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The Clark Howard Podcast
01.09.26 Clark Answers His Critics on Clark Stinks / The Future Of Auto Insurance
00:36:56
Clark Answers His Critics on Clark Stinks / The Future Of Auto Insurance
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- [00:00]
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- [00:31]
Krista
You're about to make a trade. Which u do you listen to? Is it get optioning those options or let's do a little research? Learn more@finra.org TradeSmart.
- [00:50]
Clark Howard
I'm so glad you're with us here on the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. It's Friday, so you know what that means. It's time for Clark Stinks. And I gotta tell you something that really does stink. About me, not about you. Yeah, it is about me. It's about AI it's an AI fake that's running as an ad on Facebook. Is that right?
- [01:23]
Krista
Not even an ad. People are sharing it as a video.
- [01:25]
Clark Howard
Oh, and it totally looks like me. If you watch our YouTube show, it looks like our full podcast YouTube show set. And it's me doing an endorsement of some kind of auto insurance comparison site, shopping site. And it's all felt fake. It's all. What is that called? A deep fake. It could be whatever you call that. So it looks like me talking like I am right now doing a pitch for this thing that just isn't true. And we've tried to get it taken down. So far we failed.
- [02:05]
Krista
Yeah.
- [02:06]
Clark Howard
And I'm not the only one out there that there are fakes running around with people supposedly endorsing different products. So this is going to be an increasing problem. Think about in this year's elections, how much we're going to have fake videos floating around. And you watch this video. I watched it and the voice patterns off just slightly, but it totally seems like me talking.
- [02:37]
Krista
Yeah, they took a video of you and they just changed the words you're saying.
- [02:40]
Clark Howard
And you can't tell watching it that the words that supposedly AI has me saying are not the words coming out of my mouth. So it's gotten harder to know when something is real and when it's not. Here's what you need to know. I have not since I went into public life in 1987 to this moment. I have never done an endorsement. An endorsement is when someone is paid to say whatever about a product, almost like an ad. I've never done that. And anytime you see anything pretending to be me doing an endorsement, you know it's phony and I'm a little annoyed. Right, because for you to be misled and think I'm the one misleading you. Wow, that stinks.
- [03:40]
Krista
It really stinks.
- [03:41]
Clark Howard
Anyway, we got Clark stinks. Coming up later in this episode, I'm going to talk about some potential edge of good news, maybe in the auto insurance front. After years and years and years of these huge increases coming our way, there's a lot of developments I'm going to share with you later after Clark stinks. But now it's time to hear how I really am stinking it up. I should have never encouraged you to speak. You almost think I'm pretty stupid.
- [04:12]
Krista
You should be ashamed of yourself.
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Clark Howard
Well, maybe I'm wrong.
- [04:15]
Krista
Maybe I'm wrong.
- [04:15]
Clark Howard
Maybe you're right, pal. What are you starting with today?
- [04:21]
Krista
I'm going to begin with Michaela. I hope I'm saying that right. From New York, Kyla says consistently, stanky poo. Clark, are you not trainable? Seriously, stop saying scamsters. It truly does not convey the gravity and complete devastation to people's lives. My mom, 93 years old, thinks it's cute and she keeps sending $10 checks to every charity letter in her mailbox. I'm begging you, Clark, words matter. And you have to find another way to discuss the morally bankrupt people who scam.
- [04:52]
Clark Howard
So where did I come up with scamsters instead of scammers? Because it was like a mix of gangster and scammer together.
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Krista
Sounds like hamster to me.
- [05:04]
Clark Howard
Oh, to me, I did it. I started doing it years ago to show actually the opposite of what you're saying. To me, it was like making it more grave what scammers are up to. So that's why I started calling them scamsters probably 30 so years ago. And I hear your point. It is ugly. And you may not know this. My late mom had dementia fairly early in her age cycle and kept getting scammed by phony charities. And eventually we had to intercept all my mom's mail. And then the problem became the phone. That was decades ago and this is still a problem every day, so many different ways.
