In Under Two Minutes: Catalytic Converter Theft

 

Missing Catalytic Converter

What's missing in this picture? Catalytic converters contain precious metals, making them tempting targets for thieves
You walk out to your car and it's gone. Not your car itself, the navigation system or even your cell phone. The "it" is your catalytic converter. If you don't happen to notice it right away, the moment you start your car, you will. The sound has been described as "a deep loud noise," "an unmistakable roar," and even like "a Harley Davidson."
Dan McColl of Upland, California, remembers when it happened to him.
"When I got out of the gym, I started up my truck and it sounded like there was a hot rod in the parking lot," said McColl. "In fact, I didn't even think it was my truck at first. But when I cut the engine and it stopped, I knew that it was me. I was able to drive it, but it was like the gas wasn't really engaging. I drove it to the mechanic and he was able to tell me right away that the catalytic converter had been stolen."
The catalytic converter was mandated for all U.S. cars and trucks in 1975, to convert harmful pollutants into less harmful emissions before they left the exhaust system. Precious metals such as platinum, palladium, rhodium or gold are used as the catalyst. Depending on which metal was used, thieves can sell the converters to metal recyclers for $20-$200. The recyclers then extract the metal and resell it for as much as $6,000 an ounce, as in the case of rhodium. While national theft figures are not recorded for catalytic converter theft, the crime has risen in tandem with sharply rising metal prices.
The unfortunate vehicle owner will have to pay $1,000 or more for a replacement converter to be installed, depending on parts and labor charges. If the thief damages the vehicle's wiring or fuel line in the process, the vehicle could be left in a dangerous state and cost far more to repair. If the thief steals your converter without causing additional damage, you should still be able to drive your vehicle, but you'll need to install a replacement converter as soon as possible if the law still requires one. Ironically, during the writing of this article, a catalytic converter was stolen from a Toyota truck belonging to the brother-in-law of Edmunds.com Director of Vehicle Testing Dan Edmunds. The quote to replace it was $1,200, but because there is no smog testing program in the rural county in which he lives, he's not sure he'll replace it.

An Easy Grab and Go

Thieves can remove a catalytic converter quickly, often in less than two minutes, so theft can even occur in broad daylight. The only tools a thief needs are a wrench (for converters that are bolted on) or a reciprocating saw (for converters that are welded in). Some thieves bring a mechanic's creeper. Then all they do is slide under the vehicle, remove the bolts holding the converter, and take it. Thieves can remove the unit within a minute or two.
Typically, catalytic converters are stolen from cars and trucks in driveways, strip malls or in parking garages. "Anywhere cars are exposed," says Detective Abram Yap of the Long Beach Police Department.
The most commonly hit vehicles are SUVs and trucks, especially late-model Toyotas, because they sit higher off the ground (making for easier access) and the bolts that connect the converter are easily removed. Yap says his department has been seeing more Nissans targeted as well.
Rudy Espinoza, wholesale parts manager for Surf City Nissan in Huntington Beach, agrees, noting an uptick in requests from owners of older-model Nissan Frontiers. "It's crazy," he says. "We get calls, "How much is a catalytic converter? Mine was stolen!"

How To Prevent Catalytic Converter Theft

There are a few options that may help prevent this type of theft. Some mechanics suggest welding the heads on the catalytic converter bolts — or simply shearing them off.
The aftermarket has responded by designing products to deter and prevent catalytic converter theft. The idea behind such devices is that if it takes too long to make the steal, the thieves will move on to easier pickings. The CatClamp, for example, which starts at $150, is a hard-to-defeat cage installed around the catalytic converter. This product can be installed by a mechanic or at home with an included specialized tool and is backed by a money-back guarantee.
While most owners don't give much thought to their catalytic converter, those with vehicles high off the ground might want to think twice. It's always wiser to park in well-lit or protected public parking lots, and to park your car in your home garage if possible. Owners whose vehicles have easy clearance underneath might want to take it a step further with an aftermarket product. Taking these precautionary measures will hopefully deter thieves and keep your car running smoothly.

Does Your Credit Score Affect Your Car Insurance Rate?

