accidents

6 Times You Should Insure Your Side Gig

Kat Tretina — Mon, 02 Jul 2018 08:30:11 +0000

About two years ago, I launched a small side hustle dog-sitting for neighbors. It was a profitable side gig that allowed me to earn extra cash in my spare time. But one of the things I hadn't prepared for when budgeting my startup costs was insurance for my business.

I quickly found out it was necessary. My good friend who had encouraged me to take up pet-sitting was watching a dog for a client. She must not have closed the dog's crate all the way, because he escaped one night and destroyed the owner's expensive silk Oriental rug. The owners took her to court, and she ended up owing them over $30,000. Because she didn't have insurance, she was on the hook for the replacement cost herself.

Unfortunately, my friend's story isn't that uncommon. Many side hustlers run businesses without insurance, leaving them at risk if there's ever an accident or error.

Whether you're a freelance graphic designer, dog-sitter, baker, ride-share driver, or housekeeper, insurance can be an essential safeguard for your business. You might think insurance is unnecessary because your gig is too small, or perhaps you work solely from home. However, mistakes and accidents happen all the time in all industries. Here are five times you need an insurance policy.

1. You have customers visit your place of business

If you have customers visit your home or store — maybe you opened a hair salon, or you run child care services out of your house — there's a chance your customer could get injured on the premises. The client could sue you for damages, leaving you on the hook for tens of thousands of dollars (if not millions!). An insurance policy can protect you from this liability.

2. You spend time in a customer's home

Maybe you're a personal assistant or you run a housekeeping business, and your client trusts you to work in their home. Even if you're careful, it's all too easy to knock over a precious heirloom or spill a drink on a designer sofa. Without insurance to cover your mistake, you might have to compensate the owner for the damage on your own.

3. You work with children or animals

Children and animals present unique challenges, because they can be unpredictable and have a knack for getting into mischief. Whether it's an incident while baby-sitting a child or dog-walking, you could be held responsible for legal or medical fees. It's important that you insure yourself to cover these bases.

4. You're trusted with sensitive or proprietary information

If you're a graphic designer, bookkeeper, or writer, you might not think you need insurance. However, your clients likely entrust you with company information that is sensitive or confidential. If your computer is stolen or you're hacked, that information could be compromised, and your clients could take legal action against you.

5. You couldn't cover the cost of legal fees and settlements

As a business owner or side hustler, there's always a chance of a vendor or client suing you for some discrepancy or issue. If you don't have enough money in the bank to cover typical legal fees or settlement costs, you likely need insurance coverage. (See also: 9 Times to Hire a Lawyer Immediately)

6. You're driving people around

Uber and Lyft offer their independent contractors supplemental insurance in addition to requiring them to have their own auto insurance policies. However, don't think that means you're completely in the clear. Often, the company-supplied insurance has strict limitations and is inadequate.

For example, if you're a driver with Uber, you have third-party liability coverage of at least $1,000,000, uninsured or underinsured motorist bodily injury coverage of at least $1,000,000, and contingent collision and comprehensive coverage with a $1,000 deductible only when you're on your way to pick up a rider and until you drop them off.

If you have the app on and are waiting for a request, your coverage becomes much more limited: $50,000 per person or $100,000 per accident for bodily injury, and $25,000 per accident for property damage (such as a damaged fence). If you wreck your car, or if you damage another vehicle, you'll likely have to handle the repairs on your own. Because you were working for a ride-sharing app at the time of the accident, your personal auto insurance policy may not cover it, either. (See also: What Kind of Auto Insurance Do Uber Drivers Need?)

The lesson here is that even if the side gig company offers some sort of supplemental insurance coverage, it's probably not comprehensive enough to cover all of your bases. It's a good idea to look for your own supplemental policy to ensure you're fully covered.

Where to find insurance

In many industries, you can get an insurance policy for under $500 per year. If you're not sure where to start, contact your personal insurance agent to see if they offer business policies. If not, you can also use InsuraMatch to find out what insurance you need and get quotes for the necessary policies.

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This article is from Kat Tretina of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

These 8 Modern Car Features Are Riskier Than You Think

Dr Penny Pincher — Mon, 11 Jun 2018 08:30:18 +0000

If you're in the market for a new car, you may be paying close attention to some of the more modern features than can improve your driving experience. While some newer car features improve the safety and convenience of your vehicle, others can make your ride more dangerous. Here's what you need to know to stay safe with modern car add-ons.

1. Air bags

Air bags provide a significant improvement to vehicle safety overall, but there are certain situations where they present a hazard. Air bags can be dangerous to children or adults of short stature due to the close proximity of shorter individuals to the front bag when it deploys. To reduce risk of injury, seat shorter folks in the back seat, or adjust the front seat to a position further away from dashboard.

Another problem in recent years is faulty air bags. When buying a used car, check to see if it falls into the massive recall for Takata air bags that can malfunction and spray shrapnel when they deploy. (See also: Your Car Was Recalled. Now What?)

2. Keyless ignition

Keyless ignition is a convenient feature that allows you to start your car remotely. A keyless ignition fob allows you to press a button and transmit a radio signal to start your vehicle. But this convenience can come at a dangerous cost. Without the need to turn a key or actually sit in the car, it's easy to forget that the engine is running. You may inadvertently create a carbon monoxide hazard in a garage or other enclosed space. Always check that the engine has been turned off when you exit the car.

