Smart Auto Insurance Blog

The state Attorney General has proposed a law that would prevent Connecticut auto insurance companies from charging different rates to drivers based on their credit rating or where they live. Steve Kobak of The Hour writes that rates are especially excessive in urban areas, where residents are more likely to earn lower incomes. According to Att. General Richard Blumenthal, denying auto insurance to customers based on their credit ratings is absurd and will result in a vicious economic cycle. If that practice is not banned, there will probably be more uninsured drivers on the road, causing greater risk and higher auto insurance premiums for all.

Rates for car insurance in Connecticut are already among the most expensive in the nation, says Steve, and cost even more in Fairfield County compared to the rest of the state. The act was recently introduced in the state legislature.

In an effort to fight global warming, the Washington State legislature is considering a bill that would allow auto insurers to use electronic monitoring devices to charge different rates based on a person’s actual driving habits, reports the Seattle Times‘ Chantal Anderson. Individuals who have reduced their car usage (by using bikes or public transportation to commute to work, for example) could save up to 15% on their Washington auto insurance premiums.

Auto insurance companies that are offering or planning to offer pay-as-you-drive programs in other states include Progressive Insurance (through its Progressive MyRate program), Allstate auto insurance, Hartford insurance, and Unigard. Progressive wants to keep its proprietary rating information confidential, and the senate bill will be rewritten to reflect those concerns.

Chantal reports that the bill looks likely to pass the state Senate, but could face opposition in the House. Privacy advocates are worried about the “Big Brother” potential of the tracking devices, although the data allowed to be collected and the ways in which it can be used must be approved by the insurance commissioner.

According to the Insurance Journal, Mich. Governor Jennifer Granholm is asking for a year-long freeze in auto insurance rates. Michigan auto insurance is some of the most expensive in the country, and state legislators want the time to figure out reforms.

The Office of Financial and Insurance Regulation will have the ability to penalize any auto insurance companies that refuse to refrain from increasing premiums during the next 12 months, the Democrat says.

Michigan residents have been hard hit by this recession, especially those in the Detroit auto industry. This request will offer them a measure of relief.

A change in state regulations may be resulting in higher auto insurance rates for people in New Jersey based on their education or occupation, states Larry Higgs of the Ashbury Park Press. Since January 1, New Jersey auto insurance companies are formally allowed to use factors other than an individual’s driving record in determining premiums.

According to a study of quotes, having a high school education as opposed to a college degree resulted in quotes up to 61% more expensive. Opponents of the new regulations contend that they will lead to an unregulated free-for-all: insurers will be able to reject individuals without explanation, and those individuals might choose to illegally drive without insurance. Larry says that some groups also consider this rule discriminatory against blue-collar workers and those with lower incomes, whom are least likely to afford higher auto insurance premiums.

Bills that would eliminate the usage of factors like a person’s job, education, and credit rating in calculating quotes for a policy have been introduced in both the state Senate and Assembly, but the former has remained stuck in committee for several years.

According to Jeannine Koranda of the Wichita Eagle, a bill pending in the state legislature would prevent Kansas auto insurance companies from charging different premiums to drivers with different credit ratings. Senate Bill 24 is currently waiting for a hearing in the Financial Institutions and Insurance Committee.

The bill has sponsors from both political parties, whom believe that auto insurance rates should be based primarily on a person’s driving record. Senator Oletha Faust-Goudeau also believes that using credit ratings to determine premiums has a disproportionate impact on lower socioeconomic levels: they tend to have lower credit ratings, and therefore pay more for their car insurance. This bill could change that, and lower rates for most Kansas drivers.

Carla Castano from KXAN Austin recently reported on a new trend: police are pulling over drivers, and towing their cars if they lack Texas auto insurance. The ordinance came into effect last week in Dallas. Reportedly, Austin is planning to consider a similar ordinance. Texas’ Auto Insurance Verification Program, run by the state’s Department of Public Safety, is able to run a person’s license plate in order to tell if they have liability insurance.

