There’s a fundamental principle of law. Ignorance of the law is no defense. No matter who you are. No matter what you are doing. You are supposed to stay within the law. If you do not, you will be convicted. If it was an honest oversight, you will get a lighter punishment. Because of this, all laws must be published and available to all. You can’t punish people for not knowing the law if they can’t easily get hold of it. So, all the laws in your state are available, often online. Now it’s up to you to read those that apply to you. Take liability insurance for drivers. In all but three states, this is mandatory. How come? Well, your decision whether to drive triggers the obligation. There’s no obligation to drive. This makes it different from the health insurance policies you may be obliged to buy. But that’s a different article.

Why is liability insurance mandatory? Well, you have probably seen a lot of words attacking attorneys. They sue people. That’s their job. So, if you drive badly and this causes loss or damage to someone else, you should pay them compensation to cover their medical bills or repair their property. So every time you bend a fender, this could land you in court. Except this is not practical. There are too many cases in court as it is. So all but three states have imposed liability insurance requirements on all drivers to cover a basic minimum of the cost of repairing the damage you have caused. Should you have caused major damage, you can still be sued for the difference between the basic minimum and the actual amount of loss caused. But at least the courts are not overrun by claims against drivers.

Why is this a problem? Most of the states introduced these laws forty or fifty years ago. The minimum amounts written into the law then were significant. Now they are far too low. Cases are building up in the courts again. States are talking about increasing the mandatory minimums. But take Wisconsin as an example of the problem. This February, the state finally decided to increase the minimums for both liability and uninsured/underinsured drivers. This seemed a good idea except, if you expect insurance companies to start paying out more to satisfy each claim, the premium rates will have to rise. And that’s exactly what has happened. So now the Republicans are out to repeal the law. You will understand, they think there are more votes from drivers than from victims of drivers. The other statistic of interest is that about 14% of those driving in Wisconsin are not insured.

There’s no doubt the auto insurance liability minimums are too low. Medical and repair shop costs have been rising steeply over the last forty years. At some point, all states will have to review these minimum amounts. Perhaps the timing in Wisconsin is wrong. This is a recession. More drivers feel the pinch when the premium rates rise. But the principle of being able to compensate innocent victims is the right one. That’s one of the reasons why auto insurance has been so popular. Given Wisconsin’s political upset, it will be interesting to see when other states move on this.

The problem with insurance is nothing in life is ever completely certain. One day the housing market can be rolling along, everyone certain prices can only ever go up. The next day, we’re pitched into a recession, major banks are in trouble and the housing market has collapsed. Because insurance is based on the concept of good faith, there’s supposed to be give and take on both sides of the relationship. An insurer cannot physically inspect every property it agrees to cover. To some extent, it must always rely on the honesty of the home owner to get proper estimates for the cost of rebuilding. After all, if the owner innocently underinsures, he or she will have to pay the additional costs out of savings. The insurer will not be at risk. If there was fraud, the insurer has the right to cancel the policy and avoid any payment. This protection for the insurer is fairly comprehensive. Hence, to offer better balance, most insurers offer guaranteed or extended replacement cover cover.

The point of this cover is simple. No matter how hard you try, no pre-estimate of the cost of rebuilding is ever absolute. It’s only when you get on the ground and start work you find out what all the problems are going to be. Costs have an unfortunate habit of rising and it’s relatively common for owners to have to sacrifice features of their old home to get the building work finished within budget. But, if you’re prepared to pay about 10% more on the premium rate, you can buy guaranteed cover, i.e. the insurer will pay the actual cost.

Let’s go back to the beginning again. Many insurance policies have a cap, i.e. the insurer places an upper limit on the amount you can claim. This may be a limit for all standard policyholders, or the cap may vary depending on the amount of premium you pay. The only way you can avoid the cap is by buying the extended cover. Why might costs go up significantly more than you expect? Suppose you bought an older home. It was picturesque with a wooden frame and shingles. If you now come to rebuild it, you can find reproducing the traditional building methods are expensive when you face compliance with the current building code. Everything may need to be redesigned including the electrical and plumbing systems. Once you are talking in hundreds of thousands for rebuilding, paying an extra 10% in premium can be very good value to get guaranteed completion.

Stepping outside the scope of the homeowners insurance policy, some insurers are now offering Home Value Protection policies to safeguard against a fall in the resale value of your property. In reality, this is slightly closer to a bet than most insurance policies and you need to read the terms carefully. Most have a high deductible if you claim during the first two years. Since most experts believe the housing market will begin to pick up again within the next two years, you may conclude such policies are not good value for money. Nevertheless, the next time you’re reviewing your insurance portfolio, it may be interesting to get additional quotes for Home Value Protection when you get your homeowners insurance quotes.

