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Little Known Fact about Auto Insurance

Auto insurance is a product with six distinct coverages.

Let’s look at them here:

  1. Bodily Injury Liability – This pays the medical and other expenses of those people car insuranceinjured or even killed in accidents you cause. This is required by most states, usually with a minimum coverage of $15,000 for any person involved in an accident with you and no more than $30,000 for all the persons in the accident.
  2. Property Damage Liability – This covers the damage your car causes to property. Usually, that’s the other car or cars involved in the accident, but it also covers damage you do to any object you hit; garages, buildings, lampposts, fences, whatever. This is also required in most states, usually with a minimum coverage of $5,000.
  3. Collision – This is for damage done to your car when it collides with other vehicles (your fault) or other objects (again, your fault).
  4. Comprehensive – This covers damage to your car resulting from something other than a collision with another vehicle. For example, damage caused by vandals or a wind-blown tree hitting your car. It also includes coverage for theft.
  5. Medical Payments – This pays medical, and even funeral, expenses for you as well as members of your family and passengers in your car if it is involved in a collision, regardless of who caused the accident. It also covers you as a pedestrian if a vehicle hits you.
  6. Uninsured/Underinsured Motorist – This pays for injuries to you and, in some policies, damage to your car if you are hit by a driver who doesn’t have insurance – or by someone who doesn’t have enough insurance to cover your losses. In most states, more than 10% of motorists don’t have any insurance. In some states, as many as three out of 10 drivers don’t have coverage.


Many of those who do have insurance don’t have enough to cover the damages and injuries that would result in a major collision. If you don’t have this coverage, which is often referred to as UM/UIM, you are taking a risk. UM/UIM also provides coverage for any injuries you suffer if you are hit while walking or riding a bicycle by a driver with inadequate or no insurance.

How much insurance do you need?car insurance many

You can buy the minimum required by law, say $15,000 per person, $30,000 per accident. Or you can buy limits as high as $500,000, even $1 million. Remember that someone you hit can sue you for everything you have.

* Tip. If you have a home, own stock and have a decent income, you should probably buy, atminimum, limits of $100,000 per person, $300,000 per accident. If you have more than $300,000 in assets, you should buy higher limits or an umbrella policy. Consult with your professional agent about this!

Many auto insurance companies now sell what are called combined single limit (CSL) coverages, which have no per-person limit. If you buy, say, $300,000 CSL, that means your policy will pay a maximum of $300,000. All of that could go to one person, if needed.

Some companies include property damage liability in the CSL, which means that if you total someone’s antique car, your policy could pay up to $300,000 for property damage. CSL coverage costs more than traditional limits, but it can be worth it if you have significant assets.

* Tip. Many insurance agents believe CSL is so important to have, they strongly urge their clients to buy it if it is available.

Property Damage Liability

Several years ago, $25,000 was considered the maximum most people needed for this coverage. Not anymore. There’s a lot of $50,000, $60,000, even $70,000 cars and sport utility vehicles on the road these days.

* Tip. Because of all the super-expensive cars on the road today, you should seriously consider at least $50,000 of coverage, assuming you don’t have CSL coverage; $75,000 might be preferred.

Consider how much you can afford to pay to have your car fixed if you have an accident. Auto policies have several deductible options.

* Note. A deductible is the part you pay before the insurance kicks in. You can buy deductibles of $100, $250, $500, even $1,000. The lower the deductible, the more this coverage will cost.

Unless you’re planning to have a lot of accidents, it’s probably a good idea to have a deductible of at least a couple of hundred dollars. (By the way, the deductible does not apply if someone else hits you and that person’s insurance is used to pay for your car’s damages.)

Like collision, there’s a deductible with comprehensive, although it is often lower. For example, if you have a $250 deductible for collision, your comprehensive deductible will be, say, $100.

* Note. While collision and comprehensive will pay for damage or loss to your car, neither coverage will pay for everything on or in your vehicle. Most policies exclude things like CB radios, two-way radios, car phones, cassettes and CDs.

