Can You Save by Bundling Insurance With a Car Purchase?

You’ve probably seen embedded insurance in the wild. Here’s an example: Let’s say you buy a new refrigerator. During checkout, you’re asked if you’d like to get insurance for the item. That insurance policy, or “protection plan,” gets embedded into your purchase as a single transaction.

Companies can offer insurance policies on everything from buying the latest iPhone to renting a U-Haul. But if getting insurance can be so easy, then why is it such a hassle when you buy or lease a new car?

In order to understand whether embedded car insurance is right for you, it helps to get context on how it all works. More importantly, that should also answer a bigger question: Can this actually save you money?

Rising anxiety about the cost of owning a car

Getting a new car isn’t all that different from any other purchase. If you’ve ever bought a laptop, an espresso machine or even a high-end electric toothbrush, you know the feeling: That sense of excitement that comes with being a new owner, especially after weeks or months of research.

But when it comes to big purchases, the word “ownership” can also cause anxiety. According to a 2023 NerdWallet survey, 53% of Americans plan to buy or lease a vehicle in the next 12 months. However, 23% of Americans who own a personal vehicle consider the cost of vehicle ownership to be a source of stress.

Those numbers might seem contradictory, but the reality is that the total cost of owning a vehicle is hard to calculate. You can budget your car purchase to the dollar, but it can still be hard to predict gas prices and car insurance rates. In fact, the average car insurance price for 2023 is nearly 32% higher than the average rate for 2022, according to NerdWallet’s annual analysis.

The burden of financing, insuring and paying off a vehicle lasts yearafter the initial excitement wears off. So drivers are looking for ways to save wherever they can, including at the dealership.

What is embedded insurance?

One way to reduce the stress of buying a new car is to find ways to simplify the process. This is why bundling auto insurance into a car purchase (not unlike our example of buying a new fridge) appeals to drivers.

“There’s no need to call your agent, spend 20 minutes on the phone digging up and providing details then waiting for your proof of insurance. With embedded insurance, it’s instant and seamless,” said Cassi Conrad, chief insurance officer at Sure, in an email. Sure is a digital insurance seller that specializes in embedded insurance.

Almost every state requires drivers to have liability insurance, so you’ll need proof of coverage before you can purchase a vehicle at a dealership. But having the car dealership bundle an insurance policy into your financing package might save you time and effort, both during the “checkout” process as well as when it’s time to make payments.

Additionally, consumers are more likely to buy insurance at the time of a car purchase. 50% of Gen Z (ages 18-26) and 54% of millennials (ages 27-42) believe the best time to shop for auto insurance is when buying or leasing a vehicle, according to the NerdWallet survey.

The convenience of bundling insurance into a purchase — combined with a rise in digital insurance as a whole — has created a demand for embedding policies into the car buying experience, Conrad said.

But can embedded insurance save you money?

All of this lines up with what drivers actually want when buying a car: 72% of recent car buyers would have liked to purchase insurance directly from the dealership, according to an online 2022 survey of recent car buyers by Polly, a company that sells embedded auto insurance. That same survey states that 42% of car buyers received no support from the dealership about actually getting insurance in their most recent car purchase.

Part of this disconnect is tied to availability. Embedded insurance is sort of an ongoing experiment for both insurers and car dealerships, and there just isn’t enough information available to predict whether it will save you money.

In fact, while embedded car insurance is definitely convenient, you could end up paying more for insurance over time. If you’re offered a single price for financing that includes a car loan and an insurance policy, you may end up paying interest on your insurance, which is unnecessary as well as expensive.

Choosing insurance is subjective. It’s largely dependent on how much coverage you want as well as what you feel comfortable paying, and the factors that determine pricing vary by person. But because there isn’t a standardized embedded auto insurance offering right now, the details could depend on the dealership, insurer and financing terms rather than what you want or need.

Ways to save on new-car insurance right now

If you do get offered embedded insurance at a dealership, it’s probably in your best interests to decline at this time. But that doesn’t mean you can’t find other ways to save money on insurance for a new car.

Remember all those hours you spent selecting the perfect year, make and model? Apply that same process to finding car insurance. Spend one hour getting a few different quotes for the specific vehicle you want, then compare those rates to find the best fit for your situation. If you do this before you get to the dealership, you can compare their offers to the quotes you already have.

Embedded auto insurance is still an evolving thing. Until some sort of standard policy offer exists, we recommend prepping before you get to the dealership to decide if embedded insurance is a good fit. You may still decide to add insurance to your cart at checkout, but at least you’ll know whether its the best deal before you sign the paperwork.

Drew Gula writes for NerdWallet. Email:

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6 Reasons Not to Skip Renters Insurance

Could you afford to replace your entire wardrobe if your apartment caught fire? What about your phone, your laptop and all your furniture? If the answer is no, you probably need renters insurance.

“Renters insurance can’t stop awful things from occurring, but it can make life a little easier if and when they do occur,” Yael Wissner-Levy, vice president of communications at the insurance company Lemonade, said by email.

And the coverage may cost less than you expect — in fact, some tenants could pay next to nothing. Find out why you may want renters insurance and how affordable it can be.

1. Your landlord’s insurance won’t cover you

Some landlords require their tenants to have renters insurance, but if yours doesn’t, it’s not because they’ve got you covered. “Many renters [believe] that, since their landlord has insurance, it covers damage to their property. This is not the case,” Wissner-Levy said.

