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.

Drivers across the United States are feeling the financial strain of high gas prices and are forced to cut costs elsewhere since they can’t directly control the price at the pump.  New York has some of the highest gas prices out there and some local auto insurance experts are working to help drivers in the state reduce prices on their New York auto insurance policies to help ease rising gas costs.  Through a press release, “New York Auto Insurance Experts Hamlin, Robert, and Ridgeway Issue Tips on How to Combat State’s Rising Gas Prices.”

Speak with your auto insurance company and make sure that your policy is current with your insurance needs, but also that you are getting all of the available discounts.  These auto insurance experts offer four tips for you to save money on your auto insurance policy in New York, but these tips are useful in every state.

Some performance vehicles always cost more to insure, so if you are serious about lowering your auto insurance premiums you might want to avoid or get rid of traditionally expensive vehicles.  If you have more than one car, make sure they are insured by the same auto insurance company because you can get big savings by doing that.  It might even be a good idea to go in on a plan with someone else, such as a parent or boyfriend/girlfriend.  See if your insurer offers a discount for keeping your policy with them for a long time.  If so, don’t change carriers unless you must.  Increasing your deductible will lower your auto insurance rates.  Obviously it will put you out more in the case of a claim, but safe driving will greatly reduce the risk that you’ll be in a accident and need to file a claim.

Every little bit of savings helps now, especially with greatly increasing gas prices.  Save money on your auto insurance policies by following these tips and driving safely.  You can use those savings to put gas in your car!

Auto insurance fraud is soon to become a felony in the state of New York.  Legislators are working on harsher penalties for those submitting false claims and other fraudulent activity according to the article “New York Senate Passes Bill Making Auto Insurance Fraud a Felony” found on the US Insurance Corner website.

The New York Senate is hoping that passing harsher penalties against perpetrators will not only encourage less fraud but will ultimately lower costs of auto insurance quotes for everyone in the state.  Fraud losses have to be made up somehow by insurers and unfortunately it ends up coming out of innocent, law-abiding customers.

Republican Senator James Seward sponsored the bill and on the Senate’s insurance committee as a chairman.  He believes the new legislation offers a strong deterrent to those considering fraud against their auto insurance company.  He also sees this bill improving highway safety and dropping auto insurance rates for everyone.  Depending on the history of the perpetrator and the circumstances around the fraudulent activity, a person could face a class B, C or D felony which translates to much harsher punishment.

The bill targets those who stage accidents since that is one of the more egregious acts, but this is not the most common type of fraud.  The State of New York Insurance Department says about 9 out of 10 fraud cases are related to no-fault injury claims.

According to the article “Insurance Study Sees Widespread Fraud in NYC” by Erik Holm, New York City residents are much more likely to file false claims driving up the cost of auto insurance quotes in NYC.  This is based on some research conducted by the Insurance Research Council, a nonprofit group funded by insurance companies.

New York state’s “no fault” system was implemented in 1974 and it allows someone injured in a crash to file up to $50,000 worth of claims for medical expenses or even lost wages with their own insurance company regardless of who is at fault.  The purpose of this was to speed up processes by eliminated the argument over who whose fault the accident was.  Through this system, perpetrators have figured out how to bank on false claims and take home cash.

The state insurance department has been working for over a year to revise the no-fault insurance regulation.  The Insurance Fraud Bureau estimates no-fault fraud has increased dramatically from 2006 at 10,117 instances to 13,433 instances in 2009.  Auto insurance companies are hoping that the insurance department’s changes will make it easier to deny fraud claims, but it’s going to be a process that may take years to make a difference.

According to the article “New York No-Fault Auto Insurance Leads to Inflated Claims” by Ryan Fields on e-wisdom.com, New York auto insurance could be experiencing higher rates because of their insurance model.  New York is one of many states in the US using the no-fault auto insurance system.  The purpose of this type in insurance model is to reduce costly legal costs from deciding who is at-fault for an accident.

Since no-fault auto insurance has auto insurance companies paying out claims directly to their customers regardless of fault, fraud can be an issue.  According to the Insurance Information Institute, about 20% of each no-fault auto insurance claims made are fraudulent.  That adds up to approximately $1561 per claim and cost insurers and their customers over $600 million since 2005.

