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The Best Car Insurance in New York State

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If you’re looking for the best car insurance in New York, you’ve come to the right place. We created this guide to help you find the best car insurance provider for you in New York. To come up with this list, we’ve examined factors specific to each company, including customer satisfaction, financial strength, policy options, discounts, and of course, premium levels.

My top pick, and who I’ve used for years is Progressive. However, the single most important factor for getting the best car insurance at the most affordable rate is to compare quotes from several companies. Use the quote tool below from our car insurance partner. It provides a safe, secure way to save a whole bunch of time (and money!) shopping for car insurance.

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The Most Important Factors When Comparing Car Insurance in New York

Because of the cost and complexity of car insurance in New York, you’ll need to be aware of several factors, then be ready to employ certain strategies:

Car insurance in New York is much more expensive than the rest of the country. The best strategy will be to shop between several insurance companies and take advantage of every discount available.

New York is a ‘no-fault’ state, which can lead to higher premiums and more complex policies.  You will need to know both the general car insurance laws in New York, as well as the companies that can best serve your needs.

The cheapest policy isn’t always the best.  If you go with the minimum coverage only, you may be exposing yourself to a big liability after an accident. You’ll need the best car insurance for your circumstances, which probably won’t be the cheapest.

Your coverage levels should match your net worth. One of the most important reasons to have car insurance is to protect your assets. If you have $200,000 in financial assets, you’ll be underinsured with the minimum coverage levels of “25/50/10” (see explanation under What You Need to Know About Car Insurance Laws in New York below). Minimum coverage is best for young drivers who have no assets.

Bundling will save you money. Most insurance companies will give you a substantial discount on your car insurance if you also have other policies with them. These include homeowner’s, renter’s, and sometimes business insurance.

Get special coverage if you use the vehicle for business purposes. If you drive for Uber on the side, you won’t be covered by standard car insurance policies. You’ll need to work with a company that specifically provides coverage for ridesharing. There are several on this list that do.

Keep your driving record clean to get the lowest premiums.  If you do have an at-fault accident or moving violation, look into completing an approved driver education course.

The 7 Best Car Insurance Companies in New York

We’re not going to keep you waiting! We’ll start this guide with a list of the seven best car insurance companies in New York – ranked in order. And we’re throwing in the main reason why we ranked each company the way we did.

Note on Policy Options: We’re not going to include minimum required coverages in New York, nor collision and comprehensive, since both are typical options offered by all insurance companies.

1. Travelers

The Basics:

Policy Options Policy Options Discounts
Gap coverage
Rental coverage
Roadside assistance
Accident forgiveness (one accident and one minor violation every 36 months)
Decreasing deductible ($50 every six months up to $500 you’re accident- or violation-free)
New car replacement (replace your new vehicle with a brand-new vehicle of the same make and model if yours is totaled within the first five years of ownership).
Discounts Multi-policy (bundling)
Multi-car
Homeownership
Safe driver (10% for no accidents in three years, 23% for five years)
Continuous insurance (up to 15%)
Hybrid/electric vehicle
New car
Pay in full in good payer discounts
Early quote
Good student
Student away at school
Driver training
IntelliDrive Program – uses a smart app to capture and score driver behavior, and could result in a 20% premium reduction.

Premiums: $1,544 (2nd lowest average premium on our list)

Customer satisfaction rating: 845 (2nd on the J.D. Power Survey)

Financial strength rating: A++ (highest rating issued by A.M. Best)

Why it Made the List

Travelers took the number one spot on our list because it’s strong in every category. It has the highest financial strength rating, ranks #2 in customer satisfaction, and offers the second lowest average premiums of any company on this list. The company also offers one of the more comprehensive packages of both policy options and discounts.

What Holds it Back

ConsumerAffairs.com gives Travelers less than two stars out of five based on customer reviews.

2. Progressive

The Basics:

Policy Options Gap coverage
Rental car reimbursement
Roadside assistance
Custom parts and equipment value
Rideshare coverage
Discounts Snapshot app ($145 average discount)
Bundle auto and property
Name Your Price tool (enter your desired premium, and Progressive will design a policy),
Multi-policy
Multi-car
Continuous coverage
Good student
Distant students (more than 100 miles from home)
Homeowner
Online quote
Sign online
Paperless
Pay in full
Automatic payment

It also offers large accident forgiveness if you have been a customer for at least five years, with no accidents in the last three years.

Premiums: $1,527 (Lowest average premium on our list)

Customer satisfaction rating: 815 (#9 on the J.D. Power Survey)

Financial strength rating: A+

Why it Made the List

Progressive offers the lowest average premiums in the state, which is, of course, a major draw for all consumers. Policy options are a bit on the slim side, but the company does offer coverage for ridesharing, like Uber and Lyft drivers. The company also has some of the most attractive discounts in the industry, including the Name Your Price tool and large accident forgiveness.

What Holds it Back

Progressive’s J.D. Power rating is dead last.

3. Allstate

The Basics:

Policy Options Rideshare coverage
New car replacement
Accident forgiveness
Drivewise app
Sound systems
Roadside assistance
Personal umbrella
Rental reimbursement
Classic cars
Car insurance for travel to Mexico
Discounts New car
Multi-policy
Smart student
Vehicle safety equipment
Early signing
Responsible payer
New car
Paperless
Safe driving club

Premiums: $1,572 (3rd lowest average premium on our list)

Customer satisfaction rating: 831 (#5 on the J.D. Power Survey)

Financial strength rating: A+

Why it Made the List

Much like Travelers, Allstate is strong in almost every category. That includes having the third lowest average premiums in the state. It offers many of the same policy provisions as other insurance companies on this list, but also has its unique car insurance for travel to Mexico. Otherwise, the company rates about the middle of the pack on customer satisfaction and financial strength.

What Holds it Back

Allstate doesn’t have quite as many discounts as its competitors.