Landlord insurance covers the structure of the building but not tenants’ personal belongings. If your TV is stolen or your dishes are lost in a kitchen fire, your landlord’s insurance won’t pay to replace them — but a renters policy probably will.

A landlord’s policy is also unlikely to help if you accidentally damage a neighboring apartment. “If you [let] your bathtub or sink flood out the apartment below you, the landlord’s not going to cover that,” says Jeff Schneider, president of Gotham Brokerage Co. in New York City. “You can be sued for … causing damage to the apartment below you.”

A standard renters insurance policy includes liability coverage starting at $100,000, which can pay damages and legal expenses if you’re sued for accidentally injuring someone else or damaging their property.

2. You probably own more than you think

“[One] reason why people avoid renter’s insurance is the thought, ‘I don’t have anything valuable worth protecting,’” Wissner-Levy said. But you might be surprised.

Brandon Okita, vice president at FIA Insurance Services in Torrance, California, advises opening each drawer and closet in your home to take an inventory of your belongings. Once you start tallying up the value of each item — electronics, jackets, shoes and so forth — you’ll probably find that it would cost a lot more than you expected to replace everything.

3. Renters insurance can pay for housing after a disaster

“Most policies provide what’s called a ‘loss of use’ or ‘additional living expense’ benefit,” Schneider says. “It pays you if you are forced out of your apartment by a major claim — usually fire or extensive water damage — and you have to stay in a hotel.”

Loss of use coverage can also pay for restaurant meals or other expenses associated with living away from home while it’s being repaired.

4. It can protect your finances

Maybe you’re saving for a down payment on a house, or you’ve worked hard to get out of debt and build an emergency fund. The last thing you need is a lawsuit wiping out everything you have.

“Let’s say you go golfing … [and] you hit someone in the head and they turn around and sue you,” Okita says. If a court deems you responsible, your renters liability insurance will typically cover costs up to the limit you’ve purchased, even if the incident takes place away from home.

This coverage can also come in handy if your dog bites someone at the park, your child breaks a valuable heirloom at a friend’s house or a guest slips and falls inside your apartment.

5. It covers belongings away from home

Many renters policies provide some coverage for your stuff even when it’s not at home. “If your laptop was swiped at the neighborhood cafe, or your phone stolen on the subway, your policy could cover you,” Wissner-Levy said. (Keep in mind that it would make sense to file a claim only if the lost item were worth more than your deductible.)

You may also have coverage for items in a storage unit, Okita says.

6. The cost may be less than you expect

One common reason to avoid renters insurance is the cost. “A lot of people are not looking for added expenses these days,” Schneider says.

The average cost of renters insurance is $168 a year, or about $14 a month, according to NerdWallet’s rate analysis. But if you have a car, you could pay less by bundling your renters policy with your auto insurance, thanks to multipolicy discounts offered by many carriers.

For example, Okita notes, a 5% bundling discount on a $3,000 auto policy would be $150, which would nearly pay for the average renters policy premium.

You may also be eligible for discounts if your apartment has smoke detectors, burglar alarms or other safety and security devices.

If the worst happens, you’ll likely be glad you paid for the coverage. “Renters insurance is the best defense against things in life you have no control over,” Wissner-Levy said. “Once covered, most people see the benefits.”

Sarah Schlichter writes for NerdWallet. Email:

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Smart Tactics for Millennials Flocking to Buy Life Insurance

Life insurance applications for Americans have jumped in 2020 as the COVID-19 pandemic has made us more aware of our own mortality.

No one has been more interested in their own life insurance gaps than the under-45 crowd. Application activity has grown almost twice as fast this year for Americans 44 and younger as for those 45-59, according to research through September from MIB Group, a data-sharing service for insurance companies.

Younger buyers are often first-time applicants, digging into the details to understand how life insurance works. If you’re looking for a policy, here’s how to ease your way through the application process and get the most out of your new coverage.

Plan for tomorrow, not today

Many young Americans are still near the beginning of their financial journeys. Jobs, homes, cities and relationships will likely change over the next decade, which means needs and dependencies may change too.

“The question of who needs life insurance is very personal, but an easy way to know if you need life insurance is to consider if someone would suffer financially if you were to pass away,” Faisa Stafford, president and CEO of industry group Life Happens, said in an email. “If the answer is yes, then you should consider life insurance.”

She recommends focusing on two main issues: replacing your income and repaying your debts if you die. That means thinking ahead to cover your growing financial commitments as your life changes.

For example, a new homeowner can skip mortgage protection insurance, which pays off your loan if you die, and choose a term life policy instead, suggests Roslyn Lash, a financial educator in North Carolina and author of “The 7 Fruits of Budgeting.” Your mortgage debt will shrink over time, but your life insurance benefit stays the same — so if you die, some of the money could be used for other priorities, such as sending a child to college.

Skip the medical exam while you can

Life insurance applications are notoriously frustrating. You might expect to fill out forms, explain medications and take a life insurance medical exam just to find out if you’re approved.

While this process is still out there, simpler options are now available. “The use of e-signature, no blood or urine tests, and online applications all have made life insurance more accessible to more people,” Stafford said.

In a growing practice called “accelerated underwriting,” many insurers now rely on your prescription drug use, data about you from MIB Group and electronic health records to speed the process, according to the Society of Actuaries.

