Totaled: Upside-down car loans and when Gap Insurance could be a good idea


Boston Public Library Collection - Leslie Jones

Boston Public Library Collection – Leslie Jones

We recently came upon an excellent vintage photo collection of Boston-area car wrecks from the 1930s. Part of a larger Boston Library Collection, the photos were taken by Leslie Jones, a well-known news photographer of the era. Despite the big solid appearance of the cars, the damage is impressive. There weren’t very many safety features built in to these old behemoths. Many of the wrecks look like the vehicles sustained a total loss.

Generally, a car is “totaled” when it will cost more to repair the car than the car’s actual cash value (ACV) is worth. Of course, it’s a little more complicated than that, as Gary Wickert explains in Claims Journal: When is A Vehicle Considered a Total Loss?

The criteria for deciding when a car is a total loss and when it can be repaired vary from insurance company to insurance company and might even be dictated and controlled by state statute or regulation. Further complicating the issue is the fact that insurance companies do not all use the same sources for determining the value of a vehicle. The threshold used by your insurance company to make this determination can be discovered by calling your insurance agent. Insurance professionals, on the other hand, have to be familiar with these rules, criteria, and thresholds in all 50 states.

If your car is totaled, you’ll be paid only for the ACV of the car after any deductibles have been satisfied. If you own the car outright, the check will be sent to you. But if your car is financed, the payment will go to the bank or finance company.

What if you still owe more on the car than the car is worth?

With today’s low down payments and long-term financing arrangements, it can be easy to find yourself under water in a situation where you owe more than a vehicle is worth – in the auto industry this is called being upside-down on a loan – and today, “… it applies to roughly half of all new-car buyers.” Unless you have Guaranteed Replacement Cost coverage or Guaranteed Auto Protection (Gap insurance), you could be out of luck.

Would you still have to pay what you owe on the wrecked car? Absolutely: the folks at NOLO explain: My Car Was Totaled But I Still Owe Money on It

But what happens if your loan amount is larger than the amount of the insurance company’s check? The very short answer to this question is: you are still legally obligated to make your monthly loan payments to the bank or financial lender until the loan is paid off. The fact that your car was a total loss does not change your loan repayment terms. Your legal obligation to repay the loan continues. The bank or lender still has the right to full repayment of the loan, even though you may no longer have your car.

Nobody plans to be in a car crash, but when buying a new car, Gap Insurance might be a worthwhile option if you’ll be putting little or nothing down for a deposit or if you plan on financing the car over an extended period of time.  Here’s what the Insurance Information Institute says about times when Gap Insurance might be a worthwhile investment. If you:

  • Made less than a 20 percent down payment.
  • Financed for 60 months or longer.
  • Leased the vehicle.
  • Purchased a vehicle that depreciates faster than the average.
  • Rolled over negative equity from an old car loan into the new loan.

III says that car dealers often offer a type of gap coverage, but that it might be cheaper to purchase through your  regular insurance company.  Why not check with your local insurance agent to know your coverage options before buying  a new car?

Why it’s important to monitor your credit history every year


creditYour credit history is very important. A good credit report can help or hurt you when you look for a car loan, a mortgage or some insurance policies. You may be denied loans or credit cards if you history is poor, or you may end up paying higher rates on credit cards or for insurance coverage. (See: Credit-Based Insurance Scores: How an Insurance Company Can Use Your Credit to Determine Your Premium) Some employers may even look at your credit rating as a factor in whether or not to hire you.

You should monitor your credit rating yearly, learn more about what helps and hurts you, and review reports to be sure there isn’t anything inaccurate. Some reasons you should monitor your credit annually:

  • Find problems that are hurting your good rating and try to improve
  • Identify mistakes and get them corrected
  • Watch for signs of potential identity theft
  • Somebody else’s information might be mistakenly attributed to you
  • You might find accounts that are not yours

By law, you can get one free copy of your credit report every year. That includes one copy from each of the three major reporting companies: TransUnion, Equifax and Experian. But you need to be careful about where you get your free credit reports from. Here is the authorized source:

Annual Credit Report at 1-877-322-8228
AnnualCreditReport.com

You will hear a lot of promotions for “free credit reports” – but consumer beware! Many of them make reports free but have some type of a catch – see this short video to learn more.

 What if you find problems in your credit report?

According to consumer.gov, you can take these steps to fix any mistakes or problems:
Write a letter. Tell the credit reporting company that you have questions about information in your report.

