This at-fault driver better have collision coverage.

Collision insurance covers damage to your vehicle when you are in an at-fault accident – so it can be a big chunk on your insurance bill.

Dropping collision coverage on your vehicle can often be appealing. After all, it’s probable the single most significant thing you can do to lower your auto insurance rates.

It’s no wonder people think about when to drop collision insurance – part of full-coverage insurance. But as with anything else, actions have consequences. Bear a few things in mind before dropping collision.

Don’t Drop It Until Your Car is Paid Off

Perhaps a better question is when NOT to drop collision insurance. The answer is if you’re still making car payments. Virtually all banks and other creditors on car payments – aka “lienholders” – require full coverage to protect their investment.

As the policyholder you have the right to drop your full coverage at any time. But if the lienholder finds out (and they will – the insurance company is required to inform them), they will “force place” collision coverage on the vehicle and then bill you for it.

No matter how expensive your full coverage is, the force placed insurance will be more expensive. As long as the lienholder is on your title, you are truly better off keeping your collision insurance. Adjust your deductibles if you need a price break.

Consider Lowering Deductibles Before Dropping Collision

Most lienholders require deductibles of $1,000 or less. Coincidentally, most insurance carriers offer maximum deductibles of $1,000. Higher deductibles are sometimes available on commercial policies.

If getting rid of collision insurance isn’t an option, raising your deductible can maximize cost savings. Just be sure not to raise it too high. When considering your deductible, choose the maximum amount you’re willing to spend on your vehicle in case of a mishap.

Anything lower, and you’re paying too much in insurance premium. Anything higher, and you could be stuck with paying more than you bargained for if you have an accident.

Understand the Risks of Dropping Collision

Regardless of whether you keep collision insurance, be sure to inform your insurance company to drop the lienholder as soon as you pay off your car. Otherwise this may be forgotten and cause problems later.

But once the lienholder is paid off and gone, you can consider dropping collision insurance without fear of their intervention. Just remember collision insurance protects your financial investment in your car. Without it, your car is not protected from at-fault incidents.

When considering dropping collision coverage, ask yourself one question, “If something happens to this vehicle, will I be OK with paying cash for another car?” If the answer is “yes,” then the time has come to drop collision coverage.

Will she really pay less money for car insurance than her brother?

Like it or not, women are charged different rates for car insurance than men.

That said, throw any negative preconceptions you may have about women drivers out the window. All things being equal, car insurance for women is less expensive than men.

Why is that?

Statistically speaking women are involved in fewer accidents. Ask any insurance actuary – the person responsible for setting premium rates.

Why Premiums Are Different for Women

Though it sounds like insurance companies are discriminating against men, rest assured they are not. Companies favor or punish different groups based on cold, hard statistics alone.

Here’s how it works:

Every insurance company employs at least one actuary. This is a person with a mathematics background who analyzes losses incurred by that company. They also determine if any particular group of drivers are causing more or fewer claims than others. The company then bases its premiums based on the actuary’s study.

It is important to note that insurance companies only consider their own loss experience when compiling these numbers – with only a passing interest in what their competitors are doing. What’s more, different companies place a different emphasis on different outcomes.

For the most part pretty much every company comes to the same basic conclusions: drivers under 25, as well as drivers over 74, cause a disproportionate amount of claims. In addition, women cause fewer claims then men. Thus, car insurance for women is cheaper than car insurance for men – though the rates don’t vary wildly.

The Gender Gap In Rates

The gender gap in insurance is most apparent at the high school ages. While insurance for a teenage girl is still expensive, it’s not as expensive as it is for her brother or boyfriend.

However, by the time she turns 25 rate differences between her and her male counterparts tend to level off. By the 50s rate differences between men and women are often negligible, but even at that age there are still differences in the woman’s favor.

Insurance is fundamentally a business of statistics. While by definition these statistics drive the business and prefer some groups over others, no reputable company will prefer or discredit anyone based on anything else.

When it comes to car insurance for women, the buying and servicing process should be absolutely no different for them than it is for men. If it is, you should probably take your business elsewhere.

Why you need a special policy to cover a cool ride.