Does your credit score impact your car insurance rate? It's a question you might have wondered about before — especially if you have a particularly spotty credit record. Unless you live in California, Hawaii or Massachusetts, the short answer is yes. The explanation of the relationship between credit scores and car insurance rate-setting is more complex, however.
What Factors Into a Car Insurance Rate?
Obviously, your driving record has an impact on the estimated risk your insurance company assumes by taking you on as a driver. There also are other risk elements that affect your car insurance, according to the Insurance Information Institute: where you park your car at night, your gender, your age and the kind of car you drive. Also relevant to your rate, according to insurance companies, is your credit score.
The practice of using credit scores in setting insurance rates has been around for at least 20 years. According to at least two studies, a 2003 study done at the McCombs School of Business at the University of Texas at Austin, and a 2007 study by the Federal Trade Commission, there is a statistical correlation between how much a consumer costs an insurance company and that customer's credit score.
The Texas study looked at a random sample of 175,647 people in the state and found that "the lower a named insured's credit score, the higher the probability that the insured will incur losses on an automobile insurance policy, and the higher the expected loss on the policy." The study's authors noted that they did not attempt to explain why credit scoring added significantly to the insurer's ability to predict insurance losses.
The FTC study found that credit-based insurance scores are effective predictors of risk under automobile policies. "They are predictive of the number of claims consumers file and the total cost of those claims," study authors write. "The use of scores is therefore likely to make the price of insurance better match the risk of loss posed by the consumer. Thus, on average, higher-risk consumers will pay higher premiums and lower-risk consumers will pay lower premiums."
It's also important to note that insurance companies don't use traditional credit scores. They build their own scores based on FICO or Experian scores: Basically, companies take your score and use it in their own model.
But Is This Fair?
According to J. Robert Hunter, director of insurance at the Consumer Federation of America, credit scoring was the first classification factor used by insurance companies that was not based on traditional actuarial research. Before this, he says, rate factors were determined by developing a thesis and then testing it by collecting data to determine if it was correct. For example: If the thesis was that drivers with a DUI conviction might have more claims in the following year, actuaries might look at statistical evidence to see if such a thesis was correct.
Hunter said that advocates for the use of credit scores in car insurance rate-setting "still cannot explain what they are measuring, coming up with explanations like, 'Sloppy with finance means sloppy with driving.'
"Of course, when the 2008 financial crisis hit, many people developed worse credit scores that had nothing to do with their sloppiness," he said.
"The fact is that credit is a surrogate for prohibited rate classes such as income and race," Hunter said. "Insurers are prohibited from using these factors in all states and we think this is their way around the prohibition."
But others argue that insurance is a numbers game and the practice, even if unfair, might be logical. Frankie Kuo, an analyst at ValuePenguin.com, says that insurers are "doing their best to find out whether their future and current policyholders are a good or bad risk to take."
What You Can Do To Mitigate Your Costs
Regardless of whether the use of credit history is fair, it is legal in all but three states. So what can you do if your credit score is in less than perfect shape? As always, your best bet is to shop around for an insurance company.
"Insurers always differ in how much weight they put on each rating factor, and I guarantee you consumers will always find one that finds their imperfect credit score less of a problem than other insurers do," Kuo explains.
According to a study by WalletHub, Geico appears to rely the least on credit scores, while Farmers Insurance seems to lean on it the most heavily.
For consumers who have difficulty finding coverage at all, in almost every state there is an assigned risk plan that helps high-risk drivers find coverage for a limited period of time. "Even if the rates may be higher than if they obtain a policy in the voluntary market, they will be avoiding insurance lapse, which not only contributes to higher rates in the future, but also possibly legal consequences," Kuo explained.
Finally, improve or maintain your credit history by paying your bills on time and not skipping payments. You also should check your credit report and keep an eye out for possible errors. Consider free credit monitoring with a company like CreditKarma and free annual credit-history reports from AnnualCreditReport.com.

Car Insurance Companies Use Facebook for Claims Investigations

In the hours after a car accident, filing a claim with your auto insurance company is one of the first steps you should take. But auto insurance industry insiders say a smart second step is giving social media accounts the once-over to prevent all or part of that claim from being denied.
In the past five years, the use of social media has exploded within the insurance industry, says Frank Darras, an insurance attorney in Ontario, California, who represents plaintiffs in suits against insurance companies. Because social media Web sites provide a real-time examination of users' lifestyles, insurance companies, claims adjusters and attorneys have begun to monitor and mine them as a valuable source of claims-investigation evidence. Insurers are reviewing information found on such social media sites as Facebook, LinkedIn, Instagram, Twitter, Foursquare, Google Plus and Pinterest, and applying it to auto claims, says Chicago personal injury lawyer Michael Helfand.
