Using discounts to find cheaper car insurance, choosing a cost-effective liability limit, and how to best utilize full coverage.

It's all about the discounts.

So you want cheaper car insurance? Why not?

What’s more the insurance companies know it. For years major insurers have run multi-million dollar advertising campaigns on this very premise. Finding cheap car insurance is no problem at all for most people.

That’s all fine and good, however simply looking for cheaper car insurance is not always the best thing to do. What you really want to do is look for cost-effective car insurance.

Cheaper Car Insurance Means Discounts

Apart from shopping around, the single best way to find cheaper car insurance is to find and qualify for as many discounts as possible. While the exact discounts available vary from company to company, just about everyone offers multi-car discounts, discounts for packaging auto insurance with other insurance lines such as homeowner’s insurance, discounts for good credit, good student discounts, and so on.

Rest assured there are plenty more.

A good agent will look for these discounts on your behalf. It’s the agent’s job to be familiar with the discounts his company offers. He or she is well-motivated to find these discounts for you, both because it’s good customer service, and also because it gives the agent a chance to outbid the competition (insurance agents love doing that). While it’s certainly possible to find these same discounts online, know you’re on your own when you do so.

Shop for Cheaper, Intelligent Liability Coverage

The most straightforward way to save on liability car insurance coverage is to simply go down to your local agency, ask for the state minimum limits and refuse to accept anything else. Indeed, this is how many people shop for insurance. It works, as long as they never get in an accident.

The plain truth is state minimum liability limits are routinely inadequate for anything other than minor accidents. If anything serious occurs, it’s very easy indeed to exceed the limits for bodily injury and property damage on a state minimum liability policy. While the insurance limits run out at a certain point, your legal liability doesn’t. If you’re in this situation you may find the accident very costly indeed, even with adequate insurance coverage in the eyes of the state. You may face subrogation or even be sued.

Instead, many insurance professionals recommend a more robust liability limit, such as a 50/100/50 “split limit” policy or a $100,000 combined single limit policy (CSL). These limits are often still reasonably priced for most people. The myriad of discounts available can make them even more appealing.

Don’t Forget Full Coverage

While no state requires full coverage auto insurance, it’s not always a good idea to forgo it. If you’re still making car payments, your lender will require you to carry full coverage as part of the contract. You’ll need to do so until the car is paid off.

Don’t think you can pull a fast one on them, either.

Lenders will ask your insurance company to send them a “binder,”which in this case is basically a piece of paper that documents that the vehicle in question has full coverage and lists the lender on the policy. Without a binder, a lender can put “force placed” insurance on your vehicle. Force placed insurance usually features limited coverage and extremely high prices. Keeping your full coverage is much more cost-effective.

Once your car loan is paid in full, you’re free to drop full coverage and remove the lender from your policy. Don’t assume the latter happens automatically. It often doesn’t. While this instantly results in cheaper car insurance, it also instantly results in significantly reduced coverage. Without full coverage you’re no longer covered against theft, vandalism or any accidents where fault can’t be pinned on someone else. If you’re OK with that, then go for it. If not, there’s nothing wrong with keeping full coverage.

Full coverage may not make for cheaper car insurance in the short-term, but it may be a cheaper route if you have an at-fault accident in an expensive vehicle.

Defining comprehensive auto insurance, how to best utilize your deductible, auto glass claims, and how to deal with animal strikes.

If the worst happens here, we know how to cover it - comprehensive.

No state requires full coverage auto insurance. However, most lenders or “lienholders” do. Dropping full coverage while making car payments is not a good idea.

You should also know that full coverage consists of two main components: collision coverage and comprehensive coverage. Collision is pretty straightforward. If your car hits something, it helps you fix it.

Pretty simple. But what is this “comprehensive” business, you might ask?

Comprehensive Coverage Defined

Another name for comprehensive car insurance is “other than collision.” They’re not trying to be cheeky with that (well, we don’t think so, anyway), but that’s effectively what it is. Comprehensive coverage covers a wide variety of mishaps that could happen to your car – what insurance agents refer to as “perils” – which are … not collision.