Bike insurance has hit the big time. Only a few short years ago, insurance companies were squeamish about insuring Harley-Davidsons and Kawasakis. They’re now stepping over each other to add motorcycles to their policy rolls.

It has finally dawned on many of these companies that motorcycle insurance makes sense for both them and the rider. However, there are a few unique things to consider when writing a bike insurance policy.

Is it Similar To A Car Policy?

On the surface, motorcycle insurance operates in much the same way as automobile insurance. State minimum liability limits for motorcycles are the same as for cars. Motorcycles can also be insured for collision and comprehensive coverage.

However, on the whole bike insurance is considerably cheaper than car insurance. Indeed many companies are now advertising $100/year policies, an amount that can easily be a monthly payment for auto insurance. That said, as with automobiles it’s not always the best idea just to go for the lowest possible price when it comes to bike insurance.

Why Liability Coverage is Less Expensive for Bikes

A motorcycle is smaller than a car. The damage it’s likely to cause to other people’s property is less. For this reason, individuals with bike insurance can get away with lower liability limits than those who drive cars, but it is still not recommended to go just with state minimums.

Remember state required liability limits for property damage are outdated and quite low. Limits for bodily injury can be lower than for automobiles as well, but one shouldn’t skimp on those either for much the same reasons. While there’s no need to go crazy with liability limits, it is always a good idea to have limits high enough to cover the worst-case scenario.

Covering Injuries on Your Bike Policy

The real risk involved with motorcycle accidents is to the motorcyclist himself. For obvious reasons, regardless of fault, a motorcycle driver is much more likely to be seriously injured in an accident than an automobile driver.

It’s important to cover yourself, either with a good health insurance plan or with a generous medical payments on your bike insurance policy, preferably both.

Material Damage on Bike Insurance

Full coverage for bike insurance works the same way as it does for auto insurance. However, full coverage on motorcycles costs less because motorcycles usually cost less than cars.

That said, assuming there are no lienholders the question regarding full coverage for motorcycle insurance remains the same. If the bike stolen or seriously damaged, will it hurt you financially? If your answer is ‘yes’, you should probably keep full coverage.

Drivers need car insurance for financial protection.

Most US and Canadian drivers know they need car insurance, but what exactly is it? Simply put, car insurance is a financial protection used to cover losses caused by auto accidents and other vehicle-related mishaps.

Without auto insurance, people would have to pay for these losses themselves. That could easily bankrupt most drivers on the road in a serious accident. Car insurance protects your financial assets by covering physical damage and bodily injuries for auto-related incidents.

A Short History of Auto Insurance

Car insurance is considered part of the “property/casualty” family of insurance. In addition to automobile insurance, this includes homeowners, renters, and various forms of business insurance.

The roots of property/casualty insurance in America date to before the American Revolution. Originally these companies didn’t include auto insurance for a simple reason: there were few cars prior to the 20^th century. There were even fewer serious vehicle accidents. Remember, 35 miles-an-hour speed would have been inconceivable until well into the 1900s.

Auto insurance dates to the early 20^th Century. As cars on the road increased, car accidents incidents. Insurance companies soon discovered it could compensate drivers for their auto accident losses, but also make money while doing it. Some established property/casualty companies expanded into the market, while many others began as auto insurers.

Car Insurance Policy Components

In its most basic form, auto insurance consists of two components: liability and full coverage. Liability coverage covers both bodily injury and property damage to another vehicle if you’re found at fault in an accident.

In a “no-fault” state, each insurance company pays for its own insured’s losses, while only the insured found at fault sees a rate increase. In both cases the liability is defined by a pre-determined limit. All 50 states require all liability insurance at certain minimums.

Full coverage is further divided into comprehensive and collision sections. As the name implies, collision coverage covers your car for damages regardless of fault after a certain deductible is paid by the policyholder. Comprehensive, or “other than collision” covers other damage to your car. Common claims under comprehensive coverage include auto glass repair and replacement or damage caused by vandalism.

Other coverage commonly found in auto insurance include medical payments or personal injury protection (PIP), which covers bodily injury for you and people in your car if liability coverage isn’t applicable. There’s also uninsured and underinsured coverage (UM/UIM) which covers gaps in coverage if you’re hit by someone with inadequate insurance or no insurance at all.

