Pod Insights The Clark Howard Podcast 05.28.25 Best Auto Insurance / Economic Uncertainty: Preparation & Family Communication About this episode In this episode - As auto insurance rates continue to rise, more people recognize the need to shop around. Clark shares a valuable resource for where to start. Also today - Economic uncertainty necessitates ongoing family conversations about money and the economy, and what can be done to prepare for a possible recession or employment setback. Shop Auto Insurance: Segment 1 Ask Clark: Segment 2 Family Money Talks: Segment 3 Ask Clark: Segment 4 Mentioned on the show: How to Shop for Lower Car Insurance CRASH Network - Insurer Report Card Best Auto Insurance Companies and Some of the Worst Is Your Car Model Driving Up Your Insurance Premium? Best Way To Exchange Dollars for Foreign Currency Costco Travel: 5 Things To Know Before You Book Booking a Cruise? Here Are 5 Ways To Do It for Less The Only Way You Should Pay for a Cruise Clark.com resources: Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:05 Speaker 00 It's great to have you here on the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. In this episode, auto insurance is going crazy high and you want to shop around, right? Well, you should, but who should you be shopping with? I got new information for you. And also, there's a lot of economic news out there, some negative, but a lot really uncertain. If you've got kids, how do you talk to them about that?
0:48 Speaker 00 There's no silver bullet on that, but I have some strong opinions on why you need to discuss with your kids what's going on with the economy and what it means within the four walls of your own life. And while I'm on that, if you've got a life partner or a spouse, you need to have conversations with each other about money even more now than normally. But that's later, because right now, we're going to talk auto insurance. Premiums have gone up crazy amounts over the last several years, and there are a lot of factors.
1:28 Speaker 00 I've covered this in the past about how much the cost of used cars inflated, how much the cost of parts is, shortage of body shop mechanics. All these things are factors. Now tariffs on vehicles pushing up the cost of repairs and insurers were not making money on their investments. You know, the way insurance works is they try to at least break even on insuring your home or your car and then make money on the investments from the premiums. Well, what's happened in recent years, a lot of big insurers have actually lost billions
2:11 Speaker 00 of dollars on just the policies themselves. So they've been scrambling to raise premiums.
2:20 Speaker 00 To keep themselves solvent. But the thing that I find the most interesting is something that came on my radar screen two years ago, and it's an annual report card on insurers done by body shops, which I find fascinating, because you got all these ads that the auto insurers, the big ones, run on TV and some on social media, but still, TV has been very popular as an outlet for insurers. And so they're all trying to be cute in them and
3:01 Speaker 00 humanize a very dull product. Flo from Progressive and Jake from State Farm, then the goofy guy from Liberty Mutual, and then the Allstate Mayhem guy. I mean, the ads run all the time. And sometimes, if you're watching a bad show or bad movie, the ad's more interesting than what, and entertaining than what you're watching potentially. So CrashNetwork.com does this list once a year where the body shop people warn each other and alert each other which insurers are behaving and which aren't. And they get a grade from A+ to F. Now, they
3:46 Speaker 00 put out an honor roll each year, which they include all the companies from A+ down to a solid B. What's fascinating on this list, there's almost not an insurer on here that is a name that people routinely might recognize. Krista's insurer, Amica Mutual, came in 13 on the list with a B+. [00:01:13]
4:13 Speaker 01 Wow. I'm surprised. They've usually been higher than that, haven't they?
4:18 Speaker 00 Well, with the body shop, that's a good score. Auto Owners, which is an insurer in some parts of the country people are familiar with, came in 14th. As to other brand names, not a single big brand name makes the list. They're all smaller, not marketing-based insurers, but smaller boutiquey generally, service-based insurers.
4:48 Speaker 01 Why don't you run through the top 10?
4:49 Speaker 00 I'm gonna run through the top. I was gonna run through all the As.
4:53 Speaker 01 Okay.
4:54 Speaker 00 And then have a link on our notes where people can go to the full list.
4:58 Speaker 01 Perfect.
4:58 Speaker 00 How's that?
4:58 Speaker 01 In the episode notes. That's amazing.
5:01 Speaker 00 Number one, North Carolina Farm Bureau, the only insurer in America that gets an A+ from body shops, meaning that they're cooperative with the body shop. They want to do what's right for the customer. That's what this is about. The only A went to Chubb, which is a rich people's insurer. And then Acuity Insurance got an A-, don't know who they are. Michigan Farm Bureau, Alpha Mutual, and Erie Insurance. Those are the only people who got an A-, A or A+. Then the B+ is Pure Insurance, another insurer for rich people.