4. New York Central Mutual

The Basics:

Policy Options Optional Basic Economic Loss (OBEL – extra coverage above PIP for lost income),
Supplementary uninsured motorist
Medical payments
Roadside assistance
Umbrella coverage
Rental car reimbursement
Conversion van coverage
Discounts Autopay
Driver training
Student away at school
Defensive driving course
Safety equipment
Multi-policy
Homeownership
New car
Pay in full
Senior discount
Good student discount
Claim free
At-fault accident forgiveness (claim free for five or seven consecutive years)

Premiums: $1,988 (6th lowest average premium on our list)

Customer satisfaction rating: 869 (#1 on the J.D. Power Survey)

Financial strength rating: A

Why it Made the List

Any company that has the #1 customer satisfaction rating for its state deserves to be on any list of the top auto insurance companies. NYCM also offers two programs not commonly provided by other insurers, including the optional basic income loss coverage and conversion van coverage. The latter is important because a van that has been modified to accommodate an impaired individual is not generally covered under personal auto insurance policies.

What Holds it Back

New York Central Mutual is easily the smallest company on this list and operates only in New York. If you move to another state, you’ll have to get covered with another carrier. The company is also on the higher end of the premium scale on this list, coming in at #6. It’s also at the low end of the financial strength rating, with a grade of “A”. That means it’s still a strong company, but a shade below the others on this list.

5. State Farm

The Basics:

Policy Options Car rental
Travel expenses for an accident more than 50 miles from home
Medical payments
Emergency roadside assistance
Rideshare
Sports cars
Antique classic cars
Small business vehicles
Discounts Accident-free
Defensive driving course
Accident prevention course
Safety equipment
Driver training
Good driver
Good student
Multi-car
Multi-policy
Student away at school
Steer Clear Safe Driver (complete education requirements and no at-fault accidents or moving violations in the previous three years – both met before turning 25)

Premiums: $1,943 (5th lowest average premium on our list)

Customer satisfaction rating: 845 (#2 on the J.D. Power Survey)

Financial strength rating: A++ (highest rating by A.M. Best)

Why it Made the List

State Farm ranks #2 in customer satisfaction and has the highest financial strength rating at A++. The company is also the largest single automobile insurance company in the country, which indicates a high degree of confidence that a large number of people place in State Farm. It appears on nearly every list of the best auto insurance companies in most states.

State Farm also offers unique policy options, like travel expenses for an accident, sustained more than 50 miles from home, and coverage for small business vehicles. On the discount side, they offer the Steer Clear Safe Driver program to help drivers under 25 lower their insurance premiums.

What Holds it Back

State Farm’s premiums are higher than some of the other carriers on this list, though they are still well below the statewide average. The company’s heavily advertised “Drive Safe & Save Mobile” program is not available in New York.

6. GEICO

The Basics:

Policy Options Emergency roadside assistance
Rental reimbursement
Mechanical breakdown
Motorcycles
ATVs
Recreational vehicles
Boats
Collector autos
Ridesharing
Commercial auto and driving in Mexico
Discounts Safety equipment
New vehicle
Good driver (five years accident-free)
Seatbelt use
Defensive driving
Driver’s education
Good student
Emergency deployment
Military
Multi-vehicle
Multi-policy

Premiums: $1,888 (4th lowest average premium on our list)

Customer satisfaction rating: 823 (#6 on the J.D. Power Survey)

Financial strength rating: A+

Why it Made the List

GEICO’s average premium in New York is well below the statewide average. On the discount side, we love the fact that GEICO publishes the percentage discounts you can expect. For example, you can save up to 25% for a driver-side airbag, and up to 40% for the full front seat.

GEICO also offers interesting policy options. Like Allstate, they extend auto insurance to travel in Mexico. They also add commercial auto coverage, and one we haven’t seen elsewhere – mechanical breakdown. You can use it in place of the car manufacturer’s extended warranty, and it can cover your vehicle for up to seven years or 100,000 miles (comes with a $250 deductible). It’s even available for leased cars that are less than 15 months old and have fewer than 15,000 miles.

What Holds it Back

GEICO ranks #6 in customer satisfaction among nine companies listed in the J.D. Power survey.

7. Liberty Mutual

The Basics:

Policy Options Medical payments (including legal fees and lost income)
Lower or eliminate your collision deductible
Lifetime repair guarantee
New car replacement
Better car replacement
Rental car reimbursement
Roadside assistance
Gap coverage
Original replacement parts for your car
Coverage for teachers (protection for your car on school grounds)
Driving in Mexico
Discounts Accident forgiveness
Multi-policy
Multi-car
Online purchase
Automatic payment
Pay in full
Online purchase
Paperless policy
RightTrack (save up to 30% for good driving behavior)
Homeowner
Active, reserve or retired military
Early shopper
Good student
Student away at school
Alternative energy vehicle
Safety equipment
Accident- and violation-free

Premiums: $2,046 (7th lowest average premium on our list)

Customer satisfaction rating: 819 (#8 on the J.D. Power Survey)

Financial strength rating: A

Why it Made the List

Liberty Mutual advertises “only pay for what you need”. We’re not exactly sure what that means since that statement is true of virtually all car insurance companies. There is the minimum legally required coverage, which you must purchase, then a laundry list of options you can choose – regardless of the insurance company.

Still, Liberty Mutual has some of the more interesting policy options, particularly when it comes to the maintenance of your vehicle. Of special interest are the lifetime repair guarantee (you must use an approved facility), new car replacement assistance, and the option to replace your car with a better car that’s one model year newer and has 15,000 fewer miles.

What Holds it Back

Liberty Mutual has the highest average New York auto insurance premiums of the seven companies on our list. It also ranks a disappointing #8 in customer satisfaction, and is on the low end of the financial strength rating, gathering only an “A”.