These new laws may result in more defensive driving by the uninsured to avoid being pulled over in the first place, predicts Carla. Even though it already costs about $250 to pay a ticket for driving without insurance in Austin, almost a quarter of the population was still driving uninsured.

Insured drivers may need to have uninsured motorist coverage to protect themselves. The economy is making more drivers forgo car insurance in favor of other essential needs. Unfortunately, uninsured drivers often lead to higher auto insurance premiums for everyone; often, they also have to pay penalties once they reinstate their insurance. 

(Photo credit: qthrul under CC 2.0)

The cost of New Jersey auto insurance could increase sharply for some drivers, claims Rudy Larini in the Star-Ledger. A new rule that came into effect on January 1st allows auto insurance companies to deny coverage to virtually anyone they want for almost any reason (barring obvious, illegal discrimination of course). Before, the state’s “take-all-comers” rule required all insurers to cover all drivers in new Jersey, except those who either had a policy canceled for non-payment of the premium or garnered more than 7 points on their driver’s license. Now providers can take into account factors such as not having had a license for the past 5 years.

Drivers in urban areas will suffer the most impact. The “take-all-comers” rule was first enacted when they complained of not being able to find auto insurance. According to Rudy, the rule was intended to be temporary, and this is just a final step in auto insurance reforms that have been going on for several years.

Individuals probably won’t have a problem finding an insurer that will accept them, since New Jersey requires all drivers to have insurance. Unfortunately, that insurance could be far more expensive than it was previously. If someone is rejected by two or more insurers, they will automatically be directed to the state’s high-risk pool. If that pool increases to more than 10% of NJ drivers, the rule will be reinstated to prevent discriminatory auto insurance rates.

(Photo credit: Tony the Misfit under CC 2.0)

9 News Colorado reports that a new state law (which came into effect on January 1st) is likely to increase auto insurance rates for Colorado drivers. The law requires insurance companies to automatically enroll policy-holders into a MedPay plan that provides an additional $5,000 in medical coverage. Ever since Colorado repealed its no-fault auto insurance law in 2003, there have been many problems surrounding the reimbursement of medical costs caused by an accident. This program is intended to fix many of these issues. Consumers can only opt out via a written form.

The extra coverage can increase your yearly premiums by $40 to as much as $1,200 per car, depending on your auto insurance rate. MedPay coverage isn’t really necessary if your health insurance covers car accidents, but a lot of policies don’t. Experts say you should think carefully before trying to reduce your auto insurance premiums by dropping out of the program; if you end up in a crash not covered by your health care plan, you may end up paying far more in the end.

More information about Colorado auto insurance.

(Photo credit: paraflyer under CC 2.0)

Today, I read a new article in the Wall Street Journal about the increase in uninsured motorists over the past few months. M.P McQueen reports that a recent survey by the Insurance Research Council found that several hundred thousand Americans have dropped their auto insurance over the past year, and that a 1% increase in the unemployment rate results in a 0.5% increase in the number of uninsured drivers.

Experts blame this issue on a perfect storm of higher unemployment and higher premiums hitting consumers at once. The U.S. Labor Department’s consumer price index indicates that auto insurance premiums have increased 3.8% over the past year. While I can’t blame drivers for trying to save money on auto insurance, dropping your insurance isn’t a good way to do it. Not only is driving with insurance illegal in 48 states and Washington, D.C.; but in the event of an accident, all of your assets could be wiped out in court. Also, you can be penalized with a 25-50% increase in premiums when you decide to buy auto insurance again.

A lot of people who have kept their auto insurance have downgraded to the bare minimum coverage, which may not be enough. If you get in an accident with an uninsured driver, uninsured motorist insurance will protect you and compensate your medical expenses. 20 states currently require this type of insurance by law; drivers in other states who don’t have this coverage would have to sue for compensation. Most uninsured drivers don’t have a lot of assets, so you’d be very unlikely to recoup any catastrophic medical expenses. Although uninsured and underinsured motorist coverage adds from 7% to 9% to your insurance premium, the increase in uninsured drivers on the road could make it valuable for drivers in every state.

Find out if your state auto insurance requirements include uninsured motorist coverage.