- [05:54]
Krista
Scott in Florida says without commenting on a Clark olfactory offense, he left me with a confusing mixed message. One of his never, never, not ever rules would be to buy a CD from a bank. Instead, we should buy them only from his three favorite brokerages. Today I wanted to buy a 12 month CD on the Fidelity site. The best rate was 3 1/2%. @bankrate.com There were several at 4.1% all from banks. That's a full half percent difference. They all claim to be FDIC insured and show no fees. So why is a brokerage a better source? What am I missing?
- [06:28]
Clark Howard
You're not missing anything. And that is not truly a never, never, not ever thing that you never buy a CD direct from an online bank. Traditional bricks and mortar banks generally are not going to pay very high rates. But the the key point I try to make about that is most investors savers aren't aware that most of the time the best rates on CDs come through discount stockbrokers or investment houses. And so my three favorite children, Schwab, Vanguard, Fidelity, all sell what are known AS brokerage placed FDIC insured CDs. And if you found one at a better rate@bankrate.com and you're out earning what you can earn from a discount broker, go for it. But more often than not, the discount brokers will have the best deal on CDs of various lanes.
- [07:31]
Krista
Ron in Tennessee says Clark doesn't stink at all. He just uses the wrong wording sometimes. We can't buy a home, we buy a house. That's all. Another warning one. All right, Patrick in North Carolina, that.
- [07:44]
Clark Howard
Comes from Habitat, by the way. Oh, Habitat has always said we're not building houses, we're building a home for a family. So that's where that's in my head.
- [07:54]
Krista
Okay. Patrick in North Carolina says Clark doesn't stink, but he is like the hall of Fame quarterback on the team with no offensive line. He recently said that merchants could charge a credit card fee for debit cards if they were used as a credit instead of a debit card with a pin. That this is not correct. Regardless if ran as credit or debit, merchants are not allowed to charge a fee. See this link to a Visa document as proof. And then he sent a link that I did read through. Keep up the good work Clark, and don't let the merchants get extra fees from us for no reason.
- [08:25]
Clark Howard
So what did the Visa they say.
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Krista
That even if it's cleared as credit card, they're not allowed to charge a fee.
- [08:31]
Clark Howard
That is not how Visa may say that. That's not how I understand the regulations. So I'll have to do more reading on that because the whole thing with, you know, the checking accounts where you use a debit card. But say you're using as credit and you do so many transactions a month and they pay you nice interest on your checking account each month. The whole deal there is by you saying credit instead of debit, the fees are much higher. So it's a workaround for the banks to get more money out of merchants. My understanding is that when that's done the merchant then all's fair if they are having to pay much higher credit card fees that they can then charge you those. So I will, I will do reading on that.
- [09:23]
Krista
Dennis in Oregon says your recent answer and advice to a questioner who asked Is it better to rent a car for a longer drive than drive my own car still stinks worse than the manure truck I got behind in slow traffic yesterday. Although it may be cheaper to rent a car if you don't own one, depending on how it's driven, it's not necessarily cheaper to rent a car on a long trip than it is to drive your own car. Your logic comparing AAA's computations of the cost to own a car to the cost of a rental car just doesn't work. While this average of $0.60 per mile ownership cost may be accurate, this cost includes the cost of the car loan, interest, insurance, et cetera. Then that won't change when you drive a rental and are paid whether you drive a rental or not. Obviously rental car charges will be in addition to and not replace most of the ownership costs that remain. And there's this really struck a nerve because Rosario, North Carolina wrote in with this Clark stinks like my protein shaker. I accidentally left in the car for a month. That's a good one. Recently he talked about how it can be better to rent a car instead of driving your own for a 2000 mile trip. To many of us that sounds bougie and unrealistic. I don't know anyone who would choose to rent a car for a road trip rather than just hop in their own vehicle. Can you elaborate on this more or is this just the way to justify the luxury of a rental car?