3. Touch screens

That big screen on the dash that runs the climate controls, shows you a map, and controls your music can be a major distraction. Not only does the display catch your attention, but dynamic touch screens take a lot more focus to use than old fashioned knobs and buttons that you can learn to operate by touch from muscle memory. Touch screens have different menus for different functions and typically require the driver to look at the screen to see where to press, diverting attention from the road. Practice safety first by not using the touch screen while driving.

4. Jacked-up vehicles

Jacked-up vehicles have been trendy for quite some time, going back to the SUV craze in the 80s and the Hummer craze in the 90s. Driving a large vehicle that sits high above the ground provides a commanding view of the road, but handling can be compromised. Tall vehicles have a higher center of gravity and heavier tires, which results in a greater risk of rollover.

Driving a jacked-up vehicle also poses risks to other cars on the road. Instead of meeting bumper-to-bumper in a collision, a smaller car might take the bumper of a jacked-up vehicle through the windshield, greatly raising the risk of serious injury or fatality.

5. Roof racks

Much like with a jacked-up SUV or truck, placing heavy items on top of your car raises the center of gravity and increases risk of rollover. In addition, items placed on roof rack may become loose during transit, presenting a risk of injury to pedestrians or passengers in nearby vehicles. Finally, attempting to lift cargo up to a roof rack can cause back injuries.

6. Overstyling

Styling can make an ordinary car look cooler and more expensive, but it can also make cars more dangerous. Dark tinted windows can reduce visibility for the driver, especially at night. This problem gets worse in cars that have lots of electronic displays that can create glare. Chunky pillars make vehicles look sturdier, but also make it harder get a good view of oncoming traffic or obstructions.

7. Super-bright headlights

Some expensive sports and luxury cars come with high-intensity discharge (HID) lights, often using xenon gas, that generate very bright light with a bluish hue. Some vehicle owners upgrade their standard headlights to HID to make their car seem more expensive. While bright headlights can improve visibility for the driver of the car equipped with them, the bright lights can produce glare and reduce the vision for oncoming motorists.

8. Cruise control

Cruise control can make long distance driving much easier — just reach your desired speed, and you can set your cruise to maintain speed without working the accelerator. The problem with cruise control is that it tends to promote unsafe driving behavior and reduces reaction time. Drivers using cruise control tend to cruise right up on slower vehicles before making a quick lane change to pass. Be vigilant at all times while driving — cruise control is not autopilot.

Cruise control can also be dangerous in slippery conditions that can result in the tires spinning out of control when there is not enough friction between the tires and the road. You should never use your cruise function in poor weather conditions.

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This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Times to Hire a Lawyer Immediately

Paul Michael — Tue, 13 Mar 2018 09:30:19 +0000

Lawyers have a bad reputation in this country. And while hiring a lawyer can certainly be expensive, it doesn't mean they aren't a worthwhile investment. To be sure, most legal professionals get into the business to see that justice is done and people get the representation they need. If you have been putting off calling a lawyer for any of the following situations, rethink your actions. A good lawyer is well worth the money.

1. A messy or complicated divorce

Divorce is extremely common these days. Research shows that in the United States alone, one divorce occurs every 13 seconds. Even more sobering, an estimated 80 percent of couples are headed toward divorce within the first four to five years of marriage. If your marriage fails, you will hopefully be able to come to terms amicably using a mediator. But if that's not the case, and you are both butting heads over the separation of property, custody, and money issues, you need to lawyer up as soon as possible.

The terms you agree upon during the divorce are binding, and can only be changed by going back to court. To avoid this, and even more legal fees later on, find a great lawyer as soon as things look bleak. A lawyer can also help with a restraining order if things get really out of hand. (See also: How to Protect Yourself Financially During a Divorce or Separation)

2. You're being sued

For most of us, a lawsuit is something we see in movies and on TV, and that's about as close as we want to get. For the unlucky few, a lawsuit can bring the whole world crumbling down. Lawsuits can be frivolous, like patent trolls or blatant cases of opportunism, but sometimes they can be frighteningly serious. If you find yourself being sued, don't hesitate to call several lawyers and find the one best suited to your specific case. Many offer a free 30-minute consultation.

3. An injury resulting from an automobile accident

Whether you're injured, or someone else is (including a driver or pedestrian), you should get yourself a lawyer as soon as possible. For the most part, insurance companies want to get this all wrapped up quickly and efficiently, and that will mean a lowball settlement that could leave you seriously out of pocket due to medical expenses.

Again, talk to a lawyer that specializes in these kinds of cases. They will know the going rate for any injury you have sustained, and will fight to make sure you get what you're owed. Some of these lawyers won't even charge a fee upfront, but if they win, expect them to take a significant chunk of your payout. (See also: 10 Steps You Must Take If You've Been in a Car Accident)

4. An unjust workplace termination

This covers the gamut. You may have been let go due to a misunderstanding, or some kind of corporate political maneuver. Perhaps you were wrongly accused of theft, harassment, or any other kind of "termination with cause." You may have been laid off and are left hanging without the severance package you feel you are owed. Whatever the reason, if you feel you were unfairly dismissed, get yourself a lawyer and fight the decision. In most cases, you'll be much better off fighting this with an expert than on your own.

5. Starting a significant business venture

If you're just incorporating yourself for an Etsy store or some freelance writing, you'll probably do fine using an online service like LegalZoom. However, if you're entering into a partnership, have plans for rapid expansion, or see potential issues with copyrights and patents, you need to get a lawyer on board as soon as possible. There are lawyers out there that specialize in this kind of legal representation, and they know the business world inside-out. Spending a little money upfront can save you a fortune later on, especially if you hit a massive roadblock with a competitor or have a falling out with a partner.

