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.
Inside the World of Venture Capitalists To Learn How They Can Help You
If you are familiar with the TV show “Shark Tank,” you’ve seen how entrepreneurs present such cash-worthy business ideas that the sharks are willing to pony up thousands, and even millions, of dollars to help.
The sharks are considered venture capitalists (VCs). This wealthy group of investors provides funding for thousands of start-ups that may have otherwise never have had a chance of getting off the ground. They also help established business with their expansion efforts.
A key difference between VCs and funding sources such as banks, which grant loans and line of credits, relates to risk. VCs are notorious for putting up their dollars for projects that a bank wouldn’t dare touch because of the high-risk of losses from the fledgling outfits.
There are many advantages of seeking VC funding if you are an entrepreneur, or even an established business owner. On that same note, there are just as many factors that can mitigate the benefits.
Here, we’ll go over the venture capital space, pointing out how it can be an alternative financing source for entrepreneurs.
How VCs Turn Start-ups Into Unicorns
If it weren’t for VC funding, the largest social media platform in the world may not exist. Mark Zuckerberg had the idea for the Facebook, but not enough money to fully fund it. The thought of connecting the world via a website that was simply comprised of posted pictures and such was not seen as a financially sound venture by many banks. Zuckerberg and thousands of other start-ups capitalized on VC funding, and turned their ideas into thriving businesses.
The most recent examples of start-ups that became behemoths thanks to VCs include Uber, Beyond Meats and Pinterest. They are good examples of how people with risky, curious ideas can turn them into multi-billion-dollar companies by literally starting with seeds, or seed money, that is.
VCs bank on the start-up flourishing financially, including it eventually going public. When this happens, early investors like VCs cash out their equity shares that are worth far more than they were when they initially invested.
The Stages of VC Funding
Venture capital funding can come from private individuals or from institutions.
In exchange for their investments, and their advice, VCs typically want a stake in the company. That means they want equity in the business.
There are many variations of the stages of VC funding. The most common are:
- Seed capital
- Early-stage capital
- Early-growth funding
Seed capital is for entrepreneurs who merely have an idea for a product or service. You may not even have a prototype because you don’t have the money to fund it. Seed funding often goes toward research and development (R&D).
Early-stage capital can be used to expand your team. As you prepare to roll out your product or service, early-stage capital can be used for marketing and advertising campaigns, too.
Early-growth funding can be especially useful in manufacturing. At this stage, your product or service may have grown so much that you need more capacity. You may need a larger facility, equipment or anything that help you keep up with demand.
“Is VC Funding for Me?”
These are some scenarios where a VC can help you.
- You lack the funds to scale your business’s growth.
- You are still working out of your garage on a shoe-string budget, and are unable to meet demand.
- Your production efforts are hindered because you don’t have enough employees.
- You lack the business or networking connections that could help you.
Not all business owners find VC funding to be ideal. Whether it’s the thought of losing any control of their operations, equity in their businesses, or both, many small business owners don’t see VC funding as a good idea.
More than likely, the VC will want some kind of say in how the business they are investing in operates. Their suggestions and ideas may not jive with those of the business owner, which could cause friction.
In determining if VC funding is worth considering, ask yourself these questions:
- Can I tolerate answering to others?
- Am I willing to let someone else dictate my schedule?
- How much ownership am I willing to relinquish?
If you answered yes to any of the questions, VC funding should be considered. Understand that VCs are not like banks. They set their own terms when it comes to their investments and they typically aren’t subject to the same rules as traditional finance outfits.
VCs Want Something for Their Money
If you answered yes to any of the above questions, there are some important things to know. Most important to understand is VCs don’t just invest and walk away. You must understand that you will have to give up equity and some, and sometimes most, of the control you have in your company.
If you want VC funding, this is something you will likely have to accept. Furthermore, if you have issues taking constructive criticism, or you see no benefit of giving a stranger a stake in your business, VC funding is not for you.
Understand, however, that the wealth of VCs goes beyond funding. It extends to them also having a wealth of knowledge and connections that you may lack. For example, if you are having production problems, such as not being able to meet demand, a VC’s connections could help. Your VC, or contact if you go with a firm, may have partnerships that you’d never have privy to.
To go back to the “Shark Tank” television show, one of the investors has ties to the home shopping network QVC. Often, she gets the products of the companies she invests in on the show.
The Money Game
Be prepared to give up at least 20% of your ownership to the VC who agrees to invest in your business. Some of them have been known to ask for 50% or more. They justify the percentage based on a number of factors that include:
- How much time the VC thinks they will have to spend to help you
- Your business’s valuation or worth
- The amount of money you want
The amount of ownership you may have to hand over may be unnerving, and that’s understandable. Entrepreneurs tend to treat their product or service ideas as their babies. Many are not keen on others tinkering with their product or service.
VCs rationalize the equity they expect as being fair because of the time and money they are risking on someone else’s project. Many don’t just sit on the sidelines, and not offer advice. They step in and may rule with more authority than some may like.
VC funding can come in many rounds, or what are called series. Start-ups often raise capital on an as-needed basis so there can several of these rounds as the company grows. During these rounds, funding can come from several different firms, and their individual investments can vary.
The VC will likely ask you how much money you have raised or invested on your own. Entrepreneur Matt Suster said in a “Both Sides” Medium post:
“If you’ve raised large amounts of money and can’t show much progress obviously you’ve got a tougher time to explain the past [than] if you’ve been frugal and over-achieved.”
Many VCs want to see at least 10 times their returns in less than seven years, according to Inc.
It states:
They're not interested in linear growth and will pressure you to manage the business to grow sales at that rate.
The VC Hunt Is On
If you’ve decided to go the VC route, here are some tips to standout in the crowd:
- Don’t rely on a friendly email to the potential investor in which you present a business plan. It will likely be lost in the shuffle. Instead, search out people who have direct relationships with the VC or firm and ask for a proper introduction.
- Keep potential investors you’ve reached out to in the loop by regularly sending them notes about the progress of your product or service.
- Legitimize your product or service by getting a patent for it.
- Attempt to raise capital on your own, if even just from friends and family, to show potential investors you’re committed financially.