Perils covered by comprehensive auto insurance typically include theft, vandalism, fire, weather-related damage and “missiles,” which are usually in the form of rocks. In other words, in most policy comprehensive auto insurance is a catch-all for perils which are not collision and which are not specifically excluded in the policy.

Another attractive feature of comprehensive auto insurance is the fact comprehensive claims rarely, if ever, count against you come renewal time. This is in stark contrast to collision claims, which strongly tend to raise your rates unless they’re quite small. In short, don’t be afraid to file a comprehensive claim if conditions warrant.

Know Your Comprehensive Deductible

As with collision coverage, comprehensive car insurance includes a deductible, or agreed amount you pay on any claim before the insurance company kicks in. Comprehensive deductibles options are usually the same as for collision deductibles, ranging from $0 to $1,000. However it’s not necessary to choose the same deductible for both. Most people don’t.

Since comprehensive claims on the whole are much lower dollar amounts than collision claims, many insurance professionals recommend choosing a lower comprehensive deductible. A combination of a $100 comprehensive deductible with a $500 collision deductible is particularly popular.

Comprehensive Glass Coverage

By far the most common comprehensive auto insurance claim involves auto glass repair. In fact, these claims are so common many insurance companies almost consider auto glass coverage a form of full coverage unto itself.

Many companies apply your comprehensive deductible to everything comprehensive except auto glass claims. Instead, auto glass is often covered at a zero deductible, especially if the claim is for repair rather than replacement. Some companies offer this as an option, while others may just include it in your comprehensive coverage. Ask your insurance agent for more information specific to your company.

When Collision is Comprehensive After All

There is one scenario in which hitting something with your vehicle (as in a “collision”) actually warrants a comprehensive claim. Animal strikes typically fall under a policy’s comprehensive section. These can include small animals like birds and jackrabbits all the way up to deer and moose, even livestock.

So if you find yourself accidentally running over your local fauna and damaging your vehicle, know that it’s comprehensive insurance which covers you – so long as you have it.

Defining subrogation, how it works, and why it can be a good deal for both you and your insurance company.

Oops. Someone may face subrogation after this

No one wants to get in an auto accident. No one especially wants to get in an auto accident against a negligent driver with no insurance. Needless to say, all sorts of problems can arise from that.

Fortunately there are several remedies for this situation. Hopefully you have uninsured and underinsured motorist coverage (UM/UIM) on yourself and your vehicle. That’s what it’s for.

Another remedy is subrogation. While subrogation is not something that an insured driver often considers, rest assured your insurance company considers it a big deal.

Defining Subrogation

What is Subrogation? Subrogation is an important behind-the-scenes player in many liability insurance claim situations, especially when an uninsured or underinsured driver is involved. In its purest form, subrogation is a legal concept in which one creditor unilaterally replaces another. When applied to the insurance industry, in certain situations it gives the insurance company the right to replace you as the entity which a negligent party must compensate.

This may not sound very fair. However, if your insurance company steps up to fix your car first, it actually makes a lot of sense for both you and them.

Why Subrogation Makes Sense

Regardless of whether one has insurance or not, legal liability is legal liability. This is the basis for  insurance subrogation. While subrogation can occur in many different types of insurance, it’s quite common in auto insurance.

In auto insurance, subrogation most often occurs when someone makes a collision or comprehensive claim to fix damage that was not their fault. This can occur in an uninsured motorist situation, or perhaps in an instance in which the other guy’s insurance company is taking too long to process a liability claim. As with any other full coverage claim, you pay your deductible and your insurance company takes care of the rest.

Subrogation may also apply in a UM/UIM claim situation, however there can be some additional issues with that. For example, in February 2009 the Florida Supreme Court ruled that an insurer must wait until a UM/UIM claim is closed before it can pursue any subrogation options against a negligent party in that state.

How Subrogation Works

Insurance companies will generally honor these claims with the knowledge they will subrogate against the guilty party to recoup their losses. This arrangement not only gets your car fixed, but also allows your insurance company to minimize their loss ratio, which in turn improves their bottom line and allows them to offer more competitive premiums later.