How We Found the Best Car Insurance in New York

In compiling our list of what we believe to be the best car insurance companies in New York, we’ve used the following five criteria to make that determination:

Policy Options

Virtually all insurance companies must offer at least the minimum coverage limits required by law in each state. But each company also can offer various options that are not required. These can include coverage for premium sound systems, classic cars, and specialty vehicles, ridesharing services, and umbrella insurance for high net worth individuals.

Discounts

The initial premium quote you receive from any car insurance company is only the starting point. From that base number, premium increases will be added for additional risk factors, such as driver history, the type of vehicle, and the number of miles driven. But car insurance companies will also provide discounts for certain features. These can include a safe driving history, bundling coverage with other insurance policies, multiple drivers and cars on the same policy, good student discounts, customer loyalty, vehicle safety equipment, and many more.

The more discounts a company offers, the higher it rates in this category. While we list the most common types of discounts offered by each insurance company, you should request a full disclosure of all discounts provided by your carrier, to take advantage of all that may be available to you.

Premiums

Cost is almost always the most important consideration when shopping for car insurance. While recognizing its importance, we caution that you do not make your car insurance decision based solely on the premium.

But recognizing that it is a central factor, we’re presenting the average premium charged to New York residents by each provider on this list. Since it’s only an average, it’s meant only to provide a ballpark estimate as a starting point. Exactly what you’ll pay for a policy will depend on the community who live in, your age, driving history, and other factors that are described in this guide.

The premiums shown for each company are based on data provided by The Zebra, which is determined to be a reliable source of pricing information.

The New York statewide average for car insurance premiums is $2,752 for 2020, which is well above the national average, but not nearly as high as the most expensive states. Each of the insurance companies included on our list is well below the statewide average.

Customer Satisfaction Rating

One of the most important criteria for assessing an insurance company is its customer satisfaction rating. The most important aspect of the rating is satisfaction with auto claims. After all, the whole purpose of buying insurance is the potential to pay claims. It’s the basic “product” all insurance companies provide.

For that rating, we are relying on the J.D. Power U.S. Auto Insurance Study, released in June 2019. More specifically, we’ve relied on the Overall Customer Satisfaction Index Ranking – New York Region.

best car insurance new york customer satisfaction

Insurance Company Financial Strength

In the search for the lowest possible car insurance premiums, most consumers completely ignore this all-important category. But it will do little good to have cheap insurance from a company that has financial problems. An insurance company’s ability to pay claims, and even to stay in business, is closely tied to its overall financial strength.

To determine the financial strength of each company on our list, we are relying on ratings provided by A.M. Best. The company specializes in rating the financial strength of insurance companies, particularly regarding a company’s ability to pay claims.

The higher insurance company financial strength ratings are as follows:

Superior: A+, A++
Excellent, A, A-
Good, B, B+

Companies rated lower than “A” are excluded from our list.

What You Need to Know About Car Insurance Laws in New York

Car insurance laws and requirements vary from one state to another. Regulations in New York are as follows:

State Minimum Insurance Requirements

The minimum New York State car insurance requirement is “25/50/10”, broken down as follows:

  • Bodily Injury: $25,000 per person in any one accident, or $50,000 for any injury resulting in death.
  • Bodily Injury: $50,000 for two or more persons in any one accident, or $100,000 for any injury resulting in death.
  • Property Damage: $10,000 per accident.

Bodily injury, more commonly known as liability coverage, pays for both injury and loss of wages to another driver or their passengers, as a result of an accident caused by you. The same is true of property damage. It will cover damage to another driver’s vehicle in an accident where you are determined to be at fault. It’s important to understand that property damage does not extend to repairing your own vehicle in an at-fault accident.

Uninsured/Underinsured Motorist – required for bodily injury only, as follows:

  • Bodily Injury: $25,000 per person
  • Bodily Injury: $50,000 per accident

Coverage for uninsured/underinsured motorist property damage is not a required provision in New York.

Personal Injury Protection (PIP) – requires minimum coverage of $50,000 under no-fault benefits required by law. PIP covers medical costs incurred by either you or passengers in your vehicle, regardless of who the at-fault party is in an accident. In addition to medical costs, it can also cover lost wages.

Optional Car Insurance Provisions in New York

The following coverage provisions can be added to your policy, though they are not required under New York State law:

  • Higher dollar amounts on any required coverage provisions.
  • Collision, paying for damage to your vehicle regardless of who is at fault in an accident.
  • Comprehensive, paying you for non-moving damage to your vehicle, including fire, flood, theft, vandalism, or collision with an animal.
  • Medical payments coverage, pays medical or funeral expenses for you or your passengers, regardless of who is at fault in a moving accident.
  • Accidental death and dismemberment (AD&D), if you or a passenger in your vehicle experience serious injury or death due to an accident.
  • Supplemental spousal liability covers costs related to death or injury of the driver’s spouse during an accident.
  • Towing and labor coverage.
  • Rental car reimbursement.
  • Mechanical breakdown coverage.
  • Roadside assistance.
  • Loan or lease payoff, sometimes referred to as “Gap coverage”, it provides for the full pay off of your loan or lease, even if the financing balance is higher than the value of your vehicle at the time it’s totaled in an accident or other casualty.
  • Personal umbrella policies, providing additional liability coverage ($1 million or more), typically for high net worth individuals, though it can also cover libel, slander, false arrest, and invasion of privacy.

New York is a “No-fault State”

New York is one of 12 states nationwide that operate under no-fault car insurance. Under the law, you’ll pursue coverage for medical treatment through your own car insurance provider, regardless of which driver is determined to be at fault. You will not be entitled to compensation for pain and suffering or other non-monetary damages caused by the accident.

There are two exceptions to New York’s no-fault law.

The first is vehicle damage claims. A claim against the at-fault driver can be made for either damage or total loss of your vehicle. There are no dollar limitations on this provision.

The second is the “serious injury” provision. You can pursue a claim against the at-fault driver if your injuries result in any of the following conditions:

  • Significant disfigurement
  • Bone fracture
  • Permanent limitation of use of a body organ or member
  • Significant limitation of use of a body function or system
  • Substantially full disability for 90 days

If any of the above apply, you can pursue financial remuneration against the at-fault party, either through the driver’s insurance company or with a personal injury lawsuit.

