BE AWARE OF THE RISKS ASSOCIATED WITH CAR SHARING

If you live in an urban area, owning a car can be both expensive and a hassle. Finding a parking spot can be next to impossible. Paying for parking can leave a major hole in your wallet. Due to the sheer number of drivers on the road, insurance costs tend to be higher in large cities. Fuel economy suffers during city driving because of the relatively slow speeds and frequent stops. Consequently, many city dwellers are saying no to car ownership and relying on alternatives. Mass transit remains an essential option, but a relatively new idea is taking hold in U.S. cities: Car sharing.

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According to CarSharing.net, at the beginning of 2010 there were 27 car sharing programs in the U.S., serving 388,000 members and sharing 7,500 vehicles. They go by names like Zipcar, Car2go, City CarShare, and Community Car. The programs charge an annual membership fee and some charge an application fee. Zipcar, for example charges a $50 annual fee and a $25 application fee in the Washington, D.C. area. A separate fee applies for each use of a car (for example, $30 for a four-hour reservation), which covers gas, insurance, and a specified number of miles.

When a member needs a car, they reserve one by phone or online. The program directs the member to a parking spot where the car is located. The member unlocks the car with a “zipcard” by holding the card up to the windshield (the keys are inside). The member uses the car and returns it to a designated parking spot by the end of the reservation time.

The types of people likely to use a car sharing service include:

• Those who normally use public transportation but who need their own vehicle on occasion
• Those who own one car and occasionally need a second
• Those who own cars but occasionally need a larger vehicle
• Those who can’t afford to buy a car but can afford the membership fees
• Those who want to avoid the inconvenient aspects of car ownership, such as maintenance, fees, and storage costs

A person using a car sharing service takes risks similar to those she would take while renting a car. They might incur legal liability for injuring someone or damaging another’s property while using the car. They might suffer injuries in an accident, resulting in medical expenses and lost income. They might damage the vehicle and become responsible for repair costs. The car sharing service provides Liability insurance, but the borrower has no guarantee that the amount of insurance will be enough to cover all the damages. Also, that insurance might not apply if the member lets an unauthorized person drive, such as a “designated driver” during a night on the town. Car sharers might want to buy a Named Nonowner Auto insurance policy, which will cover liability, medical, and uninsured or underinsured motorist losses over and above what the car sharing service’s policy provides. Also, certain Umbrella Liability policies might cover damage to a borrowed vehicle if the car sharing service’s policy does not pay. Our professional insurance agents can identify insurance companies that offer these types of coverages and explain the differences in coverage and cost of the various policies.

For people living in areas where it is available, car sharing might be a very sensible alternative to owning a car. Like any special service, it carries certain risks. However, by making some simple arrangements ahead of time, drivers can take advantage of these services and be confident that they’ve limited their financial risks.

REDUCE THE COST OF MOTORCYCLE INSURANCE WITHOUT SACRIFICING COVERAGE

Motorcycle owners might be a risky bunch by nature, but when it comes to motorcycle insurance, it is not a good idea to indulge that tendency. If you own a motorcycle, you need to have sufficient insurance coverage in place. Fortunately, there are some proven strategies motorcycle owners can use to trim their insurance costs, without sacrificing the coverage they need.

Ride Carefully – Keep Your Driving Record Clean

Perhaps the most effective thing you can do to keep your motorcycle insurance rates low is to be a careful and proactive rider. Keeping your driving record clean can lower your insurance rates significantly, so be sure to take safety into account each and every time you ride.

If you are a new rider, consider enrolling in a safe riding course. You can often find these courses at your local community college. Many insurance companies provide discounts for riders who successfully complete a safety course, so it might be worth your time and effort.

Choose Your Motorcycle Carefully

Some motorcycles seem to be irresistible to thieves. If you own one of these models you might end up paying the price. Before you shop for your bike, be sure to check theft records. Don’t forget: You can also contact us for a rate quote before buying your motorcycle.

Install an Anti-Theft Device on Your Motorcycle

Installing an anti-theft device can also reduce your premiums. Alarms make it that much harder for thieves to make off with your bike. Not only do they protect your motorcycle from theft, but they can lower your insurance costs at the same time.

Ask About Discounts

By having your Homeowners, Auto and Motorcycle insurance with the same company, you might be eligible for a multi-policy discount. Be sure to ask us about any discounts that might be available.

In addition to multi-policy discounts, many insurance companies offer additional discounts for everything from a college degree to a safe driving record. Just like with your car, you might be eligible for additional discounts if you keep your motorcycle in a garage where it is safe from thieves and from the forces of nature.

Raise Your Deductible

Another excellent way to lower your monthly insurance premiums is to raise your deducible. Deductibles and premiums move in opposite directions, so the higher your deductible, the lower your monthly premium. You can make this work for you by funneling the difference into a separate savings account that you can use to cover unexpected expenses in the event of an accident.

DO YOU HAVE RENTAL CAR COVERAGE ON YOUR AUTO INSURANCE POLICY?

When your car is stolen or gets damaged in an accident, the repair or recovery cost is only part of the story. Going without your car while it’s being repaired can be a significant hardship. Without another vehicle available, your only recourse might be to rent one. The good news is that you might be able to buy insurance that will pay some of the cost of a rental; in fact, your policy might already include it.

The standard Personal Auto Policy includes a coverage called Transportation Expenses. If you have purchased Collision coverage on your car and that car is damaged in a collision, this coverage will pay for “temporary transportation expenses.” The same applies if you have purchased Comprehensive coverage. If the car is damaged by something other than a collision, the policy will cover these expenses. The policy pays up to $20 per day, up to a maximum of $600. This coverage also applies to a vehicle to which you do not ordinarily have access, such as a friend’s car or a rented pickup truck.

Time limitations apply. If your owned or borrowed car is stolen, coverage begins 48 hours after the theft and ends when you are able to use the vehicle again or when the insurance company pays you for the loss. If the cause of loss is something other than theft, the insurance pays the expenses incurred more than 24 hours after you lose use of the vehicle. Finally, the insurance stops paying at the end of the period of time reasonably required to repair or replace the vehicle.

Some examples will illustrate how this works.

• John has both Comprehensive and Collision coverages on his sedan. On Tuesday at 10:00 a.m., a frayed wire in the engine catches fire, resulting in major damage to the car. The car is in the shop for 15 days, so he rents a replacement for $35 per day. His insurance will pay $20 per day, starting with the expenses he incurs after 10:00 a.m. Wednesday. If 15 days is a reasonable time for these repairs, the company will pay for days two through 15.
• John gets his sedan back. A month later, it breaks down. This time, he borrows his neighbor’s car. While he is driving this car, a deer runs in front of him; the ensuing collision badly damages the car. Because he has Collision coverage, his insurance again will pay $20 a day for him to rent a replacement while the shop fixes the car.
• He gets both cars back and returns his neighbor’s car. A week later, he walks out of a store to find an empty space where his car should have been. He reports the theft to the police and his insurance company. The company will pay $20 per day, starting 48 hours after he discovered the car missing. It takes 35 days for him to find a replacement car; his insurance pays $600 (the maximum) for his rental costs.
• Concerned about how much his insurance premiums will go up, he drops the Collision coverage on the replacement car. A month later, a bee stings him while he’s driving and he plows into a highway sign. This time, the company will not cover his rental costs because he had not purchased Collision coverage.

Not all Auto insurance policies are the same. Some might pay more than $20 per day for rental costs, but they will pay only if the insured vehicle is stolen. Others cover theft only and pay less than $20. Check with one of our insurance agents to find out what coverage you have. We’re here to ensure that you have exactly the coverage you need.