Smart Auto Insurance Blog

Did you know that your auto insurance company can charge you higher rates if you are close to the limits on your credit cards or have filed bankruptcy in the past?  In most states, they can.  In 47 states and the nation’s capital, credit-based car insurance pricing is allowed and is commonly used.  This so-called insurance scoring has been used for more than a decade, but will be outlawed soon if some opponents have their way.  According to Insurance News Net’s “OAI: Auto Insurance Scoring Bill Highlights Controversial Practice,” three Democratic House members have a bill they hope will end the process of insurance scoring.

Currently, when you are looking to get a quote on auto insurance, in most states insurers will look into your financial history before making your quote.  They can increase your premium based on your applications for new credit, how close you are to your debt limits, and other financial factors.  Many different states have already tried this type of bill on the state level to no avail.  If state auto insurance legislation is any indicator of how this bill will fare federally, it has quite a difficult path to follow.  Massachusetts is the only state that has passed a recent ban, but it was just an update of an existing ban on this insurance practice.

There are two hotly debated sides to this issue and both have their points to be made.  Supporters of insurance scoring say that studies show that people with bad finances tend to file more auto insurance claims and bigger claims than those with a sound financial history.  Based on this they say that pricing is more fair and accurate when insurance scoring is used.  Without it, those with strong financial backgrounds would be paying more than they should to compensate for those with poor financial histories.  Opponents of the program say that lower income drivers are already struggling and this will catastrophically hurt those who are trying to do the right thing by carrying auto insurance.  We’ll keep you updated with where this bill goes.

Florida has not had a hurricane for years, yet Florida auto insurance quotes continue to rise.  It’s been six years since the devastating Hurricane Wilma took it’s toll and since then every day claims for homeowners and auto insurance, including reopened claims, have risen 80%.  At this point insurers feel like there is not choice but to ask for higher homeowners and auto insurance rates according to the article “Soaring Claims Drive Florida Insurance Rates Higher” by Kenric Ward on SunshineStateNews.com.

Insurance companies are asking for rate increased for a couple of reasons.  First, there is a certain projection of future claims due to natural disasters and most states witness this type of increase.  Secondly, they are raising rates due to claims that have already been paid out that went above and beyond previous predictions.  Lynne McChristian, a Florida representative for the Insurance Information Institute confirms that these rate increases are due to future and past claims.

Just recently, Allstate Insurance Co and two of their affiliates asked for rate increases averaging 30%.  Castle Key Insurance Co. and Castle Key Indemnity Co. reported that there could be rates increases as high as 68% for individual customers.  These astronomical rate increases can devastate families financially, but it seems to be a no-win situation for everyone involved.  Some industry officials are blaming such increases on a new law, only affecting the state of Florida, which says insurers must pay full replacement costs for home repair upfront.  In addition to this, policyholders have up to five years to file a claim due to a particular hurricane which is throwing projections off.  The Insurance Information Institute reports that claims costs are increasing on average around 17% per year, and if this continues, no one will be able to afford a quality home or auto insurance policy.

Written by Sara Smart

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California auto insurance companies continue to debate Prop 17.  According to the article “Consumer Advocates, Insurers Battle Over Prop 17″ by Sue Kwon on cbs5.com The Yes on Prop 17 campaign is spending millions in ads to spread their message.

With Prop 17, the clean record discount would follow the driver if they chose to switch companies.  Insurance broker, John Morton, with the Alliance of Insurance Agents and Brokers wants the measure to pass.  He believes it’s a win-win for his clients.  He sees the good driver discount as something a driver should have ownership over regardless of what company they go with.  Morton also thinks Prop 17 will cause companies to compete and drive down California auto insurance quotes.

The Executive Director of the Consumer Federation of California, Richard Holober, believes the opposite will happen.  California auto insurance companies, such as Infinity Auto Insurance, may end up charging more to certain customers including students, military, unemployed, or low-income drivers because they break continuous coverage within 90 days.  This is detrimental to drivers in these groups who may have perfect driving records and otherwise would not get their rates raised on them.

Currently only 12 states have no-fault laws in place according to the article “How Florida No-Fault Auto Insurance Laws Work” by Robert Fredricks on youronlineinsurance.com.  A no-fault law means that there is a limit on what a driver can sue another driver’s auto insurance company for.

Florida has a qualitative threshold with its no-fault law which means that for particular injuries or death the driver can sue the insurance company for up to a certain dollar amount.  These types of laws can keep auto insurance rates in check because the auto insurance companies are not getting sued for as much as in other states where just about any type of lawsuit is allowed.

Because of this type of regulation, Florida auto insurance tends to be lower which is great news for residents.  There are other states that have much stricter no-fault laws which only allow drivers to sue for the exact amount of injury or damages not already covered by the auto insurance company.  One downside to these types of no-fault laws is that when real permanent damage has been done the victim can be left short of what they truly deserve.  It can be hard for these victims to fight for what they believe is right.

According to the article “State Insurance Official Says 15 Percent of Montana Drivers are Uninsured” by Charles S. Johnson on www.missoulian.com, Montana’s uninsured rate is slightly higher than the national average.

