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.
IRS Debt Relief
Tax time is stressful for many Americans who end up owing money to the IRS. Tax debt is nearly impossible to discharge in bankruptcy court. The IRS can attempt to collect this type of debt for ten years after the date of assessment. In the meantime, you may have your wages garnished, your bank accounts seized, and your credit ruined.
Fortunately, IRS debt relief is a viable option for many people who owe back taxes. Many tax debt relief companies make big promises. These companies may charge hefty fees, take ages to get your tax problems solved, or simply fail to do what they said they'd do.
What is Tax Debt Relief?
If you can't afford to pay the taxes you owe the federal government, you have a few good options for IRS debt relief. You may be eligible for a payment plan or even a debt settlement (called an offer in compromise) that could protect you from wage garnishment and other aggressive collection tactics.
The faster you act, the more options you have for IRS debt relief. Even if your tax debt is years old, don't give up. You may have to pay penalties and interest, but it's better to face the problem head-on and avoid the problems that come with having your bank account frozen or your credit wrecked.
The IRS can also legally put a lien on your property, preventing you from selling it before you pay your tax debt.
Penalties for Paying Taxes Late
The IRS charges several types of penalties and late fees if you fail to pay your taxes on time. Here are some reasons that the IRS may attach penalties to your tax bill:
- Failure to pay: If you don't pay your taxes in full by April 15 of the year you file
- Failure to file: If you don't file your tax return by April 15 and you don't ask for and receive an extension
- Failure to pay proper estimated tax: If you expect to owe more than $1,000 in taxes and you don't pay your taxes through withholding or you don't pay your quarterly tax estimates throughout the year
Penalties and interest rates vary. For example, if you fail to pay your taxes on time, you can expect a penalty of 0.5% of your total tax bill each month until your debt is paid in full.
If you fail to file your taxes on time, you'll be charged 5% of your unpaid taxes every month for up to five months, plus a late filing penalty of $100 to $435, depending on when the tax return was due.
If you fail to pay proper estimated taxes, you'll be assessed quarterly penalties calculated using the formula in Publication 505.
Reducing the Total Amount of Money Owed to the IRS
You may be able to reduce your total tax debt by contacting the IRS and asking for an offer in compromise. This allows you to settle your debt for less than the total amount owed. Many tax debt relief companies offer this service for a fee, but it's something you can do on your own with just a phone call.
If you choose to make an offer in compromise, you'll be charged an application fee of $205. You may not have to pay the fee if you qualify for a low-income certification or if you submit paperwork stating that you dispute your liability for the debt.
Before you can get approved for an offer in compromise, you must be up to date with your yearly tax filing and any required estimated tax payments. To see if you are eligible, use the offer in compromise worksheet from the IRS.
If you want to submit an offer to the IRS to settle your debt in full, you can do so by submitting your offer using IRS Form 656-B.
Setting Up a Payment Plan with the IRS
The IRS may allow you to pay off your tax debt over time with a payment plan. They must approve the agreement, though. You can request a long-term payment plan by applying online if you owe less than $50,000 in tax, penalties, and interest and you've filed all of your required tax returns.
There's a $31 setup fee unless you meet the low-income requirements. If approved, you'll pay monthly through automatic withdrawals from your checking account. If you want to make monthly payments that aren't automatically withdrawn, your setup fee is $149.
Final Notes
If you have tax debt, it's smart to handle the problem as quickly as possible to avoid fees and penalties. You don't need to hire a tax relief company to handle the problem for you.
In most cases, tax relief agencies make phone calls and fill out forms that an individual could handle on their own through the IRS for free.