If you are shopping for auto insurance, where you live can make as big a difference as how you drive. No matter how good your driving record, if you live in a high-cost insurance state you will end up paying more than folks living in lower cost states.

Insure.com recently came out with a list of states with the highest and lowest average auto insurance rates in the United States. At the top of the list was Louisiana which clocked in with an average premium of $2,510.87, far higher than any other state. At the bottom of the list is Ohio, Vermont, and Maine, each of which have average car insurance rates of under $1,000 a year.

The study, performed by Quadrant Information Services for Insure.com, looked at costs for insuring more than 2,400 cars from six large insurers across 10 zip codes in each state.

While it’s generally thought that states with the most urban areas have the highest insurance rates – more cars on the road mean more accidents and expensive insurance claims – this is not always the case. A bigger factor is the states’ different insurance laws.

In Louisiana, rates are sky-high because more cases are settled out of court with expensive settlements. This happens because of a state law that limits jury trials to only those cases with claims above $50,000. Similarly, in Michigan, which ranks second in car insurance costs, state law guarantees unlimited medical benefits for accident victims for life. This inevitably increases insurance costs in that state.

Rounding out the 10 most expensive states are: Oklahoma, Montana, California, South Dakota, Washington, D.C., Georgia, Illinois, and Connecticut. In addition to the three states under $1,000 previously mentioned, the other cheapest insurance states include Wisconsin, New Hampshire, Iowa, Massachusetts, North Carolina, Arizona, and Tennessee.

The Bottom Line: due to factors beyond your control, car insurance will cost more in some states than others. No matter which state you live in, you can always get the best possible price by shopping around to instantly compare car insurance rates.

photo credit: Fabio Aro

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Becoming a parent means getting your financial house in order. While you could let your finances slide a bit when you were single, you now have people depending on you. Doing some basic financial planning today can mean the difference between making your golden years happy and productive or stressful and uncertain. Whether it’s your your mortgage, insurance, or savings, every aspect of your finances should be reviewed to make sure your family is safe and secure.

Here are the 8 most important financial steps you can take for your family:

1. Buy life insurance. When you were a swinging single you didn’t have to even think about life insurance. Now that you have a family that’s depending on you, it’s imperative that you and your spouse get a life insurance policy. Term life insurance is usually sufficient and you want to make sure you get enough that your family can continue to live comfortably if you pass away, so think about at least $500,000 in coverage. If you’re healthy, term life insurance is not a huge monthly cost and it can really put your mind at ease. Use one of the many life insurance comparison websites to instantly get a rate quote.
2. Build up a rainy day fund. Life is unpredictable and having a family multiplies that unpredictability. Unforeseen medical expenses, automotive costs, or even natural disasters can quickly put a dent in your monthly budget. Take the time now to sock away at least three to five months worth of living expenses and put that money in a savings account that is accessible. But remember – this is emergency money only, so don’t go blowing it on a big vacation.
3. Review your health insurance. Medical expenses are eating up an increasingly huge chunk of the average American family’s income. It’s time to review your health insurance to make sure you have enough coverage and that your deductible isn’t too high. If you have children, chances are you’re going to the doctor on a regular basis. While having a high deductible is a good way to save money on health insurance while you’re single, frequent doctors visits will mean a lot of money out of your pocket. Review last year’s medical costs, see how much you had to pay, and adjust your deductible accordingly.
4. Buy a house. Although the housing market has been in a tailspin for the last several years, buying a house has traditionally been one of the best investment vehicles for families over the long term. Take advantage of today’s historically low interest rates to lock in a lower cost 30 year fixed mortgage. While it might feel like a stretch to pay for it now, chances are in 30 years you will be very happy about making the decision to buy.
5. Start a college fund. Sure, when your kids are toddlers college can seem like a lifetime away. But the years pass by faster than you can imagine, so start saving up for college now. Putting away even a small amount every month or quarter can allow the power of compounding to take hold and build up your savings over the long term.
6. Get a will. No one likes to think about death, but if it happens your family needs to be ready. Having a will prepared does not have to cost an arm and a leg – ask around to see which lawyers specialize in this type of work.
7. Plan for retirement. Saving for retirement on top of all your other family expenses can seem like an overwhelming burden, especially in the current rough economy. But like starting a college fund, time is your friend. The sooner you start saving, the longer your money will have to grow. Make sure you take full advantage of any 401k plans offered through your work.
8. Create a budget and track it. You can’t control your expenses unless you know exactly where your money goes each month. Use a program like Quicken or Mint.com to track your expenses and see what the trend is. Are you spending too much on entertainment or groceries? Find where the big expenses lie and figure out ways to cut back. You can also use these programs to monitor your budget month to month. The nice thing about a program like Mint (which is free, by the way), is that your accounts are linked together so there’s little to no manual entering of data. Login at anytime to check how close to your budget you are.