  • Explain which information is wrong and why you think so.
  • Say that you want the information corrected or removed from your report.
  • Send a copy of your credit report with the wrong information circled.
  • Send copies of other papers that help you explain your opinion.
  • Send this information Certified Mail. Ask the post office for a return receipt. The receipt is proof that the credit reporting company got your letter.
  • The credit reporting company must look into your complaint and answer you in writing.

The FTC offers more information:

Boston Marathon Monday 2016 Toolkit


Marathon runners on the run in cityThis year will mark Boston’s 120th Marathon and the forecast is sunny and warm. If you plan to attend, we’ve gathered some links and tools to help you prepare … or if you’re an armchair observer, we have links to mobile devices, social media sites and online streaming. Remember. Marathon Monday coincides with Patriots Day, which is  a legal holiday in Massachusetts – one of only two states to commemorate the day as a holiday.

Boston Marathon Event Information

Get a route map or download a mobile app to track runners

Policies for 2016 Boston Marathon Spectators (PDF)

Mile-By-Mile Guide To The Boston Marathon

Your guide to the 2016 Boston Marathon route, start times and more

Transportation in the Greater Boston area on Marathon Monday

Follow on social media: Boston Marathon Twitter and Boston Marathon Facebook

Watch online: Official Online Streaming site

Spectator Guidelines – what not to bring (click link for larger)

Boston Marathon security - what not to bring

Security: If you see something, say something

As summer approaches, are your windows kid-proof?


window safetyWe’re a little late in jumping on the National Window Safety week bandwagon – it runs from April 3 to 9 this year – but we’d maintain that window safety isn’t an issue that should be confined to a single week of the year. The National Safety Council says that “Window Safety Week coincides with the arrival of spring, when homeowners naturally want to open the windows and let in fresh air. Its goal is twofold: For families to understand the role of windows in escaping a fire or other emergency and to learn to safeguard against accidental window falls.”

Every room should have two ways to exit – usually, that is at least one door and one window. The National Safety Council offers these window safety tips as part of your escape plan.

  • Make sure windows are not nailed or painted shut
  • Do not install air conditioners in windows that may be needed for escape
  • Make sure at least one window in each bedroom meets escape and rescue requirements
  • Window guards, security bars, grilles or grates render windows useless in an emergency unless they have a release mechanism; update them if necessary
  • Develop an emergency escape plan and practice it during the day and at night
  • Keep emergency escape ladders in second- or third-story bedrooms and teach everyone in the home how to use them

If you have young children, you have another safety issue to consider. Every year, more than 3,300 children under the age of 5 fall from windows, suffering injuries serious enough to send them to the hospital; sadly, about eight children a year die from these falls.

The Window Safety Task Force offers these tips to protect children from window falls:

  • Avoid the placement of furniture near windows to prevent children from climbing
  • Do not rely on insect screens to prevent a window fall
  • Keep children’s play away from open windows and doors
  • Install building code-compliant devices designed to limit how far a window will open or window guards with release mechanisms to help prevent a fall
  • Teach your child how to safely use a window to escape during an emergency

Here are some additional tools:

Window Safety Brochure
Fire Escape and Window Safety: A Balanced Approach
Window Safety Checklist

April Fool’s Day on the Web: 2016 edition


April Fools Day

It’s late enough in the day that you’re probably already suspicious of pranks, so we don’t think we’re issuing any spoilers here with our April Fool’s Day roundup.  We’ve gathered a few of our favorites from around the web. But warning – if you live in China, don’t go any further because April Fool’s Day has been banned in China. (Unless that’s a great big prank from China!)

Think insurance is a serious business? Usually we are very serious, but we like to kid around, too.  Here are a few of today’s jokes — but we think most of them are a little too close to the truth to be funny!

Google always has a few tricks up their sleeve:

We liked this Jobs for Babies idea and wish it was a real thing.

 

Here’s an item we think would be a big seller: Trulia’s real estate map to help home buyers avoid hipster neighborhoods

Here’s one we think wouldn’t be a big seller: The Mark Zuckerberg fashion line for HM

The Washington Post has a really good roundup – it’s YUGE: April Fools’ Day hoaxes: 2016’s comprehensive, updating (and upsetting) list – just be warned that we can’t vouch for everything being work safe or work appropriate!

See our April Fools Day roundup from 2014 for more oldies but goodies.

We wish the prediction for snow this weekend was a big joke, but unfortunately it looks real! We remember an actual April Fool’s Day storm in 1997 that dumped the region in about 30 inches of snow!