Which Automaker Has the Best Payment Protection Plan?

Everyone wants to sell you a new car these days, then make the payments for you.

Hyundai started it. The Korean company's Assurance Plus Plan promised that, if a buyer should lose their income, Hyundai would make three payments on the buyer's behalf, then allow the buyer to return the vehicle and walk away from the payment entirely if needed. The program appears to be a success, helping protect Hyundai from the poor sales seen by its rivals in recent months.

Now, two other automakers have followed suit. The Washington Post reports, "General Motors and Ford Motor unveiled job-loss protection plans yesterday, following the success" of Hyundai's program. "GM said it will make nine car payments of $500 each for customers who lose jobs. Ford is offering payments of up to $700 for 12 months."

There are, however, important differences between the programs.

First, of course there is the payment limit. Ford offers to cover payment up to $700, GM up to $500. Jalopnik notes, "Hyundai doesn't put a number value on the total amount they'll pay, only saying they'll cover up to 90 days of loan repayment or lease payments. If you have a three-month loan on a Genesis coupe for $7,000 a month you'll be in great shape. Otherwise, your $250 a month lease on a Sonata will net you just $750."

Autoblog, however, thinks the payment protection isn't the most important factor differentiating the plans. "Where each automaker differs is what's offered above and beyond payment protection. GM offers equity assistance, which that means if you've bought an eligible vehicle and made payments for at least half the life of your loan, the automaker will pay the difference between what you owe on the vehicle and its actual value when you decide to buy a new one." The negative equity credit is good for $2,500 if you sell the vehicle to a third party, or $5,000 if you trade it in for another GM car. Neither Ford nor Hyundai make a similar offer. Hyundai's program, however, "covers any negative equity accumulated up to $7,500 when you return a vehicle."

Jalopnik also sees another key differentiator: how to qualify for coverage. While Ford and GM both offer benefits only to those involuntarily unemployed, Hyundai offers payment protection for those unemployed or physically disabled, and "Hyundai's equity plan extends to those who lose their license, lose their job, are transferred internationally, face bankruptcy, have a sudden physical disability, or are accidentally killed."

Jalopnik concludes that Hyundai offers the best plan because Assurance Plus "is the only one offering negative equity coverage with real teeth."

Timing may also be an issue. The Post notes that Ford's plan applies to "customers who buy by June 1 and lose jobs in 2009. The GM plan is available for customers who buy any of its vehicles except Saab by April 30." Hyundai' offer extends throughout the 2009 calendar year.

If you're in the market for a new car, check out the US News rankings of this year's best cars as well as this month's best car deals.

Comparing Car Insurance Companies

What Company to Choose?

Choosing an insurance company can be a tough decision, but one thing you don't want to do is rush to sign up with the company offering you the cheapest rate. You certainly might end up with this company, and this could be the best choice for you. But there are some variables to consider.

Service

First, do you want to have an agent in your community that you can call with questions and who will personally service your policy? Most people still prefer to work with agents, although the growth of the internet and effective marketing programs by Progressive and GEICO, among others, have shifted lots of business to these so-called direct writers of insurance (called direct because you deal directly with the company and not through an agent) and to other online sellers who do not rely on agents to sell or service their policies. Maybe all you care about is having an "800" number you can call at any hour - millions of consumers do so.

Some state insurance department web sites provide results of consumer complaints lodged against insurers by consumers in that state, and these can be helpful guides to companies you might want to avoid. As many insurers and agents will tell you, it's no good to get a cheap insurance policy if you get lousy support and service when you are in an accident or file a claim.

Additional Discounts

Check for discounts. If you insure multiple vehicles with the same insurer, you normally get a discount. If your car has anti-theft and certain safety features, that's another slice off your rate. Did you complete an approved driver education course? If you're a student do you qualify for a discount because of good grades? What about a low-mileage policy? Some insurers are sweetening low-mileage offerings in the wake of this summer's $4+ gasoline prices. And GPS and related communications technologies are slowly leading to "pay-as-you-drive" car insurance.

Also, make sure you find out an insurer's cancellation policies. These are set by the individual companies and not by the states.

Insurers to Consider in Your State: You should check out your state's insurance department site and review auto-insurance rules. You also should be able to find out the names of auto insurers authorized to do business in your state (you'll be surprised by how many there are). Some state insurance web sites also have valuable consumer studies, including details on which insurers in a state generated the most consumer complaints. To find your state's insurance website, use the National Association of Insurance Commissioners interactive map of state insurance department websites.