- [10:43]
Clark Howard
Okay both of you, great, great thoughts and posts. So my deal on this is that I want you to own your personal vehicle for an extremely long period of time. Depreciation is one of the biggest costs there is as the value falls each year and then it starts to level out. So if you're not running a bunch of miles on your odometer that depending on whose measurement you look at, the most recent I saw is 70 something cents a mile now, not 60 to operate your own vehicle a mile. If you. Instead for when you're putting a large number of miles on a vehicle in a short period of time, let's say a week or so, It's a lot cheaper to put that on the rental car company's vehicle than to put it on your own. Yes, there are many factors involved. And the cost of driving a vehicle one mile is made up of insurance, depreciation, interest, fuel, all those things. Maintenance. All true. I think there's a real advantage to instead of putting a huge number of miles in a short period of time on your own vehicle, to be able to keep that vehicle longer and benefit long term from the depreciation flattening out. The goal is to keep a vehicle, if it works, in your life, 10 years or longer. Average age of a vehicle in the United States, depending on how measured right now, is from nearly 13 years to just under 14 years.
- [12:20]
Krista
Okay, and stay on.
- [12:22]
Clark Howard
One more thing. This is a little nugget for you. I rent cars normally. I rent cars about 30 times a year. This last year was only 20 something times. And there's a trend that's your friend and mine. The cost of renting a car is. Is going down and getting steadily cheaper. And I've seen it in my own life and my own wallet. I just rented a car for a trip to Los Angeles where the rental is costing me before junk fees, $24 a day. And not from some rent a used something. No, from a regular rental car company, in this case Alamo, through Costco travel. And it's 24 bucks a day plus junk fees. And that's a lot cheaper than car rentals have been over the last five years.
- [13:12]
Krista
All right, we're going to stay on car rentals with Rick in Pennsylvania. Stinks. He says not so much a stink as a lack of odor. There's something missing here. Clark talked about credit cards that provide primary rental car coverage. But if you don't travel a lot, the annual fee is a bit much on these cards. There's a more affordable option for less frequent renters. Most amex cards offer an optional primary rental car insurance for 1990 per rental up to 42 days. You must enroll in the amex premium rental car insurance program to get the coverage. And you're only charged at the time of rental when paid with your Amex card.
- [13:47]
Clark Howard
100%. True. And a lot of people specifically use the Amex primary car coverage when they're traveling outside the United States. There are a handful of countries where the American Express coverage Does not apply. A lot of them start. Countries start with an I for some reason. But anyway, you look at that list and if you do have an American Express card eligible for the American Express per rental primary coverage at 20 bucks, it's a deal.
- [14:20]
Krista
And Matt in Texas, still talking about cars, says Clark discourages automobile wheel alignment, saying it is oversold. And by the way, this was a very popular stinks lots of them. When he encouraged his son to get alignment after noticing uneven wear on the tires that does not fix the tires. It only avoids the same problem recurring. If Clark waits for the tires on his Tesla Model S to show uneven wear, then gets alignment, he risks the $300 of each tire being ruined. Plus Tesla discourages replacing individual tires. This risks $600 of tire replacement due to poor alignment. Short suggestion, either purchase a lifetime alignment and have it done every year or visit Groupon and pay about $40 a year for alignment cheap insurance.
- [15:06]
Clark Howard
Thank you, Matt. I appreciate that. I've had a lot of people bending my ear about what I said about alignments and I stand corrected from you and many others.
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Krista
And then Jules in Georgia, you had mentioned your passport book was full. Says, I'm surprised you didn't mention or maybe you don't know. Now you can request a large book, 52 page passport when applying for renewing, which provides extra space for visas and stamps.
- [15:33]
Clark Howard
Thank you for that. I, I don't know if I mentioned why I had the skinny passport book. And gosh, it's such an elite thing that I've traveled so much outside the world that I've filled my passport book. But I had to renew during COVID and the passport office was only doing the skinny, not fat passports at that time. And so that's why I'm gonna have to early renew my passport because I'm almost out of space on the pages.
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Krista
That's awesome.
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Clark Howard
I don't know. That sounds like a spoiled the price of.
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Krista
No, I mean I. You've earned every penny and saved every penny. And I would say this too. Like your travel that you've done around the world has probably cost less than people spend traveling within our own country. Because of the way you look for deals.
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Clark Howard
Well, I, I mean, I always let the deal drive the trip.
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Krista
Right.