Accelerated applications can cut approval times down from weeks to hours, according to the National Association of Insurance Commissioners, with no medical exam required. Young buyers are often the most likely to be approved, and there’s almost no downside. Most insurers will simply have you take a medical exam if you aren’t approved without one.

Don’t assume life insurance is expensive

Buying now rather than later can help you save money on life insurance, which makes sense: The older you get, the more risk you pose to your life insurance company. The result is that a policy for a 25-year-old is likely to be much less expensive than the same coverage for a 45-year-old.

Many millennials may not realize the value of buying life insurance while they’re young and healthy. Research by the life insurance trade group LIMRA shows that half of millennials overestimate the cost of coverage. Only 52% own life insurance, even though 80% recognize they need it, according to LIMRA.

But the 2020 pandemic is providing new motivation. In October, nearly 1 in 3 millennials said they feel an increased need for life insurance due to COVID-19, according to consumer research from LIMRA.

To get started, all you have to figure out is how much you need and for how long you need it. Think about the people who depend on you. How much money would they need to pay off the house? How long would they need to finish school or find a job?

Stafford suggested starting with a general guide to determine your coverage need: 10 times your annual salary. “But since finances are complicated, working with a financial professional can help you figure out how much coverage you need for your own personal situation,” she said.

This article was written by NerdWallet and was originally published by The Associated Press. 

Andrew Marder is a writer at NerdWallet. Email:

The article Smart Tactics for Millennials Flocking to Buy Life Insurance originally appeared on NerdWallet.

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You May Qualify for Free or Cheaper Health Insurance Now

The latest coronavirus relief package did more than dole out $1,400 checks. The law also made health insurance free for millions more people and reduced costs for others, at least for now.

The American Rescue Plan, which President Joe Biden signed in March, expanded subsidies for people buying their own insurance on Affordable Care Act exchanges. In addition, anyone who receives unemployment benefits this year can qualify for zero-premium health insurance through the exchanges, regardless of income.

In fact, many people who are currently uninsured will qualify for free or low-cost coverage through the exchanges or Medicaid, says Daniel McDermott, a policy analyst with KFF, the nonpartisan health care think tank formerly known as the Kaiser Family Foundation.

People who lost their jobs but want to keep their former employer’s health insurance also may get help. If you don’t qualify for group health insurance elsewhere, the federal government will pay your COBRA premiums for up to six months.

Millions qualify for free ACA coverage

Since 2013, ACA exchanges have allowed people to buy individual and family health insurance policies, usually with tax credits that reduced their premiums and other costs. ACA has four levels: bronze, silver, gold and platinum. Bronze plans typically have the lowest monthly premiums and the highest deductibles; platinum plans have the highest premiums and the lowest deductibles.

Before the new relief package, people with incomes greater than 400% of the federal poverty level typically didn’t qualify for subsidies to reduce their premiums. Now people with incomes up to 600% of the poverty level — up to $76,560 for a single person or $157,200 for a family of four — can qualify, according to KFF. (KFF’s calculator can show you how much you’d likely pay for ACA coverage.)

The relief package reduced premiums for the vast majority of people who buy their own insurance, McDermott says. In addition, nearly half of the 29 million currently uninsured now qualify for a free plan, he says.

Those with incomes below 250% of the poverty line also will benefit from reduced cost-sharing, which means lower deductibles and other out-of-pocket costs. At 150% of the poverty line — income of about $19,000 for a single person and just under $40,000 for a family of four — people qualify for zero-premium silver plans with annual deductibles of just $177.

Millions of unemployed people will be eligible for similar coverage. Anyone who receives unemployment benefits for any part of 2021 can qualify for a zero-premium silver plan with the maximum cost-sharing reductions, McDermott says. “For all intents and purposes, the health insurance exchanges are going to look at you as if your income was under 150%” of poverty level, he says.

This new provision for the unemployed may not be reflected on and most state-based exchanges until this summer, and perhaps not until fall, McDermott says.

“It is my understanding, though, that if these people enroll in coverage now and can prove that they received unemployment benefits at some point in 2021, then the benefits will be retroactive and they will eventually be reimbursed for the unnecessary expenses they incurred,” McDermott says.

How to qualify for ACA subsidies

The expansion of Affordable Care Act subsidies is retroactive to Jan. 1 and will continue through Dec. 31, 2022. People must purchase their insurance from or their state’s ACA exchange to qualify for subsidies. The act also created a new special enrollment period that extends through Aug. 15, 2021.

Some people still don’t qualify for subsidies, including most people with incomes above 600% of the poverty line; undocumented immigrants; people who have offers of employer-provided health insurance that’s considered affordable; and certain low-income people in states that haven’t expanded Medicaid coverage.

What you should know about free COBRA coverage

Many people prefer to keep their employer’s health insurance coverage when they lose their jobs, although the cost is often prohibitive. Most employers pay a large portion of the cost to cover workers, but former employees who opt to extend their coverage using the federal COBRA law typically must pay the full premium plus a 2% administrative fee.

Thanks to the new law, employers are required to provide free COBRA coverage from April 1 through Sept. 30 to eligible former employees who lost their health care coverage because of involuntary termination or a reduction in hours, says financial planner and certified public accountant Kelley Long, consumer financial education advocate for the American Institute of CPAs. The employers’ cost will be offset by federal tax credits.

If you’re eligible for other group health coverage — through a spouse, new employer or Medicare, for example — you won’t qualify for free COBRA.

