Should You Buy or Lease That Car?

buy or lease carCars are a big part of our culture. Many of us work in places where cars are required to get around. At some point, you’ll need to purchase a car that costs more money than you have on hand. You’ll ask yourself “Should I buy or lease that car?”

People have been purchasing vehicles forever, but leasing (the practice of only financing the depreciation of a vehicle, not its entire cost) was once only accessible to wealthy people or companies with generous budgets. That isn’t the case anymore. As vehicle costs continue to rise, leasing becomes an attractive solution for every segment of the car industry.

Some people will tell you “It’s smart to buy the car,” or “Save yourself the hassle and lease.” Truthfully, there’s no simple answer. Which option is better depends on your situation, your finances, and your needs? We’ve laid out the advantages and disadvantages of both options.

Advantages to leasing a car

  • Your lease payment is usually less than a finance payment would be.
  • You can have a new car every year if you wanted (with all of the new gadgets).
  • You can drive a better car than you can afford.
  • A lease can be written off business taxes, making it a good company vehicle.
  • Perfect choice if you’ll only be in the area for a year or two.
  • The leasing dealership issues a warranty that covers much of the repairs.
  • You aren’t making a purchase, so sales tax is less.
  • There is no trade-in vehicle to deal with.
  • If the car is worth less than the lease predicted at the end, it’s not your problem.

Disadvantages to leasing a car

  • At the end of the lease, you don’t own the car. You have to return it (although there is an option to buy, but it’s often not in your favor financially.)
  • Terminating a lease early can lead to expensive fees.
  • Putting too much wear or mileage on the car can lead to expensive fees.
  • If you plan to keep the car for years, leasing is more expensive than buying.
  • Lease contracts are made to be confusing so you pay more in fees.
  • Your mileage is often limited to 12,000/year, which is easy to overcome.
  • You can buy extra mileage, but it’s expensive.
  • Typically the lease requires you to have excellent credit.
  • Failing to perform basic maintenance can result in extra fees.

Advantages of purchasing a car

  • You can modify or augment the car in any way you wish at any time.
  • It’s cheaper over the long run if you plan to drive the car for a long time.
  • There’s no limit to how many miles or much wear you can put on the car (which is important for commuters who travel long distances).
  • You can tailor the loan term (length) and payment amount to your budget.
  • You can sell the car whenever you want for as much as you like.
  • Once the car is paid off, a big piece of your budget opens up.

Disadvantages of purchasing a car

  • Many dealers require you to pay a down payment before you can finance a vehicle. This is smart anyway, otherwise, you’ll be upside down on the loan.
  • Long loans can mean paying a lot of interest by the end of the loan.
  • The monthly payment is higher than a lease payment.
  • You are responsible for repair costs (unless there’s a warranty, but that doesn’t last forever).
  • At some point, you’ll have to sell it, trade it in, or junk it.
  • A car is a depreciating asset, so you’ll never sell it for what you paid.
  • Fluctuations in the car’s market value can affect your selling price (which you can’t predict).
  • If you need to sell your car but owe more than it’s worth, you would have to pay just to get rid of the loan.

Summary

When you’re trying to decide whether to buy or lease a car, look at it like this: A leased car is convenient, easy, and you get to drive something new all the time. A purchased car is far cheaper, and you have the freedom to use it however you please.

Before you make any decision, it’s important to understand the real financial implications. Use this calculator to understand your potential car buying options.

Jennifer Dwyer
Personal Lines Representative
jdwyer@srfm.com

Jenn Dwyer

Auto Insurance: Why You Need a Specialty Policy for Your Collector Car

Exotic Car Insurance Why Do Exotic Autos Need Specialized InsuranceCollector cars aren’t used like typical vehicles. They’re often driven less and cared for better. They don’t commute to work, but they spend weekends parked at car shows. You need a collector car auto insurance policy that meets those specific needs.

Many collectors in the United States make the mistake of insuring their collector vehicles through big-name insurance companies. This costs them more and fails to provide adequate coverage. Specialty insurance policies provide significant advantages for collector cars.