"This happens all the time," he says.
Facebook is used in almost every claim now, especially when there is an injury. "Checking social media accounts has become one of the first things an insurance company or adjuster will do when you file a claim," adds Darras. Especially when any injuries stem from the accident.
Claims Investigation by Social Media
Part of the new claims-investigation process is for an adjuster, agent or insurance company to look for the Facebook, Twitter or other social media account of a person claiming bodily injury stemming from an accident, Helfand says. They're looking for proof that the person is filing a fraudulent claim, he says.
If the part of your accident claim is for a back injury and you share post-accident pictures of you golfing, surfing or playing ball with the kids, your claim could be denied.
"Over the years, social media has killed a bunch of claims," says Helfand.
"Almost every insurance company has a special investigation unit (SIU), and policyholders should work on the assumption that SIUs will look into questionable or fraudulent claims," says Michael Barry, vice president of media relations for the Insurance Information Institute.
"Mining social media for clues is one of the fastest-growing areas of insurance-fraud investigation," says James Quiggle of the Coalition Against Insurance Fraud in a report published in 2012.
While insurance adjusters or agents may not look into the social media accounts of every person who files a claim, they will definitely dig into social media if they have any reason to suspect a fraudulent claim.
"It's simply part of the due diligence in investigating a case, because so many people are brazen or dumb enough to say one thing to an insurance adjuster while at the same time telling the world something else," Helfand says. "It's not unusual for a person to tell the adjuster and doctor how much their back hurts and then post photos from their softball league.
"Facebook and other social media sites have become a great tool for fighting claims because the 'look at me' nature of social media causes people to shoot themselves in the foot," he says.
A claims adjuster will also stick directly to the language you use in the claim. If you report that you're unable to lift more than 20 pounds, but a picture on social media shows you doing otherwise, Darras says you can expect the claim will be denied.
The same goes for tweets and status updates detailing your mood or mental state related to the accident. A stream of tweets about your road rage or noting that you're driving against doctors' orders because you're under the influence of medicine will raise red flags on any auto-accident-related injury claim.
Switch Your Privacy Settings
Using Facebook or Twitter activity in the claims process is completely legal — as long as the information is part of a "public" profile, Darras says.
"It is generally understood that if the adjuster or insurance company has to 'friend' or have a third party 'friend' the claimant on Facebook to obtain the information, then it becomes unethical and an invasion of privacy. Unfortunately, that doesn't necessarily make it illegal," Darras says
You can reduce your exposure by adjusting the privacy settings for Facebook accounts so that only people you select as friends can read your status updates or view photos on your account. And make sure privacy settings on Twitter are set to "Protect my Tweets" to limit who can read your timeline.
But beware: Your friends' social media accounts could also complicate an insurance claim. A photo or post on Facebook that's visible on a friend's public page might also be spotted, and used, by a car insurance company or claims adjuster, Darras says.
To be safe, Darras suggests removing the Facebook photos and tags or tweets of anything incriminating. For instance, delete a post in which your friends say that you're a terrible driver — even if they're joking. Helfand says an insurance company could use this evidence against you during the claims-investigation process.
"The responsibility to be constantly vigilant with Facebook profiles and Twitter streams is ultimately on consumers," says Helfand.
Keep Quiet
Don't rely solely on privacy settings to protect a claim. Helfand says the best advice is zipping your virtual lip.
"No matter how rattled, irritated you are, it's never wise to tweet or post on Facebook that you were involved in an accident," he says. "There's nothing to benefit from doing that."
In fact, getting social about an accident or car insurance claim is possibly the worst thing you can do.
"Doing this is just asking the insurance company to use the information against you, even if what you said was harmless in your eyes," Darras says. "Remember that jokes and sarcasm aren't conveyed well on social media and the insurance company will use everything they can."
Often insurance companies ask a person injured in a car wreck to provide information about their activities for a two-week period, says Darras. If any public Facebook activity doesn't match the log, the insurance company can think you're lying and treat the auto insurance claim as fraud.
Disputing the Social Scoop
If the Internet interferes with your claim, all is not lost. It may be possible to dispute anything an adjuster turns up on your social profiles.
"One of the biggest arguments consumers can use against insurance companies is their failure to investigate the information further and receive third-party support of the information they found on social media," says Darras.
And because social media should be a starting point, not the only evidence used in approving or denying a claim, you can press the insurance company to consider statements from other sources, such as doctors or witnesses, or allow you to explain the circumstances around the information found on your social networking profiles.
The Bottom Line
There is a time and place for social media, and it's not necessary to shut down your accounts after an accident. But it is important to watch what you post and be cautious about your participation in conversations, says Darras. And remember, regardless of your privacy settings, social media is never really private.