Insurance Company Rankings

Recommendations from family and friends remain the most powerful driver of insurer choices. Just make sure the tips you receive are solid. For example, if your brother found a really cheap policy, you should ask him about the coverage it provides and whether he knows anything about its service and claims records. Or if a friend across town really dislikes her insurance agent, keep in mind that your experience could be totally different with another agent from the same insurer. And because state insurance rules can differ so much, be careful about basing your selection on opinions from people in other parts of the country.

J.D. Power and Associates provides three sets of car-insurance rankings, measuring consumers' overall experiences with auto insurers, plus subsets of consumers who were new buyers of car insurance policies or been involved in an insurance claim where their vehicle suffered collision damage. The insurers listed in the company's car insurance rankings represent about 75 percent of the national market for auto policies, says Jeremy Bowler, who oversees the insurance rankings. Further, each company mentioned in the survey must have been involved in at least 300 separate customer surveys to be included.

Car Insurance Rates

Car Insurance: What you need to know

Most people don't know much about car insurance beyond the fact that you pretty much have to have it. Insurance isn't exactly a thrill-a-minute subject. But, when you get into a car wreck (and that's when, not if), even if it's a little fender bender, you'll be glad auto insurance is there to help -- provided you've got the right coverage. This car insurance guide will give you a rundown of everything you need to know about car insurance.

If you're already a car insurance expert and just want to compare rates and companies, you're in the right place too. With our quote tool, you can get multiple car insurance rate quotes and find the best policy for you.

Why You Need It

Cars aren't cheap, and car accidents really aren't cheap. In addition to car damage, there are also medical bills to consider. When thinking about the cost of a collision, you need to keep in mind that a car accident may involve more than one car -- that can easily double the cost of the damage. And, if each car has multiple passengers and they all get injured, you see how collision costs add up.

Insurance helps you cover those costs. Basically, you pay for an insurance policy, which is cheaper than the costs you'd likely incur because of an accident. Then, if you have an accident, the policy covers some of the costs associated with it. What your insurance policy covers depends on the type of coverage you buy.

Types of Coverage

The type of coverage you get depends on the laws in your state (most states have some required minimum auto insurance laws), the value of your car, and how much of your own money you're willing to spend if you get into an accident.

Collision coverage is pretty basic: it pays for damages to your car if you hit something.

Liability coverage is required by most states. It covers property damage and injuries to others caused by your car. So, if you drive through your neighbor's fence, collision coverage covers the damage to your car and liability coverage covers the damage to the fence. Liability coverage is what you need if you're in an accident and it's your fault.

Medical coverage covers medical expenses that are the result of an accident. If you broke your wrist while driving through your neighbor's fence, this coverage would take care of it.

Comprehensive coverage covers damage to your car that's not the result of a collision. This is the kind of coverage you'd want if a tree fell on your car, or if it were damaged in a flood.

Personal Injury Protection is very similar to medical coverage. The difference is that medical coverage covers everyone injured in an accident, while Personal Injury Protection only covers you. It's required coverage in many states; medical coverage tends to be optional.

Uninsured motorist coverage takes car of damage to your car if it is hit by a driver who doesn't have liability insurance.

Underinsured motorist coverage will pay for damages to your car if it's hit by someone who doesn't have enough insurance to pay for the damage. For example, if your car gets hit by someone with only $2,000 worth of liability coverage and there's $3,000 worth of damage to your car, underinsured motorist coverage pays the difference.

Rental reimbursement will pay for you to rent a car while yours is in the shop due to an accident.

What Do You Need?

The type of coverage you get depends the laws in your state (most states have some required minimum auto insurance laws), the value of your car, and how much of your own money you're willing to spend if you get into an accident.

You should always get enough insurance to cover the value of your car -- especially if you still owe money on it. Otherwise, the car could be totaled and you'd still be making payments on it. That means that if you have an expensive car, you should get a lot of coverage. If it's a cheap car, you can buy less. You also should take into account how much money you have in savings. If you have enough money to handle unexpected medical expenses, lost work days and renting a car, you can probably get less coverage.

Also look at other insurance you have. Your medical insurance may cover injuries received in a car accident. If that's the case, you can decrease the medical coverage on your car insurance. Likewise, your homeowners or renters insurance may cover damage to your car.