Your collector car isn’t like the standard models

When you sign up for traditional insurance, you select a few options from basic categories like make, model, and condition. But that doesn’t tell the whole story of a collector car.

Collector vehicles (and exotic cars) are tricky to value. They may have a list of improvements, modifications and custom parts. A specialty insurer has to ask about what’s been modified, how much has been invested, the parts that are used, etc. Keep detailed information and receipts so your insurer can put together the right policy for you.

Specialty coverage is usually less expensive

You don’t drive your collector vehicle every day. It probably sits in the garage for weeks at a time, only taken out for the occasional drive or car show. So you shouldn’t pay typical insurance rates.

Insurance for collector cars is often far cheaper than standard commuter insurance. For example, the price of a policy for a 60s Mustang (which includes physical damage, comprehensive and collision) may only cost a couple hundred dollars.

Furthermore, bulk pricing is available for collectors with large collections including instant coverage when you buy a new vehicle.

Designed for low mileage use

Most specialty collector insurance carriers will not restrict how many miles you can drive your car each year but they aren’t looking to insure classic cars that are driven daily. Average mileage for these cars is between 2000-3000 miles per year – including car shows and events. If you do drive your car daily, high net worth carriers such as Chubb will insure your vehicle but the cost will be reflective of the use.

Collector car insurance uses the Agreed Value

Automobile insurance comes in three varieties:

  • Actual Cash Value: This is the depreciated book value that you would find in a source like Kelly Blue Book. Older cars with more miles and in poorer conditions are worth less. This is how a majority of cars are insured.
  • Stated Value: This is for collectibles. The insurer allows you state the value of the car that’s greater than the depreciated value. But the car still can depreciate, so you might get less than you expect in a claim.
  • Agreed Value: This type of insurance lets you state the vehicle’s value and guarantees you’ll get the full value of your policy in a claim. There’s no depreciation.

Collector cars are hard to price. They don’t have a clear market value. They also often appreciate in value. This means you always want to buy a policy that’s written with an Agreed Value so you’re paid accordingly should something happen. Coverage is also in effect for the full 12 months of the year, so there is no need to call and suspend coverage during the Winter months.

Don’t limit yourself to traditional insurance policies. Speak with us about insuring your collector or exotic car.

Mary McGrath
Personal Lines Manager
mmcgrath@srfm.com

Mary McGrath Personal Lines Account Executive mailto:mmcgrath@srfm.com

Disruption Ahead: The Brave New World of Self-Driving Cars

the self-driving car is comingLike it or not, self-driving cars are coming.  A rapid increase in the use of “autonomous automobiles,” as industry savants prefer to call them, is seen by many as a foregone conclusion.  Following the early lead of Google, which has been developing the concept for over six years, virtually every carmaker in the U.S. market is working on some version of this new technology.  Some, like Tesla and Cadillac, are already introducing aspects of these systems into their cars.  The ultimate mass-market endorsement, though, was surely the recent Time Magazine cover story that devoted a whopping nine pages to the subject, mostly extolling the upsides of this “next big thing” and the vastly transformative affect it will have on our lives.

Within the US insurance industry, however, everything about the coming of the self-driving car is not so rosy.  While much about the future of these cars is open to vigorous debate — for the simple reason that their full impact on the daily lives of American drivers is unknowable at this point — many in the insurance industry see these new cars as a potential source of disruption.  And not in the happy, trendy way tech entrepreneurs like to throw that term around.  The capacity for autonomous driving to reduce traffic accidents and especially fatalities, and all of the personal, legal and emotional costs that come with them, will likely undermine much of what is currently considered accepted fact in the automobile insurance business, and not just a little.

The most dire outlook so far was laid out last year in a report by the influential accounting firm KPMG, which predicted that a steep decline in automobile accidents over the next decade would be followed by a corresponding drop in accident claims and insurance premiums.  Within 25 years, the report predicts, these declines could reduce the volume of the entire insurance industry to “40 percent of its current size.”  According to the Insurance Information Institute, research shows that even in its earliest stages, the bits of driverless technology and related safety features already introduced into American cars have begun to reduce the number of fatalities between 2008 and 2011 by as much as a third.  This trend will pick up more speed as more pieces of these systems are added will have an ever greater influence on the economics of the industry.