5:44 Speaker 00 Grinnell Mutual, who are they? AIG Private Client, another rich people insurer. Mutual of Enumclaw? E-N-U-M-C-L-A-W. What is that? Farm Bureau Property Casualty, Wisconsin Mutual, and I already mentioned Amica Mutual. The first well-known, recognized brand name of a regular insurer, Amica Mutual, the only one in the top 13. You can see the full list of all no-name insurers that actually do a good job for their customer. They're not spending money, a zillion dollars, on cute advertising. They're just insuring people.
6:29 Speaker 00 If you want to go to our link, easy, or you just go to crashnetwork.com. And I love this list because... What do people do when they're shopping? When they get, most people are with these big insurers. And when they get a big premium increase from one, the only places they go for quotes are the other big insurers. Big mistake. Big mistake for your wallet. And while I'm at it, when you're shopping for a car with how expensive auto insurance has gotten, shop insurance quotes before you buy a brand that you're unfamiliar with. Because there's enormous gaps now in the cost of insuring different brands and models.
7:12 Speaker 00 So you might have in your funnel, your funnels, the vehicles you're interested in considering, you might have three or four different models. If you see what they quote out for auto insurance, you may decide that the third one is a better choice than one, two, or four, because the insurance cost could be so very different.
7:35 Speaker 01 All right. You ready for some questions?
7:37 Speaker 00 I'm always born ready.
7:39 Speaker 01 Oh, this one's from Tony in Illinois. I love fishing. Every year, I travel to Canada to fish for a week. Usually, I go to a lodge and they charge Americans in the US dollar. This year, the lodge I'm going to charges in Canadian funds. Traditionally, you pay for your trip when you attend, which for me is in late August. However, I'm given the option to pay now. With the US dollar dropping to the looney, should I pay for my trip today versus later this summer? The cost of the trip is $26.80 Canadian, which today is, when he wrote this email, $1,931 US dollars.
8:13 Speaker 00 Because it changes all through every day and every day.
8:17 Speaker 01 For reference, the Canadian price was actually $1,860 this past January. So would the recent drop in the US dollar means this current cost is $71 more than earlier in the year? For context, if I pay now and something unforeseen happens and I have to cancel my fishing trip, the lodge will roll over my payment to the next year. I can afford to pay for the trip right now. Should I pay now with the risk of the US dollar continuing to drop? Or is the time value of money more important?
8:42 Speaker 00 Okay, Tony, a lot of moving parts here. First, the Canadian dollar has been in a secular decline versus the US dollar for a good while. Canada is going to suffer mightily unless behind the scenes, there were some meaningful negotiations when the new Prime Minister of Canada, Carney, was in the US, meeting with President Trump. If they are able to move towards a deal, the value of the Canadian dollar probably will stabilize. The US dollar is falling as well, obviously, which is why
9:21 Speaker 00 you're seeing having to pay more. Currency movements are so irregular, so hard to judge, that I don't know that I would lay money out now for a fishing trip later in the year. It's just too hard. What you could do, though, if it's really, if you just want to know, the cost is what the cost is, because you're talking about the US dollar's recent decline making the trip more expensive in Canadian dollars, which is funny, because the Canadian dollar has been in such decline for such a period of time, and now we're the ones in decline. This is all so hard to predict. But if you just want to be done with it,
10:05 Speaker 00 I wouldn't give the money necessarily to them, but you may have heard me in the past talk about Revolut and Wise. Revolut, you could buy now Canadian dollars at the current exchange rate, lock in the cost of the trip, hold it in your Revolut account, and then pay later. I don't like you paying now, because if something happens, why should you have your money in the hands of the lodge for another year? What happens if the lodge changes hands, and your money is not transferred with them, and you lose the value of that? I don't like the prepayment, but if you do want to lock in, you can. Go check out Revolut.
10:46 Speaker 00 And also wise and see what it would cost you now to buy a block of Canadian dollars and lock in the price and hold it till it's time to pay.
10:57 Speaker 01 This one's from Amanda in North Dakota. My significant other's brother is going on a cruise with his family and has let us know that we can come if we'd like. I like the family. They have two other groups going as well, so we will have about 11 people in their group, 13 with us. The Mediterranean cruise and summer dates next year have been chosen and they have purchased their tickets already. If I have all this information, should I wait to see if the price softens or buy now? I'm a well-seasoned traveler and have been to half of the locations we'll be seeing, but my future husband has never traveled internationally and seems interested in the family bonding aspect of it. So I think a cruise may be a good way to ease him into Europe. The cruise line is Norwegian, if that's important.
