Save Money On Auto and Homeowners Insurance with Premium Comparison Surveys
[Updated on July 7, 2009: Added links for Maryland and New Jersey.]
I spent more than 15 minutes and I saved more than 15% on my auto and homeowners insurance. For the same coverage, I saved 25% on my auto insurance and I saved 38% on my homeowners insurance.
A typical "how to save money on insurance" article will tell you to drop collision and comprehensive coverage on older cars, get your good driver, good student, and alumni association discounts, increase your deductibles, insure your car and home with the same company for the multi-policy discount, etc. etc.
I'm not going to repeat those. I assume you already know what coverage you want and what deductibles you are comfortable with, and you already pursued all the discounts. If not, you can search for those articles on the Internet. There are a ton of them.
Rental Car Insurance Options
By the time you read this, I'll be on vacation in Ireland. I will rent a car and drive around the country. Naturally I don't want to expose myself to losses resulting from a car accident while I drive a rental car in Ireland. I did some research in rental car insurance. I'm sharing this here with you.
1. Liability vs. Theft, Collision and Damages. On any auto insurance policy in the U.S., the coverage for liability and the coverage for the car are separate. If you have an older car, you may not have coverage for the car itself, but you should have coverage for liability, i.e. damage you cause to others. This liability coverage may or may not follow you worldwide. You have to call your auto insurance company to find out. If you are covered, there is usually no deductible on liability coverage. Theft is covered under comprehensive while damage caused by a collision is covered under collision. There are separate deductibles for comprehensive and collision coverage. Your collision and comprehensive coverage from your auto policy also may not follow you worldwide. I called my insurance company. They told me I will be covered for liability worldwide but I won't have collision or comprehensive coverage outside of U.S. and Canada.
2. Primary Rental Car Insurance. Your own auto insurance usually covers you when you rent a car, at least in the U.S. If you don't want to use your own auto insurance (and subject yourself to premium increases in case you file a claim), you can buy primary rental car insurance. I found two places that sell primary rental car insurance:
DOL Webcast on COBRA Premium Subsidy
The Department Labor and the IRS are still working hard on creating guidance on implementing the 65% COBRA premium subsidy enacted in the stimulus law. They held a two-hour webcast yesterday for employers, their third-party administrators, and insurance companies. Officials from the Department of Labor, Depart of Treasury, and the IRS presented. Although it's primarily targeted at employers, the webcast can be very helpful for the laid-off employees as well. If you or someone you know are potentially eligible for the COBRA subsidy, watch the webcast.
The webcast archive will be available from now through June 23. It requires registration, but you don't have to give your real personal information. You can just use tfbreader@invalid.com because I registered with that address already. If you don't have two hours for the webcast, read the slides.
The COBRA subsidy is a subsidy paid directly to the employers. It's not taxable to the employees.
COBRA Subsidy: Cost and Cash Flow
It helps if you have some cash reserve. That's the conclusion I reached after reading this article on Yahoo!
Confusion a part of health care plan in stimulus
It's about the COBRA subsidy enacted in the latest stimulus law. The lawmakers gave laid off workers a 65% subsidy on COBRA premiums for nine months. However, it's easier for them to have a debate and vote than getting the systems and procedures in place at the Treasury Department, the IRS, the employers and the insurance companies. People want to sign up for COBRA, but the employers and the insurance companies don't know how to charge them the reduced premium or how to get reimbursed from the IRS or from the Treasury Department. If you have a cash reserve, you can pay the full premium now and get reimbursed later. The law is already the law. You know will get the subsidy. It's a matter of cash flow, not a matter of the cost. You know eventually you will be reimbursed by someone: the employer, the insurance company, or the IRS. Let time sort it out. Get insurance first.
How Much Should You Put Into Flexible Spending Account (FSA)?
My company is doing open enrollment again for next year (for more info on what to choose in open enrollment, see previous posts). I'm not going to make any changes except I have to re-enroll for flexible spending account (FSA).
If you use flexible spending account, you should be familiar with the use-it-or-lose-it rule. If you put too much in the FSA, you will lose what you can't use. In the past I always estimated conservatively. I've never lost any money to the FSA. However there is also a cost to that approach. After the money in the FSA is used up, any additional expenses must be paid with after-tax dollars. There has to be a point where losing a little pre-tax money in the FSA is less expensive than paying a lot with after-tax money.