How Auto Insurance Is Priced

Insurance is a business of statistics. Those drivers more likely to cause a claim pay more in premiums. Those with recent claims and tickets pay more than those who don’t. Gender and age are also taken into consideration. On the whole women pay a less than men. Drivers under 25 generally pay the most in premiums. Boys 18 and younger are usually the most expensive demographic.

However, after drivers turn 25, premiums usually drop until they bottom out in their 50s. Premiums start to creep up slightly again in the 60s. By age 74 a driver may once again be considered higher risk. As a reward, many companies will keep older drivers who have been with them for a long time at relatively low premiums.

Good, cheap van coverage is easier than you think.

Getting cheap van insurance is very similar to getting cheap car insurance. After all, a personal van policy is no different from a personal auto policy – but that’s different from commercial van insurance.

If you’re trying to keep your premiums low, treat it the same way you would normal car insurance. For inexpensive van insurance, you’ll want to go with the lowest liability limits and highest full coverage deductibles to limit costs. Just make sure you’re getting adequate coverage in the process.

Shopping around doesn’t hurt either. Different companies look at different things when calculating premiums so rates can vary dramatically.

However, there are other things one should consider when insuring a van. There are a lot of extras generally not found in the run-of-the-mill sedan. Cheap van insurance isn’t just about getting the best price.

Additional Coverage for Van Extras

But a standard auto policy won’t always cover a van’s extra stuff. Vans often come with extra items – these items can usually cover with an ‘inland marine’ rider. The term ‘inland marine’ is a quaint 19^th Century throwback, originally referring to insurance for items transported along canals. Today it refers to coverage for items not covered by the standard auto insurance.

Extra items on vans include third-party installed car stereos and other valuable aftermarket items. Agents or brokers may forget to tell you that if an item is not factory installed, it may not be covered on a standard automobile policy for theft or vandalism. The inland marine rider fills that gap by covering those items separately.

In addition, most inland marine coverage is based on stated value. In other words you tell the agent how much it is worth and it’s covered for that amount less any deductible – though that amount may diminish over time due to depreciation. Bear in mind, this coverage isn’t just for vans. Any vehicle with aftermarket upgrades installed would benefit from inland marine coverage.

RV Insurance for Really Big ‘Vans’

The cheapest van insurance may not be “van insurance” at all. If your van qualifies, you may want to consider insuring it as a recreational vehicle instead of as a personal automobile.

In addition to liability and material damage coverage, RV insurance often comes with extras such as coverage for personal property, liability coverage at vacation sites, emergency expense coverage (such as for a hotel room if the RV breaks down), and other enhanced benefits not found in a typical personal auto policy.

Check with your agent or broker to see if your van qualifies for RV insurance.

How much will this driver's insurance go up?

How much will your insurance premiums increase if you have an accident? The answer depends largely on the nature of the accident and how your insurance company views it.

Sometimes your rates are unchanged. In another situation, your policy will be dropped from the company – a bad situation. Oftentimes, the answer is somewhere in between.

Before delving into the answer to whether insurance increases, you should understand one of the immutable laws of auto insurance:

Drivers with incidents (accidents or tickets) pay more premium compared to drivers with no incidents.

People who have tickets pay more than people who don’t have tickets. In addition, people who make claims pay more as well. On the other hand, safe drivers with no tickets or accidents pay the lowest premiums.

That’s just how it works in Insurance Land.

How Insurance Companies Rate An Accident

So if you have an at-fault accident and there’s a large claim, the rule is you will pay more for your insurance premium. If the accident involves gross negligence (think DWI), your insurance policy could even be canceled. Ultimately, that means you will pay more for your insurance since you’ll need high risk insurance.

So how much more will you pay?

Assuming you don’t get canceled, you may get a surcharge on your policy. These surcharges can be 10% or more. They’re also stackable – meaning you can have more than one surcharge if you have more than one accident.

Surcharges are also different from company to company and usually last 3 years. If you get one, plan to pay an increased rate for awhile. Bottom line, if you have an at-fault accident with a big claim, your insurance will go up.

But there are exceptions to the rule of increased premiums after an accident.

