Does it cost more to insure a red car?

via Moak: Does it cost more to insure a red car?, clarionledger.com.

Bankrate.com sends out a lot of news releases. Almost daily, the website puts out news related to the financial industry, including many about insurance. One factoid sent on Monday caught my eye with this headline: “44 percent of Americans incorrectly thinkdriving a red car affects your insurance payments.” Included was a link to a study conducted by Princeton Research.

“Really?” I thought to myself. “How could anybody think the color of your car has anything whatsoever to do with your insurance rates?” But it’s true; ask around, and a significant percentage of people think red cars cost more to insure than others. If this research is accurate, nearly half of Americans believe this, and younger drivers (18-24) are even more prone to believe it. So, for some advice, I asked my friend (and insurance agent) Mark Doiron of Allstate.

“The auto insurance premium rating on a vehicle is based on the year, make, model and price of car, as well as limits of personal liability, deductibles and safety features such as air bags and anti-lock brakes,” he noted. “Color of the vehicle doesn’t affect the vehicle rating.” He added that other factors can also influence the rate, including driving experience, tickets, accidents, the driver’s age, distance to and from work and school, and whether the vehicle is being driven for business. Various discounts can also come into play, he added, but must be earned.

The origin of the “red-costs-more” myth is murky, but it can be reasonably inferred that, since red is often the color of iconic sports cars, and red is associated with risk-taking, that conclusion might make sense if you didn’t know the facts.

Now, of course that bright red Ferrari driven by Tom Selleck in Magnum P.I. would cost more to insure; not because of its color, but because its cost. And people who drive snazzy red sports cars might get tickets slightly more often, simply because more of those vehicles are likely to be red in the first place, and being behind the wheel of that vehicle might make you take more chances on the road. (Actually, an Australian studyfound that black vehicles are more likely to be in a daytime crash than other colors; the study suggested this had a lot to do with the visibility of the vehicles.)

The Bankrate.com study contained some more insurance-related myths. Here are a few:

  • Car insurance doesn’t cover you if a crash is your fault. If you have only liability insurance, you would only be covered for damage caused to the health or property of others. But collision coverage will kick in in an accident, regardless of who’s at fault. This distinction causes a lot of confusion among the insurance-buying public; it’s a good idea to talk to your agent to make sure you understand what’s being covered and what’s not.
  • Auto insurance pays for mechanical repairs. Younger consumers, especially, were more prone to believe this. But unless those repairs are the result of a covered accident, you’re on your own if you need to get a tuneup or to replace your brakes.
  • Car insurance covers belongings stolen from your car. This is one of the more pervasive myths, but actually, your homeowners’ or renters’ policy would be the one to pay if you’re the victim of a car burglary.

For the complete list of myths, visit http://www.insurancequotes.com/auto/common-car-insurance-myths-92115.

Should you buy earthquake insurance?

via Should you buy earthquake insurance? on Clarionledger.com

PDF: Should you purchase earthquake insurance

It was likely a cool, quiet night on Dec. 16, 1811. Residents sleeping soundly in their beds throughout the Mississippi River basin were awakened by a sudden, sustained jolt. They didn’t know it at the time, but a giant crack in the earth miles below their beds had suddenly roared back to life after lying dormant for centuries.

As the New Madrid fault shifted over the next few months, the resulting earthquakes and aftershocks sent tsunamis roaring up and down the Mississippi River, split the earth in many places and changed the landscape forever. The reported loss of life was minimal, thanks to the sparse population at the time. But it was a reminder of nature’s power and man’s helplessness in the face of it.

If the same series of earthquakes were to happen today, however, the results would be much different. The area is now heavily populated, with cities and towns having been built throughout the lower Mississippi region. Cities like St. Louis and Memphis would likely be hit hard. And the potential loss of life could dwarf any natural disaster the nation has ever faced.

Here in Mississippi, experts say, we could expect significant damage — even from a more modest quake. Some estimates have placed the potential damage in Mississippi at $9.5 billion from an earthquake of 7.7 magnitude, resulting in moderate-to-total damage to more than 45,000 buildings.