Subrogation can be as simple as insurance companies agreeing to reimburse each other in cases where claim payments are too slow. In some situations your insurance company may subrogate directly against the other driver, demanding that he or she reimburse them for your claim.

In these instances subrogation is similar to collections procedures. Your company and the other driver can negotiate a payment plan, with the driver making payments directly to your company. If necessary your company may sue the other driver to recoup its debt. If your insurance company is subrogating on your behalf, you don’t have to worry about what that other guy is doing or not doing. That’s the insurance company’s responsibility

Either way, realize you won’t see any benefit from subrogation procedures made on your behalf. Your insurance company already paid your claim, therefore the matter is now strictly between them and the other driver.

Getting Mexican auto insurance from an agent or a third party source, and other documents needed to drive in Mexico.

Driving in Mexico takes planning

Yes, you can drive your car in Mexico. Seriously.

But before you strike out south of the border, you should understand how to get car insurance in Mexico.

While its infrastructure doesn’t have the best of reputations, there have been significant improvements made to Mexican highways in recent years, particularly around the major cities. While back roads can still be scary, many major routes are as well-maintained as anything north of the border.

If you have business or family in Mexico, it’s not at all that far-fetched to drive down there. You just need to make sure you have the right paperwork.

Getting Mexican Auto Insurance

Unlike in Canada, American auto insurance is not recognized in Mexico. Indeed, many American auto insurance policies specifically exclude coverage in Mexico. You may be able to get away with U.S. car insurance it if you stay near the “border zone,” but even that’s subject to interpretation. If you drive more than 15 miles or so into Mexico, Mexican auto insurance is an absolute must. There’s no debate there.

It’s best to plan ahead.

Contact your agent to see if he can find you a plan. Although virtually no American insurance company writes auto insurance in Mexico, American agents may have access to Mexican auto insurance companies through brokerages. Insurance agents often use brokerages to fill high-risk or unusual insurance needs. Chances are your agent has access at least one.

Other Methods to Obtain Mexican Auto Insurance

If your agent strikes out, you can purchase Mexican auto insurance coverage online. Failing that, it is possible to purchase Mexican auto insurance near the border. The closer you get to the border, the more ubiquitous these agencies become. But be careful. If you go this route, make sure you’re working with a reputable firm and actually buying Mexican auto insurance.

As in the U.S., Mexican insurance companies are independently rated by A. M. Best, a neutral insurance rating company. Major, respected Mexican insurance companies with good A. M. Best ratings include Grupo Nacional Provincial, ACE Seguros and HDI Seguros (“seguros” is the Spanish word for insurance).

Whatever you do, don’t try to drive in Mexico without at least liability auto insurance underwritten by a Mexican company. According to the State Department, if you’re in an accident and found without insurance you’ll be detained until financial responsibility can be resolved, even if you’re seriously injured. The State Department also says your chances of jail time in such a scenario are “almost certain.”

In addition if you’re found driving under the influence of alcohol or drugs, your Mexican auto insurance is effectively invalidated. Obviously, don’t do that either.

Other Required Mexican Travel Documents

In addition to a valid passport or other approved travel document such as a passport card (which you’ll need to get back into the U.S.), there are several other documents you need to obtain before you legally drive in Mexico.

You and all adults in your party must obtain a Mexican tourist visa at a Mexican consulate or at a port of entry after you cross the border. The application for this visa is pretty straightforward, but you will need to go to a nearby Mexican Army Bank (“Banjercito”) branch to pay the necessary fee, which is currently in the neighborhood of $20 each. Mexican tourist visas are good for up to six months.

Remember, You’re Importing a Vehicle Into Mexico

Mexican authorities also require a “Temporary Vehicle Importation Permit” for every foreign vehicle driven in Mexico. Although there are some exemptions if you stay in the northwestern states of Baja California and parts of Sonora, these permits are required everywhere else. Getting caught without one is no joke. You may be arrested and your vehicle may be confiscated.

This permit can generally be obtained at the same place you get your tourist visa. At the customs port of entry or Mexican consulate, you will need to show the authorities at the Banjercito branch your passport, a valid driver’s license and your vehicle registration or title. Banjercito offers an English-language online application for the permit at its web site, which can expedite the process considerably.

