Smart Auto Insurance Blog

It’s becoming common knowledge that having a good credit score will save you money on your auto insurance rates, but it’s unclear exactly how much it will save you.  Based on a recent CarInsurance.com study, drivers with credit ratings over 750 save about $783 a year on their auto insurance quotes when compared with a typical driver in the same age group with average credit scores.  The study used 42,809 auto insurance quotes to determine this figure and the results are surprising.

If you calculate this out over a lifetime of driving, a person with excellent credit can save approximately $22,815 on their auto insurance premiums.  Credit is only one factor out of many that insurers use to calculate quotes but it’s becoming increasingly important.  Auto insurance companies strongly defend their use of the score despite many consumers finding it unfair.  Insurers have found a direct correlation between someone’s credit rating and the chances of them filing a claim.  Regardless of the reasoning behind this connection, there is a connection and it makes sense for insurers to use this information.

The good news is that you have control over your credit score.  Even if you have filed bankruptcy or charged off some accounts, you can repair your credit through time and bill management.  It’s important to keep your credit card debt down and make all of your payments on time.  It may take a few years, but once your credit score has improved you can start to compare auto insurance quotes and hopefully see a difference in the rates you receive.

Many states are still working under the no-fault auto insurance ruling and experts believe this is causing a crisis in the auto insurance industry.  The laws were originally put into place to stop ambulance chasing lawyers from submitting small-claims cases, and it helped car accident victims receive funds quickly instead of waiting for the determination as to who was at fault.

Unfortunately, these laws are backfiring since many believe its contributing to fraud, rising medical costs, large benefit payouts, and excessive lawsuits.  Auto insurance quotes in Florida are skyrocketing and many are blaming their no-fault laws according to “Why Does Everyone Hate No-Fault Car Insurance?” by Barbara Marquand on FoxBusiness.com.  Some insurance companies have actually limited their business in states with no-fault insurance laws since it ends up being so much more expensive for the insurer.  This ends up affecting competition and can drive up auto insurance rates.

Currently, 12 states and Puerto Rico have no-fault auto insurance laws including Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.  The laws allow policyholders to collect funds for car accidents from their own insurance company regardless of who was at fault.  The laws also prevent people from suing for pain and suffering unless their injuries are a certain extreme.  Florida is the nation’s staged-accident capital and this of course drives up Florida auto insurance quotes.  Many industry experts believe no-fault auto insurance needs to be eliminated altogether or the crisis will continues and rates will keep going up.

You may have seen some recent commercials on TV or ads in the paper from Nationwide Auto Insurance discussing their Vanishing Deductible program.  A vanishing deductible sounds appealing but how does it exactly work and is it a good deal?

Basically this benefit will apply to good drivers only.  If you’ve never filed a claim with your auto insurance company you may feel that it’s unfair to pay the same deductible as someone who has filed claims in the past.  Nationwide believes you shouldn’t pay the same deductible if you have a clean record.  That is what motivated them to create this unique plan for good drivers where the deductible “vanishes” with good behavior.

The Vanishing Deductible program drops your deductible by $100 for each year you are a safe driver.  They even offer a $100 discount for signing up.  This optional feature does seem appealing and doesn’t have much of a downside.  According to their website, annual credits are subject to eligibility requirements with a maximum credit of $500.  It’s important to understand that details and availability of the plan vary from state to state so check with a local agent to see if this is an option for you.  Having an insurance company that offers little perks like this can make all the difference since the market is so competitive.

We all know that competition generally returns better prices for products but that holds extra true for car insurance quotes.  A survey from Gocompare shows that approximately 25% of consumers do not change companies when it comes to car insurance, homeowners insurance, and other financial accounts.  The article “Consumers Benefit From Competition for Car Insurance Quotes and Bank Rates” by Ed Dixon on Newstaar.com points out how drivers are missing out since car insurance is a highly competitive industry.

Most car insurance companies do not offer loyalty benefits for staying with the same insurer, so with that said, why aren’t more people shopping around to compare quotes?  Awareness is definitely one concern.  Many consumers aren’t aware of how highly competitive the market really is and don’t even think of changing companies.  They inadvertently have loyalty to an insurer and they’re not even sure why.

With so much competition in the car insurance arena, drivers who are no shopping around are missing on a huge opportunity to get lower rates, especially if they have a good driving record.  If you’ve been with the same company for years and years, your rates may have slightly gone up since you first became a customer and you don’t even realize it.  By shopping around you are getting other companies to fight for your business and offer you market low prices.  There’s no downside to shopping around.  If no one can beat your current price then you just stay with your current provider and no harm done.  You’ll likely be surprised how much money you can actually save.

Alabama has been one of the leaders in uninsured motorists for years according to the press release found on OnlinePRNews.com.  Alabama auto insurance leaders and state lawmakers want to change this statistic and are pushing through legislation to reduce the rate of uninsured drivers throughout the state.

Alabama state law says that residents must have a liability policy in place if they want to legally drive an auto.  They are also required to carry proof of insurance with them in the car.  Even though there is a $500 fine for first time offenders, many drivers still choose to go uninsured.  The Insurance Research Council says that about 1 in 5 drivers in Alabama were uninsured in 2009.  To discourage this stat, lawmakers are trying to put in place an electronic auto insurance verification database which would match up policies with autos registered in the state allowing officials and the Department of Revenue to quickly determine whether or not a given car is insured.