The national average for uninsured drivers is 13.8% while Montana is coming it at 15%.  Even neighboring states are much lower.  Mari Kindberg, the property and casualty actuary in the state Auditor’s Office says North Dakota comes in at 5%, South Dakota is at 7% and Wyoming is at 9%.  What is different about Montana that’s making Montana auto insurance quotes unattainable?

Kindberg states that Montana already has laws requiring drivers to have auto insurance and there are stiff penalties for those who choose not to and get caught.  The Revenue and Transportation Interim Committee is studying the problem of uninsured and underinsured drivers.  The Auditor’s Office recommended changing the state credit act to assist consumers keep their current auto insurance policies and make rates affordable during tough times.  This may help Montana’s high uninsured rate.

State House Democrats announced last week a plan that would cut Michigan auto insurance rates and apply stricter restrictions on auto insurance companies according to the article “House Democrats Unveil Plan to Cut Auto Insurance Rates” by Chris Christoff on freep.com. 

Insurance companies state that this type of regulation will result in higher premiums for drivers.  The government’s plan would require insurers to offer low-cost auto insurance to drivers with lower income and good driving records.  Democrats and the state Insurance Consumer Advocate, Butch Hollowell, say the insurance industry is practicing unfair pricing. 

The article points out that Michigan has the second highest rates in the US just behind New Jersey.  This is despite the fact that accidents and thefts in Michigan have gone down over recent years.  The bill would also prohibit companies from using some discrimatory factors such as a driver’s education, their careers, or their personal credit ratings when determining auto insurance quotes.

Florida requires its residents to carry a Florida auto insurance policy which covers for both personal injury and damage to the property of others according to the article “Minimum Floriday Car Insurance Requirements May Not Be Sufficient” found on auto-mobi.info.  The article suggests that the coverage may not be enough to handle the high costs of medical care and property damage.

Florida auto insurance laws currently require drivers to have a limit of $10,000 for personal injury protection, and $10,000 for property damage liability.  These limits can easily be exceeded following a major accident and may leave you responsible for a large dollar amount if you carry the minimum coverage.  It’s a good idea to see what extended coverage is available and affordable as you shop around.

Drivers should consider adding Comprehensive and Collision to their auto insurance policy if they want to cover their car fully, especially if their car is being financed.  Some lenders actually require coverage for the physical damage of the financed car as part of the loan terms.  Car insurance quotes vary greatly from insurer to insurer, as do the benefits of policies, so it can pay off big time to do your homework.

According to the article “Additional Auto Insurance May Not Be Needed For Rental Cars” by Lawrence Shipman on usinsuranceonline.com, rental cars have auto insurance through the state of Minnesota. 

Auto insurance to cover a rental car can be up to $10-$15 per day.  This is a lot of money, especially if you are renting the car for an extended period of time.  That’s why it’s important to understand what type of coverage you have through the state of Minnesota and Minnesota auto insurance.  The minimum coverage for covering a rental car in the state is $35,000.  This is probably plenty to cover the car you are driving but the only thing to consider is that if you wreck multiple cars it could end up costing you more.

You will also want to check with your personal auto insurance policy to see if there is any additional coverage for rental cars.  When you are shopping around for Minnesota auto insurance quotes you can ask if there are any policies that offer such a benefit before making a purchase.  The Insurance Information Institute says consumers are usually covered when they rent a car.

The average auto insurance rate in Texas has decreased by more than 14% since the beginning of 2009 according to insurancerates.com.  This was found on the press release “Texas Auto Insurance Rates Decline 14.2 Percent in 2009″ on marketwire. 

This is good news for Texans as all Americans are trying to save money.  Texas auto insurance quotes are lower and by shopping around you can find competitive rates.  Some other statistics to keep in mind while shopping around are that men in Texas have an average auto insurance rate which is 7% higher than women according to the press release.  Drivers in Texas who are 19 years old or younger pay an average of 140% higher than drivers over the age of 75. 

The press release also points out that Texas is currently the 18th most expensive state for auto insurance so the decreasing rates are helpful.  Massachusetts auto insurance is the most affordable and Louisiana is the most expensive.  The best thing that you can do to ensure you are getting a good deal on your auto insurance is to shop around and compare rates.  You may be surprised how much money you end up saving.

As the unemployment rate increases and the state of the economy continues, more and more people are expected to drop their auto insurance.  This is according to the article “More Motorists Expected To Drive Without an Auto Insurance Policy” by John Pirro found on live-pr.com. 

The article states that many people see a strong correlation between unemployment rates and the number of people driving without auto insurance.  According to a study from the Insurance Research Council, about one in six drivers will be driving without auto insurance by 2010.  One of the main problems with this trend is that responsible drivers who follow the law and carry the proper auto insurance coverage end up paying more to account for accidents caused by uninsured motorists. 

The consequences for driving without auto insurance are getting harsher.  For example, the Pennsylvania Department of Transportation will suspend a driver’s vehicle registration if they are caught without proof of insurance.  Many of these people driving around uninsured believe they simply cannot afford the month to month cost of carrying auto insurance, but the truth is that it can end up costing you a lot more money in the long run if you are in an accident or caught driving uninsured.