Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. [youmaylike] You are also covered if you cause the bodily harm or death to someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. The average annual cost for full coverage: is $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for an additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on the phone to get a quote. Sparse website when it comes to customer education. State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. The average annual cost for full coverage: is $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacements or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, The Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. The average annual cost for full coverage: is $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance is offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.
In Need of Short-Term Financing?
If you are a business owner, or if you are thinking about becoming one, you’re likely aware that the financial hurdles can be daunting.
You may be especially aware that situations happen that can affect your cash flow. You may not need long-term financing, such as a loan. You may simply need something to bridge the financial gap, i.e. short-term financing.
Don’t fret if this is your situation. Business lines of credit (LOC) could help you tremendously.
This finance option is often used by those who are unable to qualify for a small business loan, or who simply don’t want to take on additional debt. This option is also useful for startups and owners who want to expand.
Here, we’ll go over the ins and outs of business LOCs.
We’ll:
- Define line of credit
- Explain how to qualify for an LOC
- Note how best to use an LOC
- Go over who provides LOCs
- Go over when they may not be the best option for you
- Address LOC pros and cons
The Business Owner’s Credit Card
A good way to think of business LOCs is think of them as credit cards. The way you charge purchases to your credit card is the same way you use LOCs. You have a maximum spending limit, and the only way to continue using it is to pay down your balance.
For LOCs, the amount of credit available to you is replenished once you pay off the balance. Therefore, you can reuse and repay at your leisure as long as you don’t miss payments. You must also be sure to not exceed the credit limit.
A plus is that you are typically only responsible for paying fees for an LOC when you tap it.
Business lines of credit are available for outfits of all sizes. Their sums can range from $10,000 to $100,000.
They can be secured and unsecured, however most are unsecured. They typically come with a variable interest rate.
Qualifying for an LOC
Before you get too excited about LOCs being an option, understand that you have to hit certain criteria to qualify.
While LOCs are not loans, the best way to get one is through a bank. Just like bank-issued loans, traditional LOC providers want specific information about you and your business.
Be prepared to provide documentation that shows your revenues. Providers want to see that you’re making money, and not losing it. If you have at least $25,000 in annual revenue, you’re on your way to getting approval.
If your LOC request is large — $100,000 or more — you may be asked to put up collateral. This includes the property where the business is located, if you own it. You may also be able to use your home if you own it.
Other documents you may have to provide include:
- Personal and business tax returns
- Bank account statements
- Business financial statements, such as profit-and-loss statements and your balance sheet
Startups may be required to have been in business for at least six months. Credit requirements vary, but be prepared to make improvements if your score is below 550. LOC providers look most favorably on prime borrowers who have credit scores of at least 620, or even 650.
Putting a Business Credit Line to Use
Getting approved for a business LOC can cause you to breathe a sigh of relief. That’s because there are many beneficial ways you can put it to work. They can be used to:
- Supplement you cash flow
- Expand, remodel or make improvements to your business
- Cover surprise expenses
- Buy new equipment, such as computers, or upgrade your systems
- Purchase inventory to meet seasonal demands
- Launch advertising and marketing campaigns
The Government Beauty Known as the SBA
As a business owner, you may gripe about a host of issues related to the government. However, there is a part of the government that you’ve likely found to be very useful — the Small Business Administration (SBA).
When it comes to LOCs, reviewing the options offered by the SBA should be on your to-do list. It backs unsecured revolving lines of credit that are offered by banks. It’s called the CAPLines program, and it helps business owners meet short-term and cyclical working-capital needs. It’s also ideal for business that are less than 5 years old.
There are four lines, so there’s something that fits almost all business needs. See the SBA’s site here for options that could suit you.
Traditional LOC providers
Big banks, as well as smaller banks like regionals, often provide LOCs. There are a slew of non-traditional financial outfits that offer them as well. Your choice depends on which you feel most comfortable with. The main difference between the two relates to their qualification requirements.
Bank of America and Wells Fargo are among the traditional banks that offer LOCs to businesses.
Bank of America’s LOC is secured by a blanket lin on your assets or a certificate of deposit. Its LOCs feature revolving loan terms with annual renewal, no cash advance fees and no interest charges until you use the funds.
To qualify, your business must be at least 2 years old, with you as the owner. It must be generating at least $250,000 in annual revenue.
Wells Fargo’s secured business LOC requires that you have a Wells Fargo savings or CD account to be used as collateral. Its LOC is offered up to 95% of the amount pledged as collateral.
While Wells Fargo does not impose an opening fee for its secured LOCs, it does charge a $50 annual fee. There is no cash advance fee unless you withdraw from an ATM or over the counter.
Avoiding the Traditional Banking Route
Also consider non-traditional financial outfits for LOC options. Some of the popular choices are Fundbox and StreetShares. Their attractiveness relates to their more lenient terms.
For example, Fundbox works with businesses that are just 3 months old. There is no minimum credit score requirement. Businesses with just $50,000 in revenue can qualify.
StreetShares requires a mere $25,000 in annual revenue. However, your maximum credit limit is limited to 20% of your annual business revenue.
Pros, Cons and Tips
Business LOCs can be saving graces for several reasons, including their flexibility. As long as you don’t miss your payments, you can reuse them as much as you need to meet a wide array of needs.
Bank of America points out that maintaining a line of credit in good standing may help build your business credit rating and position you for better loan terms if you seek future financing.
Be aware that business LOCs do carry risks — the biggest being to your own credit. If your business fails, you’ll still have to repay the LOC. If you structure your business as a sole proprietor outfit, you may be liable.
If you want to pursue a business LOC, be sure to speak to a professional, in addition to researching each financial institution’s offerings.