Smart Auto Insurance Blog

Despite the fact that shopping around can often save you a lot of money on auto insurance rates, Americans are pulling back and sticking with their current insurers according to the article “Motorists Scale Back Shopping for Auto Insurance, Survey Shows” by Jamie McGee from Bloomberg.com. 

This information comes from a J.D. Power and Associates survey which shows that customers looking for new auto insurance companies fell to 28% from 36% the previous year.  Jeremy Bowler is the senior director of insurance at J.D. Power and he said that some companies did report a rebound in recent months.  He believes customers have a “hunker-down” mentality.  People want to stay low risk in today’s economic environment so they are staying with insurers they know they can trust. 

Auto insurance quotes have decreased since drivers are reducing coverage to save money in response to the recession.  Consumers more than anything said that price is the reason for their shopping around, and more than 1/3 said price was the reason for switching carriers.  90% of customers stay with their current provider, according to J.D. Power’s survey.

According to the article “Collision City” by Jeff Gelles from the Philadelphia Inquirer, Allstate Auto Insurance examined which cities have the best and worst driving record in their 5th annul Best Drivers Study.

The study shows that on average, Allstate’s Philadelphia policyholders have collisions once every 6.4 years. New Yorkers have eight years between accidents, Clevelander drivers 10.7 years, and  Sioux Falls, S.D., 13.5 years.  Philadephia was ranked worst among largest cities.  This does affect Pennsylvania auto insurance rates and if you live in Phillie you understand the high costs.

Pennsylvania state officials and traffic-safety experts aren’t convinced by the findings.  Spokeswoman for PA Department of Transportation, Jenny Robinson, stated that 2008 was Philadephia’s best year in a decade according to PennDot’s count of “reportable crashes” which include accidents that result in death or injury, or require a vehicle to be towed.  Martin T. Pietrucha is a civil engineer who studies the “human factors” in car crashes, and he thinks Allstate’s claims data may be skewed if Philadelphia drivers are more likely to report small accidents to their auto insurance companies.

Whether or not Allstate’s study is completely reliable, one thing remains sure.  Their findings ultimately translate to the cost of their customer’s auto insurance rates.

According to the article “Massachusetts Police Arrest 13 in Auto Insurance Fraud Case” from Claimsjournal.com, 13 people from Lawrence and Methuen have been charged with auto insurance fraud.  This is in connection to what police believe to be a staged accident where over $76,000 was paid out.

Lawrence Chief John Romero told The Eagle-Tribune that it is the largest group of people charged in connection with one incident since they started focusing on auto insurance fraud 6 years ago.  This crackdown was prompted by the death of a great-grandmother in a staged crash in 2003.

Ten of the thirteen charged say they were in a van that was hit on a ramp  in North Andover in May ‘03. The runner who allegedly set up the incident and the driver of another vehicle that hit the auto were charged as well.  It’s this kind of illegal behavior that ends up affecting everyone’s auto insurance rates.

According to the article “Car insurance rates fall 8%, state says” by Todd Wallack in the Boston Globe, Massachusetts auto insurance rates have fallen since they stopped setting their own rates back in 2008.  This information was obtained from the Division of Insurance.

The state study shows that auto insurance rates have dropped 8.2% from April 08 to April 09.  The rates also fell 5.2% from 06 to 07.  In April of 2008 Massachusetts started allowing auto insurance companies to set their own rates which was to create managed competition.  Before this rates were highly regulated. 

Jason Lefferts, for the insurance division, said that the study also found that during the last year the number of uninsured cars in MA fell and that less people were placed in the high-risk driver category.  Since the change in regulation 9 auto insurance companies have entered the Massachusetts auto insurance market.

According to the article “Best Auto Insurance Coverage for Rental Cars” by Brian McKay on monitorbankrates.com, purchasing auto insurance for your rental car may be unnecessary.  Many auto insurance companies cover rental car insurance liability and collision.  Find out specifically what kind of coverage you have on your own car because most likely you will have that on your rental as well.

If you don’t have comprehensive auto insurance or collision auto insurance you can purchase rental car insurance to cover yourself in case the rental is damaged or stolen.  One thing to keep in mind though is the car you are renting must be used for personal reasons, not for business.  Many personal auto insurance policies only cover recreational rental car insurance.  This is why the rental car company always asks if the car will be used for business or pleasure.