6. Legal issues as either a tenant or a landlord

Whether you're renting out your own place, or you're renting as a tenant, you can get into some tricky and expensive waters. If you're a landlord and have awful tenants who are damaging property and not paying rent, get a lawyer. If you have a landlord that is ignoring serious issues with the property, including safety hazards and potentially life-threatening problems, get a lawyer. A skilled attorney that knows this area of the law can quickly help you resolve the problems. (See also: What Happens to Your Apartment When Your Landlord Gets the Boot)

7. Preparing an estate plan

No one likes to think about their own death, but creating a will, trust, power of attorney, or a complete estate plan is the only way you can guarantee that your final wishes are carried out. There are plenty of websites offering this kind of service — all automated, of course — but this can be a minefield that you may have trouble navigating. If you have some complex wishes for your estate, and a large family that will be depending on the assets you leave behind, you should bring in a professional attorney to help you create a plan that is buttoned up. Otherwise, you could leave a massive legal mess behind that could take years for your loved ones to battle in court. (See also: Here's What Happens If You Don't Leave a Will)

8. Declaring bankruptcy

Filing for chapter 7 bankruptcy (or chapter 11 if you own a business) is a scary proposition. It's also something you should not do without the help of a legal professional. You'll need to undergo credit counseling, pass a means test, and file all the required paperwork that will restructure your debts and get your creditors off your back. One wrong move can lead to the whole case being thrown out, so find a good attorney as soon as you realize you have to declare bankruptcy. (See also: 11 Steps to Take When Bankruptcy Is Your Only Option)

9. Trouble with the IRS

Make no mistake, if you have any kind of issue with the IRS, get help and get it fast. Very few people escape the vast and powerful reach of the Internal Revenue Service. Whether it's unpaid back taxes, major tax debts, oversights on your returns, or anything else that brings the IRS breathing down your neck, only a skilled tax lawyer will do. (See also: 10 Reasons You Should Really Fear an IRS Audit)

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Ways Driverless Cars Could Impact Your Wallet

Carrie Kirby — Mon, 05 Mar 2018 09:30:10 +0000

You hear a lot about driverless cars these days, but the truth is, they have a lot of hurdles to overcome before one will be rolling up to your front door to pick you up. One hurdle is public opinion, with a AAA survey showing that 68 percent of baby boomers and even 49 percent of millennials are scared to ride in one.

That fear is rational enough, considering that the vehicles currently being tested still have trouble handling unexpected conditions, such as snow-covered roads. There are also ethical dilemmas, such as how the piloting software should choose between injuring the driver and injuring a pedestrian. And as with most new technologies, privacy could also be a real issue.

Despite all those challenges, self-driving cars are coming. Research firm IHS Automotive has predicted that there will be as many as 54 million of them on U.S. roads by 2035. When that happens, will you be better or worse off financially? There are a lot of ways that driverless cars could affect your bottom line.

1. You will spend less on insurance

Once all cars on the road are driverless, car accidents are expected to decline — in fact, consulting firm KPMG predicts a 90 percent reduction in crashes by 2050. And any accidents that happen would be the fault of malfunctioning hardware, not user error — and therefore the manufacturer's responsibility. KPMG predicts these changes will shrink the auto insurance sector by 71 percent. Even in the short term, while people are still buying auto insurance, they are likely to reduce or drop their liability coverage as the liability shifts to the manufacturer.

2. Early models will be expensive

The first cars to be autonomous will likely be high-end brands, such as Ferrari, Audi, and of course, Tesla. That adds quite a bit of sticker shock on its own. On top of that, the self-driving technology is expected to add between $7,000 and $10,000 to a car's price in 2025; by 2035, the differential will shrink to $3,000, IHS Automotive predicts.

3. Expensive drunken driving convictions could be a thing of the past

The gravest costs of drunken driving are human lives: Over 10,000 people die every year because someone got behind the wheel intoxicated, according to the Centers for Disease Control and Prevention. But there are also steep financial costs, even if you don't get into a crash. A national survey by Nolo put the average cost of a first-time DUI arrest at $6,500 to cover costs such as the ticket, towing, bail, attorney, increase in insurance rates, and other expenses. That doesn't include lost wages, which can amount to thousands more.

Once fully self-driving cars are safe and legal, owning one would be one way to avoid ever driving drunk. But even before mass adoption, on-demand self-driving vehicles might become a popular and affordable way to get home from the bars. Best of all, no Lyft driver will have to listen to your long-winded drunken stories.

Other tickets for moving violations, such as speeding or blowing a red light, could also become a thing of the past and save you hundreds (especially if you have a lead foot).

4. Jobs will be lost

The drunken driving scenario above might be great for people who need sober rides, but not so great for those who make a living driving people home from bars.

Taxi and ride-share drivers wouldn't be the only workers impacted. The 2017 launch of Uber Freight was a warning shot for truck drivers. Goldman Sachs estimates that, 25 years from now, automation could eliminate 300,000 trucking jobs a year.

5. Cities could save money on transport for the disabled

While the cost of owning an autonomous vehicle may be prohibitive for most disabled people at first, the technology could be a boon for cities that must provide paratransit services under the American Disabilities Act.

In many cities, these services are inefficiently run. New York, for example, spends an average $71 per trip transporting elderly and disabled people who can't ride the subway or public buses; studies estimate that this system is wasting up to $100 million a year. If cities invest in driverless vans and cars to pick up those passengers who don't need human assistance, it could save millions. That could possibly lead to lower taxes or subway fares for other citizens.

