Finance Tips

I am amazed by some of the people whom I encounter every day who do not know anything about politics. Everyone should know how their government works so I am writing down my old college notes as a beginner’s guide. As it’s the credit crunch some of you will feel too busy and confused by the political situation and the criticism of the government on financial and borrowing matters. This is why everyone should take a little time to understand government rolls and why they affect everything from your home insurance to your grocery bill.

The United Kingdom is run with a democratic government. The House of Commons and The House of Lords hold the government in check although the House of Commons is the more powerful of the two houses.

We live under ‘Prime Ministerial’ rule – this means the rule of one person.
The powers that the P.M has depends on five key factors.

- The personality of the P.M
- Majority that the P.M has in the House of Commons
- The success of the P.M’s policies
- The unity of the P.M’s party
- The effectiveness of the Opposition party

Unlike in America where there is a deputy president, in the UK there is constitutionally no such role as a deputy Prime Minister.

The Prime Minister is the leader of the House of Commons.

He appoints and dismisses members of the government. He is also the Chairman of the Cabinet. The Prime Minister has his own offices and advisors and is the most important representative of the Government. The P.M holds wide powers of patronage and also chooses the date of the general election.

Now for a bit of economics. There is no excuse not to pay attention to this part if news coverage of the credit crunch has left you baffled.

Economics basically means the study of using scarce resources as efficiently as possible so that society’s unlimited demands for goods and services can be met.

The term that we so often hear in the news ‘the public sector’ refers to the sector run by the state like Government departments, Local Government and Nationalised Industries. The main role of the public sector is to provide efficient and adequate services.

The term ‘the Private Sector’ refers to organisations that are privately owned such as companies, clubs, partnerships etc. The main role of the private sector is to maximise profits.

Recession is a state of affairs that indicate a down turn in the business cycle. Output and investment has dropped, demand has dropped and unemployment has risen. This can be caused by a number of factors i.e. external factors such as a world oil crisis.

Reflation is a policy to combat recession. The policy may include reducing interest rates, reducing taxes, increasing public spending and devaluing the currency.

As consumers we all want to get the best good or service for the lowest price possible. People are always looking find a cheap way to purchase something they need. And when it comes to such mandatory things as vehicle insurance it’s evident why drivers are constantly looking for ways to save on this service. Sure, it’s really useful for a lot of drivers but having to pay a lot every year just for keeping your car insured is something that a lot of car owners aren’t happy about in the current economy. So, is there anything that can be done in order to get your car insured at an affordable price?

Of course there is! One of the easiest and most effective ways to get a good insurance for a lower price is to explore your discount options. Most insurance companies have different types of discounts to award different groups of low risk drivers and attract new clients. So you can exploit this opportunity and get a discount to gut your rates with. Every company has different discounts and various amounts of them offered. But in general the basic selection of discounts tends to be the same across most providers. So you can look into one of the following:

Multiple car discount

Most insurance providers are really happy when you’re insuring two or more cars with the same policy. This lets cutting down some costs and you can generally get a better overall discount compared to buying separate policies for each car.

Multiple policy discount

Some insurance providers specialize in providing different types of insurance services in the same area. So if your home insurance provider offers auto insurance too you may consider getting a policy from them because in most cases you can opt for a really good discount by doing so. Just ask your provider if they have such discounts for multiple policy owners.

Low mileage discount

Drivers who tend to drive less during the year can also get a good discount. If your yearly mileage is below 10,000 miles then you can opt for a low mileage discount with most insurance providers. Just make sure to check the requirements with your company in order to get this cheap car insurance option.

Security discount

Most car insurance providers encourage the use of additional safety and security options in your vehicle that will reduce the risk of the car being stolen or damaged. So if you install additional alarm devices, seat belts, anti-lock brakes, anti-theft devices to your vehicle you can then opt for a discount with your provider.

Good driver discount

If you are a good driver with a clean driving record and no claims made during the last couple of years you can opt for a good driver discount with your insurance provider in order to get cheap car insurance. Some providers will require you to maintain a good record for a period of 3 to 5 years, but it varies from company to company. Besides, good drivers with no accidents on their records usually get lower insurance rates right from the start.

Ever since the Japanese earthquake and following tsunami hit our television screens, there’s been slightly more interest in whether earthquake cover is needed in the US. In other words, there’s a temporary outbreak of paranoia, worrying whether such a disaster could ever happen here. For a few months, people will get quotes and talk to insurance agents about the cost of cover, and then interest will all slowly die down again. Even in the US states at risk, less than 10% of the population carries earthquake cover.