Some companies overlook a minor accident. If the company pays out a small claim, (a few hundred dollars) rates may be unchanged. In addition, claims under the comprehensive (i.e. “other than collision”) portion of your insurance generally do not affect your rates either, regardless of how large or frequent they are. In other words, fixing the ding in your windshield should not affect your insurance premiums.

It’s also possible to have a bad accident and not have your insurance rates go up at all. The important factors are if you got a ticket and if your insurance company had to pay a claim.  For instance, if you’re in an accident, are not found at fault and don’t make a collision claim, chances are your insurance company won’t even know it happened. In that case, your rates will be unchanged.

Your At-Fault Accidents Will (Probably) Be Discovered

If you’re concerned about increased premiums after an accident, you may be thinking about trying to hide the incident. Bear in mind, it’s hard to hide accidents – especially if you’re shopping for a new auto policy.

While writing new business auto insurance companies check your record against a shared database which includes your motor vehicle and auto insurance claim record. If the agent doesn’t do it, the underwriter at the main office will. Don’t be afraid to ask for a copy of this report as errors can and do occur.

In addition, your current company will sometimes run internal audits on existing customers. It’s best to be up front with your agent or broker so they know what’s going on.

Accidents Are Usually Forgotten – In Time

One nice thing about accidents they don’t stay on your record forever. For underwriting purposes, most companies disregard anything that happened more than five years ago, no matter how serious.

Some companies overlook accidents at the three-year mark. Rates can also go down at renewal on existing policies as accidents drop off in time. Keeping track of when your accidents drop off can save you money, especially if you’re currently in a high-risk company and can qualify to go back to lower standard company rates.

When Will Rates Increase After An Accident?

Another thing to consider is that an insurance company cannot change your rates mid-term for any reason. Any rate increase must come at your next renewal. Therefore several months may pass between an accident and any corresponding rate increase.

This can give you time to find a less expensive insurance company. However, that company will see your accident and rate you accordingly right away – they sometimes even change your rate later if you hid an incident during underwriting. Just be honest with the new company if you’re shopping because of a pending cancellation.

This car's driver may need high risk insurance pretty soon.

High risk insurance is not a pleasant experience. When insurance companies deem drivers ‘risky’, they send them to a special division (company) or refuse to write a policy altogether.

High risk auto insurance is not cheap. It’s not pretty. But the good news is it’s also not permanent.

Drivers with spotless driving records are typically placed in a ‘standard’ auto insurance company. These are companies that advertise on TV. Most people can stay in a standard company if they have a minor accident or a single ticket, but after that they’re forced to insure with a high risk company.

High Risk Insurance For Two Types of Drivers

High risk companies can be affiliated with the higher-profile standard companies or operate separately. Naturally, they are more expensive. High risk insurance companies to two types of drivers:

• People with no (or recent) driving records.
• People with less-than-perfect driving records.

Drivers With No Driving Record

Insurance companies typically define ‘no driving record’ as not having driven for the past 3-5 years. These drivers are often put in high risk insurance companies to establish their auto insurance history. These drivers tend to be genuinely new drivers who just got their license, or perhaps those who were licensed in the past but haven’t driven recently.

The potential of getting stuck with high risk insurance is yet another good reason to keep continuous coverage on your auto insurance.

Most people in this category can move to the standard companies in 6-12 months provided they maintain a clean driving record – though each company is different on when you can move.

Drivers With Bad Driving Records

Drivers with bad records are usually consigned to the high risk insurance companies for a longer period of time. If you have a driving violation that requires you to file an SR-22, which is basically a proof of minimum liability insurance coverage sent to the state, you’re almost certainly going to a high risk company for your auto insurance needs.

Don’t worry about the SR-22 itself though. High risk insurance companies are all quite familiar with them and will file them on your behalf for a nominal fee, or perhaps no fee at all. Just make sure to tell them you need it.

There’s one final thing to remember about high risk insurance companies. There’s no need to stay in them if you don’t have to. If you’ve been continuously insured and haven’t had an accident or claim in a few years, you don’t need to be there. A good insurance agent or broker will review your coverage periodically and let you know when it’s time to go back to the standard company. If you don’t have a good agent, it’s time to shop around.

Assigned Risk: Can’t Get High Risk Insurance?

But what happens when not even high risk insurance companies will insure you?