While these eight steps may seem like a huge amount of extra work, you don’t have to do them all at once. Take one item from the list to complete per week and eventually you will get through them all. By the end, you’ll know much more about your present financial condition and will be able to successfully plan for the future.

photo credit: Sukanto Debnath

In an accident, under no fault laws, your auto insurance company will pay for your damages (up to your policy limits), regardless of who was at fault for the accident. Any other drivers involved will be covered by their own auto insurance policies. Under a pure no fault system, drivers would be completely covered by their own policy, and would be barred from ever suing another driver for damages.

However, no state uses a pure system. Instead, all “no fault” states actually use parts of both the no fault system and the standard liability system. Under a standard liability system you’re financially responsible for the cost of damages you cause.

Currently, only 12 states employ the no fault system. Obviously, it’s a good idea to understand your state’s requirements before you shop for insurance as Florida car insurance is very different from California car insurance which is very different from Texas car insurance and on and on.

No Fault Auto Insurance Policy Basics

The actual no fault part of your auto insurance policy is usually called personal injury protection, or PIP.  Different states’ PIP packages cover different things, but in general benefits will include most injury-related expenses. The most common benefits are medical costs, loss of wages, compensation for loss of services, funeral expenses, and death benefits.

The amount and type of PIP required varies from state to state. In some no fault states drivers can actually choose whether or not they want to purchase PIP and drive under the no fault system. (If not, they operate under the standard liability, or tort, system.) Because no state is pure no fault, drivers can always be held financially responsible for the cost of injuries they cause in certain circumstances.

Some states allow injured parties to sue if their injuries meet certain standard for severity, while others allow it when total costs reach a certain dollar level. That’s why liability insurance is still so important, and why every no fault state requires it.

The Goal of No Fault Auto Insurance

No-fault insurance has the goal of lowering premium costs by avoiding litigation over the cause of the accident, while providing quick payment for injuries. However, critics of no-fault insurance note that it does not punish reckless or negligent drivers in litigation and that it is particularly difficult to sue if a person’s injuries leave them with a handicap. Proponents of no-fault insurance point out that auto accidents are inevitable and that at-fault drivers should therefore not necessarily be punished. Additionally, in regions with high numbers of uninsured motorists, the at fault party often does not have resources to pay their liability, leaving the accident victim with nothing.

Pros and Cons of No Fault Auto Insurance

Under current no-fault laws, motorists may sue for severe injuries and for pain and suffering only if the case meets certain conditions. These conditions, known as a threshold, relate to the severity of injury. They may be expressed in different ways such as verbal terms or in dollar amounts of medical bills.

Some laws also include minimum requirements for the days of disability incurred as a result of the accident. Because high threshold no-fault systems restrict litigation, they tend to reduce costs and delays in paying claims. Some states offer a no fault system (Example: Connecticut auto insurance policies are required to comply with the State of Connecticut’s no fault laws just like Ohio auto insurance policies and policies in the 10 other no fault states) and others offer a combination of no fault and liability.

While there are pros and cons of each system, knowing what your state offers can help if you are ever in an accident.

Finding very cheap car insurance is not as difficult as you might think. Here are five tips to help you save money:

1. Increase your deductible. If you have an older car and are comfortable with the idea of potentially paying more out of your pocket in the event of an accident, increasing your auto insurance deductible can be a great way to save money. In many cases, the money you save on your policy will more than make up for the increased out-of-pocket costs that you may incur if you crash or have a theft.
2. Check your car model. The type of car you drive has a big impact on your insurance costs. The Highway Loss Data Institute maintains a database of the insurance costs of every car make and model. Even small differences in models like a 2 door vs. a 4 door can make a big difference in your auto insurance rate. If you are thinking about buying a car, researching the costs of insuring your vehicle before you buy it could save you a lot of money.
3. Bundle your insurance. One way to get really cheap car insurance is to maintain your auto policy with the same insurer that you use for your homeowner’s policy. Insurance carriers often give significant discounts for customers who have more than one policy with them. Likewise, if you own more than one car, keeping both policies with the same auto insurance company should save you money.
4. Ask for discounts. Most auto insurers have a variety of discounts available, but in many cases you have to ask for them. If you have a clean driving record you should be able to get a good driver’s discount. If you don’t drive your car very far each year, you should be entitled to a low mileage discount. One way to get cheap car insurance for young drivers and teenagers is to maintain a good grade point average. Students who maintain high GPAs are viewed as more responsible, lower risk drivers and can often get a discount on auto insurance.
5. Shop around. Perhaps the single most important thing you can do as a consumer to save money on your auto insurance is to compare rates from multiple companies. Each insurer has a different focus and different rules when it comes to insuring drivers. Some insurers will shun high risk drivers while other companies specialize in this. With so many car insurance companies, there’s no reason not to compare rates from at least three to five insurers.

If you follow these tips you could be saving hundreds of dollars on your annual auto insurance policy. So stop paying too much for car insurance and start saving.

Proponents of insurance exchanges, which have been proposed in the current health care bill making its way through Congress, argue that these entities could level the playing field and make health coverage much more affordable for small businesses.