New York Doesn’t Allow Occupation or Education to be Used as Underwriting Criteria

Under a law passed in 2017, New York prohibits the use of a driver’s education or occupation as criteria for determining the acceptability of an applicant or the premium rate in auto insurance policy.

These are common criteria used by auto insurance companies across the country, but they are specifically prohibited under New York law. The law is intended to eliminate penalizing drivers in low-wage occupations, or those without college degrees.

New York State Car Insurance FAQs

If I get into an accident in another state, what happens if my liability exceeds the New York State minimum requirements?

If the minimum liability requirements in another state where you are operating your vehicle are higher than those of New York, your policy will provide coverage for the minimum required in that state.

Why is car insurance so expensive in New York?

The statewide average premium in New York is nearly twice that of the national average. There are several reasons why this is true. First, New York has a very high population density, particularly in New York City and the surrounding suburbs. Close proximity produces more accidents. The state has a higher risk for both vandalism and theft. New York City also presents a problem on the parking front. Tight spaces and on-street parking increase the likelihood of accidents. Still, another factor is that New York is a high cost state in general, which is also reflected in auto insurance premium rates.

But one of the biggest single contributors is the state’s high premiums is its no-fault status. No-fault is designed to minimize litigation, but it often results in higher premiums. Because of the no-fault law, you’re required to have personal injury protection (PIP), which results in a higher premium.

What happens when your car insurance lapses in New York?

First, midterm cancellation is not permitted once a policy is in force for 60 days, or anytime during the renewal period, except for revocation or suspension of your driver’s license, non-payment of premium, or fraud or material misrepresentation. If you fail to pay your premium when due, the insurance company can either cancel your policy midterm or refuse to renew it. And you may be subject to a $300 fine.

Summary: Best Car Insurance in New York

Company Best For  
Best Overall Get Started
Cheapest Overall Get Started
Cheapest After DWI/DUI Get Started
Highest Customer Satisfaction Get Started
Teen Drivers Get Started
Young Drivers, Drivers With a Violation Get Started
Customized Coverage Get Started

 

The post The Best Car Insurance in New York State appeared first on Good Financial Cents®.



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Eco-Friendly Home Modifications That Impact Your Home Insurance

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As the green revolution continues to gain popularity, homeowners are discovering practical ways to reduce their carbon footprint. One of the most meaningful ways is by making eco-friendly modifications to your home and making sure your homeowners insurance takes them into account.

Benefits of eco-friendly home modifications:

  • Lower utility costs
  • Reduced carbon footprint
  • Save money on energy costs
  • Potential tax credits

Whether you’re on the market for a new energy-efficient home or interested in upgrading your current space, you must make sure your policy is ready to accommodate those changes. While many insurers are extending their coverage to include green renovations, not all offer this additional coverage.

We’re here to guide you through how typical eco-friendly home modifications impact your home and your homeowners insurance. We’ll break down four home improvements you can make to your home, the benefits, installation considerations and insurance implications.

Solar energy

One of the most common eco-friendly home modifications, solar energy is the cleanest and most abundant resource available to us. A big investment, solar energy gives homeowners a way to save money and generate their own electricity.

Benefits of solar energy

Lower energy costs

In the U.S., the demand for solar energy is at an all-time high. As the prices of installation have dropped, solar energy has become an economical choice for many homeowners. The lifespan of solar panels is typically around 25-35 years, so they are a long-term investment that will continue to pay off.

Increased home value

In addition to saving money, installing solar equipment to your home can increase its value, sometimes by tens of thousands of dollars. While a solar upgrade can be an expensive investment, the increased home value can help you earn back what you spend.

Reduced environmental impact

Besides the potential tax breaks, solar energy has a positive impact on the earth. Solar energy doesn’t produce air pollution or carbon dioxide, which helps reduce emissions and the negative impact on the environment. Solar panels help homeowners take control of their energy consumption and also contribute to the reduction of U.S. dependence on other energy sources.

Solar energy installation considerations

Roof stability

Not every roof can support a solar energy system. Hardware options will differ by weight and sizes, so make sure you understand what a roof needs to be able to support them. Even for roofs that are designed to support solar panels, installation can have unintended consequences. If your roof is damaged during the installation process, your insurance policy may not cover it. Make sure you contact your provider to discuss your coverage and avoid being forced to pay out of pocket to cover damages.

Cost

While the hardware cost continues to drop, the soft costs associated with solar installation aren’t dropping nearly as fast. At the end of 2018, the average price of a residential rooftop system was around $18,000, before tax credits or incentives. Approximately 64% of the total cost of residential systems. These costs include, but are not limited to:

  • Permits
  • Labor
  • Sales tax
  • Indirect corporate costs
  • Supply chain costs
  • Transaction costs

Even though solar energy is much more affordable than it once was, it is still out of reach for some. Thankfully, there are financing options for homeowners.

Solar power financing options
Third-party ownership 40% of homeowners with solar energy systems use third-party ownership. Under this type of agreement, homeowners spread out their payments over time and share the responsibility of maintenance with the third party.
Solar lease A solar lease requires the homeowner to pay fixed payments to the solar leasing company. The homeowner will pay any electricity usage that extends beyond what the system generates.
Loan financing Solar loans are designed to help homeowners stretch the system’s cost of the system over the length of the term while directly owning the panels and all the benefits that result from them.

Tax incentives

As a way to reward homeowners for choosing solar energy, the U.S. government offers tax breaks and incentives.

  • Tax credits — There are both federal and state tax credits given to homeowners, allowing them to deduct a percentage of their solar costs from their taxes.
  • Solar renewable energy certificates (SRECs) — If you live in a state which requires that a certain amount of their allotted yearly energy has to come from solar power, you will collect SRECs. You can sell SRECs to supplement your income.
  • Performance-based incentives (PBIs) — PBIs are paid to homeowners (per kilowatt-hour) for the energy that’s produced by their systems. The rate is set at the time of installation.