There’s a reason why most sites like this talk about discounts as the best way of saving money. It happens to be true but, to take advantage of the discounts safely, you need to think carefully. Let’s start with the most commonly mentioned. All you have to do to make big savings is to increase your deductible. Indeed, the theory is often proved correct that an increase from $500 to $1000 can save you up to 25% of the annual premium. But there are two issues to think about.

Many insurance companies are already increasing the deductible whether you asked for it or not. The reason for this is the rise in the number of claims from bad weather. No matter what your view on global warming or climate change, the last two years have seen record-breaking claims for damage caused by snow, flooding, tornadoes and hurricanes. This year is ending on another unusual note with unexpected snowfall disrupting the northeast in late October, early November. The amount of snow and disruption to more than 2 million homes has broken new records for October for West Virginia through to Maine. All these additional claims mean premium rates will be going up again next year, and the deductibles are being adjusted on a take-it-or-leave-it basis. Don’t be caught out. Before you raise the deductible yourself, find out what your insurer has done. Second, if you do increase the deductible, can you afford to self-insure all the small accidental losses around the home? If not, resist rises in the deductible.

Now on to the other discounts. In the good old days before the internet, people used to rely on the agent to claim all the discounts. These people knew you and your home. They understood the inner working of the insurers. They used to protect you (well, they were supposed to protect you). Now you have moved online, you are the only one who can look out for your own interests. There are a range of monitors and sensors you can fit to your home that will save you money. The details will vary from company to company so, before you spend any money, get a list of the approved devices and cost their installation. Never fit anything unless you can recover the cost in savings within a reasonable period of time. These include central station alarm systems for both unauthorized entry and temperature rises, smoke, water and gas leaks, and so on. Whenever you renovate, ensure your rebuilding cover is increased and that you gain access to the discounts.

Finally, revisit the question of bundling policies together with the same insurer. Almost all companies will give you a discount if you give them more business. So if you have one or two family cars, giving the same company both the auto and homeowners insurance policies can represent at least 10% in savings. This needs quite careful research to confirm. Get as many quotes as possible for individual cover with different companies, and then look at what savings you will get if you bundle with any one of them. Never assume one of your existing companies will give you the best deal. Always shop around and get as many car and homeowners insurance quotes as possible.

Everyone knows about the professional criminals who are now working up and down the country to bilk insurers out of their money. They stage accidents, fake injuries and receive several billion dollars a year for their trouble. Why, you ask, do they get away with this. The answer comes in two parts. The first is at state level. As you might have noticed, almost all states are running deficits and are under pressure to find savings – for some reason, no state wants to be seen raising taxes. This means even essential services are being cut. So when it comes to law enforcement, where does a Police Chief spend his reduced budget? What are the priorities? Well, we all want to feel safe so a focus on violent crimes like robbery and burglary wins votes in the election. So-called white collar crime takes a back seat. That means local police forces only investigate fraud when it’s really serious, i.e. there’s a lot of media coverage. The FBI are interested in anything crossing state lines and there is a task force set up to deal with insurance fraud. But this is a drop in the ocean when you consider how many billion dollars are involved every year.

The second reason is that you are not exactly overjoyed by the prospect of better fraud detection. Just imagine the sequence of events. Insurance companies have to recruit and train investigators to work alongside claims adjusters. This immediately boosts the insurer’s costs which get passed on to you in higher premium rates. Now all these eager-beaver investigators finish their training and they are released on to the current files. Suddenly everything slows down as these investigators decide whether there’s anything fishy about your claim. How long are you going to put up with someone poking around your claim to decide whether you really did suffer whiplash in that accident? At what point do you start complaining? It’s possible, of course, that these investigators may detect real fraud. If so, the savings they make could start paying their salaries and the premium rates would come down. Well that’s the theory, anyway, and we can all dream.

This leaves all those little frauds. Now we have pay-as-you-drive black boxes, this does away with the most common which was people lying about their mileage. Honest drivers with low mileage can now enjoy their justified discounts. Everyone else can go back to paying the proper rate. But this still leaves about $15 billion in other problems. You would be amazed (well, that’s probably an exaggeration) at the extent to which people lie. They forget to tell the insurers exactly who will be driving the family car, or they edit the driver’s experience, age or marital status. Relatives suddenly develop membership of clubs and affinity groups which produce discounts, and all this is before we get to those who forget to mention they are using their vehicle in a business. Yes, these are only small frauds, only barely dishonest really. But the industry estimates it loses $15 billion a year because of these little lies. That’s $15 billion we all have to cover with higher car insurance rates. So, be honest, what would you prefer: everyone telling the truth and most paying lower rates, or higher car insurance quotes to cover this continuing dishonesty?