If you are renting a car for business you can take the coverage the rental car company is offering.  The daily car rental expense may be more but at least you will be covered and since it’s a business expense, the cost of the rental and insurance is most likely tax deductible. 

Many credit card companies offer car rental insurance just for putting the purchase on their credit card.  Contact your issuer to see exactly what types of benefits you have with your card.  The benefits probably are not as good as the coverage you get with your own auto insurance policy but it is worth looking into.  You do not want to purchase car rental insurance if you are covered for free through some other outlet.

According to a PRWeb Newsrelease found on Entrepreneur.com, the recession is causing many Americans to drop their auto insurance which can be extremely risky.  The Insurance Research Council found that one in six drivers may be uninsured by 2010 as the economy continues to struggle. 

In addition to the obvious risk of possibly getting into a car accident and having huge bills to pay, auto insurance should never be dropped for other reasons.  It is against the law to drive a car without auto insurance coverage.  It’s a crime in all 50 states.  Your auto insurance rates may increase when you do decide to reinstate your policy.  You may incur harsh penalties that will cost you a lot of time and money.  Your odds of getting into an accident with an uninsured driver are substantial so if neither of you are covered it can be catastrophic. 

Also, most states require that you carry proof of insurance at all times while you are driving.   You can even get your license suspended or receive jail time.  If you get caught driving uninsured, it goes on your record and your auto insurance rates will be affected as you will be placed in a high risk category, even though you may be a safe driver. Many auto insurance companies charge a reinstatement surcharge up to 50% since they consider these drivers irresponsible.  Bottom line, do not drop your auto insurance policy to save money.  It will end up costing you much more in the long run.  If you are desperate to save money, shopping around for a more competitive auto insurance quote is a much better route.

According to the article “Car Insurance Mandate in Wisconsin Budget; No Driver’s Card for Illegals” on insurancejournal.com, Wisconsin auto insurance policy holders will have to buy liability insurance for their cars, but illegal immigrants will not be issued special cards to drive legally.  This is under the new proposed Wisconsin budget legislature.

This new requirement has been considered and proposed since the 70’s, but never put through because of the insurance industry.  Governor Jim Doyle has expressed his support for the new proposal.  It would take effect next year.  Anyone pulled over with no insurance card would be subject to a fine of $10.

Posing more of a debate was the driver’s card for illegal immigrants.  Immigrant rights groups and the police argue for the cards claiming they make the roads safer by ensuring everyone, even illegal immigrants, carry ID and are able to get auto insurance.  Doyle did not propose this and the Senate rejected it in the Wisconsin budget.

Joe Ducey from abc15.com wrote the article “Why falling credit may cost you higher insurance premiums” which has some great information about watching your credit so your auto insurance rates are not affected.  He contacted the American Insurance Association for some more information on how and why your credit rating affects your premium.

Basically, your credit rating determines predictive behavior and research shows it does impact how many claims you file and how much they will cost.  It’s called “risky behavior”.  There are other seemingly unusual factors that go into determining your auto insurance rate such as if you are smoker, if you drive during rush hour, if you are good student and how many miles you drive.  The criteria varies between auto insurance companies, so it can be beneficial to shop around. 

This is yet another reason to keep a close eye on your credit report and check it regularly.  Not only does it affect your auto insurance rates, but it affects your mortgage rates, car loan rates and other insurance rates!

According to the article “Are Your Car Insurance Rates About To Go Up?” by Dan O’Donnell on 620wtmj.com, Previant Law Firm put together some information outlining how the 2009 budget might impact your Wisconsin auto insurance.

The main note is that minimum liability limits will be increased.  They discuss 7 key points on minimum liability coverage.

1. Minimum liability coverage was established to ensure the insured had adequate coverage
2. Coverages were set back in 1982 last
3. Limits are now being raised to reflect today’s costs
4. New proposed limits are $100,000/$300,000/$25,000
5. This will affect 20-25% of insured drivers
6. 75%-80% of drivers already have higher limits so should not see any impact
7. The cost to your auto insurance rates should be small compared to how much more coverage would you would receive