Smart Auto Insurance Blog

Hurricane Sandy, aka “Frankenstorm”, is approaching the east coast of the United States and is expected to hit in the next few days.  As Americans make preparations for the storm by stocking up on food and water or even evacuating their homes, auto insurance companies are making preparations for Hurricane Sandy as well.  Reuters’ Ben Berkowitz talks about what they are doing in “Insurers prepare for impact of Hurricane Sandy.”  Insurers are ready for a storm of their own once the claims start filing in.  They prepare for big storms like this by prepping claims teams and sending adjusters to the locations they believe will be hit the hardest.

A spokesman for Travelers Insurance said that they have employees and other resources positioned so that their clients will get help as soon as possible after the storm hits.  They are the second largest personal home, auto, and commercial insurer in Connecticut and the third largest in New York.  Customers in both of those states are expected to be hit hard by Hurricane Sandy.  Travelers has also had to put plans in place to keep their business running smoothly across the country since a large number of employees will be working in those two states.

Lucky for insurance companies, 2012 hasn’t been too bad of a year for financial losses.  With billions of dollars of losses forecasted for Hurricane Sandy, the industry is braced to handle the claims and doesn’t expect any delay in processing because of the storm.  State Farm is the leading insurer in New York and New Jersey.  They said that they have catastrophe teams waiting to respond when the storm hits.  Allstate has teams waiting in North Carolina, Virginia, and Pennsylvania.  Private insurance companies think that the majority of their claims will be from wind damage to autos and roofs.  They also worry about business losses if businesses are out of power for a prolonged time.  Insurers are pleading with Americans to heed evacuation orders before it is too late to reduce some claims.

Around 1% of those with auto insurance are using usage-based programs to try for discounts on their auto insurance premiums.  But according to NASDAQ’s “The rise of usage-based auto insurance,” that number is rising.  In the next five years, some estimate that as many as 20% of drivers could be using usage-based programs.  They even predict that 30% of drivers will be using them by 2020.  Usage-based insurance, or UBI, allows your auto insurance company to place a device in your car to monitor your driving habits.  They can determine when you drive, how often, how far, how fast you are accelerating, as well as your braking habits.  Companies advertise discounts of up to 30% when you use their UBI, if you are found to have safe driving habits.

When asked, drivers said that they are happy to give up some privacy in exchange for a discount on auto insurance rates.  Between smart phones and Facebook, people are used to giving up some of their privacy, so they willingly participate in UBI services.  In fact, companies who are not currently using this technology, or at least in the development process, are pretty far behind and risk losing some customers.  At some point in the future, drivers may end up paying higher premiums if they don’t allow their insurer to track their driving habits.  It’s unlikely that insurers will force drivers to share UBI information, but collecting this data will likely become the norm in the future.

Here is a summary of some of the companies offering usage-based insurance.  First of all, you do have to have a car that is newer than a 1996 model.  Drive Wise is offered in three states by Allstate, but they plan to expand the program later this year.  American Family Insurance has tested their product and is currently developing a plan to implement it.  Esurance has teamed up with Sprint to collect UBI data, but it is only available now in Texas.  GMAC collects data through OnStar.  The Hartford insurance works with Octo USA to collect data for their TrueLane program, currently available in five states.  Progressive’s Snapshot is available in most states and even non-customers can try it out.  Travelers has started using IntelliDrive in four states.  Safeco offers the Rewind program to some customers who are trying to avoid rising premiums after violations.  State Farm’s Drive Safe & Save program also works with OnStar and is available in 14 states.  Have you taken advantage of UBI yet?

If you’re looking to save money on your auto insurance, look for an insurance company using DriveFactor.  That is only if you are a good driver of course!  DriveFactor, which used to be known as Crimson Informatics, is a sytem that tracks your driving habits and could save you big money on your auto insurance rates.  According to a company press release, DriveFactor is expanding as more auto insurance companies decide to offer this discount system to their customers.

Mobile technology combines with informatics to monitor your safe driving habits and DriveFactor says that you can save up to 50% off of your auto insurance rates.  Usage-based insurance (UBI) programs are already being used by Progressive, State Farm, Allstate auto insurance and others.  A diagnostic device is placed in the vehicle to monitor everything from speed to distance between other vehicles.  After a specific time period of monitoring, drivers are given a DriveFactor Score.  Those with the highest scores get the highest discounts on their auto insurance.

DriveFactor benefits both drivers and auto insurance companies.  It is very cost-effective for auto insurance companies and allows them to offer discounts to drivers they know are less likely to drive dangerously and take risks.  Use of DriveFactor can give auto insurers quite an advantage in their industry and it also saves drivers money, which makes them happy.  The information gathered is really the best way to accurately price car insurance for customers.  DriveFactor is available in the United States and Europe right now, but will likely expand even farther in the future.

Allstate Insurance continued its crackdown of insurance fraud in New York state to close out 2011.  Many insurance companies have a big problem with insurance fraud because of the no-fault coverage issued in the state of New York, according to Insurance News Net’s “Allstate Files $1.1M Insurance Fraud Case in NY.”  This most recent lawsuit for $1.1 million is against sixteen people accused of falsely running companies they said were owned by a medical doctor in order to submit false claims to Allstate.  This is Allstate’s ninth insurance fraud lawsuit in New York this year and their thirty-sixth since 2007.