“The intention is to help people who have no other options and would otherwise be uninsured because they can’t afford COBRA,” Long says.

Normally you have 60 days after you lose your job to opt for COBRA coverage, which typically lasts a total of 18 months. If you missed that 60-day window, or signed up but then dropped coverage, you may have another opportunity to enroll. The new law extends the sign-up period so that people who lost their jobs during the pandemic can get the free coverage. Employers are required to reach out to eligible former employees by May 31. If you think you’re eligible but you haven’t heard from your employer, McDermott recommends contacting your former employer’s human resources department.

There will be a special enrollment window at the end of September to allow people with COBRA to switch to an ACA plan, McDermott says.

This article was written by NerdWallet and was originally published by the Associated Press.

Liz Weston writes for NerdWallet. Email: Twitter: @lizweston.

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6 Steps for Financial Spring Cleaning, Pandemic-Style

Given the challenges of pandemic life, many financial tasks may have stayed on the back burner this year as we all tried to just make it through each day. At the same time, the pandemic had a big impact on our financial lives, and some money-related to-do’s are likely in order.

Now that it’s spring, it’s a good time to conduct a thorough review of your finances and address any neglected areas. Here’s how to spring clean your finances after a year of pandemic living.

1. Update your budget

Your spending patterns might have totally changed over the last year: According to the Federal Reserve Bank of St. Louis, travel, hotel, restaurant and bar spending fell during the pandemic, while grocery and beverage store spending went up.

So it may be time to create a new budget that reflects current expenses, says Curtis Bailey, certified financial planner and founder of Quiet Wealth Management in Cincinnati. “Covid changed spending patterns last year, and potentially going forward,” he says. He suggests anticipating what habits you plan to continue beyond the pandemic and avoiding any drastic changes, such as buying a second home, until you’ve done a thorough analysis of your needs going forward.

Shea Newton, CFP and president of Financial Journey in Leesburg, Virginia, recommends redirecting some of that previous spending into an emergency savings account. Some people, she says, may want to replenish their emergency fund after dipping into it over the last year, or boost it to a higher level, given the income uncertainty many people continue to experience.

2. Set new financial goals

Looking forward to beyond the pandemic, you might want to set new financial goals, such as finally taking a big vacation or finding a job that allows you to continue working from home. “You may be reeling, trying to figure out your direction again. Ask yourself what is truly important” and whether your current spending reflects that, suggests Andrew Mitchell, CFP and financial advisor at Fiduciary Financial Advisors in Grand Rapids, Michigan. If you want to go on a big trip but much of your spending currently goes to daily expenses, then you may need to adjust your budget.

Mitchell also suggests asking yourself if you’re prepared for the next catastrophe. Looking back, do you wish you had had a larger savings fund going into 2020 or more diversified investments? Reflecting on those questions can help you set new goals that will help you get through the next challenge, he says, whenever it may arrive.

3. Review your insurance coverage

The pandemic has had a big impact on our homes: Not only are we spending more time inside them, often with more expensive technology and other items to help us work or attend school from home, but housing prices have also increased. According to the Federal Housing Finance Agency, home prices rose 10.8% between the fourth quarters of 2019 and 2020. You might need more insurance coverage than you currently have, says Noah Damsky, principal of Marina Wealth Advisors in Los Angeles.

The cost of building materials has also gone up, which means it would cost more to replace a damaged home, he adds. His firm recently helped one of its clients increase their dwelling coverage by 40% to better reflect how much it would cost to rebuild the home today.

Damsky also recommends increasing coverage for water damage. “Since we’re spending more time at home, we’re likely using water more frequently, and the potential for plumbing issues increases.” If you rent, then renter’s insurance is crucial. Apartments carry a higher risk for flood damage with so many people at home straining the shared infrastructure, he says.

4. Streamline subscriptions

Because of all the time spent at home, many families increased their spending on subscription services such as Disney+, Netflix and HBO. As we all start to leave the house more, it might be time to scale back, suggests Jason Dall’Acqua, CFP and president of Crest Wealth Advisors in Annapolis, Maryland. “Cancel the subscription services that you will no longer be using as much and realign your budget with more normal circumstances,” he says.

5. Update your credit card

If your spending patterns have changed, you might also want to consider a new credit card that better maximizes your current lifestyle. Bailey suggests first logging into your credit card accounts and pulling up a summary of last year’s spending, as well as the rewards that you earned.

Did you maximize your reward earning potential and redeem those rewards in valuable ways? If you spend a lot on takeout or restaurants but your current credit cards don’t reward you for that spending, then it might be time to apply for a new card that does, he says.

6. Zero out mobile app balances

Given the rising popularity of payment apps like Venmo, PayPal and Cash App, it’s a good idea to check your balances: NerdWallet found that about two-thirds of mobile payment app users say they have maintained a balance in their accounts, which means they aren’t earning interest on that money. Instead, consider transferring your cash into a high-yield savings account.

“Interest rates are low right now, but if you get into the habit now of moving money into your savings account, when interest rates rise, you will see a bigger impact,” says Newton.

Kimberly Palmer writes for NerdWallet. Email: Twitter: @kimberlypalmer.

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5 Ways Young Drivers Can Save on Car Insurance

Insurance costs for drivers in their early 20s can be staggering — after teenagers, young adults have some of the highest car insurance rates in the country.

