Just say no to Extended Warranties for Cars

Extended Warranties for Cars Are ‘Fraught With Peril for Consumers’

"While reputable options exist, the robocalls are almost certainly scams, an industry group warns. And for consumers who feel they have been ripped off, there is no guarantee anyone will help" writes Christopher Jensen for The New York Times.

"vehicle service contracts — are “fraught with peril for consumers, especially economically vulnerable people who can’t afford to have their car break down,” said Rosemary Shahan, the president of Consumers for Auto Reliability and Safety."

'In the worst case, telemarketers are just collecting money. “There is no warranty, it is just a flat-out scam,” said Chad M. Canfield, an official with the Michigan attorney general’s office.'

'Policies can cost thousands of dollars, and consumers believe they are getting bumper-to-bumper coverage when they hear claims such as “100 percent of covered repairs are paid.”  But that is "misleading because many things are not covered."

Just say NO! to extended vehicle warranties. If buying a used vehicle, get it checked out first by a trusted mechanic. Instead of buying the warranty, put the money into your emergency savings.

Cost of auto insurance in 2021

 How much are you paying for auto insurance each year? "Americans spend an average of $1,674 a year, or 2.44% of their income, on full coverage car insurance" but "Americans can pay significantly different rates depending on their location." Bankrate.com has great info and advice for drivers

This web site offers a map of the U.S. where you click on your state to find out the average cost of vehicle insurance. Where you live within your city can impact your car insurance premiums! Click on the map to view costs in your area: https://www.bankrate.com/insurance/car/the-true-cost-of-auto-insurance-in-2021/#how-to-reinvest-auto-insurance-savings

Learn how to save on auto insurance

Improve your credit score

Choose the right vehicle

Focus on your driving

Prepare in advance for your teen driver

Learn where to"invest" your auto premium savings.

 

 

Vehicle insurance prices dropped in 2020 due to fewer miles traveled

Rates fell on average 4% in 2020 but expect rates to increase in 2021.  

The average annual car insurance bill is $1,483, down 3.9%.

Gee, with so many people working from home, why didn't rates fall more than 4%? Car insurance companies are posting record quarterly profit gains. The Center for economic Justice and the Consumer Federation of America are asking insurers to reduce rates to reflect their growing profits. 

Insurers say the accidents that have occurred have higher property damage and higher medical cost because the fewer accidents have been far worse to the excessive speeding taking place during the pandemic. Also there is a lot more accidents attributed to distracted driving due to drivers texting and talking on smartphones.

Miles driven are returning to pre-pandemic levels even if a lot of employees are still WFH. More people are driving rather than flying to visit relatives and take vacations.

Thinking of Buying Vehicle Insurance Online? Think Again

Writing for The Wall Street Journal (11/24-25/18), Nicole Friedman explains the pitfalls of online shopping for car insurance. The experience can be frustrating for many reasons, including, the proprietary formulas that insurance companies use. You need to visit multiple sites for the different companies (and set up your own spreadsheet for comparison). Some of the biggest insurers (including Stte Farm & Geico) don't share their rating system with price comparison sites. Now most sites are simply "lead generation" sites that identify potential customers for agents to contact.
Another reason: Your info may be sold. Most auto insurance comparison sites sell shoppers' info to agents and insurance companies.
So... what do you get in return for sharing your personal info? Two to three quotes, emails, and phone calls from agents.
"It's nothing more than a garbage arbitrage play, where someone buys your info once and sells it 10 times" according to Keith Melnick, CEO or insurance comparison sites Zebra (which no longer sells leads).
Insurance is regulated by the states with each state having different rules.
The actual cost will differ from the estimated price, sometimes significantly. 
Most shoppers need an expert's help to decide how much insurance to buy for their circumstances. 
"The quoted price matches up with the final price about 60% of the time."

Related: Take Control of your Auto Loan webinar from the Consumer Financial Protection Bureau: https://www.youtube.com/watch?v=RIYKGRp1veM

Wondering Why your New Car Insurance is So Expensive?

