Car Insurance

If you want to donate your car to a charity, you might consider doing it before December 31, 2004. A new law will go into effect in 2005 that will alter the rules for the contributions of used motor vehicles (including boats and planes). Under the new rules, if the claimed value of the donated motor vehicle exceeds $500 and the vehicle is sold by the charity, the taxpayer is limited to the amount the charity receives for the vehicle. The charity must send a notification to the donor within 30 days of the sale stating the amount of the gross proceeds.

According the Internal Revenue Service (IRS), for the remainder of 2004, taxpayers will be able to deduct the fair market value of the contributed property. The fair market value is the price the car would sell for today in its current condition. If the used car is not in good condition and needs significant repairs, do not believe promotional promises that claim you will be able to get “top value” for your car donation based on one of the latest published guides that show the average regional prices for various used cars. If you are claiming that the car is worth $5,000 or more, you will need to get an official outside appraisal in order to substantiate the claimed value for the IRS.

In order to take a tax deduction for donating a car, boat or other vehicle before December 31, 2004, there are a number of other things you should keep in mind.

* First, verify that the recipient organization is tax exempt as a charity. Taxpayers can use the IRS Web site to check that an organization is qualified by searching Publication 78. Publication 78 is an annual, cumulative list of most organizations that are qualified to receive deductible contributions. Publication 78 is also available in many public libraries.
* Make sure the title of the car is transferred to the charity’s name and keep a copy of this record.
* Find out how the charity financially benefits from the resale of the vehicle.
* For tax records, take a photo of the car and keep copies of current classified ads or guide value estimates for similar vehicles. For more deductibility information, get a copy of IRS Publication 561, Determining the Value of Donated Property.
* Check out the charity with the BBB Wise Giving Alliance at www.give.org or contact the Better Business Bureau in your area.
* If you are in doubt about whether a contribution is deductible contact the IRS at 1.800.829.4059.

Donors concerned that contributions are being solicited for fraudulent purposes should contact the appropriate state charity official, who is often located in the state attorney general’s office. A list of state charity official offices can be found online.

The price of new cars has climbed steadily over the past few years making used cars more attractive than ever. Buying a used car is a great way to stretch your dollar, but you will want to learn the facts about the car before you shop. With the recent surge in the used car market, the Better Business Bureau warns consumers that there are scam artists out there who willing take advantage of unsuspecting buyers.

The BBB offers the following advice to avoid becoming a victim of used car fraud:

* Be aware of odometer tampering. The National Highway Traffic Safety Administration (NHTSA) estimates that consumers lose billions of dollars a year to odometer fraud. Odometer readings may be rolled back or documents can be forged. Making miles disappear helps increase the car’s value to the seller, but can mean increased maintenance and repair costs to the buyer.

Before deciding on a used car, do the math. Industry standards claim the average vehicle accumulates about 12,000 miles per year. If the mileage seems excessively high or low in comparison, find out why. Ask the seller if you can see the maintenance records and compare them with the mileage on the odometer itself. Examine the car for telltale signs. Is wear on the car’s pedals, tires and seats consistent with the miles displayed on the odometer? Obtain a detailed vehicle history report. If the seller cannot provide this information, you can use the vehicle’s 17-digit vehicle identification number (VIN) to secure a history from either the state or a private vehicle history company. You can search the web to find companies providing this service by looking under the topic of “vehicle history.”

* Watch out for damage disclosure, salvage and rebuilt titles. These titles are issued by states when the car has sustained damage as a result of one or more incidents. Salvage titles are issued by the state when an insurance company takes possession of a vehicle as a result of a claim. This usually occurs when a vehicle has been declared a total loss. A rebuilt title may be issued if a vehicle sustained damage and was rebuilt or reconstructed, then placed back on the road. Junk titles are issued when a vehicle is not road worthy and cannot be titled again in that state.

* Be careful of individuals selling used cars from a vacant lot or from the side of the curb. These vehicles may be sold by con men posing as private individual sellers. The car can come with hidden problems. Before buying any used car you should thoroughly research the car and the seller. Contact the Better Business Bureau.

If you are shopping for a new or used car, you may be encouraged to buy an auto service contract. Auto service contracts have become increasingly popular as a way to provide consumers a means to deal with unforeseen vehicle repair problems. Before signing on the dotted line, the Better Business Bureau urges consumers to be sure they understand the terms of the contract and know who is responsible for providing the coverage.

According to the Federal Trade Commission, an auto service contract is a promise to perform (or pay for) certain repairs or service. Sometimes called an “extended warranty,” a service contract is not a warranty as defined by federal law. A service contract may be arranged at any time and always costs extra; a warranty comes with a new car and is included in the original price. This separate and additional cost distinguishes a service contract from a warranty.

Before deciding whether to buy an auto services contract, the BBB suggests you ask the following questions.