Backers of health insurance exchanges testified on Capitol Hill earlier this week, saying that these entities could be a huge boon for small businesses to increase employment. Health care costs have forced many small businesses around the country to cut back on employees. Insurance exchanges, as proposed in legislation approved by the Senate Finance Committee, would level the playing field and allow small businesses to purchase health insurance plans at rates competitive to those that big companies pay.

Supporters say that the proposed insurance exchanges would help small businesses by spreading risk among a greater number of companies, thereby lowering premiums. The exchanges would also allow small businesses to compare the services, quality, and price of numerous plans offered.

Under the bill approved by the Senate Finance Committee, companies with up to 100 employees would be able to enter into an insurance exchange. Sen. Olympia Snowe, a key supporter of the legislation, wants to do away with measures contained in the bill that would fine companies with over 50 employees who do not offer health care plans to their workers.

There is some debate as to whether insurance exchanges will be local, regional, or national. Many small business proponents are pressing for a national plan, arguing that some states do not have enough competing insurers to create an efficient exchange.

Here are five tips to save you money on health insurance:

1. Compare all the costs between plans. Just because a health plan might be offering lower rates, make sure you understand what the tradeoffs are. Will you have higher co-pays? Are some essential services not covered? Think about how you are likely to use the plan’s services and whether they meet your needs.
2. Buy prescriptions through mail order pharmacies. Unlike brick and mortar pharmacies, mail-order pharmacies allow you to buy a 90-day supply of your prescription medication for the same co-pay you would pay for a 30-day supply. This can save you a lot of money over the course of a year.
3. Raise your deductible. The size of your deductible can make a huge difference in your monthly health insurance premiums. If you are young and healthy, consider increasing your deductible as high as $5,000. Yes, $5,000 is a lot to pay out of pocket, but if you rarely need medical care you can more than make up for it with lower payments.
4. Participate in your employer’s health plan. If your employer offers a health plan, take it. In most cases you will be paying significantly less than if you try to obtain insurance on your own.
5. Get an emergency medical endorsement. If you are going to high deductible route, many health policies will allow you to add emergency medical coverage for which your deductible won’t apply. So if you break your leg and need to be hospitalized you won’t be out of pocket that $5,000.

No matter how much health insurance may be costing you now, there are ways to be a smart consumer and save. Just don’t take the option of not buying health insurance.

Here are five tips to save you money on homeowner’s insurance:

1. Increase your deductible. If you are comfortable with a bit more money coming out of your pocket in the event of a natural disaster or other damage to your building, increasing your deductible to over $1,000 can save you as much as 25% on your policy.
2. Shop around. Comparison shopping for policies could take some time, but it could also save you serious money. There are dozens of homeowner’s insurance comparison websites around to make this task easier.
3. Ask for discounts. Most insurers have a variety of discounts available, such as if you are over 55 or have an auto insurance policy with the same company. be sure to ask what’s available when shopping for a policy.
4. Get your rebuilding costs right. You should not be insuring your home for its full value, which includes both the home’s structure and the land it sits on. When calculating rebuilding costs, only include the value of the structure itself, not the land.
5. Improve your house’s security. Intstalling burglar alarms, smoke detectors, and dead-bolt locks can cut your homeowner’s insurance premium by over 15%.

With a bit of planning you can get a great homeowner’s insurance policy without paying an arm and a leg for it. Now start saving!

Here’s how it works: when you sell your policy to a stranger, that person pays you a cash sum and continues to pay the premiums on the policy to keep it current. Here’s where it gets weird: the stranger to whom you sold your policy only profits when you die.

These transactions are called life settlements and they are becoming more common. Huge banks like JPMorgan Chase and Goldman Sachs invest in packages of life settlements because the return is not correlated with the stock market. So as an investor, life settlements can be a great way to diversity and hedge your stock market exposure.

Investors in life settlement policies prefer people over 65 who are insured for at least $500,000 or more. Whether you are a senior selling a life insurance policy or an investor looking for a hedge against the stock market, it seems likely that transactions in life settlement policies will only continue to increase.

While insurance professionals are sure to disagree amongst themselves about it, there are several reasons to opt for term life insurance over whole life and universal life insurance policies. Term life policies will cost you a third or a quarter of whole or universal policies. With term life insurance you also keep your investments separate from your insurance – whole life and universal life policies intermingle them.

Here are four tips to save on your life insurance coverage, regardless of whether you end up with term, whole or universal:

1. Keep your weight in check. You will pay more for life insurance if you are above the recommended level for your age and height.
2. Keep your driving record clean. Most insurance companies will look at your driving record when determining their rates. If you have moving violations you’re considered a higher risk and will pay higher rates.
3. Ace your medical exam. Life insurance companies will often want you to take a medical exam prior to issuing a policy. Of course, there’s not much you can do to improve your health overnight, but at least stay away from too much alcohol, caffeine and fatty food before the exam.
4. Have a doctor explain any existing conditions. If you have conditions like high blood pressure or diabetes, make sure your doctor can verify that you have the symptoms under control.

If you have dependents, it’s time to get life insurance. Follow these tips and you’ll get a great policy at a great rate.