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.

Delaware auto insurance rates are going up for State Farm customers in that state.  According to Online Auto Insurance News’ John Pirro, “State Farm car insurance rates to rise for Delaware policyholders.”  Starting today, rates will be increasing around 1.9% in Delaware.  State Farm is the second biggest auto insurance company in Delaware behind Nationwide.  Their market share is 22 percent and they say that they’re raising rates so they can keep the financial promises they have made to those customers.

Many factors will determine the amount of individual policyholder increases, including their particular coverage and any discounts they maintain.  All liability and personal injury protection coverage will be increasing.  Collision and comprehensive costs, however, will be increasing for some but decreasing for others.  From 2006 to 2008, PIP claims increased 10% and property liability claims increased 4.5%.  State Farm is also raising Michigan and Wisconsin auto insurance rates, while they are decreasing Illinois, Alabama, and Georgia auto insurance rates.

Hurricane Irene has devastated many areas of the US and its estimated that at least 18 people have died as the storm moved from the Caribbean all the way up to New England.  The article “Hurricane Irene’s Damage, State by State” by Drew Armstrong on Bloomberg.com states that about $3 billion in damages have occurred and power was out in over 6 million homes and businesses throughout the east coast.

State Farm Mutual Automobile Insurance Company is the largest US home and auto insurance company in the nation and they’ve reported about 1600 homeowners insurance claims and about 500 auto insurance claims in just North Carolina and Virgina.  The number of claims will surely increase over the coming weeks.  State Farm received reports of siding and roofs blown off of houses and much destruction from the falling of trees.  There have even been claims for loss of food since the power outages have made food in refrigerators spoil quickly.

In the New York area, where the storm had weakened, claims are standing at about 360 homeowners’ claims and 60 auto insurance claims, but this is only after a few days.  People are still getting settled and assessing damage before calling their insurance company.  Storms such as Irene can cause slight increases in auto insurance quotes to account for all of the claims, but this generally happens over time.  Insurers across the nation are working hard to fulfill claims as efficiently as they can to ensure costs do not soar.  Sometimes, when there are heavy claims filed, insurers are quick to give out money to save time.  Hopefully insurance companies were prepared enough for this storm that it will not happen this way across the board.

Written by Sara Smart

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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.

State Farm auto insurance offers pay-as-you-drive auto insurance policies in California, Ohio, Texas and Illinois.  Progressive Insurance offers it as well throughout the US.  It’s getting more and more popular.  According to the article “Low-Mileage Drivers Benefit From Insurers’ Pay-As-You-Drive Plans” by Eve Mitchell on BellinghamHerald.com, auto insurance rates are tied to part of the actual number of miles driven and many consumers are seeing big savings.

State Farm specifically calls their program the Drive Safe & Save program and drivers can self-report their mileage online or at an agent’s office before they renew their policy.  Customers who drive General Motors, Saab, and Saturn vehicles with OnStar technology and have a diagnostics account can have their actual mileage sent right to State Farm for updating.  Drivers are paying better attention to how they drive in hopes that it will ultimately save them money on their quotes on auto insurance.

The pay-as-you-drive momentum is party due to California’s Proposition 103 which was the landmark auto insurance reform bill passed by voters back in 1988.  It requires insurance companies to base rates primarily on the customer’s driving record, number of miles driven per year, and driving experience.  More recent regulations allow actual mileage to be a voluntary alternative to estimated mileage and it makes it possible for auto insurance companies to obtain mileage verification from devices inside the car.  Any savings from actual miles driven are applied once the policy is renewed.  Drivers who are not on the road that often really appreciate this initiative and are hoping to see big savings over time on their auto insurance.

We haven’t been hearing too much about the successes of a variety of industries during this economic downtown, but good news out there for some auto insurance companies.  According to the article “State Farm Profit Double” found on KansasCity.com, State Farm seems to be doing pretty well.

State Farm Auto Insurance Co., the largest US home and car insurance company, reported full-year profit more than doubled as underwriting losses were narrowed.  Net income for the year 2010 increased to $1.8 billion from $777 million the previous year.  The insurance company is owned by policyholders and reports results every year.

Chief Executive Officer Ed Rust leads State Farm which was helped by some debt relief and equity markets as well as a relatively mild hurricane season.  A rebound policy sales overall in addition to an increase in personal auto and home coverage rose revenue at US property-casualty insurers.  As we start 2011, State Farm expects to continue doing well and is working hard to ensure this is the case.  In today’s economic environment, this is great to hear.

According to the article “State Farm Changes Auto Insurance Rates” by Rapid City Journal.com, State Farm Auto Insurance has increased their insurance rates in South Dakota an average of about .1% as of July 12.

Once this rate change goes into effect, State Farm’s overall average auto insurance rate will be 14.2% lower than they were 13 years ago.  This is fantastic news during this tough times for those struggling with South Dakota auto insurance quotes.

Currently, premiums for comprehensive and collision coverages are increasing.  Comprehensive coverage takes care of losses from theft, fire, damages from weather, vandalism, and broken glass.  The cost of liability as well as medical payments will decrease for many customers.  Rate changes will vary from customer to customer, depending on what type of coverage they choose, where they reside, the type of car they drive, and how often it is driven.

State Farm auto insurance is a proud supporter of Mothers Against Drunk Driving (MADD), whose primary mission is to put an end to drunk driving and support victims of such crimes.  They also fight to put an end to underage drinking.  State Farm is a national sponsor and they share very similar values in educating youth about the dangers of drinking.

“Protecting You/Protecting Me” is a comprehensive program offered through MADD which uses an approach to stop underage drinking through effective, educational efforts to stop the access of alcohol to our youth.  This excellent program is a research-based plan which is nationally recognized nationally.  The Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Prevention named it a “Model Program”.

State Farm and Meharry Medical College also came together to research why seat belt and child safety is lower among African Americans.  They plan on using the findings to influence legislation to further support cultural public awareness programs.

Driver safety continues to be a priority of State Farm.  If you choose to disregard any safety provisions put forth by the law, then not only are you putting yourself and other drivers lives at risk but you are increasing your chances of paying higher auto insurance rates or having to carry SR-22 insurance.  There are no benefits to breaking the law when it comes to driving.