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Clark Howard
And that's how we decide where we go.
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Krista
Right.
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Clark Howard
And it's what I've always done. And you know, for our staff reward trip and our staff meetings that we do somewhere in the world, when a deal pops up, what do we do within six hours? We book everybody, right?
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Krista
Yeah.
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Clark Howard
Yeah. And so this year we're going to Croatia because it was a new route for United Airlines and there was an introductory special. And so that's where we're going. So it's so random. Name some of the crazy places you've been over the years.
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Krista
Oh, my gosh. Argentina, Australia, Shanghai. Tokyo was like 475 round trip non stop for $470.10.
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Clark Howard
Don't exaggerate.
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Krista
That was 20, almost 24 years ago because I was pregnant with my daughter. And you still remember that?
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Clark Howard
Well, because, I mean, it's multiplied out by the number of people.
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Krista
Talk about spoiled. I feel like it's, you know, it's such a privilege we've had over the years to get these trips. It's unbelievable.
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Clark Howard
Speaking of privilege.
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Krista
And I'm spending more to fly to Minnesota today, by the way, than just about the Croatia ticket cost.
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Clark Howard
And it's going to be so warm in January. Minnesota, you know, people in Minnesota want to come south during January and you go there in June. No. No plan either way. Okay.
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Krista
It's for an event.
- [17:52]
Clark Howard
All right. So this is also irrelevant to Clark Stinks. But I want to tell you we are in one of the two prime weeks for discounting in the world of travel every January. Cruises often have their lowest rates. And also a lot of international airlines offer deals right now. Air New Zealand as one. There are several European airlines offering deals right now for travel later in the year because after Christmas people are pretty tapped out and they're not thinking about booking travel into the future. And so we are in one of the core key weeks to get great deals for travel going on through this year, particularly for travel spring, summer and fall internationally. So if you want to pick up a bargain and not hear somebody else tell you sitting next to you on a plane that they paid a third of what you paid, pay attention to the deals going on right now. Coming up ahead, somebody has been a no deal for the last many years is auto insurance. But there's more and more promise coming on the auto insurance front. And I want to tell you what you need to know about. I want to tell you that after we have just received body blow after body blow from auto insurers pushing rates higher and higher and higher. We're in a time right now that that has basically exhausted itself and insurers are looking more and more depending on the state and actually lowering rates. Some not like the rates are going back to where they were three years ago. But the big run up seems to be over and now treading water and even some price cuts. So what that means right now there's more gap between what insurers are charging now. Fact, there were a number of insurers that were losing billions of dollars. I know, don't cry me a river for them. But they, but they need to make money to stay in business. And a lot of auto insurers were losing huge money because they got caught so badly by the increase in the cost of vehicles, the increase in the value of used vehicles, the increase in the cost of parts for vehicles and for repairs and body shop work. It all just went crazy high and they played catch up and we're pushing these rates up and now things have moderated some on the cost front and now in turn that's being reflected more and more in auto insurance rates. Some insurers are just going to keep using momentum with you to keep charging what they're charging. That's why you go shop the market and see what you can do. Also wanted to talk to you about something that is like really kind of out there and it's something that there's enough millions of miles of data on Waymos and on FSD full self drive Tesla's that the data shows that the accident rate when a Waymo is driving or a Tesla is on FSD that the accident rate drops by 90%, 9 0% and all of us think we're above average drivers, but other people are terrible. The reality is humans are not great drivers unless they're a professionally trained driver which is like nobody. So these vehicles that do the FSD in the Tesla world, the Waymos, because the accident rate is so much lower, we're going to see some very positive trends. I, I alluded to this about six weeks ago that as the vehicle fleet in the United States automates and you and I aren't driving, we're just sitting there. That the terrible road fatality rate we have is going to decline gradually over a number of years as the fleet changes over. But also there's an opportunity, speaking of auto insurance, to save a lot of money. Lemonade, which is an insurer that charges you based on how much you drive and how you drive, has new experimental rates that they are trying