Insurance is a rather simple form of gambling. The insurance company offers odds on the different ways you might suffer a loss. You can place a bet and, if you suffer the loss in the predicted way, you claim your “winnings”. Well, that’s changing the words around to make you think, but the spirit of this is correct. It all comes down to the ability of the insurer to predict how many people will lose money and how much they will lose. The total amount plus a margin to cover administrative costs and provide a profit, is then divided among the policyholders as the premium. So why should the insurer give you a discount? The answer comes down to those predictions. If you do something to change the odds on you losing money, the insurer rewards you.

Take something as simple as a fire alarm. They cost very little to install and maintain. Yet, if smoke is detected early, you can either put out the fire before it has a chance to take hold, or you call in help before your home burns to the ground. So a small investment earns a big reward. Now add in another fire-related variable. Did you have the good sense to buy a home close to the fire department? If so, your rate will be lower than for the people who decided to live somewhere off the beaten track. Even if they have early warning from an alarm, it still takes too long for a tender to arrive. Now what about the cause of the fire? Old homes have bad wiring that often causes fires. Get a certified electrician to make your home safe and you earn a discount. Similarly, new pipes don’t leak and properly maintained furnaces don’t catch fire as often. Continue Reading

In offering advice, there’s no point in complaining about the way the system works. All you can do is explain what insurers do and then suggest the best way of trying to deal with it. For better or worse, insurers take your ZIP code into account when setting the premium rates. For a moment, let’s say a word in praise of California. In 1988, Proposition 103 forced insurance companies to place more weight on your driving safety record, your years of driving experience, and the number of miles you drive every year than any other factor, including the ZIP code. Breaking the linkage between premiums and the ZIP code still took years – the insurers fought tooth and nail to prevent implementation of the Proposition. But it is now in force and Californians benefit. Shame about the rest of America where the practice of redlining continues, affecting not just insurance but banking and, even, where shops choose to locate or deliver to. That this is racial profiling under another name is ignored.

We now come to the difficult part. Neighborhoods get a bad reputation for a number of different reasons. In this case, it’s not so much the why as the result that concerns us. Those that can, move away to a “better” area. This is great for those individuals but it accelerates the downward trend of the area. The only ones left behind are those who cannot move. The tax take drops. Local services suffer. A ghetto is born. So, if you are a renter, can you afford the rent in a ZIP-code area with lower insurance rates? It might be worth paying a bit more on the rent and saving on the vehicle insurance. You come out even on the move. If you own or cannot afford the rent elsewhere, can you afford a lock-up garage in a better ZIP-code area within easy walking distance. Although walking is not usually considered the best way of getting around a city, this may save you money. Continue Reading

Well, it’s that time of year again. We’ve got Thanksgiving on the last Thursday of November and we’ve no sooner recovered from that when Christmas is upon us. And for those still alive, there’s a further opportunity to celebrate come New Year. Indeed, statistics show we drink more over the next few weeks than at any other time during during the year. Sure, there are cookouts when a few friends come around and drink some beer, but this is the season of good cheer and, often, excessive alcohol consumption. So welcome to the developing world of social host liability. Let’s suppose it’s obvious one of your party guests is seriously intoxicated, but you continue to supply more alcohol and fail to stop this person attempting to drive home. Once on the highway, this driver is involved in a traffic accident and seriously injures other people.

Under the law of negligence, you are liable if it’s foreseeable a drunk may drive and injure a third party. This area of liability started off under the Dram Shop Acts that made bartenders liable if drunken customers injured people on the way home. Courts have extended the liability from commercial sellers to social hosts who give the alcohol away. Either way, the driver is allowed to leave and presents a high risk to the general public. Let’s start off in New Jersey where a social host served a guest thirteen drinks in a hour and allowed him to drive away. Minutes later, he was involved in a head-on collision. The host was held liable. In 1986, the New Jersey lawmakers reduced the liability a little. If the blood-alcohol content is below .15, the host is exempted from liability. Continue Reading

It’s not often you see a headline on the foreign news section and actively worry about how it’s going to affect you. Yet, when you look at the spread of the democracy movement in North Africa and the Middle East, there’s real cause for concern. With the continuing fighting in Libya, oil supplies have been disrupted. Although the Saudis say they will always be able to make up the shortfall, there’s increasing doubt they can. Perhaps in years gone by, they really could turn a spigot and more crude would come out of the ground. Now, experts are saying we’re at “peak oil”, i.e. we’re producing the maximum amount possible and, from now on, we’re just going to have less. That’s why the price of gas at the pumps has been rising steadily over the last few weeks of February and shading into March. There are pessimists around saying we’ll be back up to $4 a gallon come the fall. The last time the price got that high, we all drove less and started to buy vehicles that would do more miles to the gallon. The same thing will probably happen this time around. But there’s another game just coming into town you might want to have a look at.

No matter what your view of the environmental movement and all this talk of climate change, there’s one fact no one can dispute. Right now, we still feel like we’re in a recession. Officially, unemployment is still around a national average of 9.5%. The real figure is probably around 16%. People are being put on short time and, in Wisconsin and other states where Republican Governors like Scott Walker and newly-elected lawmakers think they have a mandate from the voters to cut their deficits, layoffs are still to come. So everyone’s in the game of finding savings in their household budgets. As insurance premiums rise, we all need to find ways of keeping them affordable. Continue Reading

A lot of car owners will agree that at times auto insurance can get very costly for the ordinary budget. And having to deal with the economic recession, most of us would agree that learning how to cut insurance costs effectively is a necessity these days. When every dollar counts, getting smart about your expenses is the best way to cut down your costs without sacrificing insurance coverage. But how do you do that and what should you start with?

Fortunately, it’s not that complicated as it may seem. You just need to ask yourself the right questions about auto insurance in order to determine your exact needs and adjust your policy respectively. There are four questions that are very important, so make sure you put them right and get a definite answer:

Do I have the right coverage amount?

Collision and comprehensive coverage is the type, which is mostly influenced by depreciation of the vehicle itself. So if your car is quite old you may want to adjust or even drop collision and comprehensive. Check other types of coverage as well, since your needs could have changed from the moment you’ve purchased the initial policy. Marital status change, moving to another place or changing the car should make you review your policy according to your new needs. Keep the policy up to date and you will always have adequate insurance costs. Continue Reading