Smart Auto Insurance Blog

California auto insurance policy holders are in for some good news as California implements a $34 million statewide rate reduction announced by California Insurance Commissioner Steve Poizner on Wednesday.  This is according to the article “21st Century to cut premiums for California drivers an average of $50″ by Marc Lifsher on LATimes.com. 

21st Century Insurance, which was recently acquired by Farmers Insurance Group, insures over a million California cars.  This is about 5% of the private passenger car insurance market, so this is a big deal that they will be experiencing an average of $50 in cut costs on their auto insurance rates. 

A Farmers Insurance Group spokesperson stated that they were able to drop rates because of less accidents and less severe accidents being claimed over the past years.  Annual dollars saved will average $80 in Los Angeles county, $62 in Sacramento county and $58 in San Francisco.  This is great news as California residents are trying to save money in this challenging economy.

It’s always important to understand what type of auto insurancecoverage you carry, but now more than ever we need to pay close attention.  This is according to the article “Car Insurance in the New Economy” by Ed Normund on Injuryboard.com.  The recession is causing more and more drivers to cut back on their coverage or eliminate auto insurance altogether and this may cost you in the long run.

The article recommends certain types of coverage that can help protect you during these tough times: 

1. Bodily Injury Liability - pays for injuries that you cause to another based on negligence
2. Property Damage Liability - pays for property damages that you cause due to negligence
3. Umbrella Insurance - covers you for bodily or property damages from auto accidents
4. Uninsured Motorist Protection - covers injuries to you and others when hurt by someone else
5. Comprehensive coverage - covers your car for damage caused by theft or other events
6. Collision insurance - covers you for damage to your car when in a crash with someone else
7. Medical Payments or Personal Injury Protection Insurance - covers you and your car occupants for limited medical payments with no regard to who is at fault

Take the time to understand what is included in your auto insurance policy to ensure you are fully protected.  What type of coverage you have does factor into your rates, so consider closely what you do and do not need to ensure you have adequate and affordable auto insurance.  It’s often better to be safe than sorry in the case of a car accident.

Joe Ducey from abc15.com wrote the article “Why falling credit may cost you higher insurance premiums” which has some great information about watching your credit so your auto insurance rates are not affected.  He contacted the American Insurance Association for some more information on how and why your credit rating affects your premium.

Basically, your credit rating determines predictive behavior and research shows it does impact how many claims you file and how much they will cost.  It’s called “risky behavior”.  There are other seemingly unusual factors that go into determining your auto insurance rate such as if you are smoker, if you drive during rush hour, if you are good student and how many miles you drive.  The criteria varies between auto insurance companies, so it can be beneficial to shop around. 

This is yet another reason to keep a close eye on your credit report and check it regularly.  Not only does it affect your auto insurance rates, but it affects your mortgage rates, car loan rates and other insurance rates!

Auto insurance premiums were the lowest they have been in May since September 2008 according to an article on IFAWebnews.  The average rate dropped to $1871 in May.  It was as high as $1950 back in September, 2008. 

This lower premium comes at a good time since industry experts believe that new car sales will be increasing by as much as 9% in June over May as dealers try to get rid of 2009 cars to make room for the new 2010 cars.  This will thrust more auto insurance buyers into the market.  As expected, new car sales have been behind throughout the year as consumers try to cut back due to the economic conditions.

It’s important to understand what goes into determining your auto insurance premiums.  Prices vary greatly from company to company, so to assure you are getting the best deal it helps to know how they are calculating your auto insurance quote. 

Age, gender, marital status, occupation, education and location are a few factors you have little to no control over.  But your auto type, accident history, how you drive, your credit rating and mileage are all factors you have some degree of control over and can impact your auto insurance premium. 

Even though each auto insurance company comes up with their rates differently, it’s important to shop around.  To compare auto insurance rates to see if you are getting the best deal, visit smartautoinsurance.com.

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.

Members of a variety of associations can save on their New Jersey auto insurance premiums with a local insurer. According to a press release from High Point Auto Insurance, more than 75 groups are eligible for extra discounts, including:

• the New Jersey Society of Certified Public Accountants
• OnStar
• the New Jersey State Chamber of Commerce
• New Jersey Soccer Group
• the New Jersey Dental Association

This membership benefit can be combined with other High Point discounts, which the company claims can result in up to 50% lower auto insurance rates.

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.