 Other predictions about the timing and extent of these changes vary greatly.  The most optimistic estimates for the complete adaptation of the autonomous automobile pinpoint the year 2030 as the date by which all American cars will have this technology.  Other sources see too many potential roadblocks still lying ahead for there to be complete market penetration by anything close to that date.  Most estimates see a gradual introduction of features over the next two to three decades with a proportional decline in the role of the driver as the technology is refined and the public, as well as federal and local governments become more comfortable with it.  By some accounts, the complete integration of this technology could take another 30 to 40 years, if not longer.

In addition to the fundamental economic impact of driverless cars on the insurance industry, there is also a thicket of legal and political issues about liability and culpability that has to be cleared over the next several years, a task made all the more difficult because many of those issues need to be worked out on a state-by-state basis.  If the past is any indication, the big question about who is responsible in a collision involving an autonomous car: the owner, the car manufacturer or the developer of the technology — and their respective underwriters will be pounded out one small increment at a time.  So hang on for a very bumpy ride, which is the one aspect of this automotive innovation that is not likely to be fixed by technology.

Jonathan Belek
Risk Management Consultant
jbelek@srfm.com

Jonathan-Belek

Are You Protecting Your Invaluable Collections?

How to Insure Valuables Fine Art, Wine, Jewelry & MoreOver the years, you may have developed a knowledge and love of wine and picked up a few special bottles, which turned into a few more and, before you knew it, you had an extensive – and expensive – wine collection.  What would happen if there was a flood in your home or you experienced a power outage that impacted your temperature-controlled cedar wine cellar? 

From wine to art to fine jewelry to exotic cars and yachts, many people fail to recognize these items that they enjoy for their aesthetic or leisurely qualities as the valuable investments they truly are and therefore, don’t properly protect them.   

Additionally, as people do estate planning, they also often overlook outlining their plans for these non-traditional valuables, like an antique jewelry collection or Bentley.

Here are five tips to ensure you properly protect your collections:

  • Secure Specialized and Periodic Appraisals: Make sure the person appraising your items has   expertise in your type of collectible so you get the most accurate appraisalRe-appraise your collectibles every two to three years and make sure you share them with your financial advisor, insurance company, tax attorney and estate planner so they can understand the value of your collection and the potential risks and benefits within your overall portfolio as well as any implications to your charitable giving wishes or estate planning.
  • Keep a Detailed Inventory: Document your collectibles, where and when they were purchased and for how much.  Update every time a new item is added to the collection and ensure there’s a complete, properly appraised inventory at all times as well as information on where certificates of authenticity are housed.
  • Assemble a Smart and Specialized Advisory Team Early: Work with an insurance firm, financial planner, tax attorney and estate planner who have expertise protecting and planning for the issues associated with these non-traditional investments.  It’s important to do this early, as your collection could have implications on your overall wealth, taxes and estate plans as it grows or diminishes in value.
  • Properly Insure your Collectibles: Make sure you choose an insurance company with expertise in providing coverage for your unique collection and coverage options that would truly account for their value.   These prized collections often mistakenly get tacked onto an existing homeowner’s insurance policy with very limited coverage that would never provide the value they truly hold if they needed to be replaced.
  • Make an Early Succession Plan: Whether you want to hand down your fine art collection to your son, donate it to a museum or have it auctioned off for charity, be sure to work with your team to detail your plans and to get their input on how to properly include them in your estate planning. 

By treating your collectibles like your other assets, you can enjoy your passions and ensure their potential returns and risks are managed and that they’re properly protected.  This will allow you – and your loved ones –to enjoy your collections now and in the future.

Mary McGrath

mmcgrath@srfm.com

Sinclair Risk & Financial Management

Mary McGrath

Caring For Your Exotic Car

Caring For Your Exotic Car  Caring For Your Exotic Car

A common assumption many individuals make is that their exotic car will be covered by their standard Connecticut personal auto insurance policy. On the contrary, this type of vehicle will need special insurance coverage due to its high value.