How Car Insurance Companies Handle Car Accident Claims

After an Accident, Collect Information

From the second after the accident, keep good records. Among the information items to collect are: the time and location and the other driver's name, license number, insurance company and contact information.When Apple programmer Kit Cutler's 2012 Ford Focus was slammed from behind by a silver Lexus, the hit was so hard that it shoved his car into the Honda Accord in front of him. Although no one was hurt in the accident, the driver of the silver Lexus drove off without providing insurance information to anyone. Cutler and the Accord's driver exchanged insurance information, filed reports with the police and went home. The accident was only slightly more confusing to Cutler than the insurance claims process that came after.
That car insurance claims process baffles nearly everyone. "Most people only file a claim every eight to 10 years," says Jeanne Salvatore, vice president for public affairs and consumer spokesperson for the Insurance Information Institute, an industry-supported, non-lobbying group dedicated to improving public understanding of insurance.
Cutler filed his claim by phone. "In that initial interview, the agent told me very quickly that I wasn't at fault," he says. Then she asked him questions about the accident and typed his answers into an online form. Cutler checked and verified the information.
"They go through it all very quickly, so you have to pay attention," he says. "I hadn't been in an accident before, and I didn't know what was going on."
This article explains what insurance companies are doing behind the scenes in the wake of an automotive mishap or collision. It also discusses what happens if you're hit by an uninsured or underinsured driver.
Immediately After the Accident
If you're involved in an accident, "The first thing to do is let your insurance company know you were in an accident and provide all the specifics of it," Salvatore says. "From the second of the accident, keep good records." Use your smartphone (or keep a notebook in your glovebox) and write down the time, date, plate number, make and model of their car, their registration information, license number, name, insurance company and contact information.
If the police are on the scene, Salvatore says, take their names and badge numbers. Get the names of any witnesses and note whether emergency medical personnel were called. "Photos are helpful. Take pictures of the car and the license plate," she says. "If the claim is straightforward, you may not need any of it, but if a problem occurs, you need all the information possible." Again, with the prevalence of smartphones these days, this is all quite easy to do.
From filing the claim to resolving it, every insurance company's methods are different. However, the essentials of the process are fairly standard. You'll only see part of the process, though. All negotiations between insurance companies about payments and reimbursements will be carried on behind the scenes.
Filing Your Claim
As with Cutler's case, it's standard for your insurance carrier to call soon after you report an accident. During that call, "We'll match the person to their policy, determine what happened in the accident, find out about any injuries, the extent of damage to both vehicles and get some demographic information," says Mike Flato, a process business leader for Progressive Insurance. "We'll make sure everyone is OK; if not, what happened and then who'll handle the medical claims."
After a claim is filed, your insurance company assigns you a claims adjustor, who is your contact from then on. Adjustors coordinate teams that look at medical reports, investigate the accident, speak with witnesses, view the scene, examine the vehicle damage, manage all the repairs and any medical treatments, check all coverages (how much your policy pays for medical injuries and property damages) and ultimately determine fault.
"The claims process is the business of the insurance company," says Salvatore. "Every situation is different, and the better organized you are, the easier the claims process is."
While adjustors work, medical treatment and auto repairs start immediately, with each insurance company covering its own driver's injuries and property damages. This process of "making you whole" is known as indemnification. Your insurance company indemnifies you, not the other way around. Later, after the insurance companies assess fault, they will negotiate to determine which one will reimburse the other for claims paid.
Who's at Fault?
Fault assessment is not necessarily a simple matter. "Liability laws don't govern how you assess fault," says John Murphy, service center business leader for Progressive Insurance. "They dictate how much you can collect and who is eligible." Therefore, fault determination is up to the insurance companies.
"There may be an allocation of fault, such as 60/40," says Scott Spriggs, a member of the Insurance Council of Texas. "In that case, payments may be apportioned by percent of fault." That is, the insurance company of the driver who is 60 percent at fault pays for 60 percent of the claims and the other company pays for the rest.
"Sometimes, if one party is allocated more than 50 percent of fault, that driver's insurance company pays for everything," Spriggs says. "In no-fault states, each driver's insurance company pays for its own customer's claims."
If one driver is wholly at fault, it's much simpler. "In at-fault states, at-fault drivers try to collect from their own insurance, whereas the person who is not at fault collects from the at-fault driver's insurance company," Salvatore says.
When an Uninsured or Underinsured Driver Hits You
It may come as a surprise, but the process doesn't change much when uninsured or underinsured drivers are involved.
"Each state has its own rules about what qualifies as uninsured and underinsured," says Murphy. If an uninsured driver hits you, and you suffer injuries, "your insurance company will pay you," he says. However, you must have collision insurance or coverage for uninsured or underinsured drivers in order for your carrier to pay for your car's damages. After any payments to you, your carrier "will try to find the uninsured driver and get reimbursement for its payments," he says.
Fortunately, Cutler got a photo of the Lexus' license from the Accord's driver. The photo meant Cutler's insurance company could find the hit-and-run driver and demand reimbursement for the $11,000 it paid to repair Cutler's car. Because of the photo, Cutler says, his insurance company waived his deductible.
Every state but New Hampshire and Virginia requires auto liability insurance. New Hampshire requires that drivers set aside funds for accidents, but Virginia doesn't, according to the Insurance Information Institute. Despite this, the institute says your chances of encountering an uninsured driver in the United States are about one in seven.
When a driver is underinsured, "your insurance company will work with the other driver's company to cover your claim," Spriggs says. For example, suppose the underinsured driver's policy covers up to $5,000 of property damage, but your vehicle sustained $10,000 in damage. In that case, the underinsured driver's insurance company will pay $5,000 and your insurance company will pay the other $5,000. Your insurance company will then go directly to the underinsured driver and seek reimbursement for its payment to you.
Although claims adjustors determine fault, "subrogation units" use those determinations to decide which insurance company pays and how much it pays.
"Subrogation is the substitution of one creditor for another," Spriggs says. "If I am hit by someone else, my insurance company will cover that damage." In other words, you substitute one creditor — your insurance company — for another creditor (the other driver's insurance company). That is subrogation. Then, of course, your insurance company seeks reimbursement from the other insurance company or the driver.
In Cutler's case, neither he nor the Accord driver were at fault. Therefore, each driver's insurance company paid its own customer's claim. No subrogation was involved.
How Carriers Resolve Payment Disputes
When each driver's carrier completes its claim investigations, "one insurance company will send a demand [for payment] to the other," Murphy says. "That will be countered. The carriers will then work out liability and who pays what. Most of the time, we make the appropriate payments. The faster we can do that, the faster we can pay out."
If companies can't agree on payment, they can request judgment from Arbitration Forums, an industry-funded nonprofit set up to handle insurance carrier disputes.
"For arbitration, the two companies apply and present all their information," Murphy says. "The arbitration panel makes a decision." Those decisions are final and binding, and there is no appeal.
What You Need To Know
Even the most minor car accident can shake you up. But it's important to know the steps to take so that everything will go smoothly in the claims process.
If you need to file an auto insurance claim, know what kind of coverage you have, be prepared with as much information about the accident as possible, stay in touch with your claims adjustor and know your state's laws regarding liability.
"Every state has an insurance commissioner," Salvatore says. "You can go to that Web site to learn about your state's laws."

Little-Known but Important Car Insurance Issues

Even though you've done your research and insured your vehicle, there's still more to know when it comes to the wonderful world of car insurance. Below, we look at some not so commonly discussed, but important, issues about insurance that can benefit you tremendously when managing your automotive coverage.