If you add special features to pickups, vans or SUVS, these things probably will be excluded as well. In fact, it’s a good idea for you to talk to your insurance agent about any high-tech equipment or special features you have added to your vehicle.

Many, perhaps even most, of these features aren’t covered in the standard policy. It is possible, however, to obtain special coverage for any high-tech equipment or special features your vehicle may have. Your agent can advise you of the options.
Uninsured/Underinsured Motorist

protectionFor most people, it’s a good idea to have the same limits for UM/UIM as you have for bodily injury liability. But remember, UM/UIM coverage is for you. It pays for your injuries and, in some policies, damage to your car if the person at fault in an accident with you cannot. Since it’s wise to base your liability limit on what you have to lose, you should do the same with UM/UIM.
Who is Covered When You Buy Auto Insurance?

All the coverages in your auto policy apply when you are driving, but they also apply when other people are driving your vehicle. The coverages are actually for the car, not the person.

* Note. If someone is going to be a regular user of your car, that person’s name needs to be added to the policy.

Your insurance company wants to know who’s going to be using the car. After all, you could be a great driver with no tickets or accidents, but your spouse, your teenage child, or your reckless cousin could be a lousy driver.

If you let these people drive your car without telling your insurer and these people keep getting in accidents, your insurance company isn’t going to be happy. In fact, they may cancel your policy.

* Tip. It’s not wise to risk losing your policy by failing to disclose who’s driving the insured vehicle. Keep in mind, however, that if you add drivers with lousy records or who haven’t had much driving experience, your premiums will go up.

Any parent of a driving teenager can tell you this; teenagers are notorious for getting tickets and having accidents. They are also very inexperienced drivers. As such, when your child gets his or her license, your insurance premiums will go up when he or she is added to the policy.

If you buy all six of the major auto insurance coverages, your policy will cover you in most instances in which you cause damage or injury to your car, yourself and your passengers, or drivers and passengers in other vehicles.

But not all.

* Note. The standard auto insurance policy has some “exclusions,” which is insurance-ese for, “We won’t cover that.” Here are some examples where your auto policy won’t provide coverage:

If you intentionally try to cause damage to your car or another vehicle. This includes liability coverage.
If you are using the vehicle to transport other people for a fee. (This does not apply to car pools where the expenses are shared.)
If you are using the vehicle for certain business activities. This does not include traveling to see clients or taking a standard business trip.
If your vehicle sustains damage caused by normal wear and tear, freezing, mechanical or electrical breakdown, or road damage to tires.
If your car is damaged because of radioactive contamination, intentional or accidental discharge of nuclear weapons, war, insurrection, rebellion or revolution.

Important Question: What are You Using Your Vehicle for?

You can get sideways with your insurance company because you haven’t been upfront about how you are using your vehicle. For example, do you drive your car to work? If so, you will pay more for auto insurance than if you take mass transit. In fact, the further you have to drive to work, the more you will pay.

* Tip. If you drive to work and tell your insurance company you don’t, you have basically committed fraud. Resist this temptation, even if it might save you a few dollars.

* Example. Say you have an accident on the way to work. Say, also, that you have told your insurance company you don’t drive to work. Your insurer could technically argue that it is not car accidentobligated to provide coverage and you’ve given them a good reason to cancel your policy.

Honesty is the best policy when it comes to insurance. Insurance fraud is a huge problem in this country; claims are frequently padded with nonexistent damages; accidents are staged and injuries are faked.

* Fact. It is estimated that fraud accounts for as much as 25 cents to 30 cents of every auto insurance premium dollar. Think about that. If even half the auto insurance fraud in this country were wiped out in the next year, you would pay 12% to 15% less for your next policy.
Personal Car for Business, Company Car for Personal Use

Do you use your personal car for business? Do you have access to a company car? If the answer to either question is yes, you could have potential coverage gaps.