11:40 Speaker 00 Okay, so one of the mainline cruise lines and the, the big cruise lines all do wave season, what used to be called wave week in January. You're talking about going next summer. Usually the best deals of the year are offered in January each year by tradition. You already know you're going on this cruise. It's more than a year out and so it's a bit of a gamble because if you wait till January and the bookings have been really solid for that Mediterranean cruise for that week that's
12:19 Speaker 00 already picked, you can't just opportunistically buy a great deal on something. This is one that's almost a roll of the dice. If you buy now, you're just buying at whatever crazy special they claim they're offering that moment when you're booking. And it could go cheaper in January, but again, everything is based on expected occupancy levels and how much they're sold out. It is a gamble to wait till January, which is what I'd normally advise if you were asking me about going on a cruise next summer, anywhere.
12:58 Speaker 00 But because this is a specific event to be with specific family members, I'm gonna say something, I'm not gonna choke saying it, even though it's hard for me to say it. I would go ahead and book now. You'll be in a position where it will be refundable deposit likely for a long time to come. You can keep watching the prices and rebook over the next many months if you need to, but you'll know you're locked in at no worse than what the price is booking right now.
13:31 Speaker 01 Would you recommend looking at Costco Travel to see if they have that cruise?
13:35 Speaker 00 Well, they'll have that cruise and I'd love for you to use a discounter. The family may already be using a cruise agent. It might be a good idea to use the same cruise agent they're already using, but Costco Travel, if you're a member, I mean, Amanda's in the only state I've never been to, North Dakota. Anyway, I'm not sure that Costco is in North Dakota. Maybe they are, maybe they're not, but Costco Travel is fantastic for saving money on cruises.
14:09 Speaker 01 Mark in Georgia says, when booking on Delta for a family, basic economy is a lot less expensive than Maine. Would you pay the extra to have the ability to change flights and use the Sky Club? Also found out that if you book with Amex Travel, it's considered a third party and Delta will not make any changes for that.
14:27 Speaker 00 Okay, so if you book any fare through a third-party booking, and American Express and Delta are as tight as any credit card company could ever be with any airline, all it means is that you would, with the online booking tool with Amex, if you book regular economy, you would make your changes there instead of on the Delta app, except I think day of travel. Getting your family in the Sky Club, you only get yourself in the Sky Club. You get a couple of passes a year as a Sky Club member to bring in family. Everybody else you have to pay for.
15:07 Speaker 00 The big problem with basic economy is you don't get seat assignments. You don't get checked bags. You obviously have some decent status with Delta if you're a Sky Club person. You're not going to get the free bags you normally would, I don't think, as someone with a Delta American Express card. I just don't like basic economy, except for a very last minute booking that you know is going to happen. That's just me. I like the flexibility of a regular economy booking that can be changed with full credit, no penalty at any time. Just my opinion.
15:52 Speaker 00 Coming up ahead, talking about family. We'll talk about having discussions about money with the economy being unsettled now. Recession possibility kind of 50/50 as we move through the year. I think it's time to just have talks, not a talk. Talks, I'm going to tell you why ahead.
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17:01 Speaker 00 I know so many people in their 30s who are still suffering trauma because of what their parents, what their families went through during the Great Recession following the banking scandals. And so, these now adults bear scars from the harshness of the Great Recession, where they could have found themselves with both their parents unemployed. They could have found themselves evicted from their home or apartment. Home could have been foreclosed, the apartment they could have been evicted from. That's rough as a
17:39 Speaker 00 kid. My dad, growing up in the Depression, came home twice from school to find themselves, a family, evicted, and their stuff on the street. And my dad carried that his whole life. So, we're not going into the Great Recession, but we are going to have likely some level of rising unemployment from what's a very low unemployment base. The unemployment rate in the United States, still by historical numbers, extremely low. What economists used to refer to as full employment, because there are, for every person loses a job, there's
18:24 Speaker 00 another job out there. That may or may not be true later in 25 or moving into 26. And as I said, it's a toss-up if we're going to go into a recession. But, the reality is, employers have been holding on to workers, but not hiring as much as before. The holding on to workers, that could end later.
18:53 Speaker 00 And plus, so many families have been crushed by inflation. That brings me, this whole preamble brings me to something I feel that parents generally avoid discussing with their children. What's going on generally with the economy and what it means in their house? Parents are so worried that they're going to bring stress into their kids' lives, but it's all about being appropriate for the age of your kids. And it's not a conversation. You want to engage your kids because they may be silently worried because a friend of theirs' parent lost his or her job.
