How to Get Fast Cash

It’s a fact of life that, as we age, our bodies slow down. The reflexes we relied to get us out of trouble are no longer so sharp. Worse, the eyes of a hawk that helped us spot danger on the horizon now need spectacles. We can still see but, with reaction times slowed, the risk of accidents increases. Yet, because public transport remains so poor, particularly in the rural areas, we need to continue driving. It’s what keeps us independent. Everyone wants to stay behind the wheel of a car for as long as possible.

The national statistics show insurance is cheap up to the age of 55. Then insurers begin increasing the rates. It’s a slow increase at first, but once you cross 65, the premium hikes are more real. If you want to continue driving after 75, the rates start to match those charged to teens. This reflects the accident rates. Although the damage tends to be less because we all drive more slowly as we get older, most insurers prefer us not to drive at peak times. Hence, there are discounts for low mileage during limited hours of daylight.

The most common discounts are offered to older drivers who go through defensive driving courses. This would be a genuine gesture toward improving safety on the roads if all the courses were behind a wheel. Unfortunately, insurers are currently prepared to accept online courses as satisfying the requirements. This means you can get a discount simply by logging time in front of a computer screen. Most of these courses take between four and eight hours to work through with the most popular being offered by the AARP. There are two major problems with this.

First, there’s no check on the identity of the person sitting in front of the screen. No doubt there are grandchildren with the right skills who will work through the courses for a few dollars. This lack of security makes a nonsense of the discount requirement if it’s intended to promote real safety. Yet, this is the way insurers currently work. The second problem is about learning outcomes. Ask anyone who’s studied education theory and they will tell you people who study practical skills using books or online materials, rarely benefit. The only way to learn a practical skill is by doing and receiving immediate feedback on performance. Older people are more set in their ways and it takes longer for them to change their behavior. Only by sitting with an instructor in a car can seniors be given the level of training necessary to change the way they drive. Except this is relatively expensive.

At present, twenty-eight states have special licensing requirements for older drivers, i.e. renewing the license more frequently or taking a driving test. For now, you can save money by going through online driving courses, typically up to 15%. Talk with the insurers when you get the next set of car insurance quotes. With online courses cheap, savings often exceed $100 a year. But, if you want to be a better driver, pay the extra for one-to-one tuition behind the wheel. You know you should. Cheap car insurance should be about more than you paying less.

Let’s go back to basics on insurance. It works because those clever actuaries estimate how much money will be required to pay out all the claims over the next year and then divide that amount by the number of policyholders. It’s called the cost of loss. To that they add a percentage to cover the administrative expenses and a profit. If the estimates are right, everyone is happy. Now suppose we could do something to reduce the cost of loss. That would mean a smaller share for all of us to pay and happier people. It’s just common sense we would want to do everything in our power to make driving safer, right? Well, it seems not everyone is in favor.

Take the question of road design. To anyone interested in statistics, one of the most dangerous places to drive is junctions and intersections. That’s why we have stop lights to show who has right of way. Except that’s not actually the safest design. The roundabout is the safest way of regulating traffic flow. You keep everyone moving in the same direction. The Federal Highway Administration has been compiling some good research data. Wherever roundabouts have been installed, accidents have dropped by 40%. In the busiest intersections, adding peak-time stop lights reduces the accident rate even lower. Yet even though this is an ideal way of preventing accidents, a lot of drivers object. It’s the same when it comes to red light cameras. More than one-hundred thousand people are injured every year by drivers coming through on red. Yet, shouting about invasion of privacy, some counties are now removing the cameras. It seems local politics beats positive measures to reduce injuries and save us money through lower premiums.