Unfortunately, no-fault auto insurance has been causing a fraud nightmare in the state of New York for years.  Consumers in New York pay more for their auto insurance because there is so much fraud, dubbed a ‘fraud tax’ by some.  An Allstate spokesperson urges New York lawmakers to enact and enforce regulation that will eliminate no-fault insurance or find a way to eliminate the fraud it is causing.

This most recent scheme involved multiple small companies and individuals sending medical claims and referrals in violation of the no-fault law.  Everything was under the guise of a named medical doctor who does not really exist.  Allstate’s Special Investigative Unit filed this lawsuit to recoup the more than $1 million it feels it lost.  Allstate Insurance is joined by many other insurers, like Donegal Insurance, and state leaders in New York in their battle to reform the no-fault auto insurance system.

Written by Sara Smart

Follow me on Twitter: https://twitter.com/#!/SaraSmart55

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.

In many states teenagers can receive their drivers license at age 16 once they have passed a written test as well as a driving test.  At this point you will need to look into auto insurance for your new driver.  Many auto insurers such as Progressive and Acceptance Insurance offer policies to these young drivers, but rates may be higher and if you add the driver onto your existing policy you can expect to see your premium increase, in some cases relatively drastically.

You can see your auto insurance rates come down over the years with your teen on your policy by encouraging good grades which can earn discounts and demanding safe driving habits.  The Department of Motor Vehicles in various states offer teen driving education from everything like passing the written test to the importance of never drinking and driving.  There are online tools for your Internet savvy teen to browse articles and online quizzes to help educate your child on safety guidelines on the road.

Many auto insurance companies also offer online programs for teens.  USAA Auto Insurance explains to your student how to buy a car as well as how to handle distractions while driving.  State Farm has launched a unique campaign called “Not Now, I’m Driving” (NNID) which has teen-friendly YouTube videos and messages from famous actors sending the message about the importance of never texting while driving.  Allstate and Geico also have programs geared towards making your teen a safer driver which will hopefully save lives and as a nice perk, hopefully facilitate lower auto insurance rates for you over time.

Allstate Auto Insurance, which is a very well respected insurance company, has created an innovative policy for their customers.  The policy is called Your Choice Auto and it provides high quality auto insurance.  Their website provides more details, but here are the highlights:

• Accident forgiveness helps to keep rates low even after one accident
• Safe driving bonus earns you cash for safe driving
• Deductible rewards gives you up to $500 off your deductible for safe driving
• New car replacement gives you a new car if yours is totaled within the 1st three model years

There are numerous different packages offered through the Your Choice Auto program.  According to their website, those who switched to Allstate from another carrier saved on average $480 per year.  Getting auto insurance quotes from a few different companies is the best way to ensure you are getting the most competitive auto insurance rate.

According to the article “7 Desirable Auto Car Insurance Companies” by Matthew Keegan on saycampuslife.com, the insurance commissioner in any given state authorizes who can write auto insurance policies.  The article discusses 7 auto insurance companies that have a national presence with excellent reputations and competitive prices.

The companies discussed in the article include State Farm, Allstate, Government Employees Insurance Company, Progressive, USAA, Liberty Mutual and Nationwide Insurance.  All of these companies are well known and provide an array of benefits.  Having auto insurance is required in most states and important to have in case you are in an accident.

When you do decide to shop around with these or other companies, be sure you are obtaining quotes based on comparable coverage to ensure your comparison is fair.  Most auto insurance companies review your credit as part of determining your rate, so it’s a good idea to pull your credit report and have a good understanding of where you stand.

According to the article “Allstate: More Customers Buying Auto Insurance Online” by Lavonne Kuykendall found on money.cnn.com, auto insurance companies who have relied on agents to bring in new customers are now adapting quickly to Internet sales.

Thomas J. Wilson, the chief executive of Allstate Corp, says their goal is to have fewer, larger agencies that offer a more consistent experience for policyholders.  He also said that half of its new auto insurance policyholders first make contact through the Allstate website.  Allstate is quickly adjusting to meet customer Internet demands.

The article points out that Allstate’s plan calls for fewer agents with an enhanced local presence.  About 87% of web site shoppers end up closing the deal with an agent so agencies continue to be an important part of their plan.  This is particularly true for homeowners with more than one car who often prefer using an agent because the policy can get complicated.

Allstate Auto Insurance recently gathered data that showed an increase in Texas auto insurance claims for hit pedestrians during the week of Halloween.  This is according to the article “Texas Pedestrian Accidents Jump 23% During Halloween” by Kristen Beaman for Allstate found on reuters.com. 

Allstate looked at claims in Texas over the last 5 years and found a large jump in accidents around trick or treating.  Last year, Allstate claims more than doubled over the Halloween week compared with the rest of 2008.  Their data matches up with a report from the Insurance Institute for Highway Safety which showed that October 31 is the 2nd highest day of the year for pedestrian deaths.  The first is Fourth of July.  With Halloween falling on a weekend this year, there may be more people out than normal so it’s crucial that drivers are extra careful. 

The article offers some important tips to follow while out on the road, especially at night when pedestrians are out.  Never drink and drive.  A designated driver should always be assigned before heading out for the evening.  Texting while driving can be very dangerous so keep your phone in your pocket until you can pull over to text or make a call.  As a pedestrian, it’s a good idea to avoid texting while walking.  Anything that takes your eyes off the road can be very dangerous.  Not only will following these steps make you a safer driver but it may eventually lower your car insurance quotes.