Given that California sits on a major fault line, this may seem surprising. But, when asked why cover is refused, most people come up with an entirely rational reply. If there’s a “big one”, this would not simply cause one home to fall down. This would open cracks in the ground and damage all the major infrastructure of roads, bridges, the cabling and piping that brings essential services to an area, and so. There could not be any rebuilding of individual homes until access was restored and the basic services were reconnected. When you look at the deficits being run by many of the at-risk states, there would be serious delays in accessing federal funds and then commissioning the necessary works. So having earthquake insurance on the homes is not going to be much use for months or, indeed years. In some areas where there are landslides or sections of the land fall into the sea, it might never be possible to rebuild on the same sites. This is not to say pessimism is the right approach. Since earthquake damage is usually excluded from the standard policy, you should ask for quotes and decide whether the cover on offer is affordable.

As an incentive for you to review your cover, there’s a major earthquake drill called ShakeOut due to be held. This will give the 9 million people living in the areas covered by the drill a chance to consider how severe the damage might be to their particular area. People at work, at school and at home will be invited to think about where the safest places are in each location. That way, if there’s a quake, everyone knows where to drop, cover and hold on. All schools, business and families should have a disaster preparedness plan.

From the insurance industry’s point of view, this is the time to discuss insurance with both individual home owners and businesses. Records show businesses carry even less insurance than homeowners. Given the levels of loss to both the buildings, stock-in-trade and earnings following a quake, this failure to insure is surprising. The scenario for the drill assumes a 7.8 earthquake along the San Andreas Fault. Even if homeowners and businesses continue their reluctance to insure, they can at least be alerted to the need to plan a response.

Home insurance is all about assessing risk. The US Geological Survey has reported 877 earthquakes on American soil in the seven days up to October 26. Fortunately, most of them were low intensity but, sooner or later, there will be a more damaging quake. Scientists have no way of predicting where this “big one” will hit. So when you ask for home insurance quotes including earthquake cover, ask yourself how lucky you feel.

There are many different types of insurance policies that a homeowner can purchase to protect his investment. Buying a home is a very big purchase; a large investment such as a home should be protected in case of unforeseeable accidents and malicious acts of others.

A basic insurance policy provides you with coverage that will cover the loss occurring to your home and its contents, as well as give you liability protection for accidents that may happen at the home. The insurance company will also reimburse you for hotel costs you may incur while your home is being repaired.

Costs

In most cases, prior to finalizing an insurance policy, an official from the insurance company inspects the property and assess the value of the items being covered by the insurance policy. The premium of the policy is determined by the property value, amount and value of the insured products inside the home, amount of coverage, as well as the location of the home.

The cost of the home insurance increases with the addition of other types of coverage. Purchasing additional coverage such as flood insurance and earthquake insurance can add a significant amount to your insurance policy. However, it is necessary to purchase these additions due to the fact that they are not included in a typical insurance policy.

Why get homeowner’s insurance

Aside from the fact that it would be a very smart move to protect your assets in case of an unforeseeable disaster, you may be required to purchase an insurance policy for your home. Most homes today are purchased with a mortgage loan. Providers of the mortgage loan sometimes include in the contract a provision that the homeowner insure the property to protect the lending agency’s interest in the property. Without insurance, the lending company can lose the money it provided to the borrower. With insurance coverage, the lending company can at least get its money back if the home is damaged or rendered unlivable.

If you own a home based business, you must be aware that you are required to take out a separate insurance for you home based business apart from your home insurance. If you utilize your vehicle for your home-based business, you require separate insurance for car because your regular car insurance would not cover your commercial use.

The first thing you would have to do is contact you insurance company, agent, or broker. They would help you determine if your car usage would require commercial auto insurance. To determine this, the insurance agent will ask about your driving practices. The agent will ask how frequently you use the vehicle for work and if employees also use it. People who frequently use the vehicle for business use and who let employees use it should get commercial auto insurance.

So what does commercial auto insurance cover? Essentially, it will tender you the similar sort of coverage that your individual policy tenders. Liability, collision, comprehensive, personal injury, and uninsured motorist coverage are all standard features of your commercial auto insurance policy. Nonetheless, if your staff drives their personal vehicles for your business, you can get a “non-owned” endorsement to your commercial auto insurance for their vehicles. It would be prudent to sit down and negotiate all the details with your insurance agent with regards to the coverage you want.

You do not have to be loyal to your current insurance company. Before deciding up on an insurance policy, make sure you get couple of insurance quotes from different insurance companies. Always compare prices and levels of coverage provided.

Don’t take up any insurance policy without conducting a background check of the insurance company. You will also need to check the financial stability of the companies you are taking into consideration, so confirm with A.M. Best, Fitch, or Standard and Poor’s to make sure you commercial auto insurance company is well rated. Lastly, verify with your state insurance department to find out consumer complaint ratios and get recommendations from other business owners.