Disabled people who can afford it will probably be early adopters of privately-owned driverless cars as well. They might not even be more expensive than the current options, since converted vehicles with hands-only controls and other accessible features, for instance, can cost more than $50,000.

6. You might earn more through higher productivity

Since Americans spend 75 billion hours a year driving, just imagine how much more you could get done if you could work while your car drives you around.

Morgan Stanley predicts driverless cars could result in more than $500 billion in U.S. productivity gains. Whether you personally or your employer will enjoy the bulk of those gains depends on how things play out. If you are self employed, you could really unlock earnings potential.

If you don't want to spend your commute working, that's fine too. You'll have more time to catch up on a good book or even a nap.

7. You may buy fewer cars

A 2015 University of Michigan study suggests that autonomous vehicles could decrease car ownership by 43 percent, from 2.1 to 1.2 vehicles per household. The theory is that an autonomous vehicle could drop off one family member, and return home empty to be ready to transport others, instead of sitting idle in office parking lots.

Another way that self-driving cars might reduce ownership is through growth in ride-hailing services. Already, younger adults are more likely to feel they don't need a car because they can always get an Uber. If technology makes those services cheaper and more ubiquitous, that sentiment is sure to grow.

Avoiding a vehicle purchase would save the average family more than $8,000 a year, according to AAA's total cost of ownership figures.

9. You'll probably save on parking

Whether your car drops you off and returns to your home garage, or you rely on automated shared vehicles, you likely won't have to waste time and money on parking any more. Imagine never having to feed a meter, pay a parking ticket or a towing fee, or circle endlessly looking for a spot.

The average American wastes $345 a year in fuel costs, lost time, and emissions just looking for parking, according to INRIX Research.

10. You could save on baby-sitting

Many parents of young teens who could safely stay home alone end up hiring sitters just to pick them up from school, drive them to soccer practice, etc. If these kids could hop into a self-driving car instead, many families could drop their after-school sitter and save hundreds of dollars a week.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Reasons You Should Buy the Rental Car Insurance

Emily Guy Birken — Thu, 13 Jul 2017 09:00:10 +0000

Erika Plank Hagan knows all too well the value of buying rental car insurance. In July 2013, Hagan and her family drove from Connecticut to Ohio in a rental car to attend her brother's wedding. While they were on the road, Hagan's eldest son, who has special needs, got bored in the back seat and decided to wrap the middle shoulder harness belt around his neck — when it suddenly locked.

They happened to be driving through a construction zone at the time, meaning there was no place for them to pull over. Hagan's husband was driving, so she leapt into the back seat and wedged two fingers between the seat belt and her son's neck, and they drove that way until they were able to pull over. The belt would not unlock, and so the Hagans had to cut their son out of the shoulder harness. Thankfully, he was shaken, but unharmed.

This terrifying story has Hagan almost believing in premonitions, however. Her husband just happened to pack a pair of scissors, which he normally wouldn't do because he was so used to traveling by air. In addition, though the Hagans do not usually buy car rental insurance, they happened to agree to the rental insurance for this trip, meaning they did not have to pay for the cut shoulder harness.

This is the story that also got me to question my own belief that rental car insurance is an unnecessary add-on that car rental companies use to upsell their customers. While few drivers will experience a scenario like the one Hagan and her family went through, it is important to recognize that there are definitely good reasons to sign up for the rental car insurance.

1. You will have to pay your auto insurance deductible

Relying on your own personal insurance can be more costly than signing up for the rental car insurance because of your deductible. Depending on what you have set as your deductible, you might find yourself staring down a bill as high as $1,000 after an accident in a rental car. The daily cost of rental insurance will surely be less expensive than your deductible, and paying that cost can provide you with a great deal of peace of mind.

2. Your auto insurance does not cover "loss of use"

The majority of auto insurance policies will cover your rental car within the limits of your collision and comprehensive coverage. As long as you are prepared to pay your deductible in the event of an accident or other damage to the car, then it can seem as if your personal auto insurance should be enough.

Unfortunately, that assumption does not take into account all of the costs of damage to a rental car. In many states, automobile insurance does not cover what's known as "loss of use." When the rental car is in the shop for repairs, the company is losing the money it would earn from renting that car out. You will be on the hook for that cost if you are relying on your auto insurance to cover damage to a rental car.

3. Rental car insurance might protect you from auto insurance rate hikes

One major downside to relying on your personal auto insurance to cover a claim on a rental car is the fact that your insurance rates will probably go up afterward. However, using the rental car insurance you purchased from the company will not increase your auto insurance premiums in certain cases. According to Hannah Rounds, Consumer Finance Expert at Unplanned Finance, "If you hit a pole while insured by a rental car company, you'll probably escape rate hikes. If you hit another vehicle, you should expect to see your primary auto insurance rates increase."

Here's how it works: National rental car companies sell primary collision damage waivers, which means your rental vehicle is covered at 100 percent. If you purchase the rental car insurance and have an accident, the rental car company won't go after your personal insurance for money, and they normally don't report damage. As a result, your insurance claim remains outside of mainstream reporting, and your rates remain unchanged. However, if there are police involved in your accident, then the incident will be reported to your Motor Vehicle Record, which means you might see your premiums rise even if you don't make a claim with your insurance.

Finally, there are multiple types of rental car insurance. Supplemental liability insurance through the rental car agency covers any damage not already covered by your personal auto insurance, meaning that a claim will be made to your insurance and you will likely be seeing a rate hike as a result.