19:37 Speaker 00 Or they're worried about what's going on with the ability to spend money in the household. So, age appropriate, talking to your kids about where you are financially, what you're doing to prepare. And as I've said for months, this is a time of uncertainty that makes it more compelling, more important for you to build up reserve for rainy day. And if you're doing it, you tell your kids, "Yeah, it's true. Things could get tougher, but here are the things we're doing to prepare." And maybe, just maybe, the very thought of talking to your kids about it gets you in
20:20 Speaker 00 gear, doing what you know you should be doing anyway. This is not a time for impulse spending. This is not a time for optional purchases. This is a time that you preserve your cash. You build up reserves. And if you're doing that, let your kids know, "Yeah, things are potentially going to be tougher ahead for some of your friends' parents. Things are going to be tougher potentially for us, but here's what we're doing to prepare and be doing it. Get with it and do this to prepare."
21:02 Speaker 00 But your kids may be worrying, particularly if they're teens, they may be worrying more than you realize and just not talking to you about it. And so you say, yeah, from time to time, times get tough financially. Here's what we're doing and you'll be surprised. Your kids may surprise you, say, how can I help? You engage in that conversation. Now I alluded at the very top of this podcast and YouTube show about couples. Couples are notoriously bad generally at talking about money with each other.
21:41 Speaker 00 This is one of those inflection times that if that's the nature of your relationship, whether you're married to someone or so someone you're living with, whatever the situation, talk to each other, not when something bad has happened or you're angry about something. Talk about it just generally, and it's not a sit down conversation. It's creating new communication in a couple about money. More important during a time where a recession is a clear possibility than even regularly. Cause I want you to do this anyway, just now there's more urgency.
22:23 Speaker 00 Krista, do you know, who knows if there's going to be a recession?
22:27 Speaker 01 Nobody.
22:28 Speaker 00 Nobody. You know, you can, you can have your predictive models and they range anywhere from like 40% minimum to like 70% maximum right now, but it's just a range and it's not a certainty.
22:44 Speaker 01 Okay. Just another millennial in Washington wrote in with this question. Like most millennials approaching 30, my husband and I dream of buying a house someday. We made a combined approximately $250,000 a year, which sounds like a lot, but in the Pacific Northwest, it seems average.
23:01 Speaker 00 Isn't that weird?
23:02 Speaker 01 So crazy. We are diligently saving both in a high yield savings, $3,000 a month as well as our work retirement plans. Our goal is to have all debt paid off by the end of the year. This would free up maybe a thousand dollars a month. Our problem lies in the question of when do we have enough to start looking at homes seriously, or do we give up and just rent forever? Any home? Home worth pursuing within an hour of our jobs and with enough space for us to think about starting a family will be at least $1 million. We currently have about 100K liquid savings, but I know we should have some on hand for emergencies and fees of buying a home too. Should I lower my 401K contributions to save faster and only get my employer match? I know that goes against conventional wisdom, but I'm just not sure how we can reach 20%
23:47 Speaker 01 down before prices keep going up on homes. I'm sure we're not alone in this, so any advice is appreciated.
23:53 Speaker 00 So, gosh, brutal in the I-5 corridor. I mean, from the Mexican border in San Diego to the Canadian border in Washington State, the I-5 corridor is brutal. Housing costs that are just mind-blowing to people elsewhere in the United States. Although there are parts of where you went to college, the Boston area in New England, that are having same kind of issues as the I-5 corridor on the West Coast, or as they say in California, "The Five." There is no right answer for your question, but you're creating the possibilities already
24:38 Speaker 00 by living on substantially less than you make, saving money like crazy. I mean, think about what you're doing with the $36,000 a year you're saving in just a savings account. That's more than 10% of your pay just right there. Then you're doing the 401K. I mean, you have the right attitude and right discipline to get there. If you decide that you want to, in your case, cut back what you're contributing to the 401K to pick up the full employer match...
25:16 Speaker 00 I know I'm going to shock you, Krista. I'd say because of the, the culture of your household where you live so substantially on less than what you make, I'm okay with you doing that to ramp up savings towards a down payment on a home. You don't have to do 20% down, although that's preferable. You could, if you get to 10% with your financial discipline, I'm fine with that. It means you might have private mortgage insurance for a while, or you might do something known as an 80 10 10, where you avoid private mortgage insurance by putting 10% down and borrowing 10% in a second mortgage to go with the first
26:01 Speaker 00 because you live so substantially on less than what you make. We don't know what's going to happen with home values going forward, other than the rapid acceleration in prices is over. So every year you go forward, your paycheck will buy essentially more than it would have before in the housing market after year after year it bought less. So with your discipline though, I'm okay with you proceeding on buying a home because you'll handle it and you'll be able to easily handle the payments with an income of more than a quarter million
26:45 Speaker 00 a year. And again, congratulations to you on being such a great saver, living substantially on less than what you make.