Then there’s the issue of speed limits. On the roads in every country, the moment you force people to drive more slowly, there are fewer accidents. Our country used to have a national maximum limit of 55 mph but, in 1995, Congress canceled it and delegated the issue of speed limits to state lawmakers. Now you find different limits on roads in every state. Trust us to resist the idea of any federal laws telling us what to do. It’s the same with the age at which our children can be licensed to drive. All the states that hold off until seventeen have accident rates 30% lower than in states where children can drive at 16. The STANDUP Act (Safe Teen and Novice Driver Uniform Protection Act) is to be reintroduced in Congress. Hopefully it will do better than last year. There’s a similar move to force all states to enforce a ban on drinking and driving under 21. Left to well-informed lawmakers, there would be a zero tolerance approach to all drink driving. Sadly, politicians feel they will lose elections by supporting such measures.

These are simple measures to make our roads safer. In turn, they would reduce the car insurance quotes. But few politicians are prepared to take a stand on anything that interferes with the rights of the driver. The gun lobby is stronger, but lawmakers fear a voter backlash if they make the active policing of the roads a major policy priority. Lower car insurance rates don’t win elections.

You may have noticed Hurricane Irene which has broken records for a hurricane hitting land and working its way up the Atlantic Coast. This has not happened for a good few years and even though Irene was downgraded to a topical storm, it’s contrived to dump an amazing amount of water on to one of the most densely populated parts of America. The immediate estimates are that this will be a top ten natural disaster with billions in claims on auto and home insurance policies. When all the numbers are added up at the end of 2011, experts are predicting this will be one of the worst on record for the insurance industry. A M Best, which monitors the insurance industry, recently announced the payouts so far this year have already exceeded the amount paid last year. Last year was expensive. When you add the two years together, it’s likely the insurance industry will run out of cash reserves later this year. This will force it to borrow and erode its capital base, assuming of course there are banks or investors prepared to advance more money. No matter what happens in the stock exchanges or on Wall Street, premium rates will have to rise.

This gives everyone a big incentive to avoid making a claim. Although an increase in premium installments is not automatic after a claim, it’s better not to take chances. So what do you do if your local weather forecasters start warning of big problems? The first and most straightforward advice is not to drive during really bad weather. No matter how well prepared you are, it’s just not worth the risk unless there’s an emergency that forces you to make the attempt. So start with the vehicle itself. You need the best possible grip on the road so having tires with the maximum tread is best. If snow is going to be the problem, consider having chains to fit should you encounter drifts. In winter, the real problems come with ice. In wet weather, the problem is aquaplaning if you drive too fast. The first you know of either problem is when you discover you have lost contact with the road. Should you have time, take your foot off the gas and hope engine compression slows you enough to recover control before you hit something. Remember before you drive into flood water, there’s always a risk of hitting a submerged object. If in doubt, don’t drive into more than a few inches of water. Keep replacing your windshield wipers to ensure the best possible view of the road.

Always carry emergency supplies with you. You need a charger to keep your cell phone working, and either warm clothes or blankets to keep you warm while you wait for rescue. Remember emergency services will be slow to reach you if the weather is bad across large areas. Follow these simple rules and you should survive. More importantly, if your vehicle is undamaged, next year’s car insurance quotes should come in lower than you expect. But the advice remains the same. Don’t drive unless there’s no choice. If you are warned of a hurricane, evacuate early to high ground to avoid flooding. It’s all common sense to avoid higher car insurance rates next year.

Last year, we saw a bad-tempered debate in California. Eventually, Proposition 17 was approved and placed on the ballot papers. It lost by just 2% which is a close result. Several features make this debate interesting. Let’s start with the Proposition itself. It wanted to allow insurers to take your track record into account when setting the rates. So, for example, your current insurers may give you a persistence or loyalty discount for renewing year in, year out. This is only fair. If you renew, pay the installments on time and make no claim, you are a valuable customer who should be rewarded. The problem for the rest of the insurers is this persistence discount is not transferrable as such. When calculating what premium rate to offer, the new insurers are not allowed to look at the length of time you have been with your current insurer. This all sounds good and there was a $16 million advertising campaign in support. That’s why the Proposition was almost carried. So what’s wrong with this idea?