to implement or some stories say they already have, others say that this is going to happen. You'll find out if you live in Arizona, California or Oregon. Lemonade has a program with Tesla where you can just download the Lemonade app and it can track mile per mile whether you as a Tesla driver driving on full self drive which Means you just sit there and the car does everything and that the insurance per mile you're driving, where you're not driving in the car is the insurance will be a little bit more than nominally free. It'll cost almost nothing for those miles because the risk to them drops 90% of you being in an accident. And this is something Eliminate wants to do in all the states. They're in there in about a dozen states around the country, hoping to keep adding more. And Tesla, you know, offers auto insurance in a bunch of states and I imagine that they will go to a system where when you're on fsd, full self drive, that you'll pay lower prices per mile for auto insurance. How does this work with per mile insurers? There are now several in the country. You pay a base rate based on your driver profile, driving history, and then you pay a per mile every mile you're on the road. Because obviously if you're not on the road, you can't have a wreck. So you pay per mile. And the automation improves the safety so much. I'll share a little story that happened to me because I drive, according to the records on my Tesla, about 90% of my miles I'm driving FSD. So I was at a corner, I was getting ready to take a right turn. The car was. And then all of a sudden it abruptly stopped because a vehicle, I was getting ready to go southbound. The vehicle coming northbound made an illegal U turn right there and me driving, I was looking left. If I was driving, I would have pulled right into that vehicle making the illegal left. But the car with the FSD has cameras everywhere and stopped and prevented that accident. I mean, that was a perfect example of where the automation was superior to what I could do as a human. So a lot of good stuff after a lot of bad years with driving and premiums and all that good stuff I think is on our way. And yes, Krista is an example of me always being Pollyanna.
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Krista
Oh, I don't think so. Well, you know, I'm accused of the same. You say I wear Krista colored glasses.
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Clark Howard
I. You initially coined that for yourself.
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Krista
No, I did not.
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Clark Howard
I did.
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Krista
You did? Yes.
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Clark Howard
Krista, colored glasses are.
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Krista
Yes.
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Clark Howard
Where no matter what's going wrong, Krista says, but it's gonna be okay.
- [25:41]
Krista
Well, usually it is okay. Okay. Steve in South Carolina says recently my auto insurance premium increased by over 10%. I'm going to say the carrier, my carrier, State Farm. And I've been with them a number of years with home and auto insurance. No claims ever filed. When I contacted them about the increase, they wanted to put a tracker on my car, which would supposedly lower the premium. What do you think about this? Is it a good idea to trade more of our personal data for a lower rate? Thank you for all you do to keep us from being ripped off.
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Clark Howard
Okay, so first of all, Steve, State Farm is rumored to be one of the insurers that uses profitability index scores, which are or loyalty index scores, which are based on your personality and how loyal you are that you are not going to be. If you're an extremely loyal kind of person, you're not going to be somebody who's going to say, well, State Farm raised my rates. I'm going to go shop somewhere else. Who knows if they really are using these loyalty scores or not. But a lot of insurers do. So I'll get to your question in a second about putting the device in your car. You should use this as an opportunity and as a clear signal to go shop your auto insurance. And you may find that State Farm is not offering you what the marketplace will and that you can find the same coverages from another company at a significantly lower price. Or maybe you'll find out you you aren't. But then as you shop around, you're also going to see this offer that State Farm made to you to put in a tracker on how you drive. And it's all about tracking how aggressively you drive, how much you do lane changes, how much you speed, how much you do jackrabbit starts and stops, that the insurers use these things as a predictor of the odds you're going to be in an accident and adjust your rates up or, or down based on it. So you have to know yourself and what kind of driver you are. If you are somebody who's extra, extra cautious, careful behind the wheel, then these trackers in your vehicle will benefit you. If you know yourself, though, to be a pretty aggressive driver, you don't want one of these trackers.
- [28:02]
Krista
Mike in Montana says we have a college student that is not a very good driver. He paid for his own car. He bought it from us, but is still under our name and insurance. Insurance we have above average income and assets. Should we have him register the car under his own name and pay for the insurance for liability reasons? We're happy to reimburse him for these expenses until he graduates. We had a similar question recently, but I felt it was worth repeating here.