Place Your Bets

In the end, car insurance is a bet. You pay a monthly fee to an insurance company. They're betting that you won't get into an accident. You're hoping that you won't, but betting that you will. If you "win," the insurance company will pay your accident costs. If you're not in an accident, the insurance company wins because they get to keep your money. Losing this bet isn't bad, though. You won't have to deal with being in an accident, and the longer you lose the bet by not getting into a wreck, the less you'll have to pay the insurance company. But, the day you're in an accident, you'll be glad you're covered.

Car Insurance Costs

What Drives the Cost of Your Car Insurance?

Car insurance is priced based on you and your driving record, your car and where you live and drive, plus on any state-specific rules that might affect insurance rates. Because insurance is regulated by individual states, rates vary sharply among states. So, if you paid $1,000 for car insurance in Iowa, for example, and then moved to Silicon Valley, paying two or three times that amount may alarm you but it shouldn't surprise you. California insurers don't necessarily take those extra premium dollars to the bank. There is a lot more traffic, accidents, auto thefts and related risks of loss in California, and these statistically known expenses help explain the higher premiums paid by California drivers.

States have different minimum insurance requirements . Please keep in mind that these are minimum requirements. Getting a policy with these levels of protection will satisfy the law in your state but probably will not provide you a whole lot of solid protection should you be in an accident. Remember what insurance is for - to protect you and your property. Property can mean everything you own besides your car, so, don't put your assets at risk by buying a policy with bare-bones liability coverage.

Because liability is so potentially large in an auto accident, determining who's at fault in an accident can mean big money. Even in what are called "choice" or "no fault" states, being found liable for an accident can be a life-changer. You may lose your coverage and your license, face much more expensive insurance costs for several years and also be on the wrong end of liability lawsuits should the accident involve any serious injuries. Twelve states and Puerto Rico have some form of no-fault car insurance. Look for details on your state's insurance web site.

One common and cost-effective way to boost your liability protection is to get what's called an "umbrella" liability policy that tacks on substantial liability protection for your vehicle(s) and your home. The catch is that you generally need to insure both your car and home with the same insurer in order to qualify for an umbrella policy from that carrier.

Finally, keep in mind that car insurance can vary by the type of car you drive. The Insurance Institute for Highway Safety conducts safety tests and provides vehicle ratings used by the insurance industry in calculating your insurance rates.

If You Have a Bad Driving Record

Drivers with accidents and traffic tickets on their records may have trouble qualifying for an auto policy. But because coverage is legally required, the insurers doing business in a state have set up what's normally called an assigned risk pool, where they agree to provide coverage to drivers with poor records.

If you're rejected for normal car insurance coverage, the insurer that rejects you is supposed to tell you about the assigned risk option. Your state insurance department web site should have this information as well. When you apply to the assigned risk pool, your coverage will be randomly assigned to one of the auto insurers in your state that participates in the pool.

So, you may not have much choice about who insures your car. And, you'll pay more for coverage - often a lot more. Assigned risk designations often last until your record has improved - that can take three years in many cases but check with your state to find out.

There also are insurers who specialize in covering what are known as "substandard" drivers. They are willing to accept riskier drivers in exchange for collecting higher premiums from these drivers. If you qualify for one of these policies, you should find out how the proposed rates compare with those charged in your state's assigned-risk program. Sometimes, not often, you can find better rates in the assigned-risk program.

Car Insurance Discounts

While you don't want to skimp on car insurance, you don't want to pay more than you have to. Here's a list of common discounts car insurers offer. Check with your insurance company to see if any of these discounts apply to your policy.

Low-mileage drivers

Insurers have stepped up these programs in response to driving cutbacks caused by $4 gasoline and, more recently, a weak economy.

Pay as you drive

Insurers are testing rate modifications for cars with on-board systems that record driving times and mileage. Progressive's "MyRate" program is now in eight states and expanding.

Group insurance

Check out group or affinity programs from your employer or from your professional and business groups.

Safe drivers

Discounts frequently are offered, usually after three years with no accidents or moving violations. You may also qualify for a cut if you have recently taken a defensive driving course.

Students

Price breaks are offered for students who have taken driver education or receive good grades. Also, if you're away at school, your rates might decline during the school year.

Safety features

Air bags, anti-lock brakes and anti-theft devices can translate into lower premiums.

Buy your car and home or rental insurance from the same insurer

Discounts often are available and many consumers add what's called an "umbrella" liability policy on top of both their car and home or rental insurance.

Seniors

Some insurers offer discounts to older drivers.