In fact, the average car insurance rate for drivers 20 to 25 years old is about $2,200 a year for full coverage, according to a 2020 NerdWallet analysis of the top five insurers in the nation. That’s about $700 more per year than the average rate for a 40-year-old driver.

Why is car insurance so expensive for young drivers?

Drivers ages 20 to 24 are involved in more crashes than any other age group besides teens, according to the most recent data from the Insurance Institute for Highway Safety, or IIHS. Young drivers, like teenagers, are inexperienced and more prone than older age groups to take risks like speeding and not wearing a seat belt.

For example, IIHS has found that 16- to 24-year-olds in the front seat are the least likely to wear seat belts, and drivers who speed tend to be younger than drivers who don’t. IIHS has also found that 42% of drivers ages 21 to 30 who were killed in crashes in 2018 had a blood alcohol content at or above the legal limit, more than any other age group in the study.

As drivers age, risky driving behavior declines, with crash rates leveling out around age 30, according to Eric Teoh, director of statistical services at IIHS.

Even so, young drivers can still save on auto insurance by following a few guidelines.

1. Drive safely

Don’t drink and drive, avoid accidents and slow down. Sounds simple, but a clean driving record can save hundreds of dollars a year. A separate 2020 analysis from NerdWallet showed that, on average, 25-year-old drivers pay nearly 25% more per year for full coverage car insurance after one speeding ticket and almost 50% more annually after a car accident.

Staying “ticket- and accident-free goes a long way to less expensive insurance,” says Michael McCartin, president of Joseph W. McCartin Insurance Inc., an independent agency in the Baltimore and Washington, D.C., metro areas. “You don’t want to be 22 years old and looking for insurance with three tickets.”

2. Shop around

In addition to age, insurers use a variety of factors to determine rates, including gender, location and your car’s make and model. Because each company weighs these factors differently, getting car insurance quotes from multiple providers is the best way to find a good rate.

Try to compare car insurance rates from at least three insurers for equal amounts of coverage once a year or whenever any big changes happen, such as moving or getting married.

3. Take advantage of discounts

Ask your insurer about any discounts you might qualify for. McCartin says young drivers will save the most by bundling insurance if they buy another policy from the same company. And young drivers still living at home save by staying on the same policy as their parents.

Other discounts young drivers can ask for include price breaks for being a student living away from home, getting good grades and completing a driver’s education course.

4. Consider nontraditional car insurance

If you won’t be driving much for the foreseeable future, you could save money by switching to pay-per-mile insurance, with rates based on how many miles you drive.

Similarly, if you’re a safe driver, consider usage-based coverage, which uses an app or device to track driving behavior, such as speeding and hard braking, to determine a discount or reward.

While some companies specialize in per-mile insurance, many traditional insurers offer both of these options.

5. Build your credit

In most states, insurers use a credit-based insurance score to calculate your auto insurance rate. This score looks at information such as payment history and outstanding debt, similar to the credit scores used to get a credit card or loan, but weighed differently. The practice is not allowed in California, Hawaii, Massachusetts or Michigan.

In other states, credit can impact car insurance rates more than a DUI for some drivers. On average, 25-year-olds with poor credit pay 74% more per year for full coverage car insurance than drivers with good credit, according to NerdWallet’s rate analysis.

You can improve your credit by:

  • Paying bills on time.
  • Paying down credit card debt.
  • Keeping your credit utilization, the percentage of your total available credit, low.

Learn more about your score by getting a free credit report.

Kayda Norman writes for NerdWallet. Email:

The article 5 Ways Young Drivers Can Save on Car Insurance originally appeared on NerdWallet.

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Surprising Things Renters Insurance Covers — And Leaves Out

Insurance is designed to offer peace of mind, but there’s a reason your policy has all that fine print: You might not have the coverage you expect. Like any other insurance policy, renters insurance has exclusions, and knowing about them ahead of time can help you avoid unexpected bills in a disaster.

Just as important, though, is knowing what is covered. All that fine print in your policy likely includes coverage you might not expect, which could save you money down the line.

Covered: Belongings outside your home

Most renters know insurance covers personal belongings within their home but may not realize their things are probably covered off-premises too, including when traveling. Barbara Madvin, an insurance agent at Gaspar Insurance Services, says vehicle break-ins are some of the most common insurance claims she sees for renters. While damage to the car itself is generally covered by your auto policy, your renters insurance pays for items stolen from the vehicle, as long as their value exceeds your deductible.

Your renters policy will also cover your belongings if you move them from your home to a storage unit, a friend’s house or anywhere else to protect them from a covered disaster. In the event of a wildfire or hurricane evacuation, this can be particularly valuable, according to Christine G. Barlow, a chartered property casualty underwriter. This coverage typically lasts 30 days.

Covered: Living expenses if your rental is uninhabitable

While your home is undergoing repairs due to a fire or other covered disaster, your insurance company will usually pay for you to maintain your normal standard of living somewhere else.

A “normal standard of living” is broader than you might think. For instance, if you live in a rental home with a pool that you use every day, “the carrier needs to put you someplace where you have access to a swimming pool,” says Barlow, who is also managing editor at FC&S Expert Coverage Interpretation, a trade publication. If you have pets, your insurer should find you pet-friendly accommodations or board the animals where you normally would.

