The Orange Squeezee

Cheap car insurance has become one of the most sought-after prizes car owners share among their top priorities. It’s absolutely clear why people are so eager to get a cheap policy by imply looking at the average insurance rates. If we take a look at the rates in the most affordable state of Maine the average ones are around the $900, which is certainly quite a hefty price tag. Not to mention those living in Louisiana with their $2,500 average yearly premiums, which is more than enough to buy a decent used car these days. Unfortunately car insurance has certainly become ridiculously expensive and it’s quite unlikely that it will become considerably cheaper anytime soon. Nevertheless, in many cases the car owners are actually responsible for having expensive auto insurance, even if they took the time to shop around for the best policy. They simply forget to pay attention to one of the most crucial factors – the car itself.

It’s really so, too many people complain about not having cheap car insurance while driving huge SUVs or classic sports cars. You should understand, the car you drive has a significant impact on the rates you will be charged with by the insurance company. There are many variables that insurance companies use to assess the risk associated with each particular car model. Moreover, they have extensive rating charts that include all possible car models with a designated risk rating for each vehicle. That means, the higher is the risk rating the higher is the premium even if you are a middle-aged man with clean driving record, good credit score, with a spouse, living in a safe neighborhood. Should you really need cheap car insurance you should learn how insurers assess cars in terms of insurance risks in order to pick the safest and the cheapest cars on the market.

To estimate the insurance costs insurance companies use a wide set of variables, which include top speed, engine volume, production year, safety features, theft rates, repair costs, liability costs and typical driver behavior. All these variables help the insurance company to assess the risk associated with insuring a particular car model. For instance, if the car model is expensive to repair, the price for insuring such a vehicle will also be higher, since the insurance company will have to handle the repair costs in case of a claim. Cars that are often targeted by thieves will also be expensive to insure, since the insurer will want to cope with the risk of theft. According to the same principle cars with large engine volume and high top speed will usually provoke the driver to drive aggressively and cause more insurance claims than slower and less powerful vehicles. If you keep all these variables in mind it will definitely help you pick the right vehicle to get cheap car insurance with.

As a rule of thumb, you get cheap car insurance if you stick to vehicles that are very safe, cheap to repair, rarely stolen, don’t provoke aggressive driving and don’t cause too much damage in case of an accident. The category, which fits this description, includes mid-class sedans, wagons, hatchbacks and minivans, mostly targeted on families and general purpose drivers. If you look at large cars such as trucks and SUVs, they are often associated with serious liability costs because of their large mass, which causes too much damage in case of collision. Sports and muscle cars often cause aggressive driving, which results in a higher number of claims. Luxury cars are usually very expensive to repair, often requiring exclusive and expensive parts, so it’s not very cheap to insure them. But don’t forget, these are all just general observations that don’t imply that all sports cars are expensive to insure while all minivans will deliver cheap car insurance. The rates will vary from car model to car model, so it’s always useful to shop around and pick carefully within the same sub-class if you really want to get cheap car insurance.

When any economy crashes, there’s a moment of panic as politicians look around desperately for someone to rescue them. If no one is immediately forthcoming, they do their best to come up a solution. As an example of what not to do, we have the classic case of Cyprus. Faced with a bank crash, they decided everyone who had savings in those banks should pay towards the rescue. The reasoning is not bad. If the banks fail, no customer is safe. Bankruptcy means the creditors take what there is. If the banks have been using the customers’ savings for other purposes, the depositors lose everything. It’s therefore in their interests to pay up to 10% of their savings towards the rescue rather than lose everything. Except that’s political suicide. In 2008 when the recession hit around the world, there was a moment of panic, then banks were rescued using public funds and, after a few months thought, the central banks around the world began an aggressive policy of monetary stimulus. Essentially this means the central banks print lots of money and give it to their local banks at almost zero percent interest. The US Federal Reserve has recently confirmed it will keep the interest rates low until unemployment falls. The European Central Bank has pledged to keep cheap money flowing into the banking system for as long as is necessary.

We should be clear. There’s nothing wrong with this strategy. But it creates serious problems for the cheap life insurance market. When finding good returns on investments is easy, administrative costs can be cut to the bone. The pension income can be placed in more or less any investment and the return will appear. Now look at the markets. With the central banks offering money at near to zero percent, the returns on all investments made by companies and individuals have also fallen to one or two percent. Because most of the policies have a guaranteed minimum payout on death, this investment income is not enough to cover administrative costs and make a profit. The majority of cheap life insurance policies with guaranteed minimum benefits are therefore looking at losses unless they can find a way of improving investment returns.

This means recruiting investment managers and they command good salaries plus bonuses. The Insurance Commissioners and other regulators are growing alarmed life insurance companies may not have enough capital provision to meet all the claims. In Europe, the regulators are looking for ways in which regulations can be coordinated across all the member states and improve supervision of pension and life insurance companies. Unfortunately, the American regulators have been less active and they are not addressing the increasing gap between capital available and liabilities. Although this may not be a problem in the next five years for cheap life insurance companies, the longer the regulators do nothing, the greater the risk of bankruptcies.