Switching Auto Insurance Companies Relatively Painlessly
You may choose to terminate your auto insurance policy for any number of reasons. Maybe you're moving to another state, getting rid of your car altogether, or maybe you're just dissatisfied with your existing company's service. Beware, however, that if you don't give your insurer sufficient notice, it could end up costing you money, or negatively affecting your credit history.
Standard practice for most insurance companies is to allow you to cancel your policy at any time during the policy term by sending written notice stating the date of cancellation. Your car insurance policy does not necessarily terminate at the end of each policy term, so it isn't safe to assume that you can just cancel by failing to pay your next bill. If you don't send notice of cancellation, your insurance company will automatically bill you in advance for the next term's premium payment. If you don't pay it, they'll cancel your policy and it will go on your credit report.
Don't expect this information to be made explicit in your policy; while insurers are quick to inform you that your coverage will terminate at the end of the policy period if you don't pay your next premium, they don't always inform you of the repercussions you may face for not giving formal notice of your policy termination.
Another thing to keep in mind is that allowing your car insurance policy to be canceled may hurt your chances of obtaining auto coverage in the future. A cancellation in your insurance history may cause other companies to label you a high-risk applicant, thus giving them an excuse to charge you a higher premium. However, you can usually avoid this trap by officially terminating your policy in a timely manner.
Here's what to do: Call your insurer, let them know that you want to cancel your policy and give them an effective date. They will then send you a cancellation request form - review this form carefully before you sign and return it to your insurer.
If you're switching to another insurer, and you plan on driving your car throughout the process, you want to make sure there is no lapse in your car insurance coverage. Therefore, be sure to coordinate the effective starting date of your new policy with the termination date of your old policy. The last thing you want is to get in an accident during an uninsured interim - how stupid would you feel if that happened?
As long as you are considerate about giving your insurance company plenty of notice when you want to cancel your auto policy, and then go through the official termination process, you should avoid any negative repercussions.
Closing the Gap—With Gap Insurance
Just when you thought you knew everything about insurance — along comes gap insurance.
Though it may sound trivial, gap insurance is a must for leasing. And if you made a small down payment when buying a car, a gap policy can be lifesaver as well. But first, let's look at why it exists.
As the name implies, gap insurance covers what traditional auto insurance doesn't. In other words, it closes the gap between what your insurance company pays if your car is stolen or totaled and what you owe the finance company.
Let's take a test case. Say you bought your car two months ago for $25,000. You begin making payments at about $500 a month based on a 6 percent interest rate. Then, disaster strikes: a tree falls on your car and flattens it.
You call the insurance company and it looks into its crystal ball and decides at the time of the accident your car was worth only $20,000. The car may only be a couple of months old, but it has already lost 20 percent of its value. Unfortunately, the finance company still wants the full amount you owe them. With interest, tax and license fees, they figure that to be $27,000.
Yikes! There's a gap of $7,000 between the $20,000 that the insurance company is willing to pay you and the $27,000 the finance company is demanding. Most folks are going to be eating Spam dinners for the next two years, but if you have gap insurance you can safely order steak.
Apply the same scenario to someone who bought their car. If they left the dealer lot without putting several thousand dollars down, they likely owe more than the insurance company will pay if the vehicle gets totaled or stolen in the first few years. Once again, gap coverage can save the day.
And that's why gap insurance is a must for many drivers. In fact, gap insurance is usually mandated by lease contracts or included within them. If a gap policy is required but not included in your contract, you should shop around for this coverage (insurance companies sell it). If gap coverage is included in the lease, check to see how much is offered and how much you're going to be paying for it. (In some cases, lease contracts may include what is known as a gap waiver, which protects you from gap charges in the event that the leased vehicle is declared a total loss — eliminating the need for a gap policy.)
Is gap insurance necessary for people who finance their cars? Well, it depends on your coverage. If your regular insurance policy is written to pay off the fully financed amount, then you don't need gap insurance.
A few things to keep in mind when buying gap insurance:

• Although most people purchase it when a lease is initiated, some insurance companies will sell you a gap policy anytime during the lease term.
• You must be in compliance with all terms of the lease.
• Your gap insurance policy may not be honored if you don't have collision and comprehensive insurance coverage. Further, lease contracts generally require that you carry collision and comprehensive at all times.