4. Insurance provided by your credit card may not cover enough

Travelers who have both a robust automobile insurance policy and a credit card that offers car rental coverage may believe that they are completely covered in case of a rental car mishap. Unfortunately, credit card coverage is not nearly as comprehensive as you might think. (See also: What Does Car Rental Insurance Really Cover On Your Credit Card?)

To start, some cardholders may not be aware that they need to use the specific card offering rental car insurance benefits when they rent the car. It's not enough to be a cardholder. You must use the card with rental insurance benefits to rent the car in your own name in order to access the benefits. You must also decline all optional coverage offered by the rental car company.

In addition, not every card offers these insurance benefits, so you need to know ahead of time if your card will protect you.

Credit card rental insurance also has some pretty specific limitations. For instance, some types of vehicles are excluded from credit card rental insurance coverage, including pickup trucks, some SUVs, and expensive and/or exotic vehicles. The traveler who dreams of exploring the city in a Porsche needs to remember this limitation.

Furthermore, many card policies won't cover administrative fees charged by the rental car company, and none will cover diminished value. Diminished value refers to the reduction in a rental car's resale value caused by an accident. If you get into a crash that is serious enough to lower the car's value but not serious enough to total it, you'll be on the hook for that diminished value if you are relying on your credit card for rental insurance coverage.

5. Business travelers may not be covered by personal auto insurance

My father used to fly to Arizona for an annual business conference, and then stay for a few extra days to enjoy the sunshine. That kind of business/pleasure trip can be a land mine for car renters. That's because while their company may cover the insurance for car rental during the business portion of the trip, their personal auto insurance will likely not cover them for the pleasure part of the trip. One workaround for this would be returning the car and then re-renting it once the trip ticks over from business to pleasure — but you might find that buying the rental car insurance from the start is an easier fix for this problem.

6. International travel is often excluded from personal auto insurance

If you are renting a car outside of the United States, you may or may not be able to count on your personal auto insurance and/or your credit card's rental insurance for coverage. Many auto insurers specifically limit their coverage to driving in the States, and credit cards specifically exclude several countries from their rental insurance benefits.

Better safe than sorry

By its nature, insurance is something you hope you never have to use. The cost of rental car insurance can make it seem like it's financially smarter to skip it and hope for the best. But if you ever do have a problem with a rental car, you'll be glad you bought the insurance and didn't rely on hope to keep you financially fit.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Times You Shouldn't File an Insurance Claim

Dr Penny Pincher — Fri, 07 Jul 2017 08:31:04 +0000

It may seem like a waste of money to pay insurance premiums every month, then avoid filing a claim when you actually have damage. Yet sometimes, this is exactly what you should do to save money.

The strategy of filing a claim whenever you have home or auto damage may get you more payout from insurance companies, but your insurance premiums will likely go up significantly, and you may even be dropped from coverage altogether. Both home and auto insurance companies report claims to industrywide databases, so all of the major insurance companies can see your claim history. Even if you move on to a new insurance company after filing a lot of claims, your premiums will likely be very high.

Filing a lot of claims is almost certain to cost you more in higher premiums over time than you will get from claim settlements. According to a 2015 study from InsuranceQuotes.com, a single auto insurance claim can drive your rates up 41 percent to 76 percent, and multiple claims can drive rates up even higher.

Insurance companies set your rates based not only on their assessment of your risk of having property damage, but also for the risk to them that you will file a claim. As a result, there are situations where you are better off not filing a claim with the insurance company — even if your damage is more than your deductible and you could get a payout.

1. The claim would be less than the deductible

The first thing you need to know before deciding to file an insurance claim is your deductible. The deductible is how much you have to pay out of your own pocket before the insurance company will pay to settle a claim.

For example, if your auto policy has a deductible of $1,000 and your total repair bill is $1,100, then the insurance company will only pay $100. If the total damage is $900, then the insurance company won't pay anything, and your premiums could still go up.

There is not much point in going through the hassle of filing a claim, getting the damage appraised by an insurance adjuster, and risking higher insurance premiums if it is likely that the damage is below your deductible and you won't get a payout anyway.

2. You have filed recent claims

Even if your claim would be more than the deductible and you would get a payout, if you have filed other recent claims, you are risking a significant increase in rates by filing another one. The average person files a claim about once every eight to 10 years, so if you file claims more frequently than average, you could be setting yourself up for higher rates.

3. There is no accident report and no injuries

For auto insurance, the payout from a small damage claim can easily be offset by the years of higher rates you'll pay afterward. For small incidents, it can be much less expensive to simply pay to repair the damage without going through the insurance company if there are no injuries and no accident report is filed. If a police report is filed, your insurance company will likely find out about the incident whether you report it or not.

4. There is no potential for lawsuit

One of the benefits of getting your insurance company involved is to handle a potentially very expensive lawsuit. Even if your incident is minor, you may want to talk with your insurance company if you get the feeling that the other party may pursue a liability claim. If a lawsuit does not seem like a possibility based on the incident and the parties involved, this can tip the balance in favor of paying for the damage yourself without involving the insurance company.

5. You have an emergency fund

If the damage is a few thousand dollars or less, you might still come out ahead by paying out of pocket rather than filing a claim. You can avoid the risk of higher premiums for years, and getting a record that can follow you even if you look for insurance from a different provider. For example, the back window of my car shattered, and I decided to take care of this $300 repair without going through the insurance company at all.

6. Watch out for expensive home policy claims

Dog bites, water damage, and slip-and-fall claims are most likely to trigger rate increases on your homeowners insurance, according to Bankrate. Think twice before making a claim in these categories if the claim would be fairly small and you can handle the expense on your own.