Solar energy insurance implications

Most homeowners insurance policies cover rooftop panels, though you may consider increasing your coverage to include the cost of the entire system. Remember, all insurance policies are different. Examine your policy and contact your provider to see what your needs are since other options like ground-based and carport systems are not always covered.

Shamor Paul, co-founder of Sunly said, “A solar power system, if designed and installed by a professional, and carrying all necessary approvals and inspections, should not be an issue to get insured. As it is an added asset to the home, the premium may increase to cover the replacement cost.”

If you plan to sell the extra energy you generate, consider additional liability through Green Energy Insurance. This coverage would protect you in case of a net-metering accident that damages property or harms the employees of the municipality.

Geothermal heating and cooling

One of the lesser-known energy options, geothermal systems use the earth’s heat to warm and cool your home. There are three main types of geothermal technologies: ground source heat pumps, direct use geothermal and deep and enhanced geothermal systems.

Geothermal heating and cooling benefits

Lower energy costs

Geothermal systems yield substantial energy savings for homeowners. Up to 65% more effective than regular HVAC systems, installing a geothermal system in your home can reduce your energy costs by approximately 70% per year.

Another advantage of this method is its single system design. You can avoid worrying about multiple components that can break at any point and reduce maintenance costs. These systems also have an extremely long lifespan, so there won’t be a need to replace parts regularly.

Increase home value

Geothermal energy is a long-term investment that results in considerable savings. Even though installing a geothermal system is expensive, you are adding a significant amount of value to your home. Unlike solar energy, which requires visible hardware, most of the geothermal components are buried underground. This not only protects the investment but also means that the curb appeal is high.

Reduced environmental impact

An effective way to reduce your carbon footprint, geothermal systems use 25% to 50% less electricity than conventional options and don’t contribute to the burning of fossil fuels or greenhouse gas emissions. As an added bonus for your family’s safety, this type of energy eliminates the chance of a carbon monoxide leak in your home. Choosing to pursue geothermal energy is one of the most environmentally-clean home improvements you can make.

Geothermals installation considerations

Property suitability

While geothermal technology can thrive in any environment, it doesn’t mean that any home is suited for it. When evaluating your home for a geothermal system, your provider will consider three things:

  • Soil properties
  • Groundwater available
  • Available land

Cost

The installation cost of a geothermal heat pump generally ranges somewhere between $10,000 to $25,000. The upfront cost is noticeably higher than traditional options, but the savings over the lifespan of your system can be worth it. Low operating and maintenance costs also supplement the initial costs, leaving you to break even on the entire system in under ten years.

Like solar energy, there are federal and state tax incentives and select financing options available to help mitigate the cost. Figure out what incentives you’re eligible for here.

Geothermal systems insurance implications

With such an expensive system, making sure your insurance covers your investment is crucial. Start by contacting your provider to see what is included. If you have an extensive system, you may need additional coverage. Most components of a geothermal system are buried underground, which means they are safe from external dangers like vandalism, hail or wind damage. But if you live in an area that is prone to earthquakes, be wary. Since homeowner insurance policies do not cover earthquakes, you should take out an additional policy to cover your investment.

Rain harvesting

Rain harvesting is one of the easiest eco-friendly home modifications. Collecting water for future use, it also reduces storm water pollution. You can use the rainwater you harvest for outdoor irrigation or utilize it in your home for laundry, cleaning or purified human use.

Benefits of rain harvesting

Lower water costs

Collecting rainwater allows you to be less reliant on water companies. And if you have enough to meet your daily needs, it will drastically reduce your water bill. Another great benefit about harvesting rainwater is its storage life. Since rainwater is not always consistent — and in some areas scarce. having a reservoir of rain can help you get through dry seasons.

Rain harvesting systems generally have low maintenance costs, especially if you are collecting water for outdoor use with no purification requirements. After installation costs, you shouldn’t expect to dedicate funds for regular maintenance.

Increased home value

Having a well-maintained rain harvesting system can have a positive effect on your property’s value. If you plan to sell your home, most potential buyers might find the eco-friendly system attractive and vital as the demand for clean water continues to grow.

Reduce environmental impact

Harvesting rainwater impacts the environment in multiple ways. Collecting rainwater allows you to lessen your reliance on companies and reduce the demand for groundwater, which keeps increasing every year.

Collecting rainwater also reduces the chances of soil contamination. Runoff water can pick up contaminants from pesticides and other pollutants and spread them to the surrounding water sources. Eliminating the chance for excess water to run off by collecting and reusing it is a way to mitigate the negative impacts of pollution. In addition to increasing your home value and reducing an environmental impact, rainwater harvesting systems give your home an emergency water supply.

Rain harvesting installation considerations

Property suitability

Rainwater harvesting systems can be easily integrated into most homes, though some things can rule out suitability entirely. Your roof and gutters are at the center of property compatibility. Depending on the material they are made of, they could potentially introduce contaminants into your water supply. Older pipes or galvanized roofs may cause lead, copper or zinc contamination. So before installing any system, make sure you identify what materials your roof and gutters are made of.

Not every climate is a match either. Infrequent rainfall negates the purpose of rain harvesting systems altogether. If you live in a particularly arid climate, for example, you would not see a quick return on investment.

Cost

You decide how intricate you want your water harvesting system to be. It can be as simple as one tank or more complex with pumps and purification technology. The price of these systems can range from hundreds to thousands of dollars, depending on which system you choose. The initial cost of setting up a water harvesting system is high, and the return isn’t as quick as what you see with geothermal systems.

Time

A rainwater harvesting system requires a big time commitment from homeowners. You’ll have to regularly check your tanks and make sure they are clean. So while it won’t cost as much some of the more involved home modifications, it requires more of your time.