Some residents of central Mississippi got a couple of reminders over the past couple of months, as three small earthquakes jolted residents in Madison County. These were minor quakes that would hardly merit attention in quake-prone areas such as the West Coast, but they obviously got a lot of people thinking about earthquake insurance; many agents’ phones were ringing the next morning.

Most homeowner’s insurance policies don’t cover movement of the earth. Earthquake insurance is an add-on, or endorsement, to a standard homeowner’s policy. It’s different from flood insurance, which is a policy purchased separately through a program called the National Flood Insurance Program. (Statistically, Mississippians are more likely to be affected by floods than any other disaster, so it’s a good idea to consider flood coverage.)

But with the likelihood of an earthquake affecting Mississippians rising with the passage of time, Insurance Commissioner Mike Chaney urges homeowners to consider earthquake insurance as part of their total coverage.

“The more prepared you are helps save lives and property,” he said. “Being prepared can help prevent unpleasant insurance surprises should disaster strike, and one of the first steps of preparedness is to talk to your agent for a policy review to make sure you have the proper coverage.”

Here are a few things to think about as you speak with your agent:

Consider the potential damage. If your home is made of brick, wood-frame with a crawl space or has more than one story, damage from a quake is more likely.

Plan ahead. Many companies won’t sell new earthquake insurance policies for 30-60 days after a quake because of the expectation of aftershocks.

Read the fine print. Earthquake policies typically don’t cover damage to your lot or land, such as sinkholes, or damage to vehicles or external damage caused by water, and some policies don’t cover replacement of masonry veneers such as brick or stucco.

Decide how much coverage you need. Your agent can walk you through the coverage options for the structure and contents. The cost will vary depending on a number of factors, and there are limits of coverage on most policies. Be sure you have enough coverage not only to reimburse the mortgage lender, but also to make repairs.

The National Association of Insurance Commissioners has produced a brochure called A Consumers’ Guide to Earthquake Insurance, located at http://bit.ly/1HHk3FU. It has a lot of great advice to help you think through your options.

“Bogus association” busted by feds

In all the chaos surrounding health insurance these days, scammers are looking to take advantage. Case in point: a group of marketers who allegedly tricked consumers into buying phony health insurance are permanently banned from selling healthcare-related products under a settlement with the Federal Trade Commission, the agency announced in a news release Tuesday.

The company, operating as Independent Association of Businesses (IAB) — which the FTC labels a “bogus association” — is alleged to have preyed on consumers looking for health insurance. According to the FTC, consumers would sign up for what they thought was solid health insurance, but instead found they had signed up for an IAB “membership”.

Consumers allegedly paid initial fees ranging from $50 to several hundred dollars, and then, monthly fees ranging from $40 to $1,000. The health insurance product was said to be sketchy, at best, limiting doctor and hospital visits with “broad exclusions and limitations.” It wasn’t disclosed how many consumers were victimized.

This ends a saga that began back in 2012, when the company was cited by the feds for violating the FTC Act and the Telemarketing Sales Rule. Now, the owners will be permanently banned from selling healthcare-related products. The ill-gotten gains from the operation will have to be returned to settle about $2 million of the $125 million penalty. The plunder included a Lamborghini, two Mercedes, a Porsche and an MG Roadster, as well as $562,000 put into retirement accounts. Of course, that will be a drop in the proverbial bucket, but it does send a message.

IAB has been on the radar of many consumer watchdogs around the nation in the past couple of years, and there are other scams out there right now. So, how do you know what’s a scam and what’s not? The FTC has these tips and others at http://1.usa.gov/1se1Bju:

  • We’ll help you…for a fee. If someone offers to help you find insurance on the Healthcare Marketplace for a fee, look out. Legitimate employees of the Marketplace will not charge you anything.
  • The Medicare scare. Scammers will try to convince you that you need a new Medicare card, or you’ll lose your coverage. Don’t believe it. Call 1-800-MEDICARE if you’re concerned about the status of your coverage.
  • This is insurance. Medical discount plans aren’t insurance, and don’t believe their claims to be providing insurance. Some of these are actually just trying to get your personal information to use for identity theft.
  • I’m from the government. If someone says they’re from the government, then asks for your personal information (such as your Social Security Number) don’t give it. Government agencies aren’t going to call you and ask for that information.