* Example. Let’s say you use your personal car for business. It’s possible your employer is providing some coverage for you through your employer’s commercial auto policy. Some coverage. In most cases the coverage is for liability only, and often this commercial auto policy doesn’t even apply until the limits on your personal auto policy are exhausted. (This is what insurance people call “excess” coverage.)

* Tip. You should talk to your employer about what, if any, coverage is available to you through the company’s commercial auto policy. That way, if you have an accident while on company business, you know who (or which insurance company) to call.

If you use your personal car for regular business purposes – trips, visiting clients, etc. – your personal auto policy probably provides enough coverage for these activities. (Assuming you have “enough” coverage to begin with.)

But what if your car is actually a source of revenue? You make deliveries, for example. In that case, you likely need a commercial auto policy as well.

* Note. If you have an accident while delivering a product or using your car as a taxi, your personal auto insurer may deny your claim. Talk to your agent to make sure you have coverage for all the business activities for which you use your car.

What about company cars? They can be an insurance problem, if you use the company car for business and pleasure, particularly if you don’t have a car of your own. If you don’t have a car, you probably don’t have a personal auto policy. If you don’t have a car (or personal auto coverage) and use a company vehicle for pleasure, you are inviting disaster if you have an accident during a pleasure trip.

* Tip. If you are in this situation, you should have what is called a non-owned personal auto policy.

Such a policy can also come in handy if you don’t have a car and you rent a vehicle on a trip. Your non-owned auto policy will cover you and your rental car if you have an accident. Otherwise, you would probably need to buy coverage from the rental car company, coverage that is very, very expensive.

* Tip. You can have coverage gaps even if you have a personal auto policy and use a company car for pleasure or if your spouse or children use the company car for pleasure. Find out from your employer the extent of coverage that is available for your corporate car. Once you know the extent, talk to your insurance agent about any additional coverage you might need.

Tips and notes from McClain Insurance Service

Tips On How To Play Retirement Catch-Up

Tips On How To Play Retirement Catch-Up

With the economic woes of our country, many people are finding themselves trying to play catch up to their retirement savings in their 50’s and 60’s. While it may be hard to get back everything that has been lost with the recession and economic hardships, there are ways to improve retirement prospects. However, the sooner you get back on track, the better off your financial future will be.
The unemployment rate was nearly 5% for those over 55 years of age. That is higher than it was before the recession hit. Studies show that the baby boomer generations have lost almost 30% of their net worth during this volatile time in our country. While we cannot change yesterday, we must live in the new reality and play catch up. By running a retirement calculator and seeing what kind of savings is needed, it is easy to put a plan in motion. It is hard to recover, but here are some tips to help get your retirement on track.

1. Save As Much As Possible
Even if you have went from a salary of $200,000 down to $100,000 you can still save. While it may not be as much as before, you can still put something away. Some people give up in desperation and say they have nothing to save. Save what you can and don’t even fall into the mentality that it is not enough. Pennies make dollars and these dollars can mean everything during retirement.

2. Change Your Lifestyle
If you are on a lower salary than before, you need to adjust your living and spending accordingly. This could mean moving to a smaller and less expensive home or it could mean getting rid of a car. When heading toward retirement, make sure that financially you are set. Make changes today and avoid heartache in the future.

3. Don’t Make Loans To Family Or Friends
Some people have a very giving heart and if you are one of them, stop! Children are our financial responsibilities until they reach 18, after that they are on their own. Many kids never fully cut the apron strings and expect their parents to be the welfare cash shop. Endless it is an emergency, don’t loan money to anyone, especially your kids.

4. Prolong Retirement
If you had plans to retire at the age of 65, you may want to work till 70. While it may be difficult to work that addition 5 years, it could mean everything to your financial stability. A financial portfolio that would be at $170,000 at the age of 65, could inflate to nearly $230,000 by continuing to work till 68. If that person worked till 70, it would be around $265,000.

