May 25
adminArticles Bank Failures, Carpools, Credit Crunch, Debt Reduction, Family Budgets, Finance Company, First Response, High Density, Housing Developments, Journeys, Money Lives, Private Transport, Recession, Straw In The Wind, Taxi Business, Time Machine, Timetables, Towns And Cities, Traffic Accident, Ways To Save Money
If you were building a time machine, you need only find a way of travelling back two years to find a land of plenty. Remembering how good it was almost brings tears to your eyes. Every week a bank, credit card company or finance company would mail you their latest offers. Cheap overdrafts, reduced interest with expanding credit limits or yet another way of converting that positive housing equity into cash for spending. There seemed no possibility of this coming to an end. Yet suddenly the price of gas was up to $4 and more a gallon. That proved just a passing straw in the wind. A month or so later came the bank failures, the credit crunch and a full recession with major problems of unemployment. Comfortable lives disappeared. Family budgets suddenly had to pay for debt reduction. Everyone was looking for ways to save money.
Lives must go on but the problem was how to stay mobile. During the good times, towns and cities had exploded. Gone where the high density housing developments close to workplaces. In their place came suburbs and then exurbs. People were organizing their lives around private transport and expecting to commute further and further to get anything done. What do you do when you find you cannot afford to replace your current vehicles but live too far away from work, schools and convenient shops? There is no private transport so, as a first response, you are looking at constantly patching up your old vehicles to keep them moving. But small repairs become major repairs, particularly if your mileage is high or you get into a traffic accident. You look around the neighborhood for carpools. This can work for routine journeys, but it ties you to other people’s timetables. That leaves renting.
If you decide to drive other people around and take payment, you need to check whether your existing policy covers you. The majority of insurers believe taking money makes you a taxi business and they want a higher premium. As with all insurance, use the online search engines to find affordable cover. But, in some parts of the US, it’s now economic to give up ownership. There are new rental systems allowing you to take a vehicle from a local pick-up point as and when you need it. Booking online, you only pay for the vehicle for the hours you use it. Economists have calculated the average yearly spend on car ownership is about $8,000. The average hourly rental rate is $15. That’s 533 hours a year in a rental car before you pay more than an owner. But here comes the warning. The rental car always comes with cheap auto insurance, but the companies are only interested in protecting their capital. You are usually asked to pay more to top up on cover against medical expenses for your own injuries. But even with this extra premium, it’s often significantly cheaper to rent as needed. Even better, you do not pick up from local offices where sales agents pitch extra options. Pick-ups and drop-offs are in local garages with no formalities. Check out what services are on offer in your area. If the cheap auto insurance terms are right, you will save to go down this road.
May 23
adminArticles Buying Stocks, Car Insurance, Cheap Money, Credit Cards, Credit Rating Agencies, Credit Score, Credit Scores, Debts, Family Budget, Finding The Money, Friends And Neighbors, Insurance Companies, Insurance Premium, Landlords, Midst, Recession, Responsible Person, Risky Investments, Sacrifices, Short Time
When you look around your neighborhoods, it’s hard to find any good news. Friends and neighbors may have lost their jobs or be on short-time. There are foreclosed properties on every street. Shops and businesses have been closing down with increasing frequency. These are the signs of a real recession where unemployment and poverty stalk the land. The cause of all this pain is not hard to find. We have all been living beyond our means. When the banks and credit card companies offered us more money to borrow, we just took it. Why bother to save when the value of our homes only goes up? Let’s plan for our retirement by borrowing cheap money and buying stocks and other more risky investments. No-one ever loses if they follow the advice of the credit rating agencies. Well, we know better now. What goes up can also come down. What is given a triple A rating can be junk tomorrow.
In the midst of all this chaos, the credit card operators have been cutting back on the borrowing limits. This has forced pain on us for two reasons. Firstly, finding the money to pay down our debts more quickly means redesigning the family budget. Sacrifices have to be made. Secondly, the way the credit score is calculated depends in part on the extent to which we use the credit cards we have. If the limits are reduced, we look like bad risks because the amount borrowed is closer to the limit. We have less money available to borrow and cut down on card usage so we can repay faster. Put the two together and the score falls. This is a direct criticism of the methods used to calculate the scores. It produces a fundamentally unfair result during a recession.