"New cars loaded with high-tech crash-prevention gear are having a perverse effect on car-insurance costs: They are soaring."
"Safety features such as autonomous braking and systems to prevent drivers from drifting out of their lanes are increasingly available on vehicles rolling off assembly lines. Auto companies and third-party researchers say these features help prevent crashes and are building blocks to self-driving cars. But progress comes with a price."
"Enabling the safety tech are cameras, sensors, microprocessors and other hardware whose repair costs can be more than five times that of conventional parts. And the equipment is often located in bumpers, fenders and external mirrors—the very spots that tend to get hit in a crash."

Christina Rogers & Leslie Scism explain the details behind the sky rocketing insurance costs in the Wall Street Journal: Why Your Extra-Safe Car Costs More to Insure

What to do BEFORE you get hit by an uninsured motorist

My assistant blogger had the unfortunate experience of being hit by an uninsured motorist. Learn from her experience.

It's not unusual to get in a fender bender in the winter, and most motorists know what to do if this happens. Exchange insurance information, document it, etc. But, what happens if you're hit by an uninsured motorist?

First be proactive. BEFORE you get hit by an uninsured motorist check and make sure your insurance covers this. Likely it does, even if you only have liability insurance. Check the coverage limits and make sure to add this protection if you don't already have it.

Our insurance, for example, had a $250 deductible with a $3500 maximum for uninsured motorist property damage. So, if we were driving a car worth more than $3500, it might be worth it to increase the maximum property damage amount.

*Note that our insurance had no deductible for bodily damage caused by an uninsured motorist. The maximum insurance would pay for bodily damage was $100k per person up to $300k per accident. To put it another way, bodily and property damage can have two different maximum pay out amounts and different deductibles as well. Check your coverage and make sure you're comfortable with the amounts covered and the deductible.

With an uninsured motorist, it's very important to document, document, document! Make sure to get the other driver's contact information, driver's license, and vehicle information, etc. use your cell phone to take photos of vehicles, license plate, their driver license. If the damages are more than your deductible, consider filing a claim with your insurance company, but only if the damage exceeds your deductible by a substantial amount. That’s up to you to decide, keeping in mind that insurance claims often result in higher premiums for years. Will the compensation from your insurance justify potentially higher rates for years to come?

Also, note that one should call the police even for a minor fender bender. Driving without insurance is illegal and most uninsured drivers risk having their car impounded after an accident. Assuming you're the one hit by an uninsured motorist, the more documentation you have the better for you and your insurance company.

It is possible and legal to settle without using insurance. However, a driver without car insurance is unlikely to have the money to pay for damages so make sure you're covered before you get in an accident!

Financing an Automobile

Taking out a loan to purchase an automobile can be a significant part of consumers’ financial lives. And it is a complicated process.  The decision to obtain auto financing includes many factors, including the source of financing, features of the loan, and issues related to down payment, trade-in, and add-ons. To help consumers navigate this process and get the best loan for their situation, the CFPB has released a new set of resources called Take Control of Your Auto Loan.

1.  Take Control of Your Auto Loan website

This web page has easy-to-navigate information and tips on planning to shop for an auto loan, learning to explore loan choices, knowing what is negotiable, and understanding how to close the deal. You can access the website here.

2.  Auto Loan Worksheet

Consumers can use this worksheet to compare loan offers, see the total cost, and negotiate the best deal on an auto loan.  You can access the worksheet here.   

3.  Take Control of Your Auto Loan: A step-by-step guide

Consumers can use this printable guide to navigate the auto financing process, including budgeting considerations, understanding the auto finance process, shopping for an auto loan, negotiating and closing the deal. The guide also emphasizes how to avoid common pitfalls. As a financial educator, you can also use this guide to familiarize yourself with the auto finance process, so that you can provide helpful guidance to those you assist. You can access the guide here.

4. Consumer Voices on Automobile Financing

This report describes the findings of consumer focus groups and consumer complaint data about the challenges of navigating the auto financing process.  We found that many consumers reported they did not shop around and negotiate as much for the financing as they did for the vehicle itself.  The complaint data showed that consumers faced challenges in understanding loan features during negotiations on financing. You can learn more about these findings here.

5. Ask CFPB auto loan questions

There are updated questions and answers about auto budgeting and financing in the Ask CFPB database of consumer questions.  The Ask CFPB auto loan questions can be found here.

