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.
Is Online Investing Safe?
These days, it seems like you can do everything online. And I, for one, am thrilled with this new world.
In the past few months alone I’ve used the internet to book everything from an oil change to a haircut to a round of golf. Millions of people (myself included) have met their spouses online. Social media and YouTube videos have become our new go-to versions of entertainment. And thanks to the miracle of online banking, I no longer have to visit the branch every time I need to pay the electric bill.
Investing is another thing that has moved from an in-person experience to something that’s done online. Millions of Americans have embraced a do-it-yourself investing approach using self-directed online brokers and cheap exchange traded funds (ETFs), eschewing the traditional path of entrusting a financial advisor with their retirement savings.
But is this really the best move? Is online investing safe for regular folks who are looking to grow their investments for a comfortable retirement? Let’s take a closer look.
The Different Routes
The biggest difference between investing online and through a traditional financial advisor is the amount of help you get through the process.
There’s a reason why investing with an advisor has been the default for many years. This professional is always there to answer investor questions. He/she can consult with smart folks when clients have complex issues, too. Investors can feel safe in such a scenario, since there are many layers of security. And remember, advisors are required to know their clients’ risk levels, which ensures a regular investor won’t accidentally stumble upon complex investments meant only for professionals.
There’s just one big problem with the traditional advisor method: these folks expect to get paid for all they do, which is usually in the form of higher expenses. Typically, financial advisors are paid in one of three ways: per transaction, a set fee every year or a trailer fee, which is a percentage of your investments.
Compare that to online investing, which doesn’t have anyone holding your hand. Fees are much lower, but you’re on your own. You’ll have to research individual investment choices yourself, and you’ll have no one to reassure you during the next market panic. For more experienced investors, this is hardly a big deal. But it could be massive for somebody just starting out.
A new breed of financial advisor has started to be popular, a hybrid of the two basic methods called a robo-advisor. Robo-advisors will choose a suitable slate of passive investments for you and has people you can talk to if you’d like the human touch. But don’t expect a robo-advisor to roll out the red carpet for you — they’re mostly automated. The good news is the efficiencies created are passed onto investors in the form of much lower fees, at least when compared to the traditional advisor route.
How to Invest Online
The process of investing online is a pretty simple one.
The first step is to open the account. This involves a pretty complex application form — which is mandated by regulators, but you can perhaps save some time by using your bank’s online broker, who will already have much of your info on file already — and some pretty invasive financial questions.
A few days after filling out the form, your account opening should be approved. The next step is then funding the account, which will be explained to you. I find the easiest option is usually sending money electronically back and forth, which is easy to set up for anyone familiar with online banking.
Once your account has cash in it, the final step is buying specific stocks or ETFs. Remember, this part is all up to you. You’ll have to tell the broker what stock to buy, how much to buy, and whether you want to pay the going price (a market order) or a specific price (limit order). The order won’t go through until you hit the buy button.
This may sound like a complex process, but it’s not so bad. Remember, there are millions of Americans with online brokerage accounts. If they can figure it out, you can too.
Which Route Should You Take?
You don’t have to worry about some fly-by-night online broker stealing your money. Each online broker is regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The Securities Investor Protection Corporation (SIPC) also protects investors if their broker is ever forced to declare bankruptcy. Your money is safe from everything except your own boneheaded decisions.
In fact, some people argue a financial advisor is more likely to be a risk to your savings than any of the leading online brokers. Financial advisors have used a myriad of tricks over the years to milk excessive fees from naïve investors who made the mistake of trusting their advisor completely. Regulators do a good job stamping out these excesses, and investors can sleep well at night knowing most advisors are honest folks who want to help investors.
The biggest risk in embracing a do-it-yourself route by online trading is you’re likely to screw up a few times. This is especially true if you decide to pick individual stocks, rather than sticking to passive investments that track the underlying stock market itself. A loss of 20% might not seem like much today, but it can really make a dent in your net worth after a few decades of compound growth.
Remember, using an online broker means you’ll have to act as your own financial advisor. You’ll have to choose your own investing strategy, figure out any tax implications and then decide if a downturn is a buying opportunity or a time to exit stocks completely. This is harder than most people think, although there is plenty of help from smart folks that is only a Google search away.
Is Online Investing Safe? The Bottom Line
Online investing is a safe way to put your cash to work over the long-term. It’s not going anywhere, and huge investments in security ensures some hacker can’t get in and magically move your money into some Swiss bank account.
The big risk is what happens when amateur investors are in charge of their own money. Some will embrace risky individual stocks when blue chip stocks might be the better choice. The optimal strategy for most investors is a slow investment into a broad market ETF, but it’s easy to be enticed by other options when you’ve got the whole investing world at your fingertips.
Still, this doesn’t mean you won’t be successful at it. A little research, the right temperament and consistent savings will go a long way to eventually making you wealthy.