State and local restrictions

There are no federal laws concerning rainwater harvesting, though some states do have restrictions on how much rainwater you can collect. States also specify where and when you can collect rainwater and limit how it can be used. For example, there are generally stricter guidelines if the water is intended for drinking.

In climates where rainfall is not frequent, states may restrict collection to ensure that the water that does fall flows to its rightful water drainage system and is not limited to a number of people. Read more about the laws and legislation of states here.

Rain harvesting insurance implications

Contact your broker before installing a system to make sure your home insurance policy will cover it. Much like solar panels, rainwater harvesting requires above ground, outside fixtures. This means that the equipment is susceptible to damage. When going over your current policy, make sure you consider potential damage to the system, as well as to your home. Leaks or floods as a result of your rainwater harvesting system may not be covered under every policy, so adding coverage is always a good idea.

ENERGY STAR products

ENERGY STAR appliances and products use less energy than the traditional options on the market. To be considered an ENERGY STAR product, it must meet the energy requirements set by the U.S. Environmental Protection Agency (EPA). As a homeowner, choosing appliances and products with an ENERGY STAR will help you save money, energy and contribute less to harmful emissions.

ENERGY STAR Benefits

Lower energy costs

The average homeowner can save hundreds of dollars on their energy bills by choosing products with the ENERGY STAR. Designed to be energy efficient, the appliances you replace will impact how much money you save on your energy bills. For instance, a traditional clothes dryer can use the same amount of energy as an ENERGY STAR model dishwasher, refrigerator, and washing machine combined.

Beyond just certified appliances, ENERGY STAR also offers installation of doors and windows designed to control air leakage and sunlight transmittance.

Increase home value

There is no denying that replacing appliances with ENERGY STAR models is a significant investment. But once the installation process is over, you’ll be rewarded with incremental home value ranging from hundreds to thousands of dollars. While the increase may not be as substantial as installing solar panels, energy efficiency is a selling point for many buyers on the market.

Reduced environmental impact

ENERGY STAR’s mission is to reduce the impact we have on the environment. Since 1992, the label has helped reduce greenhouse gases by more than 3.5 billion metric tons, which is proportional to the yearly emissions 750 million cars would produce. While saving money on electricity bills directly benefits homeowners, the environmental impact ENERGY STAR products reduce cannot be ignored.

ENERGY STAR Installation considerations

Cost

The benefits of switching to ENERGY STAR certified products cannot be overstated. But updating your home with these types of appliances will require a considerable amount of money, especially if you plan to make replacements all at once.

Depending on the appliances you want to replace, your energy savings may not be as significant at the beginning. For example, a dishwasher will most likely yield fewer savings than a refrigerator because it uses less energy by default. If updating all of your appliances is unrealistic for your budget, create a long-term plan to gradually switch to all ENERGY STAR products.

To help offset some of these costs, the government offers federal income tax credits for making energy-efficient improvements to your home. However, to claim the tax credits, the improvements must be made to your home before 2021.

ENERGY STAR Insurance implications

Adding ENERGY STAR appliances and updates to your home generally doesn’t impact your insurance. Most homeowners insurance policies have coverage for energy-efficient appliances. Contact your insurance provider to better understand what type of coverage you need and what incentives they provide.

Final thoughts

Eco-friendly home modifications are considerable investments but benefit homeowners with savings, increased home value and tax credits. More than that, these home modifications are changes homeowners can make to help the environment. Personal responsibility for your carbon footprint is part of living in the global community. No matter how many changes you are able to make, every bit makes an impact.

The post Eco-Friendly Home Modifications That Impact Your Home Insurance appeared first on The Simple Dollar.



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How to Talk with Your Parents About Their Finances

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Talking to your parents about their finances probably seems like one of the most awkward you conversations you could ever have. I’ll bet it ranks right up there with the sex talk your parents gave you when you were a kid — or that you’ve had with your own children.

I grew up in the South, where we don’t talk about money or sex. So when I asked my mom where babies came from, she told me a man and woman “make love”. That’s it. That was the extent of the conversation.

I have three kids, so clearly I figured out where babies come from. When my oldest was 10, she asked me where babies came from. I didn’t say something vague like, “A man and woman make love.” I simply told her the basics. She then looked at me – and remember, I have three kids – and said, “Ooh, you did that three times.”

I decided to be upfront with my kids because I wanted them to know they could feel comfortable talking to me about a topic that many people consider taboo. Like the money talk with parents, it’s only as awkward as you make it.

However, unlike the birds and the bees talk, you cannot figure out your parents’ finances unless you actually get the details.

I learned this the hard way.

Why You Need to Talk to Your Parents About Money

Years ago, I suggested to my mom that she look into getting long-term care insurance. She was sixty years old and living on her own because she and my dad had divorced. As a personal-finance journalist, I knew it would be good for her to have an insurance policy to pay for long-term care if she ever needed it.

She took my advice and met with an insurance agent. But, unfortunately, she had a pre-existing health condition – a benign tumor behind her left ear — that made her too much of a risk to insure. If I’d been smart, I would’ve used that opportunity to start talking to her about her finances to figure out how she would pay for long-term care if she ever needed it.

But I wasn’t smart.

I didn’t realize how important it was to have a conversation with my mom about her finances at the time.

A few years after my mom found out that she couldn’t get long-term care coverage, she started having trouble remembering things. I knew I needed to act quickly to get her to meet with an attorney to update her legal documents. She agreed, and the attorney drafted a will, living will, and power of attorney for her.

It was especially important to get those latter two documents drafted. Her living will named my sister and me as her health care surrogates and gave us authority to make health care decisions for her. And we both were named her power of attorney, which gave us the right to make financial decisions for her.

Here’s the thing. You must be mentally competent to sign those documents. If I had waited any longer to get my mom to meet with an attorney, the attorney might not have allowed her to sign her power of attorney and living will documents. I wouldn’t have been able to step in and start making financial decisions for her without going through a lengthy and expensive court process to become her conservator and guardian.

