Smart Auto Insurance Blog

According to the press release “The Impact Accidents Have On Auto Insurance and Keeping Rates Affordable” found on wiredprnews.com, accidents affect auto insurance rates in numerous different ways.  Just because you have an accident doesn’t mean your rates will automatically increase.  It’s beneficial to understand what will ultimately affect your rates.

A very critical aspect of an accident is whose fault was it?  If the policyholder is found to not be at fault then it’s likely their auto insurance rates will not be affected.  Being at fault is what will probably change your rates.  Depending on the company’s underwriting guidelines, one may lose their good driver discount which can be up to 20%.  Injuries can affect your rate as well with the more serious the injury the higher the rate is affected.  If the collision is with an emergency vehicle like an ambulance or police car this can spike rates.  And of course if there are any drugs or alcohol involved rates can be severely affected.

Many insurance companies such as First Acceptance Insurance try to offer fair rates whenever possible.  If you are in an accident and your insurer raises your rates, it may be worth your time to shop around since different insurers have different underwriting policies and an accident may not affect your rate as much.

We all know how dangerous drinking and driving is, but the epidemic continues and people are still dying in tragic accidents caused by drunk drivers.  According to the article “More Young Women Driving Drunk” by Steven Reinberg on BusinessWeek.com the trend is growing in young women which is very unfortunate.

Men still make up the majority of drunk drivers, but the number of drunk women on the road is growing.  A study based on data from the US National Highway Traffic Safety Administration found that women drivers involved in deadly car crashes increased over the years 1995-2007.

Weekday accidents with alcohol involved among females increased by 3.5%, and weekend alcohol related accidents increased by 2.2%.  With more women consuming alcohol in large amounts there are more women making poor decisions and causing horrific accidents.  Simply said, do not drive drunk.  Even if you do manage to get extremely lucky and avoid an accident you are at risk of expensive fines, jail time, and carrying special SR22 Insurance for high-risk drivers.  None of that is worth it, especially putting lives at risk.

According to the article “Texting While Driving Ban: Texting While Driving Laws Do Not Reduce Accidents” found on khabrein.info/news, a recent study shows that the recent bans on texting has not effectively brought accidents down in California.

The research was conducted by Highway Loss Data Institute, which is a non-profit organization supported by the auto insurance industry.  The research shows that the rate of accidents before and after laws were enacted in California have not significantly changed.  The study also pointed out that accidents in CA haven’t shown any significant changed in comparison to Arizona and Nevada where there are no bans on texting while driving.

The Automobile Club of Southern California finds the research interesting but they do not plan on accepting the study, citing that the samples were not large enough and the study is inconclusive.  It’s still known that any distraction while driving will put you at a higher risk of being in an accident, whether it’s texting, changing the radio, or programming a GPS.

According to the press release “Federal Government Cracking Down on Texting While Driving” an Executive order put forth this year has banned all US government employees from texting on their cell phones while driving in government autos that are owned, leased or rented by the government.

Another part of this ban says these government employees cannot text in their own cars either if they are conducting company business or using company phones.  As of 2010, penalties are being placed on those breaking the rule.  This trend continues as over 21 states have laws banning texting while driving.  Most auto insurance companies, such as Dairyland Insurance, urge their policyholders not to text while driving.

The Virginia Department of Motor Vehicles reports that about 30,000 car accidents per year are because of distracted drivers.  About 100 people have been killed in these types of crashes and approximately 15,000 injured.  These staggering numbers are the reasons texting laws are being passed in many states and being encouraged by many auto insurance companies.

According to the article “Massachusetts Police Arrest 13 in Auto Insurance Fraud Case” from Claimsjournal.com, 13 people from Lawrence and Methuen have been charged with auto insurance fraud.  This is in connection to what police believe to be a staged accident where over $76,000 was paid out.

Lawrence Chief John Romero told The Eagle-Tribune that it is the largest group of people charged in connection with one incident since they started focusing on auto insurance fraud 6 years ago.  This crackdown was prompted by the death of a great-grandmother in a staged crash in 2003.

Ten of the thirteen charged say they were in a van that was hit on a ramp  in North Andover in May ‘03. The runner who allegedly set up the incident and the driver of another vehicle that hit the auto were charged as well.  It’s this kind of illegal behavior that ends up affecting everyone’s auto insurance rates.

On Wednesday, May 13, Florida Cabinet members refused to stop auto insurance companies from charging new policy holders higher rates if they have been in not at fault accidents. 

Industry representatives say that charges for new customers with accidents on their driving record is a common practice, even if the customer didn’t cause the accident.  They say it’s justified because research shows these drivers are at higher risk of filing claims and it’s often difficult to determine who is at fault for the accident. Auto insurance companies need to consider all facets of the driving record to understand the customer’s risk and charge the most appropriate rates.

On MainStreet.com, Carl Winfield recently explained important facts about Allstate’s auto accident forgiveness program, which has been available since 2006 but is gaining attention now. It’s a tempting option to prevent increasing auto insurance costs, but it’s not for everyone. Here are some frequently asked questions and answers about their accident forgiveness policy.

Q: What exactly is auto accident forgiveness?

A: It’s a policy that will ensure that your auto insurance premiums do not rise after a car accident.

Q: How much does accident forgiveness normally cost on a policy?

A: There tends to be an additional fee added to accident forgiveness plans; an typical fee is about $43 added to the premium every six months. However, premiums can jump far higher with an accident; sometimes they may even double.

Q: Who is eligible for Allstate’s Your Choice policies with accident forgiveness?

A: 

• Policyholders on the most inexpensive standard plan will have to maintain a clean driving record for five years before being eligible for accident forgiveness.
• Mid-range plan customers can take advantage of accident forgiveness immediately.
• Drivers with Allstate’s top-line, most expensive plan will also have access to accident forgiveness as soon as they buy the policy.

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)

As of April 1st, Massachusetts auto insurance customers will no longer be able to appeal surcharges on their premiums if they are found at fault in an accident, reports Ron Sanders of WBZ. The state’s insurance commissioner wants to eliminate the Auto Insurance Appeal Board, the only one of its kind in the nation, because of inefficiencies and high costs. Instead, auto insurance companies themselves will be allowed to review appeals.

Ron says that legislators are fighting to keep the appeal board active: almost half of Massachusetts drivers win their appeals, saving them $25 million each year. They worry that insurers will be unfairly biased towards rejecting appeals, although the insurance commissioner counters that people can shop around for auto insurance quotes and switch their provider if they are unhappy with the results.

Auto insurance companies warn that a new bill in the Colorado state legislature could increase rates for motorists, claims Bob Mook of the Denver Business Journal. In 2003, the state switched to a tort system (where insurers pay a percentage of costs based on whose fault the accident was, going to court to settle disputes), but the Colorado No-Fault Motor Vehicle Insurance Act would reverse that change.

Governor Bill Ritter says that the tort system saves drivers about $322 per year on average, a 35% decrease from auto insurance rates under the no-fault system. A representative of the Rocky Mountain Insurance Information Association claims that Colorado auto insurance premiums have dropped from being the ninth-highest in the nation to 23rd-highest since the reform. According to Bob, insurance companies believe that no-fault insurance, where each insurer pays all expenses for their driver without assigning blame, is easily defrauded.