Chief economist, Dr. Steven Weisbard, ties the increase to medical providers who submit claims that are much higher than they should be.  He says the amount of fraud in New York’s auto insurance system is so severe that payouts for claims are currently the 2nd highest they have been since the late 1990’s.  This excess translates to higher auto insurance rates for drivers in New York obtaining auto insurance.  Costs rise for everyone as fraud claims rise.

According to the article “Syracuse car insurance quotes continue to rise” by Chris Rowe on viploan.com, Syracuse, NY continues to see rates increase.  Analysts are not concerned about the increasing car insurance quotes.  This is the trend is many parts of the country. 

But a different article “New York State Auto Insurance Rates Decline 20.3 Percent in 2009″ found on money.cnn.com, paints a different picture for New York over all.  This article states that the average 6 month auto insurance rate in NY has decreased more than 20% since the start of 2009 according to insurancerates.com. 

The article also goes over some other interesting facts on New York auto insurance quotes.  Men in NY pay an average auto insurance premium about 12% higher than women drivers.  NY drivers who are under the age of 19 pay 100% more than drivers 60-74.  NY auto insurance rates declined over two percentage points more than the national average which declined 18.1% since the beginning of 2009.  Car insurance quotes will continue to flucuate in NY as well as the rest of the country so that is why it’s important to ensure you continue to shop around so you know you have the best deal on your premium.

According to the article “New York Releases Auto Insurance Rankings” from insurance journal.com, The New York State Department released their annual report which looks at complaint ratios of all New York auto insurance companies or groups with 10 million minimum in average premiums in 2007 and 2008.  If a company has less than 10 million premiums but had 10 or more complaints against them, then they are also included in the report.

In total, there were 38 companies included in this list.  Amica had the least amount of complaints.  There were 6 other auto insurance companies with no complaints upheld in 2008.  These included The Main Street America Group, QBE Insurance Group, LTD, American Express Group, Balboa Life and Casualty, Electric Insurance Group, and Everready Insurance Co.  Amica writes the most premiums, at about 86.7 million, so this is why they top the list.

One of the most common types of complaints was the delays in payment for no fault claims.  The average complaint ratio for insurance companies was .10 per $1 million in premiums.  Twenty seven auto insurance companies had complaint ratios that were average or better.  This is some information to think about as you are shopping for New York auto insurance quotes.

New York Auto Insurance consumers have a new option to save some money.  According to the article “Humorous Online Course Helps Curb Auto Insurance Rates” by Gary Alexander on bignewsbiz.com, NY is offering an online defensive driver course that uses humor to help teach car safety skills.  It’s completed entirely online and no need for a physical exam.

Drivers who complete the course receive a 10%, 3 year discount on their auto insurance rates and quality for a 4 point reduction on their driving record.  The average auto insurance premium in NY is $2,456 a year so this could add up to over $700 in savings. 

This is the only course that uses humor to get across its message.  It is approved by the New York State DMV and is one of the only courses that has been proven to reduce traffic violations and accidents.  This is according to an efficacy study of Basic Driver Improvement courses in FL which was conducted by the Dept of Highway Safety and Motor Vehicles.  The program is called Improv Aware Driver created in partnership with the Improv Comedy Club.  It’s offered by National Point and Insurance Reduction Course.

The first major impact on auto insurance brought on by the economic downturn that received a great deal of media attention was that many people were going without auto insurance because they couldn’t afford it despite the fact that it is required by law.  In less severe cases they were simply reducing their levels of auto insurance coverage.

Another impact to auto insurance has been cases of auto insurance fraud.

• In Hawaii, auto insurance fraud convictions are up 61% from 2007 to 2008.
• Cases of abandoning vehicles and then reporting them stolen are up 33% over same time frame
• Pennsylvania auto insurance fraud cases are up 30%

Industry experts say this phenomena is not unusual, auto insurance fraud increases are typically experienced during an economic downturn such as the one we are experiencing today.  Unfortunately, other drivers pick up the tab on the $6 billion in fraud cases in the form of excess auto insurance payments.