This becomes an interesting math problem.
TFB's Stumbles: Week Ending April 4, 2008
Here are some interesting articles for this week.
IRS making sure your rebate gets spent (Marketplace, audio) – This April Fool's story fooled me. It gave me a good laugh.
Iceland's Biggest Banks Targeted by 'Unscrupulous' Speculators (Bloomberg) – Iceland banks under attack. You can't blame the attackers if your banks borrowed four times of your country's GNP.
How Many Points Should I Pay On My Mortgage? Do You Like To Gamble? (My Money Blog) – Another great article by Jonathan. Should you pay points when you get a mortgage? It comes down to a guessing game on whether and when the interest rate will go down after you get your mortgage. If you think it may go down within a few years, don't pay points. If you think it won't go down in the next few years, pay points. Also see my previous post "No Cost" Mortgage Refinance: Stepping Down the Ladder. » Read more …
My Flexible Spending Account Sent Me a Debit Card
As if I don't have enough cards in my wallet, the vendor for my employer's health care Flexible Spending Account (FSA) sent me a MasterCard debit card. I'm supposed to use it for items eligible for reimbursement from the FSA.
The pitch from the FSA vendor is that I won't have to file reimbursement claims for items I charge to the debit card. But I'm still required to save every receipt. They can come back and challenge me for the eligibility of the purchase and I must then send them the receipt showing what exactly I bought with the card. Using the card is only going to complicate matters. Because the card is good only for FSA eligible expenses, if I buy a 12-pack of soda together with a prescription at a drug store, I must pay for the drugs with the FSA debit card and pay for the soda with cash or a different card. It's also only accepted at stores which installed a special computer system which distinguishes FSA eligible items from non-eligible items. If I charge the co-pay for a doctor's visit to the FSA debit card, and the insurance company later tells me I haven't met the annual deductible yet, I still have to file a paper claim to the FSA but I also have to explain to them that the co-pay is already reimbursed but the deductible isn't. What a mess.
I'm afraid this is just an attempt from the FSA vendor to capture the merchant fees from the purchase. The FSA debit card came with no PIN. All transactions must be processed as "credit." If I use their card, I won't receive the 5% rebate from drug stores or the 1.5% rebate from elsewhere on my own credit card. Thanks, but no thanks. I cut up the FSA debit card without even activating it.
What To Do If Your Health Insurance Says Your Treatment Is Not Covered
Last Friday, I happened to pick up a copy of the Wall Street Journal somebody left on the train. There was an intriguing article on the front page — How U.S. Health System Can Fail Even the Insured. There's also an online video for the same story.
It's a long story but the story line is familiar. A Mrs. Barbara Calder has a rare genetic illness but she had to jump through one hoop after another to get her health insurance to cover the treatment she needed. I'm going to use this case as an example to show what to do if your health insurance says the treatment you need is not covered.
Here's a timeline of the events. I'm marking my comments with [TFB].
Research Life Insurance Company Ratings
This is the final post in my mini series on life insurance. The previous posts in this series are:
When you buy life insurance, you want to make sure the company will still be there when your beneficiaries need the payout. Otherwise you just paid premiums for nothing. How can you be sure it will be there? Well, you can't. Insurance companies can and do go out of business. Nobody can predict the future. But that doesn't mean you shouldn't try to pick a financially strong company when you buy your life insurance.
Life Insurance: How Much Should You Buy
I ended my previous post on life insurance with the question "how much should you buy?" I will address it in this post.
First you have to figure out how much income you need to replace for your beneficiaries. You don't have to replace 100% of your gross income because if you died, you would stop earning a salary, and you wouldn't have to pay taxes on that salary either. You also wouldn't have to contribute to your 401k and retirement savings any more because you don't no longer need them (you died). For me, taxes and retirement savings take up more than half of my income. Some of the household expenses directly attributable to you would be gone (you wouldn't need a second car); and some other expenses might go up (perhaps your family is on your health insurance).
After figuring out how much income you will need to replace, you can run some numbers. AccuQuote provides a life insurance needs calculator. According to the calculator, a 30-year-old wanting to replace $30,000 income for 20 years, with 3% inflation and 6% investment return, will need life insurance for $463,507.
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