If something were to happen to your parents – say a stroke – and you needed to access their bank account to pay their hospital bills or talk to any of their financial institutions, you couldn’t unless your parents had already named you their power of attorney and you had the document. And you can’t make health care decisions for them unless they’ve named you their health care proxy.

If you wait until a health emergency to talk to your parents about their finances, it could be too late. They might not have the legal documents in place to allow you to step in and help. You won’t have a plan for dealing with the emergency. And emotions will be running high. You and your parents won’t be thinking rationally, and the last thing any of you will want to discuss are finances.

It might not be a health issue that forces you to get involved with your parents’ finances. They might not have saved enough for retirement and will need support from you. They might die without a will, and you’ll have to deal with what’s left behind while family members fight over who gets what.

As scary as having a conversation with your parents about their finances might seem, the consequences of not talking to them can be much worse.

How to Talk to Your Parents About Their Finances

So now that I’ve sufficiently scared you, you’re probably thinking: “Okay, I get that I need to have this conversation. But I don’t know how.”

First, realize that the scenario you’re playing out in your head about your parents flying off the handle because you tell them you want to talk about their finances probably won’t happen. In fact, they might even be grateful that you’re looking out for their well-being – that is, if you approach the conversation out of respect and concern for their best interests.

What you don’t want to do is be condescending. The fastest way to shut down a conversation with your parents is to talk down to them.

You’ll also scare them away if you appear to have selfish motives. These conversations are not about you and what you might hope to inherit someday. These conversations are about letting your parents know that you want to know what their wishes are so you can follow them.

And don’t issue ultimatums. Telling your parents you won’t help them as they age if they don’t talk to you about their finances won’t work. They’ll just resist your efforts even more.

Instead, choose a time when your parents are relaxed and there aren’t other people around who don’t need to be part of the conversation. (Hint: A holiday meal isn’t the ideal time for this talk.) Then try one of these tactics to get the conversation started:

  • Share your own financial planning experience. For example, if you recently drafted a will, tell your parents that you want them to know where it is in case of an emergency. Then you could ask what sort of estate planning documents they have and where they are. The goal isn’t to find out whether they’ve included you in their will or how much money you’re getting, but to know if they even have their financial wishes in writing.
  • Use current events. You could let your parents know that you’re concerned about their well-being during the current coronavirus pandemic and want to know whether they’ve taken any steps to plan for a health-care emergency. For example, you could ask whether they have an advance directive or living will that names a health care proxy for them – someone to make medical decisions for them if they can’t.
  • Offer to lighten their load. You can get a glimpse into your parents’ finances by offering to take over a money task for them – such as setting up automatic bill payments – so they have more time to do things they enjoy.
  • There are plenty of other ways to start the conversation, from sharing a story about someone you know who had to get involved with a parent’s financial life to sending them an actual invitation to talk. If one approach doesn’t work, try another.

    What to Do If Your Parents Are Reluctant to Talk About Money

    It might take time for your parents to get comfortable with the idea of sharing information about their finances with you. If you’ve made several attempts to start the conversation and haven’t had luck, you might benefit from getting a third party involved.

    Reach out to a family friend, a member of the clergy or your parents’ attorney or accountant for help. That person might be more successful in persuading your parents to start talking to you because parents can be reluctant to take the advice of their own children.

    Another option to get your parents to share information with you is to ask them to write it down rather than tell you. Ask them to make a list of their financial accounts, store that list someplace safe, and tell you how and when you would be able to access it.

    This can be a tricky situation, but it’s important not to give up. If those approaches don’t work, here are a few other strategies for speaking with reluctant parents.

    What Information to Gather

    If your parents are willing to talk, start with the basics.

    You don’t need to know how much they have in the bank, but you need to know where they bank. Also find out how they pay their bills – by automatic bill pay or by check. If it’s the latter, suggest that they set up automatic payments to ensure their bills get paid if, say, they are injured and have to be in the hospital for a while.

    Find out whether they have a power of attorney who can make financial decisions for them if they can’t — and a health care proxy to make medical decisions for them if they can’t. Also, ask if they have a will that spells out who gets what when they die. An attorney can draft all of these documents. Without them, state law will determine who gets your parents assets, and a judge will likely decide who can make financial or health care decisions for them if they become incompetent.

    Over several conversations (that’s right, you don’t need to do this all at once), dig deeper to find out what sources of income your parents have and where they stand financially.

  • Do they have debt?
  • What sort of insurance policies do they have?
  • Do they have enough saved for a comfortable retirement?
  • Do they have a plan for paying for long-term care if they need it?

Gather as many details as you can about the financial accounts they have, the bills they regularly pay, the investments they have, the professionals they work with and their financial wishes. Again, you could ask them to write down this information – including usernames and passwords – so you’ll have it in case of an emergency.

I can’t promise that if you use any or all of these strategies that the conversation will go so well that you and your parents will pop open the champagne and celebrate when you’re done talking. It might take several attempts and several conversations.

But if you don’t try at all, you won’t get the information you need, and you won’t be prepared to help your parents as they age. Really, that’s what this is all about – being there for your parents when they need you most.

J.D.’s note: Cam and I are in similar situations, and we’ve chatted about our shared frustrations before. Both of our mothers are aging and have memory issues. As a result, we’ve both taken charge of their finances.

One thing that I’ve learned is that some of this stuff is really very easy. Many institutions will work with you as long as you have the proper documentation. In some cases — as with my mother’s bank — the organization will work with you, but there are hoops to jump through.

Believe it or not, the greatest difficulty I’ve had in managing my mom’s money is with the Vanguard Group, and it’s not because they’re being jerks. They’re very serious about security — as they should be — but as a result, it’s a total pain in the ass to take care of my mom’s retirement accounts — including required minimum distributions.