5. Wait To Draw Social Security
Some people get anxious to draw their social security as soon as they hit 62. However, if a person can wait till their 70 years of age, they could be hundreds more on the month. If a person got $1,600 when they were 62, they could get over $2,200 a month when they are 70. Check the social security website and see how much more you can get by simply waiting a few more years

6. Learn A New Reality
Everyone thinks retirement will be a time for jet setting around the world and having a good time. Reality says something totally different. Most couples, on retirement, live on a fixed income and can’t afford to take lavish vacations. Those who don’t save properly will live off of social security’s meager income. If you are used to living in a big house overlooking the beach, retirement living may have you with a two bedroom apartment on the sound side, or with a slight view. Adjusting living and arrangements are necessity for retirement.

7. Live Simple
To save money, do things you don’t normally do. Rather than eating out, try cooking at home. Instead of buying your lunch, pack it instead. This can be a substantial savings that can go straight into the bank each month. Carpool if possible and try to save one day for running errands to save on gas money. There are ways to cut spending by simply altering the current lifestyle to make retirement better.

8. Set Goals
If you have credit card debt or other loans looming over your head, make goals to pay these off. Even if it means skipping that coffee and sand witch on the way to work, put that money on your credit card. You will be surprised how much this will save you in a weeks’ time, let alone a year or two. One option may be to sell your larger house and get a smaller one. By having smaller payments, you may be able to pay off some of those smaller loans.

9. Contribute As Much As Possible
Make as many contributions to your 401K and IRA accounts as you can. After you have hit bottom, you are not going to bounce back, rather you will probably crawl. However, as long as you are moving toward a goal, any movement is progress. While it may be a fight to get back to your current standing, and it may not even be possible, any money you squirrel away for retirement is going to mean something when that time comes.



5 ways to get the best mortgage deal

Buying a house usually means going through the process of finding a mortgage. While it’s easy to find a mortgage, it can be a lot more complicated to make sure that you’re getting the best deal. In addition to a low interest rate, a good mortgage should also have low closing costs and great customer service. In order to find a good mortgage, follow these tips.
1. Get your credit score as high as possible. Start by getting copies of your credit reports and look for errors. Work on correcting any bad information, then work on mistakes. While it isn’t always possible to get notations of bad incidents removed, it’s worth it to try.
2. Be honest on your loan applications. In today’s market, everything is going to be checked, so it doesn’t make sense to lie about your credit score or leave off assets and loans. If you need to use income from a bonus or second job in order to qualify for the loan, be prepared to show proof.
3. Make as big of a down payment as you can. The more of your money that you’re willing to invest, the less risky the loan is for the bank. That means a lower interest rate if you can come to the table with a large down payment. Of course, make sure that you can still afford your moving costs and the closing costs on the mortgage.
4. Don’t just look at the interest rate. While the interest rate can be important, its also critical to consider the fees and other charges that come along with the mortgage. These fees can add up to a lot more than the monthly interest charges.
5. Know how much your home is worth. This is critical if you’re doing a refinance, but it is also important for first time home buyers to know what the asset they’re buying is worth. Homes that are mortgaged for more than their appraised value tend to have mortgages with higher interest rates. If you know what your home is worth, however, you’ll be in a better position to negotiate a lower rate.


What You Don’t Know About Credit Reporting Can Hurt You

Credit reporting is one of the most mystifying components of adult life. Deciphering it and treating credit reports appropriately are things high on the list of things that we are not taught in school en route to the real world. In a world that runs so heavily on credit, this is a tragic deficiency that is causing many people very serious inconvenience.

It is often the case that people have no idea their credit report is damaging their purchasing power. It is also 5frequently over preventable events. Understanding this requires understanding what about credit reports is fact and what about them is fiction.

Do Debit Cards Help?
It’s not clear where the myth that debit cards assist with your credit report came from. Debit cards and pre-paid credit cards have no impact on your credit whatsoever on credit. They don’t involve lending or collateral of any form. There is never any debt to report to a credit agency. Properly managing a debit card is a great habit, but it won’t assist you with your credit in any fashion.