Not covered: Common disasters

Most renters insurance covers your possessions only in the case of specific scenarios, or “named perils” listed in the policy — things like fire, theft and wind. “If something’s not mentioned in that list, then there’s no coverage,” Barlow says.

For example, flood damage is almost always excluded from renters policies and typically must be purchased separately. (One exception: USAA, which serves military families, includes flood coverage with standard renters policies.)

Not covered: Brand-new stuff

Madvin recommends asking whether replacement cost coverage is included in your policy. If not, your belongings are covered only for their depreciated value, which often isn’t enough to buy brand-new replacements.

Say your 10-year-old TV is stolen and replacement cost isn’t included. “The carrier’s going to say, ‘OK, you paid $1,000 for it 10 years ago; we’ll give you $250 for it now,’” Madvin says. With replacement cost coverage, you’ll receive enough to purchase a new TV.

Not covered: Expensive valuables

Most renters policies cover jewelry and other costly items only up to a specific limit named in the policy, typically $1,000 to $2,000. So if you have an expensive engagement ring, for example, both Madvin and Barlow recommend adding separate coverage for it. An appraisal is usually required.

How to avoid surprises

Before buying renters insurance, take inventory of your belongings. “Most renters underestimate how much stuff they have,” Barlow says, which can leave a coverage gap. Barlow recommends using the Encircle app to upload photos of your belongings and estimate their worth. Other similar apps include Sortly and Allstate’s Digital Locker.

Read your policy thoroughly. Barlow suggests marking it with what’s covered in green and what isn’t in red. Madvin advises paying particular attention to the policy’s endorsements, which are typically add-ons or exclusions to standard coverage.

Confused by all the legalese? Turn to an expert. Talking through your options with an insurance agent or broker can ensure you understand the policy you’re buying. “Unless you really know insurance,” Barlow says, “it’s very easy to miss coverages that you need or to not realize something isn’t covered.”

This article was written by NerdWallet and was originally published by The Associated Press. 

Sarah Schlichter is a writer at NerdWallet. Email:

The article Surprising Things Renters Insurance Covers — And Leaves Out originally appeared on NerdWallet.

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How to Reduce Your Car Insurance Costs During Coronavirus Pandemic

Amid a pandemic, it’s no time to pay for things you don’t need, and that includes car insurance for an idle vehicle.

You might be thinking about how to ditch your auto policy if you own a car you never drive — and whether it makes more sense to cancel the policy or suspend it temporarily.

Putting your car insurance on hold can be a good way to save money if you have an out-of-use vehicle. But it’s not as easy as halting your Netflix subscription. In addition, your options may be limited depending on why you’re taking a hiatus from driving the vehicle or whether you have a car loan. If you still use the car at all, you’ll want to keep it insured to stay legal and financially protected.

If you’re experiencing financial hardship because you lost work due to the coronavirus, insurers and other financial institutions are likely to be lenient.

Where it concerns your auto insurance, there are five main options to explore:

  • Request a coronavirus-related payment delay or plan.
  • Suspend your coverage.
  • Cancel your policy.
  • Reduce your coverage.
  • Remove yourself from a policy.

Coronavirus-related payment delays or plans

Many auto and home insurers are willing to work with customers financially affected by the coronavirus. Depending on your auto insurer, payment assistance can take many forms:

  • Pausing cancellations due to nonpayment of premiums.
  • Special payment plans, including delayed payments, for coronavirus-related financial hardship.
  • Custom payment options on a case-by-case basis.

No matter who provides your auto coverage, the best thing to do is alert the company before your bills are late — here is a list of financial institutions’ contact information you may need.

Suspending your auto insurance coverage

Pros Cons
  • You won’t pay for insurance while your car is out of use
  • You likely won’t have a coverage lapse, something that could increase your future rates
  • The vehicle won’t be covered if anyone wants to drive it
  • The vehicle won’t have insurance against nondriving problems like fire, animal damage, vandalism or theft
  • Drivers with car loans typically are ineligible

Suspending coverage essentially pauses your policy but doesn’t cancel it. That way, you can probably prevent your hiatus from being called an insurance lapse, which would likely result in higher rates later. Confirm this with your insurer beforehand.

Companies don’t always let customers suspend coverage, or might allow it only in certain situations. If you anticipate being out of work due to coronavirus for longer than your insurer’s available grace period or payment plan terms, the company may suggest this option. However, pausing coverage will leave you uninsured while you’re looking for work.

Only use this option if you have alternate transportation available. You may need to file an “affidavit of non-use” from your state’s department of motor vehicles to halt state-required auto coverage. This document officially lets the state know that you won’t operate your car for a given time.

Suspending your policy probably isn’t an option if you have a car loan. Lenders generally require that you maintain coverage for problems such as theft and vandalism.

Canceling your policy

Pros Cons
  • You won’t pay for insurance while your car is out of use
  • You can cancel your car insurance regardless of your insurer
  • The vehicle won’t be covered if anyone wants to drive it
  • The vehicle won’t have insurance against nondriving problems like fire, animal damage, vandalism or theft
  • You’ll have a coverage lapse, which could increase your future rates
  • Drivers with car loans typically are ineligible

You could consider canceling your auto coverage and getting a new policy when you’re ready to drive the car again. However, like suspension, cancellation probably won’t work if you have a car loan. Your lender likely will want at least some insurance on the vehicle.

Contact your DMV if you’re thinking about canceling. Similar to a suspension, your state may require you to submit an affidavit of non-use to officially take the car off the road and drop state-required insurance.