In those good old, bad old days of driving, you just passed the test, got your licence, and answered the call of the roads. Never mind singing “key of the door… never been twenty-one before”, having a licence was opening the door to freedom and throwing away the key. You could go anywhere, anytime and, except for pesky laws about speeding and not crashing into things, there were no parents, no authority figures looking over your shoulder and telling you what to do. Bliss! Then came the first signs of change. To protect lorry drivers against excessively long hours (and to protect other road users who were being mown down by sleeping lorry drivers), the tachograph was announced. Suddenly, all drivers were united in their opposition to this “spy in the cab”. We threw up barricades to defend our rights. Ah, such happy days of demonstrations without the police kettling you into confined spaces and beating you to death with their batons. And it all came to naught. The tachograph with its easily forged paper disk was duly installed and life went on. Now, it’s standard for a tamperproof digital tachograph to be fitted in all new vehicles and there are spying cameras at traffic lights, on motorways and most other roads with a bad accident record, waiting to take pictures of us as we duck and weave through traffic.

Well, innovation never stops and what was a good idea for LGV drivers could be a black box coming to your car. It’s all the fault of the Norwich Union which introduced the pay-as-you-drive policy back in 2007. Little did they dream of the volume of business. In fact, they were caught short without enough black boxes to fit. So how does it work? Well, back in the days when insurers worked out your premium in pencil on the back of an old envelope, everyone guessed when, where and far how you were going to drive. Now technology answers all the questions without any actuary having to lick a pencil to get it to write. This inconspicuous box records the time of day, where you drive and how far you drive. This data is sent to the insurer who works out whether you “did good” and sends you an itemised bill, i.e. you decide the amount you pay by your actual driving record. There’s a sliding scale depending on the time of day and the type of road with you paying more to drive long distances in heavy traffic conditions when the risks of an accident are highest.

The good news for UK car insurance policy holders is: the less you drive, the more you save. This really could be your route to really cheap car insurance. All you have to do is sacrifice your right to privacy. The Big Brother sitting in the insurance office will know exactly where you drive. Naturally, the data will be protected and no-one should tell your partner of those trips to that “friend” of yours or that you were the getaway driver in that bank robbery last Tuesday. You know the risks. If this is for you, get car insurance quotes for pay-as-you-drive.

The problem can be stated simply. If you take your eyes off the road, you will not see the other vehicle coming toward you. This makes you a danger to other road users. The group most likely to fall into this trap are young drivers. Not only are they the least experienced behind the wheel. They are also the ones with the most peer pressure to reply to the text message or answer the cell phone call immediately. The evidence cannot be more clear. Looking at all the different ways in which teens die through disease and accidents, crashes in motor-vehicles are the leading cause of death. The government estimates that, in 2009, about 5,500 people were killed and more than half-a-million injured because one of the drivers was distracted.

In a perfect world, this would be resolved by a discussion at home. As a parent, you would sit down with your children and explain the risks. The statistics are available on the internet to back up your warnings. Your children would nod their heads wisely and swear by all they hold holy not to continue this dangerous practice. Except this would not work in most families. What teens say to their parents is not how they act when they are outside the home. So now comes the hard choice. Do you sit back and rely on prayer every time they drive off into the wild blue yonder, or do you take positive steps? First, a little law: it’s a criminal offense to operate any transmitter that will block or jam wireless communications. So you would face big fines if you were found jamming mobile phone signals. But it’s probably not an offense if you instal equipment in your vehicle that acts as a passive block to the signal. The reason for the distinction is that if you created a cone of silence around your vehicle by transmitting a signal to jam all the cell towers, you would cut off all the other users in your area. While this might make the roads safer, it would seriously inconvenience everyone else. More importantly, it might interfere with emergency calls for the police and ambulance. So passive shielding is probably legal because it does not interfere with any other vehicle or person on the sidewalk. Taking this simple step means you no longer have trust issues with your teen (until he or she works out how to turn it off or get round the shielding, e.g. by putting an antenna outside the vehicle).

More intrusive are the camera systems now offered by some insurers. In return for allowing active monitoring of the way in which your teens drive, they get cheaper premium rates. So if your teen signs up for a policy and agrees not to text or use the cell phone, enforcement just became easier. Similarly, if there’s agreement limiting the number of passengers, you have it on disk. Yes this is cheap car insurance for your teen courtesy of Big Brother, but it’s also helping to keep him or her alive. Statistics show a remarkable improvement in driving when teens know the cameras are watching. So this all comes back to your door the next time you are looking for car insurance quotes. How far do you want to go?