7. Inquiries can make your rates go up without even filing a claim

Some insurance agents are obligated to report inquiries to the insurance company, and a mere inquiry about your coverage can be used to raise your rates due to the increased risk that you may file a claim.

You may want to investigate your coverage on your own by looking at your insurance policy and deciding whether it is worth it to call your insurance agent. You can also ask your agent if they are obligated to report the inquiry to the insurance company before you start talking about a potential claim.

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3 Things You Should Know About Rental Car Insurance

Aaron Crowe — Tue, 06 Jun 2017 08:30:16 +0000

After a long day of traveling, being forced to listen to an upsell for extra insurance at the car rental counter can be frustrating.

Some extra rental car insurance may be worthwhile, however. Your own personal car insurance policy may not cover rentals, for example, or maybe you don't have car insurance at all.

On the other hand, you may not want to buy insurance from a rental company if it duplicates what your credit card offers, or if your auto insurer already provides rental car coverage through your regular policy.

Here are some things to be aware of before a car rental agent tries to pressure you at the rental desk.

Know what is and isn't covered by rental car insurance

There are two types of damage waivers that are commonly sold by rental car companies: Collision Damage Waiver (CDW) and Loss Damage Waiver (LDW). They're often packaged together as CDW/LDW coverage.

They serve the same basic function. These waivers aren't necessarily insurance so much as an optional service where the rental car company will cover you if an accident or some other event damages your rental car, or in the case of theft. The waiver only covers the rental car and waives the rental company's right to pursue you, the renter, for damage.

What a rental damage waiver won't cover are hospitalization costs if you cause an accident and someone is injured — that falls under liability coverage. The rental damage waiver also won't cover risky behaviors such as drinking and driving or speeding. If you're hospitalized, your auto insurance policy will take effect.

Another type of insurance that you may be offered at the rental counter is supplemental liability insurance. This covers damage to other people's property, such as their cars, and their medical costs if you caused the accident.

This extra liability insurance may be worthwhile if your auto or homeowners insurance policies won't cover you. Another option is to buy umbrella liability insurance through the company that provides your auto or homeowners liability insurance, so that you have extra protection while driving a rental car.

When you should consider buying

If you have collision and comprehensive coverage on your personal auto policy, it will typically cover damages to a rental car. However, you will still need to pay your deductible in the event of a claim — and of course, filing a claim can cause your personal auto insurance rates to spike. Rental damage waivers will typically cover all of the vehicle repair costs, including a deductible. If you don't want to deal with the hassle of paying a high deductible, or filing a claim, you can consider purchasing the CDW/LDW coverage.

You may also be renting a vehicle with a far higher market value than the car you own. Your insurer will only pay the value of your car — not the value of the rental car that's damaged. So if your car isn't worth as much as the rental car, then you may want to consider additional coverage to account for the gap between the value of your personal car and the value of the rental car.

If you have no auto insurance, or a personal auto policy with bare minimum liability coverage, you may also want to consider adding supplemental liability protection through the rental company. This will protect you in the event you damage someone else's vehicle or property, or cause injury.

Don't overlook your credit card benefits

When renting a car with a credit card, you're likely to get insurance protections that you may not even realize you have. (See also: What Does Car Rental Insurance Really Cover On Your Credit Card?)

Many credit cards provide free collision damage protection for rental cars, with some caveats. First, you must pay for the rental in full with the card, and then decline all optional coverage offered by the rental company.

Coverage can vary, but typically a credit card's coverage will be secondary — meaning it only pays what you can't recover from other insurance. Sometimes cards do offer primary insurance, which would prevent you from having to file a claim with your personal auto policy. You may have to pay upfront for the full damage and get reimbursed later by the credit card company, and coverage is often limited to a two-week rental.

Call your card issuer to find out the specifics of what your credit card offers. If you have multiple credit cards, it's worth comparing them to find out which one offers the best coverage on rentals.

Credit card rental coverage typically excludes injuries, as well as damage or loss of personal items. Many cards also won't cover any of the rental car company's administrative fees, "loss of use" charges, or the difference between the rental car's actual value and its replacement value.

The bottom line

However you buy rental car insurance, know that you could be on the hook for the costs of an incident until your insurance provider or credit card company comes to an agreement on the cost of repairs with the rental car company.

Before driving your rental car off the lot, check it carefully for existing damage and document anything you find with photos. Then, tell the clerk at the rental counter. You don't want to end up paying for damage you didn't cause or fighting with a rental car company. That certainly won't make for a pleasant vacation.

This article is from Aaron Crowe of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Here's How a Claim Will Impact Your Car Insurance

Dan Rafter — Fri, 17 Mar 2017 11:00:11 +0000

You sideswiped a parked car. Or maybe you slammed on the brakes too late and rear-ended the driver ahead of you. Whatever happened, the accident is clearly your fault. Now it's time to give your insurance a call.

When you file a claim, your auto insurer will pay for the repairs to your vehicle and, if you are at fault in the accident, whatever repairs are needed for other vehicles involved in the collision. Your insurer might also pay for any injuries suffered by you or other drivers.

But filing a claim also comes with a negative: In most cases, it will cause your insurance rates to rise. How much your policy's rate rises depends on a host of factors.

Mitigating Factors

On its website, Geico says that drivers' rates don't automatically rise after an accident. Instead, the insurer looks at several factors before deciding whether to issue a rate increase. These include your driving record, the number of claims you've made in the past, and the amount of money that the insurer has paid out to you during the life of your insurance policy.