This would not be a problem if the credit score was only used by banks and credit card operators. But it’s also used by companies to help decide whether to employ you, by landlords deciding whether to rent to you and by insurance companies deciding whether you are a responsible person. National figures show more than half all insurance companies use credit scores as a key factor in deciding your premium rate. This is extraordinary. There is only one possible effect of being in debt when it comes to the way in which you drive. If you cannot afford to repair your vehicle, you drive defensively to reduce the risk of an accident.
Some states like California and Massachusetts have banned the use of credit score for this purpose, but they are a minority. They cite discrimination as a reason for the ban. The majority of the population without access to banking services and credit cards fall into minority racial groups. When they do not have a credit score, they are forced to pay a higher premium simply because of who they are, not how they drive. So, when you are looking for affordable cover, get the maximum possible number of car insurance quotes to find the best policies. If you live in a state which refuses the regulation of the car insurance market, contact your local government representatives and tell them how much pain you are suffering because of this unfair use of credit scores.
May 22
adminArticles Business Arrangement, Car Insurance, Car Ownership, Carpool, Credit Crunch, Crisis Management, Excuse, Insurer, Journey, Journeys, Losses, Medical Costs, Minimum Liability, Neighbors, Recession, Second Thought, Taxi, Twelve Months, Urban Sprawl, Vehicle Owner
Urban sprawl never used to be an issue. Even though the latest development might be miles from where you work or the nearest shops, this was never a problem. Most families owned two vehicles. Some three or more. No-one walked. Everyone just jumped in the nearest vehicle and off they went without a second thought until the price of gas rocketed up. Now we have the credit crunch and a recession just bottoming out. Car ownership has become an expensive proposition. Too expensive for some who have been reborn as a one-car family to cut their losses. The first step in crisis management is to find out which of your vehicles is the cheapest make and model to insure. Now balance that against the likely costs of maintenance and repair over the next twelve months. And which will sell for the highest price? When you know which vehicle you are keeping, maximize the number of discounts on the policy, including bundling auto and home together with the same insurer. Except, one vehicle for a busy family may not be practical. What are the options?
Many families talk to their neighbors and work out a carpool. This is reasonably easy to organize for routine journeys. But there is one slight problem. If you are going to carry passengers, you should have insurance to pay their medical costs should they be injured in an accident. It is not safe to drive your neighbors around on the state’s minimum liability cover. Then we come to the always difficult question of sharing the costs of the gas. If the passengers always pay something towards the cost of the journey, many insurers treat this as a business arrangement and require the vehicle owner to take out a commercial policy as a taxi. Needless to say, this turns a friendly social service into an expensive excuse to argue with your neighbors over prices. Of course, you could all agree to lie about the arrangement. But the stories can change rapidly if everyone ends up in a hospital and big bills are presented.
The second option is the new rental plans which site vehicles for rent by the hour in local garages. You book what you want over the internet, travel to the garage for the pick-up and drop it off at the same garage when your time is up. The cost per hour on the standard plans are attractive and, assuming you do not want a vehicle more than an average of one hour every day, you will save money on car ownership. But you do need to look carefully at the insurance offered in the standard plans. Some have poor cover of medical expenses for you as the driver and passengers. Others do not include the loss of use charge if the vehicle is off the road being repaired. Always read the small print. Summing up, finding insurance for a single vehicle means getting multiple car insurance quotes and finding the one that works for you. If you are going to use your car to drive neighbors around, you also need to get car insurance quotes to cover the additional liabilities. If you use one of the new rental plans, consider paying extra for LDW which gives more comprehensive protection against loss.
May 19
adminArticles Annoying Features, Basic Economics, Captive Group, Cheap Health Insurance, Deductibles, Health Insurance, Health Maintenance Organization, Health Plan, Healthcare Professionals, Hmo, Hmos, Insurance Company, Insurance World, Insurer, Jargon, Ppos, Quota, Recession, Second Thought, Spending Power
One of the more annoying features of the insurance world is its habit of distilling options down to simple sets of letters and then failing to clearly explain what the letters mean. In other words, insurers hide behind jargon and prefer not to explain clearly what you are buying. You are expected to assume the insurer has your interests at heart and pay over your money without a second thought. In many cases it works. Over the years, we have given up the unequal struggle and just say prayers we never fall sick. But, as premium costs have risen and the recession has cut back our spending power, trying to understand the options is back on the menu. So let’s start with an explanation of HMOs and PPOs. In fact, they both rely on a network of physicians, clinics and hospitals, but they differ significantly in the detail of how they deliver healthcare to you and your family.
