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Life Events, Strategies to Save

How to Compare Car Insurance

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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By Jaime Netzer, editor of The Zebra’s car insurance publication, Quoted.

If you’re reading this, chances are you’re savvy enough to know that Smokey Robinson’s “shop around” advice can apply to much more than matters of the heart. You know how to check a big-ticket item’s price across all your favorite retailers, and you’d never book a flight before first taking a gander at Kayak or Expedia (but also remembering to cross-reference airlines like Southwest and Virgin who don’t show up on such search engines). In short: You know how to comparison shop with the best of them.

But do you know how to comparison shop for car insurance?

Like all kinds of insurance, car insurance policies aren’t quite as straightforward as a seat on an airplane or a new TV (or nearly as thrilling—we know). But this necessary expense is also a big one: insurance accounts for more than 10 percent of the average family’s expenses, more than health care, clothes, or entertainment. When combined with general transportation costs, getting ourselves from point A to point B costs us, on average, nearly a third of our total expenses.

So how do you go about choosing the right car insurance company? In a $180-billion dollar industry with an almost unbelievable amount of advertising noise, how do you sort out what you actually need? There are three main things to look for in a car insurance company as you comparison shop:

Claims & Service Ratings

Your best bet is to start with the tried-and-true experts at J.D. Power if you’re interested in learning how well the car insurance company you’re considering handles both claims and customer service. Across most of the major companies, J.D. Power measures overall satisfaction, as well as more nitty-gritty details like service interaction, repair process, and settlement. The result is an annual study on claims that provides an accurate, unbiased glimpse into what life with an auto insurance company will actually be like. Even more companies are included in J.D. Power’s “Insurance Purchase Experience” Ratings—find 2015’s here.

Pricing and Discounts

Then of course, there’s the good old-fashioned price sticker to consider. Each company’s underwriting guidelines are different, which means you could get a slightly more competitive price if you do some legwork on the front end of your insurance search. Also keep in mind that car insurance is incredibly personalized—every person has their own history when it comes to accidents, claims, and personal factors, too. For example, military members and their families might choose to go with USAA, a military-only provider. Maybe you’ve got a household of exceptionally bright teenagers who could all qualify for a good student discount, or maybe accident forgiveness is exceptionally important to you for reasons you’d rather not discuss publicly. Do you need roadside assistance? Should you hop on the same car insurance policy as your spouse? These are all good questions to ask a licensed agent before making a policy choice.

The Actual Coverage You’re Purchasing

One of the trickiest parts of car insurance comparison shopping is that it can be difficult to make sure you’re comparing exactly the same kind of coverage. Liability limits can be confusing, so first educate yourself on the ins and outs of the insurance basics—or, if you’re strapped for time, use a comparison engine like The Zebra, which does that work for you, ensuring that you’re comparing each company and policy apples-to-apples. The key here is to make sure you’re not comparing, for example, one policy that’s full coverage, with substantial coverage for both comprehensive and collision deductibles, against a liability-only policy.

A Note on How Often to Shop

Experts agree that, unfortunately, remaining loyal to your car insurance company is not likely to pay in the end, thanks to a process called price optimization. Insurance companies use a variety of information to determine our car insurance premiums—including our zip code, age, driving record, and even factors like our marital status—and they also have access to our online and social media histories.

Price optimization is the process by which your insurance company can take the information they know about you, plug it into an algorithm (the details of which are industry secrets), and determine how you are most likely to behave, statistically speaking. USA Today explains in this report that stability might hurt customers: In other words, if you haven’t moved, changed marital status or jobs recently, there’s a very real chance your car insurance company is increasing your rate by small amounts each year—just enough that searching for a new car insurance company will likely not seem worth the hassle, but also enough for the company to increase its profit. USA Today explains that over years, these tiny tweaks can make a huge difference: Eventually you could be paying an average of $426 too much each year, thanks only to your brand loyalty.

Most auto insurance policies come up for renewal every six months, and ideally, you’d check with your agent or shop around each time your policy came up for renewal. But at minimum, you should be sure to check in anytime you have a big life event that could alter your rates, like a wedding, a move, or even a change in job, or every couple of years—whichever comes first.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]

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Strategies to Save

The Best Places for Raising a Family as a Single Parent

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Being a single parent is a challenge. Not only must single parents manage debt and other financial priorities, they must balance work and time spent with their children. Unfortunately, single-parent households are more likely to be impoverished, and not all states offer the same workplace benefits for parents. That could make raising children harder.

To determine where single parents may fare best, we scored the 100 largest metros on four key indicators:

  • Income score, including median income; the percentage of households living below the poverty line; and the percentage difference between median single-parent households and all households.
  • Affordability score, which considers regional price parity; income limits for in-state child care assistance; the percentage difference between single-parent household median income; and income limits for child care assistance.
  • Time score, which includes the average commute and the average number of hours worked per week.
  • Workplace protection score, which considers statewide paid family leave insurance and protected time off for school events.

Here’s what we found.

Key findings

  • Single parents in Springfield, Mass. came first in our rankings, with a score of 65.2. The city had an especially high time score and workplace protection score.
  • Sacramento, Calif. and Buffalo, N.Y. followed Springfield, with final scores of 62.2 and 61.5, respectively.
  • In McAllen, Texas, a whooping 60.8% of single parents live below the federal poverty line. Honolulu had the lowest incidence of single parents living below the poverty line, at 24.9%.
  • Houston, Texas had the lowest score among the 100 metros we studied. Its final score was 26.7. Notably, the difference between the median income of single parents and all households was -51.4%.
  • Atlanta and Birmingham, Ala., which were No. 99 and No. 98 in our rankings, didn’t fare much better, with final scores of 27.7 and 28.1, respectively.
  • So-called “blue states” tended to dominate the top of the list, thanks mostly to strong workplace protection laws for parents and generous childcare subsidies.
  • On average and across all metros, 39.2% single parents are living below the federal poverty line.