Because an exotic car is such a large investment, you’ll want to do everything you can to protect it, both financially and physically. Here are some tips when it comes to caring for your exotic car.

Use compressed air and a vacuum for the interior. To get to every nook and cranny in your vehicle, use an air compressor to blow all debris to the center of your carpets, and then vacuum it up.

Keep the “new-car smell” lasting longer by cleaning the ducts. If your car has a cabin air filter you can change it, or remove it and blow the dust and dirt out. Also, getting dust and dirt out of the heating and air-conditioning ductwork on a regular basis will keep your car smelling fresher, longer.

Use non-acid based tire cleaners. Acid-based cleaners can cause bare alloy wheels to oxidize and pit, and they can damage wheels that are painted with color or clear coatings.

Use appropriate carwash solutions to hand wash your car. Using soaps that aren’t meant for car surfaces, such and dishwashing detergent, will strip away the protective wax coating on your vehicle, exposing it to possible nicks, scratches, and stains.

Store your car in a garage. Storing your exotic car outdoors exposes it to inclement weather, bird droppings, and other types of damage.

Polish and wax your car. Polish helps smooth the surface of the pain, making it shine and helping your car look newer. Wax will wear off in a few months, but during that time it will absorb stains and small scratches before those hazards make it to the paint.

Know when to see a pro. If your paint has a scratch that goes down to the metal, the only way to fix it is by sanding and filling the scratch with pain, using a tiny pinstriping brush. It takes experience to know how to properly do this.

Sinclair Risk & Financial Management has access to specialty insurance markets to find you the right coverages and features for your Fairfield County exotic car. We can secure a policy to protect the true value of your car, and include an option to increase coverage on the vehicle to reflect changes in market value anytime prior to a covered loss. We have programs that will insure collections worth millions. Give one of our professionals a call at (877) 602-2305.

The Difference Between Auto & Exotic Car Insurance

The Difference between Auto & Exotic Car InsuranceThe Difference between Auto & Exotic Car Insurance

Each car is different. For instance, a 2013 Honda Accord LX and a 2012 Honda Accord LX marginally differ in look and performance. But this margin expands when you compare an Honda Accord with a Bentley Continental GT Speed or a 1966 Shelby 427 Cobra.

Purchasing an exotic or classic car is an investment in both time and money. So, why protect your baby with a standard auto insurance policy designed for standard cars?

Before you cross the t’s and dot the i’s, review the differences between auto and Connecticut exotic car insurance.

The Cost: If you are like most exotic and classic car owners, your Bentley isn’t your everyday car. Because standard cars are more likely to be driven often, purchasing exotic or classic car insurance is less costly. Insurance carriers presume that a loss is less likely to occur if a car has mileage restrictions (ranges from 1,000 to 7,000 miles, annually). In short, the less you drive a car, less risks you’ll face.

Storage: Unlike standard cars, insurance companies require exotic and classic cars to be placed in a fully enclosed garage (preferably one with a security system) when not in use. This requirement is intended to protect your car from severe weather conditions, theft and vandalism.

How Value is Calculated: A standard auto insurance policy utilizes Actual Cash Value (ACV) whereas exotic and classic car insurance utilizes Agreed Value. ACV assumes that a car’s value will gradually decrease over time, therefore offering a deprecated value. But for exotic and classic cars, an Agreed Value will be established. This means that the insurance company and you will calculate a guaranteed value that you will receive at the time of a loss.

Sinclair Risk & Financial Management has access to specialty insurance markets to find you the right coverages and features for your Connecticut classic car. We can secure a policy to protect the true value of your car, and include an option to increase coverage on the vehicle to reflect changes in market value anytime prior to a covered loss. We have programs that will insure collections worth millions. Give one of our professionals a call at 203.265.0996

Exotic Car Insurance: Why Do Exotic Autos Need Specialized Insurance?