If your car is totaled, or stolen, carefully follow all requirements made by your insurance company. For example, some companies require you to continue making loan payments on your totaled car until the money from the gap insurance is paid out.
So when initiating a car loan or lease, always remember to ask your insurance agent or loan officer about gap insurance. If you have an accident you'll be glad you planned ahead.
OEM vs. Aftermarket: Decisions, Decisions... You've been in an accident, you're dealing with the nuisance of getting your car repaired, finding someone to chauffeur you around (unless your insurance covers the cost of a rental, which is always nice), and you've probably had to take some time off from work to recover and take care of the whole mess. Life couldn't get much more complicated, right?
Um...well, wrong.
Oh, did you think you could just turn your car over to the body shop and trust them to do the best job possible to make your car like new again? 'Fraid not, dear friend. You must decide whether or not to mandate that the repair facility use OEM (original equipment manufacturer) replacement parts, as opposed to aftermarket parts. What difference does it make, you ask? The answer is debatable.
According to non-OEM manufacturers and many insurance companies, the difference between OEM and aftermarket parts is negligible. And it's not surprising that insurance companies are such strong advocates of using aftermarket parts, seeing as how they are considerably less expensive than OEM parts. For that reason, many insurance companies will not reimburse 100 percent of your repair costs if OEM parts are used. Most insurers discourage the use of OEM parts by making the policyholder pay for the difference in cost between the non-OEM parts specified in the estimate and the OEM parts used. This can turn into a large sum of money, as OEM parts may cost nearly twice as much as aftermarket parts. For example, an OEM replacement hood for a '96 Ford Contour can cost close to $600, whereas an aftermarket hood can be had for about 300 bones.
A few insurance companies, such as Chubb Insurance Group, actually encourage their policyholders to use OEM repair parts, while not charging them a penalty. It should be noted however, that Chubb is one of the more expensive auto insurers.
The use of aftermarket parts can be called into question for two reasons. First of all, they decrease a vehicle's resale value. This should certainly be taken into consideration if you plan on reselling or trading in your car. Many dealers check the repair history of vehicles to see what kinds of parts were used. The trade-in value of a BMW with non-BMW parts can certainly be adversely affected. By the same token, using non-OEM replacement parts to repair a leased car could cost you all or part of your security deposit, because technically you would not be returning the vehicle in the same condition as when it was leased.
The other concern with aftermarket parts has to do with safety. Advocates of OEM parts claim that non-OEM parts aren't subjected to the same crash-testing procedures as OEM and therefore are not as safe. The Insurance Institute for Highway Safety (IIHS), however, contends that making cosmetic repairs with non-OEM replacement parts does not degrade the safety of a vehicle in a crash.
In the end, it's up to you to decide what type of replacement parts are used in your vehicle's repair. If you opt to save money and use non-OEM parts, you should make sure that they are approved by the Certified Automotive Parts Association (CAPA), which sets the standards that must be met in the manufacturing of non-OEM parts for collision repairs.
Obviously, you want to know your options before you turn your car over to a repair facility. If you are concerned with the depreciation of your car, especially if it's a high-end vehicle, you'll probably be wise to go with OEM parts at repair time, even if you have to foot part of the bill. But if your car's resale value isn't of extreme importance to you, and you'd rather not dig too deeply into your own pocket, you should consider allowing the body shop to use non-OEM parts.
Just make sure that you specify one way or the other with your repair facility - the last thing you want is to end up paying for OEM parts that you weren't concerned with using, or to get aftermarket parts put on the super-rare ride that you intend to keep in tip-top shape for the rest of your life. As long as you play an active role in choosing your body shop and then communicate clearly with both the repair facility and your claims adjuster, you shouldn't be caught off guard.
Deciphering Auto Insurance Lingo
Here's a glossary of commonly used auto policy terms.
Actual Cash Value
The cost to replace property minus the amount it has depreciated since the original purchase date.
Benefit
The amount an insurance company pays to you or your beneficiary when you file a claim.
Bodily Injury Liability
This covers medical expenses for injuries the policyholder causes to someone else.
Claim
The policyholder's request for the reimbursement of a loss covered by their insurance policy.
Collision
This covers damage to the policyholder's car from any collision. The collision could be with another car, a light post, parking curb, garage wall, etc.
Comprehensive
For damage to the policyholder's car that doesn't involve hitting another car. Covers damage resulting from fire, theft, falling objects, missiles, explosion, earthquake, flood, riot and civil commotion.
Deductible
The portion of losses that you agree to pay in the event of an accident. Higher deductibles lower premiums significantly, but will come back to haunt you in the case of an accident, especially if you're at fault.
Endorsements
These are changes to the original insurance contract, such as a different deductible or an additional car or driver.
Exclusions
Situations that are not covered by a given insurance policy; specific exclusions are listed on your insurance policy.
Extraordinary Medical Coverage
Sometimes included in Personal Injury Protection, this coverage protects you if you suffer accident-related injuries that require serious and/or long-term medical care and begins once you have exhausted the limit on your standard medical benefitscoverage.
Full Coverage
This indicates that you have all the minimum coverage for your state of residence; it does not necessarily mean you will always be fully covered.
Income Loss Coverage
Sometimes a part of Personal Injury Protection, income loss coverage takes care of you if you're unable to work due to accident-related injuries.
Indemnity
A predetermined sum paid for a covered loss.
Limits
The maximum amount of money your insurance company will pay out for your losses; many states have minimum required limits.
Medical Payments or Personal Injury Protection (PIP)
Covers the treatment of injuries to the driver and passengers of the policyholder's vehicle. At its most extensive, PIP can cover medical payments and the lost wages of those injured in an accident. It may also extend to covering the policyholder if he/she is injured while in another vehicle or is hit by a car while on foot.
No-Fault Insurance
A no-fault policy usually will not require that someone be assigned the blame in order for the policyholder to receive his/her money. In no-fault states, insurance companies are required to have this type of policy.
Property Damage Liability
Pays for damage the policyholder causes to someone else's property.
SR-22
A document that shows proof of financial responsibility in the case of a traffic violation.
Tort
A legal term that describes circumstances when someone is deemed legally responsible for injuring another person or damaging his/her property. Some states encourage you to make a tort provision, thereby reducing the cost of your premium by limiting your right to sue for non-monetary damages.
Uninsured/Underinsured Motorist Coverage
This is to pay for treatment and/or property damages of the policyholder in the event that he/she is injured in a collision with an uninsured driver. Underinsured motorist coverage is another policy option; it kicks in when an at-fault driver has auto liability insurance, but the limit of insurance is insufficient to pay for the victim's damages.
To delve even more deeply into the wonderful world of car insurance and find out your own minimum policy requirements, see the state-by-state table in our feature "How Much Auto Insurance Do You Really Need?"

Should Newlyweds Combine Car Insurance Policies?