Having a car involves many responsibilities, some of which may be not as pleasant as driving a car and involve additional costs. Yes, we are talking about vehicle insurance. It’s definitely one of the most irritating aspects of owning a car and a cash-consuming one. Ask any driver and he will tell you that his or her insurance could be less expensive, since it takes a good bite off the family budget. If you are in the same situations as millions of drivers in the country and want your car to be not as expensive to insure as it is now the following money saving tips will definitely help you optimize your costs effectively:

Modify your policy

Vehicle insurance comes in many forms and delivers many options to choose from. When there are many different coverage options included into your policy it becomes very expensive. So your aim when optimizing your insurance costs is to strip off all the unnecessary coverage features and leave only those that are really needed. In fact, the only type of coverage that is legally required is the third party liability whereas all others are optional. Sure, it doesn’t mean that you have to strip down your policy to the bare minimums. But make sure to take some time and think about the things you really need with your policy and things you can leave behind. This will certainly cut your insurance costs effectively.

Adjust the deductible

As you may already know, deductible is the amount of money to be paid by you before the coverage actually starts to apply. It is used to prevent insurance claims due to minor damage to your car. And the higher you set the amount of deductible the lower is the premium. You can set the deductible up to $1000, however make sure that you can actually afford such an amount. Otherwise it doesn’t make any sense decreasing the premium and not being able to get any coverage when needed since you can’t meet the deductible.

Shop around

Comparison shopping is the best way to get the lowest price no matter what type of product or service you’re looking for and auto insurance isn’t an exception. With so many quote comparison sites on the web it’s really easy to shop around for vehicle insurance since it takes only a few minutes and you get plenty of quotes to compare. Try to get as many quotes from different providers as possible – this will raise your chance of finding a very good policy with plenty of coverage and reasonable premiums that will save your money.

Switch the car

Many car owners tend to forget that the most important factor contributing to the cost of auto insurance is the car they actually drive. Some cars are less costly to insure while others will automatically give you higher premiums even if you shop around a bit. In general sports, muscle, luxury and large cars are more expensive to insure. So if you feel that your auto insurance costs are unbearable consider buying a car that is less costly to insure in the first place.

The world would be a better place if everyone was trustworthy and honest. Sadly, human nature seems to have come with a selfish gene. We want what we haven’t got. We don’t want to pay for what we need. There was a recent piece of research which staged accidents at intersections involving a bus. The point of the study was to discover how many of the innocent people on the sidewalks would run on to the bus and claim to have been injured. Needless to say, the results did not show city dwellers in a good light. So, when people were first working through the basic statistics of assessing risks, it was obvious there was less risk if people drove only a few miles a week. But if they were commuting long distances on busy interstates, the risk of accidents grew high. The insurers reasoned it would be good to pitch the premium rates to reflect the risks. Except how could they trust the drivers to make an honest declaration of how many miles a week they drove? The answer, sadly, was that no one was trustworthy if allowed to self-certify mileage. When insurers ran a trial, asking drivers to bring in their vehicles for their odometer readings to be taken, everyone quickly learned how to wind back the count of miles.

Well, now technology has arrived that eliminates the risk of cheating – until someone learns how to hack the black boxes, that is. For now, insurers like Progressive are selling a basic policy plus monitoring equipment to plug into your vehicle. The insurer can then monitor when, where and how far you drive. Some insurers are even fitting a GPS transmitter. This is useful if your vehicle is stolen or you report a breakdown and a tow truck has to find you.

Many consider this new technology an invasion of their privacy. The question you have to answer is whether you want the discounts. As a low mileage driver, you pay a monthly premium based on how far you drive and whether you avoid driving at peak times. Before you answer, note some insurers also collect data from your vehicle showing how often you break suddenly, whether you swerve from side to side, and other features of your driving style. Should you have an accident and make a claim, the insurer has a record of how you were driving at the time. If you claimed you hit the other car because you were swerving violently to avoid a moose, the recording may show a slightly different story (ignoring the problem of explaining how there came to be a moose loose in your part of town).

Insurers are, of course, enthusiastic. They believe this new technology will encourage drivers to be more careful. If there are fewer accidents, this will result in lower auto insurance quotes for all of us. Federal government is also watching carefully because we may all be encouraged to drive more slowly. This will be good for the environment, reduce our dependence on imported oil and prevent global warming. Ironic that we might be thanking the insurance industry both for cheap auto insurance quotes and for saving the planet. Well, that’s an exaggeration, but you get the idea.