The fee for the permit itself is around $30, while the required bond deposit can be up to $400 depending on the age of your vehicle. A credit card can be used for the bond deposit, which is given back to you once you surrender the permit upon leaving Mexico assuming there were no problems.

Don’t forget to surrender the permit before you head home. If you leave Mexico without doing so you lose your bond deposit and any future vehicle importation permit applications will be denied.

It can be a confusing situation, but it’s not impossible getting auto insurance in Mexico. Just understand the process before leaving the US.

What’s needed to drive with US car insurance in Canada, when you need to get Canadian insurance, and things to consider while driving in Canada.

American auto insurance works in Canada, eh? Beauty!

Have you ever wanted to take a road trip to Toronto, Montreal, Vancouver, Winnipeg or even Alaska?

To do so you need to drive in Canada. While you may think you need to buy additional insurance at the border as you do in Mexico, the fact is in Canada you don’t need to worry about it in many cases.

However, there are several other things to consider before driving in the Great White North. It’s why US car insurance in Canada may not work in all situations.

Driving with US Auto Insurance in Canada

Canada is the only foreign country where U.S. auto insurance is generally recognized nationwide. As long as you’re traveling to Canada on a short-term basis as a “tourist,” purchasing Canadian auto insurance is not required provided you already have a valid U.S. license, registration and auto insurance policy.

As you do back home, as a U.S. drivers you are required to carry your license, registration and proof of insurance with you in Canada. Canadian officials also require you carry a “Non-Resident Inter-Province Motor Vehicle Liability Insurance Card” issued by your insurance company. To get this, just call your agent and tell him or her you need a Canadian insurance card

(yes, they should know what it is, or at least know who to call about it).

Oh yeah, you need a passport or a federally-approved travel document to get into (and out of) Canada in the first place. The days when you could cross the border without this documentation are a thing of the past.

Getting Canadian Auto Insurance (If You Need To)

You don’t need to worry about it if you’re only in Canada for a few days. However, if you plan on moving to Canada or or otherwise driving there for any length of time as anything other than a tourist, such as for college or an extended work-related excursion, you may very well have to get Canadian auto insurance.

While Canadian auto insurance is somewhat similar to auto insurance in the U.S., bear in mind all provinces and territories employ some form of “no fault” auto liability insurance, or auto insurance where your policy pays for your own liability-related damages.

Minimum liability limits in the Canadian provinces and territories are significantly higher than in U.S. states. Most provinces and territories require a liability minimum roughly equivalent to a $200,000 combined single limit (CSL). Although this is in Canadian dollars, it’s still considerably more than required anywhere in the U.S. Canadian auto insurance also often includes components of disability insurance and even life insurance in the form of final expense coverage not seen in American auto insurance coverages.

In some provinces auto insurance is partially or entirely a government operation. Ontario’s state-run auto insurance program is comprehensive, but particularly complex. Private auto insurance is available in other provinces, however, such as Alberta and Nova Scotia.

Canadian Things to Watch For (Other Than Moose)

Speed limits in Canada are expressed in kilometers per hour and considerably lower than in the U.S. The standard highway speed limit in Canada is 80 kilometers per hour, or just under 50 miles per hour. Posted speed limits on rural highways can be up to 100 kilometers per hour, but even that’s only around 62 miles per hour. Also bear in mind road signs may be in French, particularly in Quebec.

DWIs are dealt with very severely in Canada. In fact U.S. citizens found driving in Canada with any alcohol-related offense on their records are subject to immediate deportation, no matter how minor or how long ago the offense was. Americans with any prior DWI conviction must apply for a waiver from the Canada Border Services Agency, the Canadian Embassy in Washington, D.C., or any Canadian consulate in the U.S. before they can drive legally in Canada. This process can take weeks or even months.

Radar detectors are illegal in Quebec, Ontario, Manitoba, the Yukon and the Northwest Territories. If you are caught with one in these areas, even if it’s off or broken, it may be confiscated and you may be heavily fined. All the more reason to review your US car insurance in Canada – before driving there. Leave your detector at home if you plan on driving at all in these areas.