Chances are, car insurance wasn't the first thing you thought of after the proposal. In fact, you might not have thought about how marriage might affect your car insurance rates at all. But after the decorations have been cleared and honeymoon adventures logged, you'll want to consider adding "check on combining car insurance policies" to your newlywed to-do list. Car insurance is usually cheaper for married couples — with a few important caveats.
No Matter What, You'll Likely Save
Even if you do absolutely nothing, the sheer fact of being married is likely to have a positive impact on your rates once your policy is up for review. The Zebra, a car insurance comparison engine and digital auto insurance agency, projects a premium savings of 10-12 percent when all other factors remain the same.
Why is this the case? According to Frankie Kuo, an auto insurance specialist at Value Penguin, "Insurers find married people less likely to file a claim compared to single drivers of comparable profile, and so consider them less risky to insure."
When Combining Policies Makes Sense
To nab an even steeper discount, consider combining your car and your beloved's in a single policy. This makes the most sense if you both have spotless driving records and no recent gaps in insurance coverage, Esurance explains.
Remember, too, that in addition to lower rates, having two cars on the same policy can often earn you multi-car discounts from insurers. Moreover, even if your household only has one vehicle, you can still earn discounts for sharing a policy.
"Even if a family only has one car, we would still recommend a single policy that would cover both drivers, since it ensures that both drivers are insured without incurring the extra cost of a second policy," says Eric Madia, vice president of product for Esurance.
Finally, combining your auto insurance policy with existing homeowners' or renters' policies from the same company could lead to even greater discounts overall.
Take a Combined Policy Test-Drive
Many factors shape one's insurance premium, and driving is only one of them. In some states, insurance companies use credit scores as one element in determining rates. So you may have some choices to make, based on your separate driving and financial histories.
For example, what if your spouse has a decent driving record but a poor credit score? Or what if you're a great money manager, but your lead foot has recently scored you a speeding ticket?
You should first get a quote for adding your spouse to your insurance or vice versa, says Jean-Marie Lovett, president of independent insurance agency MassDrive Insurance Group in Boston. Asking for a quote doesn't obligate you to follow through with the change. (If your spouse is a champion speeding-ticket holder, however, you might have to list him or her as an excluded driver in your household. More on that in a moment.) Lovett says it's a good practice to first get quotes for two drivers on one policy.
If putting the policies together does not help you save on the premium, you can just list your spouse on your policy and defer them to their own individual insurance, Lovett says.
When it comes to credit scores, one of the smartest things you can do is place the person with the best credit score as the primary named insured. "Their credit is the one that will be portrayed to the insurance company," Lovett notes, "and will be the credit score that the insurance company will rate off of."
Keep in mind this is only true in states where it's legal to use credit scores as a rating factor. Some states, such as Massachusetts and California, do not permit the practice. In that case, Lovett explains, the person with the best driving record should be the primary insured.
Still unsure on whether to combine policies? It can help to know the value of your cars. "Maybe your spouse has a good driving record," Lovett says, "but a junker of a car."
"If you have a 1995-2005 vehicle, you should debate whether to have collision coverage, or increase the collision deductible to $1,000," she continues. "Cars that get over the 10-year-old mark tend to take a significant drop in value, and you want to weigh the cost of the collision coverage on the vehicle versus the actual value of the vehicle." She adds that in the event of an accident, having the $1,000 deductible "gives you the option to junk the caror make a claim while keeping your insurance premium manageable."
When Not To Combine Policies
Though you're now joined in holy matrimony, there are some cases in which it just doesn't make sense to bring that partnership to your car insurance. Esurance warns that if one of you has a truly poor driving record, separate policies could end up costing you less.
"Combining a low-risk driver's policy with a high-risk driver's will likely increase the low-risk driver's car insurance rates," according to Esurance. There's also the chance that your insurance company simply won't insure your accident-prone partner, no matter the cost. "If one spouse has more than three accidents, your insurance carrier may not accept the spouse," Lovett says.
Here's where the really bad news comes in: Even if you don't combine policies, simply living under the same roof as a high-risk driver could have a negative impact on your car insurance rates.
Esurance explains why: "Because insurance companies consider the driving histories of all family members living within the same household when underwriting policies, having a high-risk driver under your roof makes you riskier by association." Car insurance follows the car, so your policy would have to cover the damage if your spouse caused an accident on an errand in your vehicle, for example.
There may be a way around this, though. "In most states, you are required to list all drivers in your household on your policy," Lovett says. "However, you can 'defer' someone, meaning they have their own insurance policy."
Also called a driver exclusion, this is an easy way to keep insurance costs low, even if your spouse is high risk. Keep in mind that exclusion truly means excluded: If your spouse borrows your vehicle and gets into an accident, you're responsible for any and all damages.
The Bottom Line
"Nine times out of 10," Lovett advises, "it will be beneficial to merge the insurance" for a newlywed couple. And if it doesn't make sense right now, Kuo recommends doing what you can to mitigate your high-risk profile. Taking a certified defensive driving course may unlock an automatic discount, or at least facilitate a negotiation for lower rates.
"Having a spotty record is inconvenient, but people usually have a chance to get lower rates just by shopping around and comparing prices across companies," Kuo adds.
Additionally, Kuo points out that minor traffic violations usually do not haunt a driver's record for more than three years. Staying clean for that long can also remove a driver from the high-risk pool.
Even if you can't combine policies immediately, Kuo recommends taking another look at your insurance every now and then. If couples think it makes sense to combine their policies, they can meet with their agent for a review. "Many circumstances of life could change, such as work, age and even where they live," Kuo says. As always, obtaining quotes from multiple companies can help you get the best deal.