The biggest downside to canceling is that it creates a lapse in your insurance history. Continuously insured customers generally get better rates than drivers who have coverage gaps, who are typically labeled “high-risk drivers.”

Reducing your coverage

Pros Cons
  • You won’t pay for unneeded insurance while your car is out of use
  • You won’t have a coverage lapse, something that could increase your future rates
  • If you keep comprehensive, your car will be covered for nondriving problems like fire, animal damage, vandalism and theft
  • The vehicle might not be usable if anyone wants to drive, depending on how much you scale back coverage
  • You’ll have to pay for the insurance you keep
  • You’ll likely have to keep certain coverages if you have car loan

Cutting back coverage is a good alternative if you’re not eligible for suspension and don’t want to cancel your policy.

To start, you can reduce your auto insurance to the coverage required by your state. Almost every state requires liability insurance, and others mandate uninsured/underinsured motorist coverage, personal injury protection and/or medical payments coverage.

Consider keeping comprehensive insurance (or adding it) if you are storing the vehicle while you don’t drive it, in case it suffers damage while stored. Comprehensive pays to replace your car if it’s stolen, and it covers nondriving problems such as vandalism and damage from falling objects.

Ordinarily, you must buy comprehensive along with collision coverage, but your insurer may make an exception and let you keep a comprehensive-only policy, sometimes known as “car storage insurance,” if you’re storing your car long term. If you have a car loan, your lender may require you to keep both comprehensive and collision coverage.

If your insurer allows you to keep comprehensive and drop everything else, including liability insurance, contact your DMV. You may need to file an affidavit of non-use because your car would no longer have enough insurance for anyone to drive it legally.

Removing yourself from the policy

Pros Cons
  • The vehicle will be covered for nondriving issues like fire, animal damage, vandalism and theft
  • The vehicle will still have the insurance needed to drive it legally
  • You likely won’t have a coverage lapse, something that could increase your future rates
  • You’ll have to pay for insurance while you’re away
  • You’ll have to add yourself back on the policy once you’re home for at least 30 days

Instead of changing your coverage, you may be able to remove yourself from a family car insurance policy temporarily. This option is worth exploring if you’re going away but others in your household will be driving the car.

This option can save you money if you’re a riskier driver than the others on your policy because taking yourself off reduces the odds of a crash. However, if it won’t save you money, there’s little benefit to removing yourself, and it’s probably more convenient to stay on the policy. If you’re not going away and continue to live with other drivers insured on the policy, this may not be an option. Many companies require all drivers listed at the same address to be included on a policy, or else be specifically “excluded.”

Removing yourself from the policy is not the same as being an excluded driver. If you’re simply not listed on the policy, you can still drive the car. Excluded drivers aren’t supposed to drive the car, and may be required to prove they have other insurance in order to be excluded.

There’s no single insurance option that works best for everyone. If you decide to keep your coverage,  a solid payment history should help you get competitive rates down the road.

The article How to Reduce Your Car Insurance Costs During Coronavirus Pandemic originally appeared on NerdWallet.

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Beware of These Overhyped Financial Strategies

A good rule of thumb when you’re trying to eat healthy is to beware of any food you see advertised. The most beneficial fare — whole grains, fruits, vegetables — tends not to have a marketing budget.

Similarly, investments that are enthusiastically pushed by commission-earning salespeople may not be the best for your financial health. Before you buy any of the following, you’d be smart to investigate lower-cost alternatives and to consult an objective, knowledgeable third party, such as a fee-only financial planner.

Equity-indexed annuities

Equity-indexed annuities are insurance products that base their returns on stock market benchmarks. They’re often promoted as a way to benefit from stock market gains while being protected from losses.

But the contracts typically limit how much investors get when the stock market rises, says certified financial planner Anthony Jones of Groveport, Ohio. Two clients, who had purchased equity-indexed annuities before joining his firm, received only a fraction of last year’s 30% increase (as measured by the Standard & Poor’s 500 benchmark).

“They expected bigger returns in 2019 and were very disappointed,” Jones says. “They each had less than a 3% return.”

Equity-indexed annuities typically come with high commissions and surrender charges that can make it expensive to get your money out, says CFP Scott A. Bishop of Houston. The contracts can be extremely complex, and many buyers don’t understand what they’re getting, he says.

“They are not necessarily bad products, but they are really more like bond alternatives than stock alternatives,” Bishop says.

Reverse mortgages

Reverse mortgages allow homeowners 62 and older to convert some of their home equity into a lump sum, a series of monthly checks or a line of credit. Borrowers don’t have to make payments on the loan, which doesn’t have to be paid back until they die, sell or move.

But borrowers don’t always realize that their debt is accruing monthly interest. The amount they owe may grow so high they no longer have any equity in their homes, says Barbara Jones, an attorney with the AARP Foundation.

Reverse mortgages typically aren’t a good fit for people who may need to rely on their equity for future expenses, such as medical bills or nursing home care. Reverse mortgages could be a way to avoid foreclosure if a homeowner can’t afford to make payments on a regular mortgage, Jones says. There may be no equity left for their heirs, “but at least the person gets to age in place,” Jones says.

Non-traded real estate investment trusts

Real estate investment trusts allow people to invest in commercial real estate without having to buy and manage the properties themselves. Most REITs are publicly traded, so it’s easy to buy and sell them.

