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.
Use a Professional's Experience to Your Advantage
Thanks to the many advances in technology, today, you can handle just about any financial transaction online. This includes buying and selling stocks, which can save you money and time.
Don’t plop down at your computer and start trading and investing all on your own, though. Instead, seek out an online stock broker who can assist you in making your investments and trades all from the comfort of your home, or whatever your preferred location.
If you are a novice investor, or if you are new to investing, you have no business trying to carry out stock transactions online and on your own. It has nothing to do with your intellect, but it has everything to do with your lack of investment savvy. Also, you likely do not have access to the tools and resources that licensed stock brokers do, which puts you at a disadvantage.
This is where an online broker can help you tremendously.
Here, we’ll go over the nuances of using an online stock broker.
The Coming of Age for Online Stock Brokers
In mid-July of 2019, all major U.S. indices were enjoying record highs. Watching the Dow, S&P 500 and the Nasdaq soar to their all-time highs piqued the interests of many who weren’t investors.
Those who are unfamiliar with the stock market are the most likely to avoid it, and therefore its gains. However, there is no need to continue to sit on the sidelines.
This is where online stock brokers come into play. They don’t just help investors buy and sell stocks online. They also bring a wealth of experience to their clients thanks to the resources available to them through their firms.
During the mid-1990s, before there was the type of high-speed internet that we have now, stock brokers facilitated transactions far differently. They did a lot of cold calling to potential investors, and pitched their stock investment ideas.
This process was arduous, so brokers often spent the bulk of their time on “sure” bets. This meant they focused on investors who they had the greatest chance of persuading to buy. The relationships they’d established with previous clients afforded them their trust.
Now investors can go online and access the information they need to initiate a stock trade. With that, the tables have turned on brokers, making it worth their while to tap this new, but growing, group of investors.
Novices and Online Stock Brokers
Novices often let their feelings of inferiority prevent them from investing. The thought of going into a swanky office of a stock brokerage firm may be intimidating. Online stock broker options can ease such anxieties — you don’t have to meet face-to-face with anyone.
That’s just one of the positives that goes along with buying stocks online with the help of a broker. Having an experienced broker can help you avoid making knee-jerk investment decisions that can be detrimental.
Anyone can go online and open an account to trade stocks. However, working with an online stock broker can give you a bit more confidence. Instead of being on your own, your broker can make suggestions based on their knowledge of different stocks, sectors and industries.
Understand that online stock brokers simply handle your transaction. While they may answer your questions, you are responsible for your own investments. If you select a stock that falls in price, the broker is not responsible at all.
Investing Independently, but Not Anxiously
Although you are personally responsible for your investment picks and their performances, this can be a good thing. That’s because you control your investment strategy. You’re not beholden to do whatever the broker pitches.
Brokers also take some of the leg work out of investing. They usually present a standard list of investment options, which include stocks, bonds, mutual funds and ETFs (exchange-traded funds).
Online Brokers and Costs
A significant benefit of online brokerage houses relates to costs. Online brokers typically offer lower costs, such as fees, than traditional brokers.
They can undercut their colleagues because they don’t offer extensive personal services.
In order to find those with the lowest costs, you’re going to have to do considerable research to compare them. During your search, pay close attention to the following:
- Commissions: Brokers commonly assess fees for each stock trade. Expect to pay at least $5.
- Minimum account balances: You’ll have to open an account to start investing or trading, and the minimum amount is typically $500.
- Account fees: Like most banks, brokerage firms can charge fees. These include annual fees, and fees for research.
Downsides of Online Stock Brokers
There is a downside to online brokers offering lower costs. Their costs are lower because they don’t have the overhead costs their brick-and-mortar counterparts do. They are also able to keep their costs low by not offering extensive customer service.
Clearly, for novices, this can be a problem. If you are comfortable with researching what you need on your own, this may not be as much of a problem. If you are clueless about investing, you may consider consulting a financial advisor.
Market volatility could lead to some online brokers taking unnecessary risks. They may hastily make trade decisions that could negatively impact your returns. You can avoid this by having order limits put in place.
According to the U.S. Securities and Exchange Commission:
A limit order is an order to buy or sell a stock at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.
A limit order is not guaranteed to execute. A limit order can only be filled if the stock’s market price reaches the limit price. While limit orders do not guarantee execution, they help ensure that an investor does not pay more than a pre-determined price for a stock.
Wrapping Up
Make sure you clearly understand and are comfortable with the pros and cons we’ve listed here before choosing an online broker.
Understand that you may have to pay more if you want one-on-one attention from your broker.
Using an online broker can save you time. This takes on more weight if your professional and personal life leaves takes up most of your time. You may not have time to stay abreast of the stock market or events that could affect your portfolio.