In order to register your car you must check a box confirming you carry auto insurance for the car, but this database would actually verify this information rather than taking the driver at their word.  Obviously a handful of drivers are blatantly lying about this information so something needs to be put in place to prevent this from going on.  Hopefully this type of system will encourage more drivers to keep their policy valid and choose to be truthful on their registration application.

Bristol West Insurance has a link on their page to The Coalition Against Insurance Fraud website with some useful information for consumers discussing how prevalent auto insurance fraud really is.  One particular article discusses how even minor “fudging of details” can be considered fraud and ends up costing insurers and ultimately consumers a lot of money.

Auto insurance fraud is not only committed by hardened criminals or fraud rings.  Many normal and generally honest people commit fraud through leaving out or changing minor details.  Some people feel they are owed more because of all the premiums they have paid so they tell a little white lie to get a little extra money.  They feel it’s a small amount and won’t hurt anyone.  The truth is, with so many people thinking this way, the losses to the insurance companies can really add up and at this point the costs are passed on to the customers through higher auto insurance quotes.

Ask yourself if you may have fudged the details just a bit in your favor.  Here are some questions to determine if you may be guilty of insurance fraud.  Have you ever underestimated the amount of miles you drive to work?  Have you ever said you park your car in a garage when you do not?  Have you let an auto repair shop inflate your bill to recoup your deductible?  Have you ever inflated the value of items in your car or home when filing a claim?  These are just a few examples of minor fraud violations that add up and really do end up costing everyone more money.  When you know better, you do better so, ensure you are as accurate as possible with your insurance company.

It’s generally recommended that everyone should compare auto insurance quotes when shopping for a policy, but new research shows that it pays of big time for drivers under the age of 25.  According to the article “Price Comparisons Pay Off for Yonnger Drivers” by The News Tribune, average premiums vary from insurer to insurer but the difference is very large when you are a young driver.  Des Toups, senior managing editor at the CarInsurance website says the difference is massive.

As an example, a 55 year old man can save an average of $456 a year by shopping multiple auto insurance companies, whereas a driver under 25 can save about $1102.  This is an extremely large difference that young drivers should be aware of.  One reason premium quotes vary so much for young people is their driving record.  They often are a question mark and this can be a major driver of auto insurance quotes when shopping around.  Young drivers don’t have a track record yet to prove they are good drivers and each insurer has its own method of determining the risk of these drivers.

There doesn’t seem to be a consensus of what ultimately matters or not.  Some see good grades as a factor while other insurers do not.  There are many factors that go into determining an auto insurance quote and it’s hard to tell for a young driver what will drive the quote the most.  So shop around and compare quotes, especially if you are young with a limited driving record.

Allstate auto insurance announced earlier this week that they are purchasing Esurance and Answer Financial from White Mountains Insurance Group according to the article found on USAToday.com.  Allstate is purchasing the companies for about $1 billion and they said the deal will help them obtain customers who prefer certain brands and value choices.

White Mountains Insurance is based in Hanover, New Hampshire and they expect to see an increase in their book value by $80 per share.  Esurance sells auto insurance directly to drivers through the internet as well as through extensive call centers.  Answer Financial is the independent insurance agency.

This is a big deal and both parties will be affected.  Allstate has agreed to pay $700 million plus the net value of the companies.  The price altogether will be around $1 billion.  Spokeswoman Maryellen Thielen says Allstate expects the deal to reduce earnings the first year or so after the deal closes, but after the first year earning should not drop.  Allstate’s first quarter profit more than quadrupled because it paid out less money for claims.  This profit was way above Wall Street’s expectations.  All in all this is a good step for Allstate who expects to see this acquisition benefit the company in the long term.

Progressive Auto Insurance has been named in Diversity MBA Magazine in its “50 Out Front Diversity Leadership: Best Places for Diverse Managers to Work” list.  The magazine lists the top companies for women and minorities to pursue positions of leadership each year.  Progressive is known for embracing diversity and it shows in this honor.

Neil Lenane, Progressive’s director of employee experience says people with different backgrounds and experiences are crucial to the growth of the business.  He believes it’s the diversity that makes Progressive Auto Insurance Company such a great place to work.  Progressive was named in part because of their consistent commitment to diversity throughout their entire company.  Progressive recruiters advertise with ethnically diverse organizations and job boards to encourage the growth of their diverse community.

Diversity MBA Magazine looks at over 400 employers on the Fortune 500 list and consider a variety of factors including employee retention, recruitment efforts, and the company’s accountability.  The magazine says that it’s a very competitive list with a 30% increase in participation by companies this year.

California auto insurance has had its ups and downs with auto insurance rates, and for 2011, California ranks 29th in auto insurance affordability according to the article from Mark Glover of The Sacramento Bee.  This was based on a new report released by InsWeb Corp.  This is actually an improvement from their ranking last year which was 34 in the Car Insurance Affordability Index survey.

In order to rank the states in their affordability, InsWeb looked closely at all 50 states and Washington DC.  InsWeb compared household incomes with the average auto insuance costs throughout the state to determine affordability.  For the 2nd year in a row, Massachusetts came in first place with a factor of 2.09%.  Louisiana came in last place with a factor of 6.76%.  California had a factor of 3.34% which was pretty close to average.

Being in one of the more expensive states for auto insurance makes it even more important to compare auto insurance online, or through an agent.  Rates can vary significantly from insurance company to insurance company.  They will look at many factors including location, driving record, and car make.  If you think you are paying too much for auto insurance shop around to make some comparisons.