Esurance also states that insurance rates don't automatically jump after an accident. The company says that minor accidents and fender benders don't always equal a rate increase, especially if you have a record of safe driving.

Fault matters, too, of course. Esurance says that if you weren't at fault in an accident, your premium might not jump.

When Are Rates Most Likely to Jump?

Both Geico and Esurance say that premiums are more likely to increase if you are found at fault in a major accident. Again, your past driving record plays a big role in determining not only if your rate jumps after a major accident, but by how much.

Your insurer, though, might increase your rate even if you weren't the driver who caused the accident. That's because car insurers have determined that even after an accident that isn't your fault, you are still statistically more likely to get into another accident. This makes you more of a risk to your auto insurer.

Some states regulate how much of an increase you'll see after an accident, no matter who was at fault. Consider New York. Here, insurance companies can boost rates only if you were found at fault in an accident that caused injuries or more than $2,000 in property damage. In Massachusetts, insurers can only raise your premiums if you are found to be more than 50 percent at fault in an accident.

You might also live in what is known as a no-fault state. In these states, each driver's insurer pays part of the costs involved in an accident, no matter who caused the incident. If you live in a no-fault state and file a claim, odds are that your insurance premium will rise even if the other driver was the cause of your accident.

How Long Before Your Rates Fall Again?

Fortunately, a rate increase isn't permanent. Esurance said that several factors play a role in how long your insurance premiums will remain at an elevated level after an accident. These include the severity of the accident, who was at fault, and whether alcohol was involved.

Some states will regulate how many years back insurers can look when calculating premiums. In Massachusetts, drivers' at-fault accidents can only impact their auto insurance rates for three to five years.

In general, you can expect your elevated rates to remain in place for three to five years.

How Much of an Increase Will You See?

Here's the big question: How much will your insurance rates rise after an accident? Again, this depends on a host of factors: Who caused the accident, were people injured, was there significant property damage, was speeding involved, were you drinking?

A 2016 report by NerdWallet found that rates typically rise by $300 or less a year for an accident that you caused resulting in under $2,000 worth of damage. That rate increase jumps to $300–$600 a year if you cause an accident with $2,000 or more in property damage. If you cause an accident that results in any human injury, your rates will typically increase by $400–$800 a year.

And if you are found at fault in multiple accidents causing $2,000 or more in property damage, your rates could rise by $1,000 or more a year.

If your rate is going to rise, it won't come as a surprise. Insurers will notify you of any upcoming increase. Geico, for instance, says it will send you information about any rate increases about 30 days before your policy is up for renewal. At that point you can shop around to see if another company might give you a better rate.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Ways Having a Paid Off Car Is Surprisingly Great

Emily Guy Birken — Fri, 13 May 2016 09:30:23 +0000

In 2005, I awoke one fine spring morning to the sound of metal crunching. Looking out the window, I saw a box truck mowing down my 1994 Honda Civic, which was parked on the street in front of my house. The driver was a 13-year-old boy who had come across the idling truck and had decided to steal it and go for a joy ride — which ended with the destruction of my car.

It was not a great day.

However, as overwhelming as it was for me to watch my car get hit by an uninsured driver, the entire situation was much better than it could have been because of one important fact: My Civic was paid off.

As a matter of fact, I have been fortunate enough to never have a car payment in my 21 years of car ownership. While I'm delighted to not have a payment due every month, that's not the only way that having a paid-off car makes my life better. Here are five ways that having a paid-off car will benefit your life:

1. Insurance and Accidents Cost You Less

At the time of its sad demise, my Honda Civic was an 11-year-old car with 120,000 miles on it. I carried liability, uninsured motorist, and collision coverage. The first two were required by the state I lived in, and my collision coverage costs were fairly inexpensive because of the relatively low value of my car. The amount of money I was paying for insurance was a great deal lower than that of a classmate whose car was also totaled by another driver around the same time.

The difference was that my classmate was driving a new car with a hefty car payment, so she had to have an expensive comprehensive insurance policy to match.

What's more, I felt like I was made whole by my cheaper insurance, while my classmate was not. After my car was totaled, I got a check from my insurance company for the value of the car minus my $500 deductible, which I used to buy another used car. My friend was forced to take on another loan with a monthly payment that was $30 higher than the one she had before the accident.

2. Having a Paid-Off Car Means Potentially Never Paying Interest Again

One of the smartest things my husband and I have ever done was starting a "car fund" savings account. Each month, we set aside $350 into the account so that we have money available to either fix our cars if they need maintenance or repair, or to pay cash for a new one if our vehicles ends up going to the big garage in the sky. We pay ourselves the equivalent of a car payment each month so we never have to pay interest on our cars — and we earn some interest on the money we've saved, too.

3. Financial Ups and Downs Are Less Stressful

Making a monthly car payment is no biggie when your job feels secure. But if you are still making monthly payments on your car when you lose your job, receive an unexpected bill, or otherwise see your personal finances go south, then that monthly payment can feel more like an albatross around your neck.

This is especially true if you have any reason to fear repossession of your car during your financial turmoil. Owning your car free and clear means that you have one less worry while you are trying to get your financial house back in order. You know that you can still rely on your car to transport you to and from work and your other responsibilities.

4. You Don't Have to Worry About Weird Hits to Your Credit

One of the bizarre aspects of how credit scores are calculated is the fact that paying off a major loan — such as a car loan — can have the effect of lowering your credit score. That's because paying off an installment loan raises your utilization ratio. For example, if you have a $12,000 car loan with a $3,000 balance that you pay off all at once, your available credit will drop by $12,000 once the account is closed, even though your debt load will also drop by $3,000.