Children aren’t cheap, and raising them is hard. This map highlights locations where being a single parent may be easier or more affordable. Hover your cursor over the dots on the map to review how each metro fared across our key indicators and overall.

10 best places to live as a single parent

This table outlines the 10 best places for single parents to live from a financial perspective. California and New York parents are in luck. Three of the top 10 locations were California-based and four were New York-based. The combination of their high income, affordability, time and workplace protection scores helped determine these locations rankings.

10 worst places to live as a single parent

These locations had the lowest rankings due to their scores in our four key indicators. Single parenthood appears to be more challenging financially in Southern states, with locations in Texas, Georgia, Alabama and South Carolina ranking in the 10 worst places to live as a single parent. Most notable are these 10 locations’ nonexistent (or very low, in the case of Chicago with a score of 10/100) workplace protection scores.

Understanding these rankings

In order to understand how we ranked these locations, it’s important to look at the four following categories that we scored. The average of the scores was individually calculated for each metric within each category and was used to determine the overall metro scores. Those sub-scores were calculated on a scale of 0 to 100, based on where each metro falls between the highest and lowest values among all the metros we reviewed.

The four key indicators that were scored and the metrics within each indicator are:

Income of single parents in the community

  • Median income of single parents.
  • The difference between the median earnings of single-parent households and the median income of all households. This gives us a sense of whether single parents are having a harder time earning money than other members of the community.
  • The percentage of single-parent households that fall below the federal poverty line.

Comparing the difference between incomes of single-parent household and all households gives us a sense of whether single parents have a harder time earning money than other members of the community.

Affordability of the community, particularly related to child care

  • The income limit for child care subsidy assistance from the state.
  • The difference between median earnings for single-parent households and the child care assistance income limit.
  • Regional price parity, which compares local costs – including housing, goods and services – to the nation as a whole. The regional price parity for the U.S. is set at 100, so a number lower than that means that costs are lower and a number above that means costs are higher.

Child care expenses are an absolute necessity for single working parents. So, we wanted to see whether or not a typical single-family household would qualify for assistance from its state, and how much below the qualifying line they fall. This is significant because many assistance programs offer graduated subsidies depending on family income.

However, some states have long waiting lists for assisted child care, so falling within the qualification limit for subsidies doesn’t necessarily mean that parents will actually get the child care they need to earn a living for their families.

Time devoted to work

  • Average commute time in minutes for the metro.
  • Average hours worked each week within the metro.

How much time a single parent spends working impacts their time spent with family and can increase the amount spent on child care costs, such as if the parent needs to put their child in day care while they are away at work or commuting.

Workplace protections for parents

  • The number of weeks under the Family and Medical Leave Act that a state will pay an employee from a state insurance program. Under federal law, workers of certain tenure can’t be reprised for taking up to 12 weeks of leave to care for themselves or close family members per year, however that time is unpaid, barring workplace policy or short-term disability insurance. A handful of states have created insurance programs, similar to unemployment insurance, to pay employees a portion of their usual earnings while they are on approved leave.
  • Protected time off for school events. Because participation in children’s schooling is so important, some states have passed laws to guarantee that parents can take a certain number of hours away from work to attend events and meetings related to their children’s schooling.

Parents in general, but especially single parents, can benefit from regulations that protect them when they take time off work due to family-related issues.

Full rankings: 100 best places for single parents

The following table breaks down the overall score for the 100 best locations as well as presents their subscores for each factor taken into consideration. Each column is sortable in either ascending or descending order. By sorting the chart, you’ll see how the different factors contribute to their scores.

Managing your finances as a single parent

Based off our findings and further research, there are a few ways single parents can better manage their finance on one income and with children.

Consider your debt relief options: If you’ve found yourself in debt and are struggling in repayment, you could review your debt relief options. Chapter 7 or 11 bankruptcy, debt settlement and debt management plans may be available to you. Learning how these options affect your credit score is something you should also research.

Review your personal loans options: Those with credit card debt or high-interest loans may want to consider refinancing or consolidating their debt into a personal loan with a lower interest rate. Doing so could reduce your overall costs for repayment. You could also extend your repayment term to reduce monthly payments, though this could increase how much total interest you pay on your loan.

Learn about government resources for parents: Single parents who are struggling financially may qualify for assistance through government or charitable programs, such as food banks. A 2017 study found that not all single parents were aware of the help that is provided at food banks or were not certain they were entitled to support.

Know your rights: Paid time off for sick children and protections against reprisal for going to parent-teacher conferences can make a big difference, although these policies may not be well enforced. Learn your rights regarding the Family and Medical Leave Act and any protected time off for school events you may be eligible for. Knowing what your rights are will help you protect yourself against employer repercussion.

Methodology

Limiting our research to the current 100 largest metropolitan statistical areas (“MSAs”), we tracked each metro across four categories. The data was derived from the 2017 American Community Survey 5-Year Estimate from the U.S. Census (“2017 ACS”), except where otherwise noted.

Each data series was scored relative to highest and lowest values across all metros. For each category, these scores were averaged for a highest possible category score of 100 and a lowest of 0. The four category scores were then averaged for a final score. The highest possible final score was 100 and the lowest was 0.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jacqueline DeMarco
Jacqueline DeMarco |

Jacqueline DeMarco is a writer at MagnifyMoney. You can email Jacqueline here

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