Chapter 8

Could usage-based car insurance save you money?

  1. How does it work?

Most usage-based car insurance policies have you plug a small device into your car’s diagnostic port, which is usually under the dashboard.  Others use cell phone connections or apps.  All of them send information about your driving to your insurer.

  1. Is it a good deal?

It could lower your premium if you drive safely and don’t drive lots of miles.

  1. How about my privacy?

There are many privacy issues to consider related to these types of policies.

For more information, click here.

Teaching Suggestions

  1. Ask students to find out if their car insurer offers usage-based insurance.
  2. Under what circumstance will you consider purchasing usage-based car insurance?

Discussion Questions

  • What might be the purpose of using global positioning systems and other technology in determining the car insurance premiums?
  • Will younger drivers embrace the monitoring devices, especially when car chips allow parents to monitor the speed and braking habits of young drivers?
Categories: Car Insurance, Chapter 8 | Tags: , | Leave a comment

Preparing Your Finances for a Flood, Fire, or other Disaster: Having a Plan

Without warning, a flood, fire or other disaster could leave you with a severely damaged home, destroyed belongings and barriers to managing your finances.  Many people think of disaster preparedness as having a stockpile of water, canned food, and flashlights, but people also need access to cash and financial services.  That’s why it is important to include financial preparedness in your disaster plans.  Here is the latest summary of important preparations.

You should have enough insurance to cover the cost to replace or repair your home, car and other valuable property, as well as temporary housing if you are displaced from your home.  Those who do not own a home should have renters insurance.  Also, make sure that you have the right coverage for the types of disasters likely to occur in your area.  For example, homeowner’s insurance does not typically cover events such as flooding or earthquakes, so you may want to consider whether you need additional coverage.

  • Periodically review your insurance coverage
  • Build and maintain an emergency savings fund
  • Sign up for direct deposit of your paycheck or government benefits
  • Gather and organize important documents

For more information, click here.

Teaching Suggestions

  • Ask students to prepare a household inventory with a description and the value of belongings.
  • Help students understand that renter’s insurance is important for the protection it provides for their personal property.

Discussion Questions

  1. How can you protect yourself from flood, fire or other natural disasters?
  2. Should you consider purchasing flood-related insurance if you don’t live in a coastal area? Why or why not?
  3. Why is it important to gather and organize important documents before a disaster strikes?
Categories: Chapter 8, Home Insurance, insurance | Tags: , | Leave a comment

Auto Insurance Resources

Having adequate auto insurance and determining what coverages are needed are fundamental for avoiding financial difficulties. Consumer Action (www.consumer-action.org) offers a variety of materials related to shopping for auto insurance, managing auto insurance costs, and obtaining assistance when encountering trouble when filing a claim.

These resources includes downloadable publications on the basics of auto insurance in English, Spanish, Korean, and Vietnamese. Also available are PowerPoint slides and lessons plans.

For additional information on auto insurance resources, click here.

Teaching Suggestions

  • Have students develop actions that can reduce the cost of auto insurance.
  • Have students create a video that demonstrates financial problems associated with not having adequate auto insurance.

Discussion Questions 

  1. What are information sources that might be used to become better informed on auto insurance?
  2. How might a person reduce the cost of auto insurance?
Categories: Car Insurance, Chapter 8, insurance, Wise Shopping | Tags: | Leave a comment

The One Financial Mistake that Could Cost Homeowners a Bundle

“Interest rates have bounced around historical lows for years, yet a surprising number of homeowners who could benefit from a refinancing still haven’t taken advantage of the potential cost savings.”

In this article, Marine Cole points out some surprising facts about interest rates and the reasons why people don’t refinance their homes.  According to Ms. Cole and other experts, some people are simply unaware of their current rate or don’t have the get-up-and gumption to refinance.  Other factors include procrastination, mistrust, and the inability to understand complex decisions may also be barriers to refinancing.

The article also points out that the decision to refinance could result in thousands of dollars in savings for the homeowner.  For example, refinancing a 30-year, $200,000 mortgage from 6.5 percent to a current rate of 3.35 percent will save approximately $130,000 in interest payments over the life of the loan.

For more information, click here

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the importance of making sound financial decisions not only when buying or refinancing a home, but other aspects of your financial life.
  • Discuss the reasons mentioned in this article that describe why people would not refinance and take advantage of lower interest rates for buying or refinancing a home.

Discussion Questions

  1. How important is comparing interest rates when either purchasing a home or refinancing an existing home mortgage?
  2. According to this article, there are many reasons why people don’t refinance their home. If you were refinancing a home mortgage, what would be your major obstacle to refinancing an existing home mortgage?  How could you overcome this obstacle?
  3. Assuming you had a chance to refinance your home and save $100,000 over the life of the loan, would you refinance? Explain the factors that would influence your decision.
Categories: Chapter 8, Financing a Home, Home Buying | Tags: , | Leave a comment

How Healthy is Your Insurance Company?

When buying home, health, auto or rental insurance, you should find out if your state insurance department offers any information about insurance companies and rates.  Check several sources for the best rate and get quotes online.  Consult an independent insurance agent who represents several insurers in your area to get a better deal.

 Before purchasing insurance, be sure the insurance company is licensed and covered by the state’s guaranty fund.  The fund pays claims if the company defaults.  Your state insurance department can provide this information.

Research the complaint record of the company.  Contact your state insurance department, or visit the website of the National Association of Insurance Commissioners (www.naic.org), which maintains a database of complaints filed with state regulators.  Finally check the financial stability of the insurance company.

For additional information and guidance visit the following websites:

http://www.ambest.com, http://www.standardandpoors.com, and http://www.moodys.com

Discussion Questions

  1. Why is it important to contact state insurance department before purchasing insurance?
  2. How can an independent insurance agent provide a better insurance rate?
  3. Why is an insurance company’s financial stability important?

Teaching Suggestions

You may want to use the information in this blog post and the websites to

*  Have students visit the various websites in this blog and then prepare a short summary of their findings.

*  explore a few advantages of purchasing insurance from an independent insurance agent?

Categories: Chapter 8, Chapter 9, Chapter_10, Home Insurance, insurance | Tags: , , | Leave a comment

Reduce Auto Insurance Costs

Auto insurance requirements vary from state to state.  Check with your state insurance regulator to learn more about individual requirements as well as insurers you may be considering for the insurance policy.

To get the best coverage at the best price, get several quotes from insurance companies; it may save you hundreds of dollars every year.  What can you do to reduce your insurance premiums?

Raise your deductible on collision and comprehensive coverage.  If you own an older car, you might want to eliminate this coverage altogether.  Don’t forget to take advantage of discounts available to you.  For example, you may be eligible for a discount based on the number of miles you drive; your age; your good grades if you are a student; your driving record; or if you have taken a safe driving course.   You may also be able to get discounts if you insure more than one vehicle, insure your vehicle and home with the same company, have anti-theft devices, or have safety features as air bags or anti-lock brake system.

For more information on automobile insurance costs go to  www.naic.org; http://www.insure.com; and http://www.insweb.com

Discussion Questions

1.  What can you do to reduce your automobile insurance costs?

2.  Why better college grades result  in reducing your automobile insurance costs?

 

Teaching Suggestions

You may want to use the information in this blog post and the websites to

* Have students research various types of discounts available to them.

* Research the make and model of vehicles that are most frequently stolen, consequently resulting in higher insurance rates.

Categories: Car Insurance, Chapter 8 | Tags: , , | Leave a comment

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