mail: firstname.lastname@example.org. Twitter: @SeanPyles.
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