A Health Maintenance Organization (HMO) is a network of healthcare professionals that enters into a contract with an insurance company. The insurer offers a captive group of people to refer to the network and, based on the expected volume of business, the network agrees a fixed fee for all the main services on offer. In theory, this works well for everyone. The fees are discounted because of the volume of business, so the insurer saves money and charges lower premiums. This is usually the cheapest form of health plan with very low copayments and, often, no deductibles. But there are problems. HMOs are very reluctant to accept people with existing conditions requiring expensive treatments. They prefer most of their patients to be reasonably healthy. The reason is basic economics. Every physician has to meet a quota of patients in a day. This means spending the shortest possible time on each consultation. Long diagnostic sessions disturb the quota and can result in penalties to both the doctors who miss their numbers and the patients who have slowed down the queue. There are also significant restrictions on patient choice. A nominated primary care doctor decides what referrals shall be made and to whom. HMOs are the cheapest form of care, but you have little control over the treatment you or your family receive.
A Preferred Provider Organization (PPO) uses the same basic approach but, because you pay more, you buy greater control over the treatment. The copayments are around 20% and there are usually deductibles. But, you have freedom to choose your own doctors. So long as you go see a physician in the network, you are covered. If you want to see someone outside the network, you usually only pay the difference between the network rate and the actual fees your choice collects.
So, when it comes to cheap health insurance, an HMO is the better option. But if you have the money and a health problem likely to need more extensive treatment, you should opt for a PPO. It always comes back down to your own personal needs and what you can afford. Cheap health insurance always comes with limitations. Read the small print before you buy into any plan and see exactly what you can and cannot do before you agree to buy the policy.
Apr 22
adminArticles Annual Salary, Auto Insurance, Electora, Healthcare Reform, Liability Auto, Liability Coverage, Liability Insurance, Loss Of Earnings, Mandates, Medical Treatment, Money Prices, New Laws, New Vehicles, Personal Injury Protection, Recession, Three States, Traffic Accident, Vehicle Insurance, Voluntary Activities, Wrong Person
Looking around the US, all but three states mandate drivers to carry liability insurance. Some states have no-fault schemes. Others add in a requirement to buy a personal injury protection policy. As the healthcare reform bill was signed into law, many asked whether all insurance mandates were unconstitutional. This is a fun debating topic which sounds possible but will get nowhere. States have always had the right to impose conditions on people’s voluntary activities. If you want to drive, you have to carry liability insurance to pay compensation to anyone else you may injure. A more interesting question is the amount of the minimum requirements imposed by your state’s lawmakers.
Most of these minimums have not been changed for thirty and more years. For example, in 1972, Maryland set $20,000 for a person injured subject to a maximum of $40,000 for losses arising out of a single traffic accident. This was intended to cover medical treatment, loss of earnings while recovering, and so on. In 1972, the average annual salary was $12,000 and most hospitals charged no more than a few hundred dollars for treatment. Most new vehicles cost less than $4,000 to put on the road. You could easily buy a new home for less than $30,000. Looking back now, you wonder how we managed on so little money. Prices have risen fast for medical treatment. Injure the wrong person and the claim against you for loss of earnings is going to be frightening. Why should this matter?The liability coverage only pays out the minimum. You get to pick up the bill for all the other losses. So any savings or property you have may be taken to satisfy a judgment against you.
Should states increase their minimums? Many are thinking about doing so, but the politics of actually making new laws is difficult. During the recession, people are under financial pressure. Forcing them to spend more on vehicle insurance is not going to be popular among the poorer sections of the electorate. For the middle classes, there is the option to buy more coverage including an uninsured and underinsured policy. This is the American way. Those who have money can use it to protect themselves against losses. Those who are poor must take life as it comes.
In Maryland, the legislators have just increased the minimums to $30,000/60,000. This is curiously unreal. An increase to match the rate of inflation since 1972 should make the minimums $100,000/200,000. But, the political situation does not permit the lawmakers to restore the value of the minimums overnight. The answer was annual increases to inflation-proof the amounts. We would have arrived at $100,000 without anyone being too upset about it. But we have grown used to accepting the cheapest solutions even though millions of people across America actually lose money because of it. Why millions of people? These are all the victims of bad driving who never recover anything more than the minimums and suffer major financial losses as a result. This is injustice on a massive scale. And it will never be cured because it would cost too much to make the necessary increases. The only people who come out of this smiling are the investors in the auto insurance industry. Their profits and dividends have been rising steadily despite the recession. To protect yourself, always get auto insurance quotes from this site to find the most affordable coverage. Insurance may be mandated but you don’t have to pay excessive premiums.
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