Choosing an Auto Body Shop

Check out this website for reliable advice on choosing a reliable auto repair shop. Surprisingly, some of the same concepts apply to evaluating your medical doctor! The site includes a "quick guide to establishing whether a doctor or auto body shop is truly independent, or if they’re really in the back pocket of the insurer." Print out the wallet size guide: “How to Sniff Good and Bad Service Providers.” http://www.thesimpledollar.com/carinsurance/auto-body/

Have you purchased these autos?

Consumer Action is sharing updates about potential class action litigation. If you purchased the products described below, contact the law firm listed below for further information.

BMW. Owners/lessees and certain prior owners/lessees of certain BMW vehicles should be aware of a potential design defect that allows water to enter the vehicle’s trunk and potentially damage electronics.  Because of the design of the vehicles’ drainage system, as well as certain other design issues, water may enter into and collect in your trunk, damaging vital electrical components. In addition, BMW did not warn owners that liquids should not be transported in the trunk because sensitive electrical components are located there. In many cases, BMW has refused to cover the cost of repairs. The defect appears to affect the following vehicles: 1999-2006 X5 series vehicles; 2003-10 X3 series vehicles; 1999-2006 fourth-generation 3-series vehicles; 2006-11 fifth-generation 3-series vehicles; 2006-11 5 series vehicles; 2004-10 6-series vehicles; and MY 2002-08 7-series vehicles.

Ford Fusion and C-Max Hybrids. Owners/lessees of Model Year 2013 Ford Fusion Hybrid and C-Max Hybrid vehicles should be aware that independent testing performed by Consumer Reports indicates that the Vehicles’ EPA-reported gas mileage far overstates the actual mileage achieved by the Vehicles. Ford marketing materials assert that the Vehicles have an EPA-reported gas mileage of 47 miles-per-gallon on both highways and city roads.  Independent testing conducted by Consumer Reports concluded that the Vehicles’ mileage ratings actually vary by as much as 10 miles-per-gallon.

Ford Ecoboost. Owners/lessees and certain prior owners/lessees of 2010-2013 Ford vehicles containing a 3.5L V6 Ecoboost Engine should be aware of a potential engine defect may cause the vehicle to suddenly limp or stall. Ford’s Ecoboost engine utilizes a “Charge Air Cooler” to cool the engine and conserve gas.  As moisture collects in the cooler, the moisture may be pulled into the engine, causing the engine to shudder, shake violently, lose power or stall.

Jeep Liberty or Jeep Cherokee. Owners/lessees and certain prior owners/lessees of 2005-2007 Jeep Liberty or Jeep Cherokee models should be aware of a potential window mechanism defect. There appears to be a defect in the window regulators, lift plates and related mechanisms that causes the windows to bind, stick, tip forward, chatter and fall to the bottom of the door frame. Often, this occurs suddenly and when the windows are partially or totally closed. The defect also causes the window to get stuck in a closed, partially closed and totally open position. The defect occurs while the engine is off or running, while the vehicle is standing still or being operated at any speed. Any dealer repairs involve simply replacing the defective Window mechanisms with similarly defective mechanisms.

MINI Cooper. Owners/lessees and certain prior owners/lessees of the 2007-2009 MINI Cooper R56 (“Cooper Hardtop”) and 2008-2009 MINI Cooper R55 (“Cooper Clubman”).  A defect with the timing chain tensioner can cause sudden engine failure at even high speeds. The Timing Chain Tensioner is a component that maintains proper tension of the guide rails against the timing chain. It ensures that the timing chain maintains proper synchronization between the camshaft and crankshaft. If it is defective, synchronization brakes down, the crankshaft may be impacted, leading to more serious engine problems. Symptoms: an engine knock occurs, indicating a problem with the tensioner. If there is a complete failure, there is a loss of power to the car.

Contact:
Bryan L. Clobes
Cafferty Clobes Meriwether & Sprengel LLP, Philadelphia, PA
Email: BClobes@CaffertyClobes.com
Phone: 215-864-2800 (office)
Website: www.caffertyclobes.com