Exotic Car Insurance Why Do Exotic Autos Need Specialized InsuranceExotic Car Insurance: Why Do Exotic Autos Need Specialized Insurance?

Exotic and collector cars go far beyond just a means of transportation. They are often the fulfillment of a lifelong dream, or a prized possession. And, like any prized possession, you want to get the best protection possible.

The cost of auto insurance varies widely across the map. The difference between cheapest and costliest vehicles to insure can add up to several thousand dollars a year. According to Forbes, the Audi R8 Spyder Quattro, Mercedes-Benz CL600, Porsche Panamera Turbo, BMW ActiveHybrid 7, and Jaguar XKR Supercharged Convertible rank as some of the most expensive cars to insure. And those models don’t even include the history or unique customization that collector or exotic cars tend to have.

Many auto insurance companies do not insure exotic or classic cars. For a car to even get the title of “exotic” car, it has an unusually high market value. The high speed, rate of acceleration, unique look, high end materials, and low availability also comes with a higher expense.

It is widely known that insurance factors are based on a number of factors. Driving record, age, gender, marital status, address, and credit rating all factor in. The type of car, including make and model, plays a role as well. But how much does that actually matter. As a general rule of thumb, pricier cars are more expensive to insure, because repairs are more expensive. However there may be breaks, depending on your insurance coverage.

Oftentimes discounts may be available for certain qualifications, such as membership in a car club, or coverage for hard-to-find-parts. In addition, if you have extremely low mileage on your exotic car, and don’t drive it that much, that could qualify you for another discount.

It is essential to find a program that can tailor insurance solutions to fit your unique needs. At Sinclair Risk & Financial Management, we have access to specialty markets to find the right coverage and features for your exotic car. We can help you get a policy to protect the true value of your car- we have programs that will insure collections worth millions, making sure you get full protection. Contact us today for more information. (877) 602-2305

How to Insure Valuables: Fine Art, Wine, Jewelry & More

How to Insure Valuables Fine Art, Wine, Jewelry & MoreHow to Insure Valuables: Fine Art, Wine, Jewelry & More

As Hurricane Sandy rolls past the east coast, residents are grieving over the loss of their valuable possessions. Even as families pack up their luggage and travel to different destinations, they often leave their home and their valuables susceptible to theft. Although your home is covered by homeowners insurance, your valuable possessions inside may only be covered by a small amount. Valuables may mean many different things to many different individuals, some find the value in sentimental objects and some find it in monetary objects. However regardless of your definition of valuable, you need to be aware and educated with the best ways to insure your valuables.

Nobody wants to see their fine art, wine, jewelry, exotic car, or silverware stolen only to find out that it cannot be replaced. Because general homeowners insurance does not cover very much of these valuables, you will need to speak with an agent and purchase additional coverage. The most common policy on how to insure valuables is the personal articles floater (PAF). Although PAF varies with every carrier, it generally means it is a separate or supplemental policy added to your homeowner policy in order to protect your valuables against theft or damages.

When purchasing a PAF you will need to create an inventory which includes the name of the item, a picture and its monetary worth. In order to compute the item’s value you may have an appraiser look and examine it. Although this may seem costly, it will ultimately it will be very beneficial in the event of a loss. This will ensure you scheduled value of the possession when filing a claim.

There is also blanket coverage which is often recommended for smaller possession, such as a less valuable piece of jewelry. If you do decide to purchase blanket coverage instead you do not need your possessions to be appraised. However, blanket coverage does not guarantee that you will be covered for the full amount you purchased the item for.

Sinclair Insurance welcomes the opportunity to sit down with you and tell you more about the special programs we can develop just for you. At your convenience, please feel free to call us at 203.265.0996, email us, or return the form on this page.

High-Value Insurance: Match Your Coverage with Your Lifestyle

High-Value Insurance: Match Your Coverage with Your LifestyleHigh-Value Insurance: Match Your Coverage with Your Lifestyle

When you sit down to assess your finances, file tax returns, or examine your retirement fund, take a moment to look at your lifestyle. The lifestyle you’ve worked so hard to provide is a huge luxury. But high end luxury lifestyles also come with risk too. In risk assessments it is essential to examine your lifestyle, from your classic car, your exotic auto to your wine collection, yacht & any other hobbies you enjoy. Ensure you are properly protected with our high-value insurance.