I don't know about you, but that kind of convoluted credit logic makes my head spin. It's a lot simpler to just have a car that's paid off — and have your credit score based on things like your mortgage or rental history, and your utilities payments.

5. It's Better for the Environment

Wanting to avoid ever having a car payment means that I strive to take great care of my cars. My current vehicle is a 14-year-old Honda Accord that could probably last another 14 years if I am diligent about maintenance.

While it's possible that car manufacturers will figure out a way for all new cars to get 50 miles per gallon before the year 2030, keeping my current car on the road for as long as possible will be better for the environment than trading it in for a more efficient one. That's because the environmental impact of manufacturing a new car and disposing of a used one offsets a great deal of the fuel efficiency I might gain by buying a new car.

The Bottom Line

Having a paid off car offers a great deal of freedom and peace of mind, whether your car provides you with years of faithful service, or it's totaled in an unfortunate joy-riding incident.

Is your car paid off? What's great about it?

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Things to Never Do When Your Car Breaks Down

Paul Michael — Wed, 10 Dec 2014 18:00:06 +0000

A car breakdown is not a common occurrence for the average motorist. In fact, it has yet to happen to me, although I have only been driving for 13 years. However, at some point your car could break down, be it a mechanical failure, an electrical issue, or a flat tire. When that happens, you will probably call your insurance or a tow service first. But make sure you also take heed of the following list. It will save you time, money, and maybe even your life. (See also: Repair the Car or Spend the Settlement?)

1. Do Not Stay in the Car

Unless the weather is extreme, you need to get everyone out of the car and away from the road. Ideally, people should be behind a crash barrier if there is one. Of course, if the weather is extreme, you may have to balance the risks of staying in the car and being hit, with the possibility of exposure or other weather-related conditions. And if you are in a dangerous area, you may need to lock yourself in the car until help arrives. Try and get the car as far away from the road as possible in these exceptions.

2. Do Not Exit the Vehicle Using the Doors Nearest the Traffic

This may seem like common sense, but few people are thinking clearly when they're in a situation like this. The first reaction is to get out of the car and look under the hood. But if you exit using the driver's door, you are at much greater risk of being hit by a vehicle. It may seem like a pain, but get out of the doors that are furthest from the flow of traffic. It is much safer.

3. Do Not Stand Behind, or Next to, the Vehicle

Once you're out of the car, you need to get a safe distance away from it. Remember, a car parked by the side of the road can be a distraction, and there are plenty of horrific crashes and near misses caught on camera every year. You do not want to be leaning on the car when a vehicle doing 60 mph smashes into it. Like it says above, get behind a crash barrier.

4. Do Not Accept Help From Unofficial Sources

It's a sad sign of the times that this one is on the list. But, it's necessary. Good Samaritans are everywhere, but so are predators, scam artists, and thieves. Even if their intentions seem genuine, someone could be setting you up for something unthinkable. You never want to get into their car if they offer to take you to the nearest gas station or repair shop. The only time you should ever accept help when it is offered is from the emergency services, official breakdown or highway services, or from someone you know and trust. If anyone else offers, politely decline and tell them the breakdown service is just a couple of minutes away.

5. Do Not Flag Down Other Vehicles

Just like the previous tip, this is a precaution you have to take for your personal safety. You have no idea who you're going to get to help, and there are plenty of people out there who will take advantage of the situation. You are basically telling a potential predator that you are stranded, and that puts you in a very vulnerable spot. Even if you're a big burly guy who can handle himself, there are always people out there who can do you harm. Don't take the chance; don't take the chance, wait for help from your breakdown service.

6. Do Not Leave Your Vehicle in the Road

You are required to get that car out of the way, and quickly. If it's possible to pull over to the side of the road, do so safely. If the car is stuck in traffic, you're going to have to move it yourself. A friendly (or impatient) motorist will no doubt come along and help you push or steer. If you don't get it out of the road, you could be rear-ended, cause a collision, or something even worse could happen.

7. Do Not Assume People Can See You

Your car is parked by the side of the road; the hood is up, it's clear you're having car trouble. But these days, motorists are more preoccupied than ever (which is not a good sign at all). You need to make sure you and your car are as visible as possible to other drivers. Turn on your emergency lights immediately, that's what they're there for.

8. Do Not Display Your Red Warning Triangle

It seems obvious that you should put that out the second you breakdown. Not so. Green Flag breakdown service says that the risks of getting out of your car and walking by the side of fast-moving traffic are far greater than the benefits of that red triangle.

9. Do Not Try to Fix the Problem Unless You Know What You're Doing

This may seem like a no brainer, but any mechanic will tell you that a little bit of knowledge is a dangerous thing. Most people know how to fix a flat tire, but some have never even tried. Put the jack in the wrong place on the car and start jacking it up, and you're doing damage. You may also have to put yourself perilously close to the moving traffic in order to change the tire. If that's the case, wait for your breakdown service. You pay a monthly fee, now is the time to utilize it.

Fiddling with engine parts can also be dangerous, and can cause more damage to the car (and you). So, if you have the knowhow, and are confident you can solve the problem, by all means do so. But if you're planning to lift the hood to fiddle with wires and do a little mindless tinkering, don't bother. You are not helping. In fact, you could make it even harder to repair.

Any other roadside safety tips we should pass along? Please share in comments!

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: