Smart Auto Insurance Blog

According to the Associated Press, Michigan auto insurance policy holders will soon have to pay more in fees as of July 1st. The Michigan Catastrophic Claims Association raised its fee, which covers seriously injured victims of car accidents, to $125 per vehicle. The charge is a $20 increase from last year.

Since Michigan is the only state that offers unlimited lifetime medical benefits through auto insurance for the seriously injured, the MCCA levies the fee to cover rising medical costs. The fee was actually reduced by $18 last year; however, that was due to investment gains that reversed themselves this year.

An article by Kenneth J. St. Onge in the Insurance Journal says that Esurance auto insurance has filed to obtain a foreign company license, the first step in being able to sell Massachusetts auto insurance. The insurer is following Geico and Progressive who have also decided to enter the state’s market, a year after deregulation of the industry. Like those companies, Esurance sells auto insurance policies directly to the consumer through the Internet.

Despite this indicator, Kenneth stresses that the auto insurance company states that they have no plans to enter the Massachusetts market any time soon. For one thing, they have not yet filed a rate plan; such an outline of the auto insurance rates they plan to charge is mandatory to sell insurance in the state.

Cliff Reisig recently wrote about significant increases in New Mexico auto insurance rates in the Alamogordo Daily News. After being hit with a 48% jump in the cost of his auto insurance premium last year, even though he had never filed an accident claim in the 20 years he had the policy, he decided to investigate the cause. 

After contacting the state’s regulation commission, Cliff found that the New Mexico state legislature recently decided to deregulate the auto insurance industry. Now, insurance companies can increase their rates at any time for any reason. As a result, auto insurance rates have exploded across the state, far beyond the customary 3% or so inflation in past years.

Since New Mexico mandates that all drivers have auto insurance, a complete lack of price controls could hurt the state’s drivers.

Here’s some great news for drivers with Massachusetts auto insurance: the state’s insurance commissioner, Nonnie Burnes, is no longer going ahead with her plan to shut down the appeals board. The Associated Press reports that her reversal comes after heavy criticism from the Massachusetts Attorney General, as well as the public.

The board, which was set to close on April 1st for new cases, allows motorists to appeal increased auto insurance premiums and added surcharges, levied when their insurance company determines them to be at fault in an auto accident. Annually, about 20,000 out of 50,000 drivers succeed in their appeals. Nonnie believes that despite that statistic, recent deregulation in the insurance market lets consumers buy auto insurance from a competitor if they believe their current insurer’s decision is unfair.

A report from Terrence Stutz in The Dallas Morning News states that some legislators have proposed a change to Texas auto insurance law that could result in significant savings on auto insurance rates. Two congressional Democrats, Representative Rafael Anchia and Senator Leticia van de Putte, have introduced bills that would make the following reforms:

• Auto insurance companies would no longer be able to increase rates immediately after they inform the Texas Department of Insurance. Instead, the state’s approval would be required before any rate increase.
• The state Insurance Commissioner would be elected to the public, making him or her more accountable to Texas drivers
• Insurers would be banned from using drivers’ credit ratings to determine premiums
• Policy forms would be standardized across all insurers in the state, making it easier to compare them

Terrence says that the fate of these measures is unknown at the moment.

In the Insurance Journal, it was reported that Attorney General Martha Coakley is wary of a potential entrant into the Massachusetts auto insurance market. Occidental Fire and Casualty Insurance Company recently filed its proposed rates for high-risk drivers, and they are 10% more expensive than average high-risk policies in the state.

Occidental also wants to charge several surcharges and fees that are either illegal in Massachusetts or considered unfair, including:

• A 35% surcharge for those unable to verify their driving records, including recent immigrants from non-English speaking countries who can’t get their records in English. That’s on top of the higher premium for inexperienced drivers.
• Drivers filing glass claims have to pay Occidental two deductibles: a comprehensive deductible and a separate glass deductible
• A fee of $25 tacked onto each initial policy purchase
• Fees of $8 per installment

In addition, Occidental does not allow drivers to reinstate their auto insurance policies after being canceled for nonpayment, which is against Massachusetts law. (Buying a new policy after having one canceled results in more costly auto insurance premiums.) Coakley is especially concerned because Occidental is targeting inner-city communities, where residents tend to have fewer auto insurance options.

In the Detroit Free Press, Kathleen Gray reports that 12 Michigan auto insurance companies have agreed to freeze their rates for a year. However, 96 other insurers have not agreed to the rate freeze as of the March 1st deadline. Governor Jennifer Granholm requested that insurers freeze their auto insurance premiums for a year while the state legislature works on auto insurance reform. 

The insurance companies that have agreed to freeze their auto insurance rates are:

• American Bankers’ Insurance Company of Florida
• American International South Insurance Company
• American Reliable Insurance
• Wolverine Mutual Insurance Company
• Pharmacists Mutual Insurance Company
• Great Lakes Casualty Insurance Company
• Electric Insurance Company
• Essentia Insurance Company
• Meritplan Insurance Company
• IDS Property Casualty Insurance Company
• Liberty Mutual Property Insurance Company
• Merchants Mutual Insurance Company

A recent editorial in the Baltimore Sun has expressed support for a proposal in the state legislature regarding Maryland auto insurance. State Senator Catherine E. Pugh’s legislation would allow the Maryland Automobile Insurance Fund, the auto insurer of last resort, to let policyholders pay their premiums in installments (i.e. monthly).

Currently, unlike private insurance companies, a state law only allows drivers with MAIF policies to pay for a full year in advance; many then turn to private financing companies that charge high interest rates, effectively adding $200 to $400 to the cost of yearly premiums. MAIF auto insurance rates are, on average, $3,219 per year.

According to an editorial on Ocala.com, Governor Charlie Crist is considering a ban on State Farm selling Florida auto insurance. State Farm will lose almost 3 million auto insurance policyholders in Florida if that provision goes ahead.

Crist, along with state Senator Mike Fasano, is retaliating against the insurer’s announcement that it will phase out its homeowners’ property insurance in the state. State Farm is leaving the market because they were not allowed to increase rates by enough to make it profitable to insure the hurricane-prone region. They are probably hoping State Farm won’t go ahead with their market exit if it means forgoing the auto insurance profits in the state.

Get State Farm quotes here.

Scott Bauer from the Associated Press has reported on the impact Governor Jim Doyle’s new budget could have on Wisconsin auto insurance. The Wisconsin Insurance Alliance is against the provision that would require an increase in the lowest level of coverage available to buy:

• $300,000 in total coverage (formerly $50,000)
• $100,000 in coverage per person (formerly $25,000)
• $25,000 in property damage coverage (formerly $10,000)