26:56 Speaker 01 Shelly in Florida says, "Back in December, I unfortunately made a visit to my local emergency room. To be brief, I had an infection on my lower back. It required a short procedure and then I was put on antibiotics and sent home. Before leaving the ER, I was told to come back in three days for a recheck of the wound. I asked if I needed to make an appointment and was told no. It's just a recheck. I paid my $200 copay and left. Three days later, I went back. I was in my mind 1,000% sure there was not going to be a charge for this follow-up visit."
27:25 Speaker 00 No such thing in an emergency room.
27:28 Speaker 01 First of all, this is a recheck of the wound from the original visit. Second, this was no longer an emergency. I was stunned to later get another bill for $200 for my copay. Why would they ask me to come back to the ER? Why not let me know I could follow up with an urgent care, which they also own, within a mile of my house with a copay of $50? Or simply go to my regular doctor with a copay of 25? Am I wrong here? I never, ever would have gone back had I known they were going to charge me again. I've been fighting this since January.
27:54 Speaker 00 Shelley, I am really, really sorry. In this case, you just got to treat this as a very expensive lesson learned, and you've done a favor for everybody else. When you were in an emergency mode, going to the emergency room was probably the proper thing to do and fought what could have been potentially a very dangerous infection. But the follow-up, when it was no longer an emergency, they should have told you that you should have gone to see your primary care doctor. And you cost the insurance company a lot more
28:33 Speaker 00 money and yourself eight times the copay by having gone back to the emergency room. There is never a situation that an emergency room is going to be a better choice for a follow-up. It's not going to be. In this case, I think you got to look at this as a life lesson. And I don't know how many people you've helped just by bringing the situation forward. If you can negotiate with them 100 instead of 200, go for it. Whatever it is, try to make a deal. Otherwise, pay the 200 and call it like tuition for your life. I don't know what else to say.
29:16 Speaker 01 School of hard knocks, yeah.
29:17 Speaker 00 It is definitely school of hard knocks. The great news, though, is you're obviously okay from that infection.
29:24 Speaker 01 Dave in Virginia says, "My daughter's graduating from Virginia Tech. We're giving her a gift of S&P 500 funds that we had started for her several years ago. The funds are currently in our name with Vanguard. It's about $8,000, but it's 40% taxable gains. She'll be moving to the DC area and probably could use the cash instead. Since she will have an income of less than $48,000 this year, I thought we could transfer the share to her Vanguard account and she could sell the shares and pay 0% tax. Am I missing anything here?"
29:52 Speaker 00 Okay, Dave, you are allowed to gift the shares to her $8,000. Yeah, you can gift anybody up to $19,000 and there's not even a gift tax implication. And you can, within Vanguard, I think like most firms, you can gift from your account to her account and avoid, since the investment stays in place, avoid capital gains. What she would have to do, she opens her own Vanguard account and it can be a receiving account, and then you move the money over as the existing holding of the S and P 500
30:36 Speaker 00 fund or ETF. She just moved that across. And only if a financial house doesn't permit that, and I don't know any reason why they wouldn't, that would be how you handle it. Now, I don't know if that is tax avoidance, or if that is considered to be uncool to move the money and then immediately claim at the 0%, which would be a 0% tax rate for the sale of it. In her case, where you would have probably typically 40% capital gains tax. That's above my pay grade. If there's any restriction on how quickly after the transfer of ownership to her, she
31:21 Speaker 00 could turn around. It may be, maybe the cap gains holding period starts over as another year. I just don't know that. And if we get a good answer on that, we'll put that in today's podcast show notes. But congratulations to her on graduating and getting ready to start at her new job. That's wonderful. And I want to thank you so much for joining us on today's podcast. It's been great being with you. And know that coming up on Friday, we have Clark stinks. And
32:00 Speaker 00 Our goal on this YouTube show and our podcast is to serve you with information that adds to your bank of knowledge, what I should say, credit union of knowledge, since banks are too expensive to do business with, that you build up that knowledge base so that you can make better decisions, so that you're empowered with ways that you can save more and spend less and avoid getting ripped off. That's what I'm about, and that's what I want for you, is to have more knowledge, more power in your own life. And we'll see you Friday.
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