Well, just as an insurer can look at your track record and see you have been loyal, it can also see there have been gaps. So, for example, suppose you fall ill and are off the road for six months. When you start driving again, you are uncertain and out of practice. There’s a higher risk of an accident. So many insurers increase the premium rate whenever there’s a gap. Indeed, many use it as an excuse to raise rates when your teens go to college or a member of the military goes on overseas tour of duty. So the “no” campaign to Proposition 17 emphasized the risk that everyone with a gap could suddenly find their premium rates increase.

In a way, this focuses attention on the California Insurance Code. This forbids the Insurance Commissioner from considering whether a rate is fair based on the level of competition. When you want the Commissioner to step in to protect consumers, it’s surprising he cannot consider whether the free market is working as it should. Anyway, the loss last year has not been taken as defeat and the original proposers are back again. This time, they have changed the wording to exclude the risk that a gap might justify a rate increase. This is solely concerned with making the persistency discount transferrable. Let’s not ask whether competing insurers can offer welcome bonuses that match the persistency discounts. California is now to be asked to decide whether you should be allowed to pick up your discount and take it to other insurers. If you Californian voters reject it again, what you are apparently saying is that you don’t want insurers to be able to compete against each other and match each other’s discounts. In effect, you want to be locked into your current insurer by lower rates.

So, when you get the next renewal notice from your insurer and it does contain a persistency discount, get auto insurance quotes from the other insurers to see whether their rates compare. If the auto insurance quotes show all the other insurers are way more expensive, try telephoning them and asking why they don’t want your business. If enough people make the point that premium rates are uncompetitive, insurers might do something about it.

In all but three states like Virginia, there are laws requiring you to carry insurance when you drive a vehicle on a pubic road. This is a simple measure to ensure there’s always a minimum amount of cash available to meet third party claims should your bad driving injure someone or damage their property. Unfortunately, the number of people driving uninsured has been rising steadily in all states, the rate increasing quite sharply as we have come into the recession. With an increasing number of people now unemployed for six or more months, family budgets will not pay for annual policies. For 2010, the Insurance Information Institute estimates that at least 18% of the drivers on the road are uninsured. This gives you bad odds on being involved in an accident with an uninsured driver. Sadly, a big percentage of the remaining drivers are probably underinsured, i.e. the amount of the coverage is unlikely to meet all your losses. Only the wealthy and those with auto loans will be carrying more realistic levels of insurance.

Against this background, more insurance companies are now offering coverage on installment plans. These are usually three, six or twelve months. But before you launch your search for these insurers and sign up, there are a number of issues to beware. The first is the right of the insurers to cancel the policy. When you have paid a lump sum for your coverage, the insurer cannot simply walk away from the deal. There will be limits on the right to terminate. But if you’re paying on an installment basis, all these protections disappear and the insurer will be free to cancel if you’re even one day late in making an installment payment. Always read the small print on this before buying to find out when the insurer may cancel and what happens if you make a late payment after cancellation.

Then look very carefully at the amount of interest and any fees and charges loaded on to the amount of the premium. Sometimes the total payable at the end of the term of the coverage is a massive percentage increase. Do sums and make sure you cannot afford to pay a lump sum for six or twelve months. This can represent a real saving. The final issue is the amount payable up front. All these policies have at least one month payable in advance. That means the insurer always has some cash from you before you put wheels on the road. But many states have formal laws requiring the payment of two or more months in advance. This protects the insurers but also raises a real barrier to the unemployed to pay. This is not something you can negotiate. If that’s the law, you’re caught by it.

To find the best installment deals, you need to get as many auto insurance quotes from as many insurers as possible. You’re looking not only for the installment plan but also for a good deal on the terms of the coverage. Just because the auto insurance policy is affordable does not make it good value for money. Always read the small print and work out the costs before you buy.