If you can’t get insurance with an insurance company, you have to get it from the state – also called the assigned risk pool. Since even the worst drivers are required to carry automobile liability insurance in all 50 states, it follows that they have the right to obtain that coverage.

Assigned risk means the state government takes the driver and assigns him to an insurance company that does business in that state. That company is then legally required to write a policy on that driver.

The state in turn subsidizes the program and sets the premium, which protects both the insurance company and driver to a certain degree. This allows even the worst drivers to legally stay on the road, at least until their driver’s license is revoked. Assigned risk is also expensive, and the coverage available is sparse, but for some drivers it’s the only option.

One nice thing about auto insurance is that nothing is forever. Most insurance companies only consider the last three to five years of a driving record. This means even the worst driver who has no hope of obtaining insurance outside the high risk pool today can eventually repair his or her record and go back to the standard company and its cushy safe driver discounts.

When do you need a business auto insurance policy?

Auto insurance isn’t just for your personal vehicle – companies need car insurance for the same reasons. Whether you need business car insurance or fleet car insurance, the need is the same – coverage for company cars.

There are more applications to business car insurance that may not be readily apparent. Indeed commercial car insurance may be ideal for just one person.

When to Cover Business Vehicles

The most important thing to understand about business car insurance is when you need it. If you’re an employee somewhere and use your car to drive to work, a standard personal auto insurance policy works just fine. You’re in the clear.

However, if you’re self-employed or you’re an independent contractor and use your car for business purposes, a personal policy doesn’t adequately cover you. In these cases a commercial policy is the way to go.

The main reason insurance companies make a distinction between personal and commercial auto insurance is because vehicles used for commercial purposes tend to be driven more than vehicles intended for personal use. In many cases, they’re driven a lot more.

Since they’re on the road more, insurance companies want to insure for the extra risk. Even many insurance agents who are self-employed have commercial policies on their own vehicles. Rest assured, experienced agents or brokers are familiar with business auto policies.

Differences Between Business and Personal Policies

On the surface there isn’t that much difference between a commercial auto policy and a personal auto policy. Both have liability limits, uninsured and underinsured coverage, medical payments coverage (unless you’re in a “no-fault” state), and optional collision and comprehensive coverage.

However there are some important differences between business auto insurance and personal auto insurance. For one, commercial insurance policies require a set list of drivers. Personal policies require this too, but they often provide coverage in an accident in which someone not on the policy is driving (this is called “non-owned” coverage).

Not so with commercial policies. You’re either on or you’re not. If you’re not, you’re not covered.

Commercial auto policies also tend to be a bit more on the no-frills side, offering fewer options than its personal counterparts. Commercial policies often offer higher deductibles for full coverage. While most personal auto insurance policies don’t offer comprehensive or collision deductibles over $1,000, deductibles of $5,000 or even higher may be available on commercial auto policies. Also, many commercial insurance policies will not take drivers under 25 or over 74 at all, regardless of driving history.

Other Items Related to Business Auto Insurance

Ironically, assuming they meet the minimum requirements, drivers on commercial policies tend to go through less underwriting than drivers on personal policies. This is despite the increased mileage associated with commercial autos. While there are differences between insurance companies, many insurers find that drivers on commercial polices tend to be safer overall then drivers on personal auto policies.

One final item related to your driver license: unless the insured vehicle has a gross vehicle weight (GVW) of more than 26,000 pounds or is designed to carry 16 or more passengers, a CDL or other type of commercial license isn’t usually needed for commercial insurance. Therefore if you need a commercial policy to cover a car or even a light delivery van or truck, your standard driver’s license will suffice.

What she needs to know about auto insurance before she gets behind the wheel.

There are two absolutely inescapable factors to consider when dealing with young drivers car insurance.

First, it’s required. Every state requires at least some sort of liability coverage regardless of how old a driver is. In addition, if payments are still being made the lien holder will require full coverage.

Second, it’s expensive. Insurance is a business of statistics. Statistically younger drivers are responsible for more accidents and more insurance claim payouts than older drivers. That’s why car insurance for teens is more expensive.

This is true for all single drivers until they turn 25. That’s when most insurance companies back off on their premiums.