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Clark Howard
Yeah. Because this has come up a lot.
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Krista
Yeah. And you and I would love to do this right. We both have college age sons driving.
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Clark Howard
So Mike, here's the thing, okay. Insurance is sold by state. The regulation of insurance and the rules for it vary by state, but this is something that's fairly consistent around the country. As long as a child is your dependent, you're providing 50% or more of their support each year. Even if they own a vehicle in their own name, they pay for their own insurance. You still have liability risk potentially in the event they have an at fault accident, particularly if somebody in another vehicle is injured. So it is not the shield you would hope it would be in most states. Montana is a little different with vehicle registrations and insurance and so I can't speak specifically to whether what's generally true around the country is specifically true in Montana, but usually that will not make that difference for you.
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Krista
That's the reason that my that my ex husband and I still have an umbrella insurance policy because we have a.
- [29:42]
Clark Howard
Yeah, you got young drivers.
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Krista
Christina in Utah says, my husband and I are both self employed and have been enrolling in a high deductible health insurance plan through healthcare.gov for the last few years. In 2025, our monthly premium for our family of six was about $2,300, which with $400 in subsidies making our payment just over $1,900 per month. For 2026, the same plan, which is the second least expensive option for us but has the closest healthcare facilities in our rural area, is jumping to over $2900 a month. Side note, the max out of pocket per person is also increasing from 9,500 to over $11,000 and the family max out of pocket is going from $18,000 to over 21,000. While we can afford to pay the premiums, we are a healthy family that hasn't made much use of our coverage in the last few years. My husband's a healthcare professional, which also helps alleviate trips to the clinic and hospital. I know you don't recommend using Health Share programs, but paying over $35,000 a year for health insurance is painful. Do we just continue to bite the bullet and consider it a cost of living in the United States? At what point, if any, do we try to try out a Health Share program knowing we can switch back to health insurance starting in January of next year?
- [31:00]
Clark Howard
Okay, this one's tough because you're Talking about a 50% increase in premium year over year because the Congress couldn't reach a deal on how the subsidies would work for individuals and families buying coverage. Small businesses as well. 50% increase. The out of pocket for coverages going up about 18% on top of that. I mean, this is bad, ugly. And a lot of people are in a position that there's no way they can afford to pay the premiums that the increases have put upon them for 26. So you're talking about rolling the dice until you can hit 27. Going into a cost share thing, one of the health share co op kind of things. Yeah. So here's the problem. If you have a routine kind of thing, you're going to pay a fraction of this cost and you won't have the big deductibles in a health share. These co ops are where a group of people pool their money together and then pay for care that people receive out of the pooled money. But they are not what's known as actuarially underwritten. And so if in a pool you have, let's say, some tragic accidents in the pool you have more than expected number of people who get, let's say, cancer or severe heart issue or have an organ failure that requires extreme medical care, you may not be in a position to limp along till 27 when you can go back into a traditional health care plan. So this is a roll of the dice on your part. Yes. If everybody's healthy, has no major illnesses, anything like that, through 26, you're going to save a ton of. But if somebody has an accident or major illness and you can't just wait till the new calendar year to cover it, you've got to just think this through and think how much risk you're willing to absorb. You're in a position, unlike other people who cannot afford the new premiums, you're in a position to afford the premium, the cost of the insurance. You just don't want to spend all that money. I get that. But you got to think about the risk to the assets you built up over the years. If there was a tragic event that required real medical spending this year. And I can't make that call for you. You'll have to decide. And this is happening. There's is it 40 million people buy individual or small business coverage who are all seeing these premium increases. That 50% is kind of in the wheelhouse, but some people are seeing much bigger increases than that. You got to make your own call on what makes sense for you and the risk that you're willing to roll the dice on. So tough topic without an automatic easy answer. I want to thank you so much for joining us today and I hope that this is a wonderful weekend for you. If you are into the NFL like I am, I hope that your team wins this weekend in the playoffs. And know that we are here no matter what team you're for or against. We're on your team with your wallet. Everything's about your empowerment with knowledge so you can save more, spend less and avoid getting ripped off. And we'll be at your service on Monday.