Non-traded REITs also invest in real estate but are designed to reduce or eliminate taxes. The trade-off is that your money could be locked up for years. Also, non-traded REITS tend to have high upfront fees that reduce the return on your investment.

“Non-traded REITs make my heart sink when I see them in a new client’s portfolio,” says CFP Jonathan P. Bednar of Knoxville, Tennessee. “These are very complex products, with high fees, and oftentimes not the greatest-quality underlying holding.”

Bednar prefers that clients own investments they can easily sell if needed, such as an exchange-traded fund that invests in real estate.

Cash-value life insurance

Cash-value life insurance combines a death benefit with an investment component. (Whole life, universal life and variable life policies are all types of cash-value life insurance.) Sometimes the policies are promoted as a tax-efficient way to invest for high earners who have maxed out their other retirement savings options, says CFP Alex Caswell of San Francisco.

But the premiums aren’t deductible, and the policies tend to have high costs, Caswell says. Many investors have better alternatives, such as using a tax-efficient investment strategy in a regular brokerage account, he says.

Also, premiums for cash-value policies tend to be much higher than premiums for the same amount of term insurance, which has a death benefit but no investment component. The higher premiums can lead buyers to skimp on coverage or to drop the policy because it’s too expensive. And sometimes policies are sold to people who don’t need life insurance at all, such as single people with no financial dependents, says CFP Tess Zigo of Lisle, Illinois.

Zigo says the higher commissions paid by cash-value policies can lead insurance agents to recommend them even when there are better alternatives.

“If all you have is a hammer, everything looks like a nail,” Zigo says.

This article was written by NerdWallet and was originally published by the Associated Press.

Liz Weston is a writer at NerdWallet. Email: Twitter: @lizweston.

The article Beware of These Overhyped Financial Strategies originally appeared on NerdWallet.

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5 Financial Tasks You Should Tackle by Year-End

A task without a deadline is just wishful thinking.

Sometimes, you can get away with procrastinating. If you never get around to alphabetizing your spices, no one’s life will change. But putting off some tasks could have a huge impact on loved ones.

The close of the year is a good time to set some firm deadlines to make sure you won’t leave a financial mess for people you love if you unexpectedly die or become incapacitated. Consider putting these items on your to-do list with a Dec. 31 due date:

1. Check your beneficiaries

If you need convincing that updating beneficiaries is important, consider the case of David Egelhoff, a Washington state man who died two months after his divorce was final in 1994. Because he had not changed his beneficiaries, his life insurance proceeds and pension plan were paid to his ex-wife rather than his children from a previous marriage. The children sued, and the case went all the way to the U.S. Supreme Court, which ruled in 2001 that the beneficiary designations had to be honored.

You’re typically prompted to name beneficiaries when you sign up for a 401(k) or other retirement account. Beneficiaries also are usually required when you buy annuities or life insurance. You often can check and change beneficiaries online, or you may need to call the company to request the appropriate form.

2. Review pay-on-death resignations

You may not have been required to name beneficiaries when you opened your checking account or a non-retirement investment account. Instead, financial institutions may offer a “pay on death” option. This allows you to name a beneficiary who can receive the money directly. Otherwise, the account typically has to go through probate, the legal procedure to distribute your property after you die.

Some states also have “transfer on death” options for vehicles and even real estate. Like pay-on-death accounts, these options allow you to pass property directly to heirs without the potential delays and costs of probate.

Beneficiaries can be added to vehicle registrations in Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Illinois, Indiana, Kansas, Maryland, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Texas, Vermont and Virginia, according to self-help legal site Nolo. To add or change a beneficiary, you apply for a certificate of car ownership with the beneficiary form.

Transfer-on-death deeds for real estate are available in Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Hawaii, Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Virginia, Washington, West Virginia, Wisconsin and Wyoming, according to legal site RocketLawyer. To add or change a beneficiary, the deed must be submitted to the appropriate county recorder.

3. Update insurers — and your heirs

Insurers usually don’t pay out life insurance proceeds until someone files a claim. But far too often, heirs are unaware that the money exists. A Consumer Reports investigation in 2013 found about $1 billion in life insurance proceeds waiting to be claimed.

Updating your contact information with your insurer also may help prevent policies from lapsing. I just heard from a reader who lost her long-term care coverage because she’d moved, forgotten to tell her insurer and failed to notice she hadn’t been billed. Many insurers will allow you to name someone who can be notified if a payment is overdue or they can’t find you. You’ll want to keep the contact information for those back-up people updated with the company, as well.

4. Visit your safe deposit box

If you forget to pay your annual fee and your bank can’t find you, after a few years your safe deposit box will be drilled and the contents turned over to the state. Photos and documents could be destroyed and family heirlooms sold at auction. Visit your box once a year to make sure your payments and contact details are current. Leave clear instructions with your executor or your heirs about where to find the box and its keys.

5. Create or revise powers of attorney

Powers of attorney allow others to make financial and health care decisions for you if you become incapacitated. If you don’t have these documents, or the designated people have died or are otherwise unavailable, your loved ones may have to go to court to take over. The expense and delay can add trauma at an already difficult time. Spare everyone that pain by naming a backup person or two and reviewing the documents every year to make sure the people named can still serve.

This article was written by NerdWallet and was originally published by The Associated Press.

The article 5 Financial Tasks You Should Tackle by Year-End originally appeared on NerdWallet.

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