* Who backs the service contract? It may be the manufacturer, dealer, or an independent company. Many service contracts sold by dealers are handled by independent companies called administrators. Administrators act as claims adjusters, authorizing the payment of claims to any dealers under the contract.

* What’s the cost of the auto service contract? Usually, the price of the service contract is based on the car make, model, condition (new or used), depth of coverage and length of contract. The cost of the service contract can range from several hundred dollars to more than $2,000. In addition, you may need to pay a deductible each time your car is serviced or repaired.

* What is covered and not covered? Few auto service contracts cover all repairs. Watch out for absolute exclusions that deny coverage for any reasons. For instance, if the contract specifies that only “mechanical breakdowns” will be covered, problems caused by “normal wear and tear” may be excluded.

* How are claims handled? When your car needs to be repaired or serviced, some service contracts permit you to choose among several service dealers or authorized repair centers. Others require the car owner to return the vehicle to the selling dealer for service. Find out if you will need prior authorization from the contract provider for any repair work or towing services. Ask how long it will take to obtain authorization and whether you can get authorization outside of normal business hours.

* What are your responsibilities? Under the contract, you may have to follow all the manufacturer’s recommendations for routine maintenance, such as oil and spark plug changes. Failure to do so could void the contract. To prove you have maintained the car properly, keep detailed records, including receipts. Find out if the contract prohibits you from taking the car to an independent station for routine maintenance or performing the work yourself. The contract may specify that the selling dealer is the only authorized facility for servicing the car.

* What is the length of the service contract? If the service contract lasts longer than you expect to own the car, find out if it can be transferred when you sell the car, whether there’s a fee, or if a shorter contract is available.

Consumers should check with the BBB for a reliability report on the business offering the contract, and with any regulatory agencies that oversee this type of company. Make sure you read and thoroughly understand the agreement and check that all verbal promises have been included. Do not sign a contract with blank spaces that could be altered or changed. Finally, once the contract is signed, keep a copy of it for your records.

Taking the time now to review the steps you should follow after an auto accident will help to reduce the anxiety surrounding the incident and avoid costly and time-consuming mistakes. The Better Business Bureau suggests the following tips to make sure things go smoothly. * Always have on hand your company’s claim service card with your agent’s name and phone number, and your policy identification number. * Notify the police immediately. Get the police officer’s name and badge number and the address and phone number of the police station. Ask the officer when the accident report will be filed and how you can obtain a copy. * Review your insurance company’s filing procedures, and store a copy in your glove compartment as a reminder of the information the company requires. * Notify your insurance company or agent. Do it as soon as possible even if you’re far from home and even if someone else caused the accident. Ask your agent how to proceed and what forms or documents will be needed to support your claim. Be familiar with your insurance company’s policy regarding qualified repair shops and pre-inspections. * Make sure you get the name of the other driver, his or her address, work and home telephone numbers; vehicle license plate number and state; insurance company name and policy number and the telephone number of his or her insurance agent. Also, obtain the names and addresses of all passengers and witnesses. * Make notes describing the accident, the vehicles involved, their approximate speeds, the setting, the weather, the traffic signs and signals, and the road conditions. Take photographs if possible; or draw simple diagrams of the roads and the accident. * Don’t make any oral or written statements as to responsibility or blame. * Don’t tell others involved in the accident how much liability insurance you carry. * Don’t discuss the specifics of the accident with other drivers, witnesses or passengers. * Don’t accept offers to settle for payment on the spot without thinking about it carefully. You may be held liable later for the same damages.

In the wake of a major flood in your area, the Better Business Bureau urges new and used car buyers to be cautious of unscrupulous businesses and individuals who may try to sell flood-damaged cars without revealing the vehicles’ history.

The BBB recommends the following tips to help consumers determine if a car is flood-damaged:

* Ask to see the title of a used car. Check the date and place of transfer to see if the car came from a flood-damaged state and if the title is stamped “salvage.”

* Check all gauges on the dashboard to make sure they are accurate, and to look for signs of water.

* Test the lights, windshield wipers, turn signals, cigarette lighter, radio, heater and air conditioner several times to make sure they work. Also, flex some wires under the dash to see if they bend or crack, since wet wires become brittle upon drying and can crack or fail at any time.

* Check the trunk, glove compartment, and beneath the seats and dash for signs of mud, rust or water damage.

* Look for discolored, faded or stained upholstery and carpeting. Carpeting that has been replaced may fit too loosely or may not match the interior color.

* Check for a well-defined line, or watermark, and for musty odors resulting from mildew.

* Check out the reliability of the dealer by contacting the Better Business Bureau where the company is located.

* If the car’s history seems suspicious, ask the dealer or individual directly if the car has been damaged by flood water.

* Before buying any used car, always get a pre-purchase inspection by a trusted mechanic. The extra cost may save you money in the long run if major problems are discovered.