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How and Why to Refinance Your Home Mortgage

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Key Takeaways

  • Refinancing can save money if you can take advantage of lower interest rates, which makes your mortgage debt less expensive to carry.
  • There’s more than one way to refinance, so choose the solution that complements your finances.
  • Refinancing can eliminate extra costs over the lifetime of your home loan like private mortgage insurance.

Although the pandemic has caused economic turmoil, it’s also resulted in at least one bright spot: interest rates are dropping to historic lows. Lower interest rates can mean lower monthly mortgage payments or better loan terms, which is especially helpful for individuals who’ve lost their jobs, had hours cut, or otherwise felt the impact of a worldwide health crisis. 

But there’s more to refinancing than waltzing into your local bank and demanding a new loan. Understanding the different forms of refinancing can guide you to a decision that makes sense for you.

Bonus:If the COVID-19 pandemic has you worried about money, check out my free Coronavirus Proofing your Finances guide and protect your money during this pandemic!

What Does Refinancing Your Home Mortgage Mean?

Refinancing your mortgage means you replace your existing home loan with a new one. Homeowners can use home loan refinancing to leverage lower interest rates, restructure their mortgages, or tap into their home equity.

When Should I Consider Refinancing My Mortgage?

  • To leverage a lower interest rate: You can lower your monthly mortgage payments if you can secure a lower interest rate, which makes your debt less expensive to carry over time. 
  • If you can recoup the costs: Refinancin’ ain’t free, so you’ll have to whip out a calculator to confirm that you reach a break-even point relatively early on in your new loan. At first, your loan will be more expensive because of the closing costs for the new mortgage, but you’ll save money later in the form of less interest.
  • If you want to reduce your loan term: Homeowners often opt for a 30-year mortgage to spread out payments. This is a double-edged sword because it also means that you’re paying more in interest plus other potential expenses like insurance. By reducing your loan to a 15-year term, you can pay more cash toward the principal. 
  • If you want to transition from an ARM to fixed: If you’re in an adjustable-rate mortgage (ARM), your interest rate stays the same for an initial period, but then changes every year for the life of the loan, according to an interest rate index. Worried about your interest rate going up? If you’ll be in your home for the long haul, it might make sense to restructure into a fixed-rate mortgage. 
  • To use a cash-out refinance: For homeowners with a substantial amount of equity (over 20%) in their homes, there’s an opportunity to refinance and “cash-out” the difference between your old home loan and your new one. This cash is free to use for home improvement projects etc. You can think of cash-out refinancing as a way to both refinance your mortgage and borrow money, simultaneously.
  • To get rid of mortgage insurance: Many lenders require at least a 20% down payment if you want to avoid mortgage insurance. If you’re still paying mortgage insurance, refinancing is a way to eliminate it.

What Are the Costs of Refinancing?

Refinancing is Latin for “new loan.” 

Okay, it’s not, but refinancing still means that a new loan is created to replace your old one. Remember all those fees and expenses you had to pay for your first home loan? Unfortunately, those same costs apply. 

Fees vary lender to lender, but you may have to pay fees for the initial application, loan origination, legal reviews, title insurance, and title searches. All in all, these fees and costs usually sit between 3% and 5% of the total loan. 

Bonus: Having more than one stream of income can help you through tough economic times. Learn how to start earning money on the side with my FREE Ultimate Guide to Making Money

Okay, How Do I Refinance?

Step 1: Know why you’re refinancing

Do you want to restructure your ARM into a fixed-rate loan? Do you want to shorten your loan duration? It’s essential to nail down exactly why you want to refinance your mortgage, so you can approach the refinancing process with a specific goal in mind.

Step 2: Take your financial temperature

Just like your original home loan, your new mortgage requires approval. Do you have a good to excellent credit score and a low debt-to-income ratio? The better your finances, the better your potential loan terms. 

If your credit score could use a little work or you have lots of outstanding loans you can pay off, it’s in your best interest to work on improving it before applying for a new loan.

Step 3: Calculate how much home equity you’ve built up

Home equity is the difference between your property’s value and how much you owe the mortgage lender. So, let’s say your home is worth $500,000, and you owe $300,000 on the loan. Your home equity would be $200,000. Figuring out your home equity will tell you if you can avoid getting private mortgage insurance and other fees.

Note: If you have more than 20% equity in your home, you’ll be charged with fewer fees and be eligible for better loan terms. But you can still refinance if you have at least 5% equity.

Step 4: Get quotes from lenders

When you’re shopping for clothes, you probably don’t take home the first thing you pick up on the sales rack. You likely try on a few clothing combos, decide those horizontal stripes are unflattering and put a few pieces back before ending up at the register. The same process should apply to your refinancing… Minus the horizontal stripes. 

Approach multiple lenders to get a variety of quotes. Make sure you look beyond interest rates when evaluating your quotes—the fees and other costs are also important to consider.

Step 5: Gather your paperwork

Have you ever had to give a speech without your notecards there to guide you? Although winging it can sometimes result in success for the lucky few, you’ll have a lot more success if you prepare. You shouldn’t “wing” your refinancing, either. 

Gather appropriate tax documents, pay stubs, IDs, and all the other paperwork your lender needs for the loan approval process. In some cases, you’ll also need to prepare for an appraisal—but not all lenders require this step. 

Step 6: Prepare for closing

Like your first home loan, you’ll be on the hook for closing costs. Lenders will give you the closing disclosure and loan estimate that details how much cash you’ll need to close on your new loan. 

Step 7: Pay your loan and settle in

Ask your lender about autopay discounts and make sure you keep track of your loan payments. Make copies of your paperwork and review your statements regularly.

Your Home, For a Little Cheaper

Refinancing isn’t for everyone, but it’s worth your time to look into your options when interest rates drop or if your current mortgage terms aren’t ideal. The pandemic has delivered a slew of unfortunate news, but for some homeowners, it can make a mortgage debt less expensive to carry.

How and Why to Refinance Your Home Mortgage is a post from: I Will Teach You To Be Rich.



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