Own an exotic or classic car? Purchasing an exotic or collector car can be a fulfillment of a dream for many. Whether you are looking for a restoration project or to speed down the highway, classic and exotic cars require significant dollar investments. And because of the high end luxury design of the car, its unique qualities also requires specialized exotic car insurance.

Art collector? Your existing coverage might include some coverage- however it is almost certain that as an art collector you will need supplemental art insurance to protect your investment. Make sure to get your art regularly appraised so you know their financial value and the amount of coverage you’ll need.

Diamonds & pearls? Jewelry insurance is an often overlooked item- sadly, many do not think to insure it until it is lost or stolen. The price of gold changes constantly, and your antique ring or necklace may be worth a lot more than it was 20 years ago. That would mean it’s more expensive to replace as well. That is why jewelry insurance is crucial.

Yacht owner? Among watercraft, yachts are a high end, distinctive type of private vessel that requires detailed knowledge and specialized coverage. Yachts need specific coverage that standard marine policies don’t always offer. When your vessel is a motor yacht, mega yacht, or something in between, it is essential to get specific Yacht Insurance coverage that provides you with full coverage of your vehicle.

For more than four decades, Sinclair Risk & Financial Management has forged relationships with insurance providers that specialize in providing high-end coverage. We have access to particular markets that enable us to craft custom homeowners and auto insurance programs that reflect the true value of your property, your risk profile, and your personal circumstances throughout the world. Contact us today for more information about our high-value insurance programs. 

 

Exotic Car Collections: Factors For Assessing Value

Exotic Car Collections: Factors For Assessing ValueThe challenge in investing in exotic cars is not only choosing models that you will enjoy, but investing in wise options that will help your collection appreciate over the years to come.

Paul Sullivan of the Wall Street Journal recently attended the Greenwich Concours d’Elégance in Connecticut. Delving through the concept cars, roadster, and muscle cars, he spoke with several experts on exactly what to look for in developing your exotic car collection.

Of course there is that initial love, whether it is spurred by nostalgia for the good ‘ole days or just appreciation for an exquisite, beautifully made vehicle. Yet when assessing exotic cars as an investment, there are numerous other factors to consider.

Exotic cars have significant value, but it also depends on the type, kind, and social value. For example, sedans from the 1920’s and 30s are losing value because the people who remember riding in them are dying. Of course, rare cars are ideal- for example a 1954 Packard Panther entered in the show was one of only four made.

However, age alone doesn’t work. To stand out from the crowd, cars must have a distinguishing feature. One 1955 Mercedes-Benz 300 SL Gullwing sold for $4.2 million at the annual classic car auction in Scottsdale, Ariz.- it was one of only 29 made with an aluminum body. Sometimes the make matters. Ferraris are more sought after than Camaros or Corvettes. At an auction in Greenwich, a 1965 Ferrari 275 GTB was sold for a record $1.25 million, a record price for a car sold in New England.

Obtaining an exotic or collector car can be the fulfillment of a lifetime dream. Each era has its style and attraction with prices to match. You may be undertaking a lengthy restoration, or looking to make your retro ride a lazy Sunday indulgence. Whatever your intentions, because of the significant dollar investment of your collector car and its unique nature, special insurance is what’s needed.

In evaluating the investment, restoration and insurance costs also must be considered. It is essential to assess all costs compared to the value. Especially when it comes to protecting your investment, you’ll need auto insurance that specifically addresses the unique needs of exotic cars.

For example, Sinclair Risk & Financial Management can tailor a program to include a zero deductible feature so that you have no out-of-pocket costs; high liability limits; mileage plan options based on one that fits your needs; automatic coverage for newly acquired vehicles for a specified time; inflation guard; and other unique coverages designed for this niche.

For more information, contact Sinclair Risk & Financial Management today.