Accident-Free and Married Young Drivers Pay Less

There’s not much you can do about your age. However, there are some ways to minimize costs.

The single best thing a young driver can do to contain auto insurance costs is to staying out of accidents. If your record is clean, insurance companies will reward you with discounts and lower rates. However, one incident can kill a decent rate. That’s why it’s important to keep your driving record clean.

Another bonus goes to married drivers. Young drivers usually catch a break once they get married – whether or not they’re 25. We don’t recommend getting married just to save on auto insurance, but it is something to look forward to if your wedding day is approaching.

Insurance Less for Drivers With Cheaper Cars

Another tip is to drive a vehicle that is cheaper to insure. That means getting an older, paid-for vehicle and a liability-only policy. If a young driver is still on their parents’ policy, this doesn’t necessarily mean he or she is stuck strictly driving that car.

In most cases any driver is allowed to drive any car on a given policy. But make sure you don’t run afoul of underwriting requirements. Some companies insist on putting the highest-risk driver on the most expensive car to insure. Some agents and brokers can be sticklers about that one – just check with your insurance company to be sure.

A young driver should also stay on a parent’s policy as long as possible. At the very least insuring separately usually means the loss of any multi-car and longevity discounts. Many companies will allow a child to stay on a parent’s policy until college graduation, marriage or age 23, whichever comes first. These rules vary widely from company to company, so check with your company to be sure.

Good Grades Lower Rates for Young Drivers

Another benefit auto insurance companies offers are good grade discounts. Most insurance carriers offer student discounts to high school and younger college students. The good news is you don’t need to attend Harvard to get the discount. Documented proof of a 2.0 GPA or higher from a school transcripts should be sufficient to qualify for the discount.

How is this possible?

Insurance companies figure that young drivers in school with good grades get into fewer accidents than young drivers with bad grades or not in school at all. It’s all in the statistics – that’s why they reward good grades and good driving with better insurance rates.

Why you need a different policy for a work van.

There are two types of van insurance: personal and commercial. Commercial van insurance deals with the vans used in business, such as those for construction, painting or delivery operations.

This sort of business insurance is different than a personal auto insurance policy and is closely related to fleet car insurance.

Getting Started With a Van Policy

Many personal car insurance policies don’t cover the vehicle while it’s being used in commercial settings. That’s why a personal auto policy is inadequate for commercial use. But commercial van insurance is designed specifically for a work-related van.

Commercial van insurance is underwritten by an insurance company that specializes in insurance risks. However, most major property and casualty insurers have a commercial insurance subsidiary. Chances are the same agent or broker who handled your personal policies can handle a commercial policy.

Registration and Drivers for Van Insurance

The van should be dedicated to commercial purposes. Ideally, it should be registered by a sole proprietorship DBA or corporation rather than an individual. The driver is insured as well. The driver should be able to document proof the he or she is licensed to drive the insured vehicle.

With a van a regular driver’s license should suffice, but with a larger vehicle a commercial driver license (CDL) may be required. Check with your state for specific requirements.

The driver’s record should also be good. It doesn’t to be perfect, but the driver may be declined if there are too many incidents on their record. Many commercial insurance carriers won’t insure a driver under age 25 regardless of driving record. Remember, all drivers need to be specifically listed on a commercial policy. These rules are much stricter than with a personal policy.

Commercial insurance is geared towards change. As long as they qualify, adding and removing both vehicles and drivers is usually a simple matter of submitting a change request to the insurance agent. The important thing to remember is to keep it current.

Extras on a Van Insurance Policy

Van insurance is only the first part of the commercial insurance process. If you’re using a van for work, you may have many valuables for your job in the van. Unfortunately, van insurance usually only covers the van itself and whatever was bolted inside of it by the factory. Tools and equipment need to be insured separately.

In a commercial setting this is typically accomplished by an “inland marine” policy. The same company that wrote the van policy should be able to write the inland marine policy. Just get your equipment together, place a value and date of manufacture on it, and submit the list to your insurance company. Premiums on inland marine policies are typically quite reasonable, and well worth every penny if something happens.

Also, don’t forget about your trailer. If you have a trailer, you’ll need to insure that separately. Trailers can usually be added to the commercial auto insurance policy. All of these things will help if you need to insure your commercial van.