Personal Factors That Affect Insurance Rates

A reporter recently asked Edmunds about the kinds of personal information that can affect the cost of car insurance. She also wanted to know whether people could do anything to address personal factors that were keeping their car insurance rates high.
They're good questions, and Edmunds was happy to help answer them. During the research it became clear that when it comes to car insurance, there's hardly anything that isn't personal. Here are five all-about-you factors that can affect your car insurance premium:
1) Your driving profile. Such factors as the number of miles you drive annually and your accident and ticket history are major elements in setting your insurance rate. The less you drive, the less risk of an accident and a claim. Safer driving — meaning a history free of accidents and moving violations — also points to someone who's less likely to file a claim.
2) The car you drive. Car insurance premiums are based in part on the car's sticker price, the cost to repair it, its overall safety record and the likelihood of theft, according to the Insurance Information Institute. The cost of fixing a brand-new $225,000 2010 Ferrari 458 Italia is going to be a lot more than the repair costs for a used $17,000 Nissan Altima. The premium will reflect this.
3) Your essential personal information, including your age, occupation and where you live. Each of these things factors into the process of setting your insurance rate because insurance companies base their premiums on actuarial information about drivers. They look for patterns of claims activity among people like you. A teenage boy is likely to have a higher insurance rate than a middle-aged driver, because statistically, teenage boys have more accidents than do 40-year-olds.
Your occupation can play a role if it affects how much driving you do. Work that involves lots of miles on the road, such as an outside sales job, can affect rates. From the insurance company's point of view, the more miles you drive means more risk of an accident.
Insurance companies also look at where you live. They track local trends of accidents, car thefts, lawsuits and the cost of medical care and car repair, according to the Insurance Information Institute.
4) The coverage you choose. The more coverage you elect and the lower the deductible you set, the more you'll pay.
5) Your credit score. Some insurance companies use credit scores as a factor in setting rates. This practice is coming under attack, however, with seven states in 2010 passing regulations regarding the use of credit information in insurance. In 2011, several other state legislatures introduced bills to regulate the practice.
Actuarial studies show that how a person manages his or her financial affairs is an accurate predictor of the number and size of insurance claims he or she might file, according to the Insurance Information Institute.
If you want to lower your insurance costs, you can't change your age, or easily change your job or hometown. But there are some personal changes you can make:
1) Consider pay-as-you-drive insurance. It's a paradox, but the more personal you get, the better your rates might be. Pay-as-you-drive programs offer better rates because they're tailored to how you personally drive — as opposed to the people who are similar to you in terms of age or other unchangeable factors.
This means that a teenager who is an excellent driver — who doesn't speed, doesn't drive at night and doesn't drive many miles — can get a better rate than the average teenager, whose actuarial profile pegs him as a greater risk, based on the accident history for people his age.
Pay-as-you-drive plans have different configurations, depending on the insurance company and state. Some require that you install a telematics device that transmits information about your actual driving (such as speed, mileage and braking patterns) to the insurance company. Others, such as plans permitted in California, only are based on the number of miles you drive, not how you drive.
2) Be a calmer, more careful driver. If you've had speeding tickets in the past, resolve to change from being a speedy, aggressive driver to a calm one. A side benefit is that you'll save money on gasoline. Edmunds testing has also shown that a calm driving style gets you 35 percent better fuel economy.
3) Choose a car with a lower cost of ownership. Edmunds has a True Cost to Own ^® (TCO) tool that lets you size up cars when you're shopping. It takes into account eight components — depreciation, interest on financing, taxes and fees, insurance premiums, fuel, maintenance, repairs and any federal tax credit that may be available — and tells you what your cost would be over five years. It's a way to get a preview of what your insurance premiums might be. Also, talk to your insurance company when you're car shopping to get a quote on how your choice will affect your insurance. If you wait until the deal is done, you've lost a chance to manage your costs.
4) Change your coverage. Don't go for every bell and whistle in an auto insurance policy. If you're willing to pay a slightly higher deductible, you can wind up saving big on your rates. Going from a $250 to a $1,000 deductible could save you 25-40 percent on your policy. Set aside a portion of these funds to cover your costs in the event of a claim.
If you have an older car with comprehensive and collision coverage, you might find yourself paying more in insurance than the car is worth. One tip: Take your comprehensive and collision premiums and add those up. Multiply by 10. If your car is worth less than that amount, don't buy the coverage. If you're worried about being left overexposed, consider this: The typical policyholder makes a claim only once every 11 years, and reports a total loss only once every 50 years.
5) Explore discounts for which you might be qualified. The options available include discounts for low-mileage drivers, for seniors and for cars with anti-theft devices and certain safety devices. It's a lengthy list — just ask your insurer about any discounts, and go from there.
6) Clean up your credit. Keep it in good shape by paying bills on time and by regularly checking that there are no items on your history that do not belong to you.
Is there personal information that doesn't matter? Gender, one expert told us. Insurance companies don't care if you're female or male as long as you're a safe driver. And it's a myth that red cars have higher insurance rates than those sporting more sedate shades, according to the Insurance Information Institute. Ultimately, insurance companies care about how likely it is that a particular driver would end up making or causing a pricey claim against them. Green is the only color that matters.

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