Is There any Difference Between Credit Bureaus?
Unfortunately there are big differences in operation between different credit bureaus. They produce distinct credit reports. The three bureaus to keep an eye on are Transunion, Experian and Equifax. They report on largely the same information but don’t yield the same numbers. Your effective credit rating is usually derived from consideration of all three credit bureaus. This means that you need to keep your eye on all three.

Fines, Fees and Tickets Don’t Count: Myth
This is overwhelmingly not true. Many local and state organizations are being forced to tighten their belts and budgets. More are becoming willing to sell their debts off to collection agencies. Even library fines can damage your credit if you leave them unpaid long enough. If something can be listed as a debt, it can be sold to a collection agency unless otherwise noted in a contract with the holder of that debt. This case is so rare as to be borderline-hypothetical.

Everything is Wiped Clean after Seven Years: Myth
It’s commonly stated that debts are removed from your credit report after seven years. This is not actually true. Seven years is the minimum amount of time a bankruptcy filing will remain on your credit report. This is largely where the myth comes from. The truth is that even after seven years you may still need to contact bureaus and dispute charges to have them removed. As nice as it would be it isn’t possible to wait out bad credit reports. You have to advocate for yourself and get your hands dirty on the phone, by e-mail and whatever else it takes to get your record clean when it should be.

Credit Repair Can Fix Everything Up, Right?
Credit repair is a very valuable tool. This is especially true for adults that are dealing with previous debt issues. 6It is not a quick fix, however, nor is it a silver bullet. Credit repair firms specialize in disputing marks that shouldn’t be on your report and disputing accounts that cannot be verified. Both result in the removal of the debt your report, but neither are 100% effective. Credit repair agencies promising 100% efficacy of their techniques should be regarded with suspicion. If it sounds too good to be true, it almost certainly is.

How Much Does Canceling Cards Help?
Canceling your credit cards can oftentimes harm your credit more than it will help it. Credit history is a very valuable element of your credit rating. Holding onto a single credit card for a long time tends to look good on a report. If you have a bad credit rating, canceling a credit card and scrubbing it from your report

A Debt can Only Hurt Once–Right?
This is unfortunately incorrect. Many people are of the belief that if you have a debt on your credit report from one organization that collection agencies can’t subsequently mark your credit report up with it. It becomes an effectively different debt that you can suffer an entirely different credit hit for unless you’re on top of it.

How Much Does Paying Off a Debt Help?
Many people believe that paying off a debt will remove the hit from your credit score. There’s no real reason for this myth to persist. Credit reports aren’t records of your outstanding debt. They’re records of your debt and credit history. Paying a debt is helpful. It allows you to remove bad marks on your credit report eventually. It does not, however, exonerate you. It is merely a prerequisite.

Doesn’t Checking Your Credit Score Hurt?
No! This is perhaps the most dangerous myth about credit reports. Many people believe that checking your credit report damages your credit. This is not the case. There are two kinds of credit checks. These are called “soft” and “hard” pulls. A soft pull is just a matter of a company looking at your open record. A soft pull does not yield as much data as a hard pull. It provides a snapshot. When you check your credit report online it is usually a soft pull. Hard pulls are used when an in-depth look is required for consideration of a new credit line. You will not generally be warned about a hard pull, which is why many people misunderstand how credit reports work. When in doubt, ask or do your own research independently.

I Pay on Time Every Time–I’m Safe!
No, you are not. The unfortunate truth is that credit reports are not infallible. Even if you are diligent unto perfection with your payments it is entirely possible for errors and infractions to wind up on your report. You may be saddled with the mistakes of someone with a similar name or with a report filed in error because one bureaucrat failed to communicate with another. You must check your credit report regularly for these errors so that you can dispute them vigilantly.

Credit reports are easy to misunderstand and difficult to interpret, but staying on top of your credit rating is a matter of responsibility. Understand the truth about how they work and check them regularly through a trustworthy avenue. If you are not relying on your credit now, you may well in the future when desire to lease or purchase a home, vehicle or office. Grooming your credit rating now will spare you needing to repair it later.

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