Wednesday, July 8, 2009

Car Insurance, Umbrella Policies, Teen Drivers, Oh My!

Hi Janine,

Can I bother you for a question about car insurance?

We are just raised the liability insurance on our cars to $100,000 per person and $300,000 per accident. Since we have two teen drivers and about $130,000 of equity in our house, we wonder if you would recommed an umbrella policy. Although an umbrella policy is only $200 or $300 more per year, it will actually double our annual premiums because it will require us to raise our liability to $250 per person and $500,000 per accident.
Thanks for your help,


Dear Amber:

I'm glad to help you, but this is really not my area of expertise. I've chatted it over with my husband, Brad and he and I recommend the following.

1) An umbrella policy is CHEAP insurance if someone sues you. I can't remember are you in CA or VA? Or am I TOTALLY off? Anyhow, depending upon where you live and how suit (spelling?) happy folks make the call.

2) Shop around for umbrella policies. Brad and I were both surprised that you would have your premiums go up on your car insurance while getting an umbrella policy too? Weird.

We have had umbrella policies for years and with three different companies and have not had that "required" from us. (the increase in premiums that is.) Now, we had to increase our deductibles, but not the premiums for the car insurance. Okay?

Again, we are NOT experts. This is just advice from one friend to another and I wish you much luck as you insure your family. It truly is a crazy reality when you're dealing with the world of insurance, but it is totally worth it with your first financial crisis! Right? Hang in there and know I'm cheering for you!

Wishing you and yours much Abundance,


P.S. If any of you wonderful readers have additional pointers or advice for Amber, please post your comments. What sort of experiences have you folks had with umbrella policies? Thanks!


Moira Lardakis said...

Janine and Amber,
In order to buy an umbrella policy, most insurance companies require you to purchase very high limits of liability - and that's the reason the auto insurance rates increased. Your "underlying coverage" went from $100,000 per person/$300,000 per accident to $250,000 per person/$500,000 per accident. That's a big increase in coverage - and it's costly!

As you said, the umbrella policy itself it not very expensive, because it doesn't come into play until your auto policy has been used to its limits.

Earl Boyer said...

I'm not an insurance expert but I did have some experience in the auto repair business. Teens and young adults that have to pay their own premiums learn a lot more about the true cost and consequences of their actions behind the wheel. Some of our best and most frequent customers were teens who had parents willing to pay the bills.

On a related note, many parents, particularly those paying their kids' insurance, will under-report the teens' use of a vehicle or when they move out on their own allow the car and driver to continue on the parents' policy as if the car is still in the household. This may save money on the premiums but in the event of a claim there could be an investigation as to where the car is normally used and by whom. It can result in the claim being denied entirely.

The Money Muse said...

Thank you, Earl and Moira! I love it when folks like you comment. Thanks for your wisdom.

Giana Wilson said...

That was a good answer Janine. The car insurance is really important and you have to pay for it regularly. I have recently gone through some of the insurance site and the site has provided the whole information about the car insurance and its related policies or schemes and its benefits which is really good and this is the best way where you can solve your queries and can find out which policy or schemes would be the best for insurance. The insurance for teens is a must now and its really very cheap and the insurance introduce certain schemes where teens or young drivers can also save money on

Car Insurance California said...

Nice and very informative post. Really these are great tips to find a budget auto insurance policy. Thanks for such a great share.