Smart Auto Insurance Blog

Even though auto insurance quotes are quick and easy to obtain, and almost every state requires coverage, 1 in 7 people still choose to go without auto insurance.  This surprising number has increased slowly over the years, probably due to the economic downtown that is affecting so many Americans.  According to industry experts, 13.8% of motorists are uninsured and these causes higher rates for everyone who follows the rules and remains insured.

The article “One In Seven Drivers Have No Insurance” by Larry Copeland on USA Today, points out that insured drivers end up paying more because of uninsured drivers.  This came out to around $10.8 billion in 2007 based on recent data from the National Association of Insurance Commissioners.  David Corum, vice president of the Insurance Research Council, a non-profit group, says the number of uninsured drivers has been studied closely.  The consequences for not carrying coverage do not appear effective even though most states do require insurance coverage.

Loretta Worters, vice president of the Insurance Information Institute says auto insurance is compulsory in every state but New Hampshire but laws have proven ineffective in reducing the number of uninsured drivers on the road.  The state with the lowest uninsured rate is Massachusetts at 4% and the highest is Mississippi at 28%.  This huge difference is also surprising.  Obtaining auto insurance quotes has never been easier with the Internet instantly comparing multiple quotes, but this isn’t powerful enough to combat the fact that many Americans simply cannot afford the rising costs of auto insurance.  It will be interesting to see if these statistics change as the economy repairs itself.

Written by Sara Smart

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Based on a recent online survey completed by the InsuranceQuotes website, a surprising 16% of American drivers say that they have driven without carrying auto insurance, which happens to be against the law.  Also in this survey, 2% admitted to currently driving around without auto insurance which is concerning for all insured drivers on the road.

With the past few years being tough economic times for many, this probably makes sense.  According to the article “16% of Motorists Have Driven Without Insurance” by Alex Vorro on insurancenetworking.com, 28% of males ages 18-25 and 45-54 were at the top of the list for driving without insurance.  The percent of women driving without insurance is only about half of men.

Men and women combined in the age group 45-54 were the most likely to have driven without insurance at about 22%.  In the age group over 55 only 8% have admitted to ever driving with auto insurance.  The survey also looked at the reasons why people were driving with out auto insurance.  Auto insurance quotes can be expensive and it would seem that would be one of the reasons.  Actually, 24% of drivers drove without auto insurance because they didn’t have a chance to renew, 19% because of a gap while switching insurance companies and 12% because the insurer cancelled their policy.

For many years, auto insurance companies have been using a consumer’s credit score to help determine risk and calculate auto insurance quotes.  It has been debated by industry experts and consumer advocates whether or not this is fair and whether or not it makes sense.  Most auto insurance companies agree that this is an accurate way to determine risk, and study after study shows that riskier drivers tend to have lower credit ratings.

The National Association of Insurance Commissioners has been probing insurers continuously about their credit score use and the auto insurers are defending themselves.  This is according to the article “Auto Insurance Companies Defend Use of Credit Scores” found on Insurance NewsNet.com.  With a struggling economy, the issue is even more hot.  People with once excellent credit scores are finding themselves out of work and paying late on bills which is affecting their credit.  Double whammy once they receive an auto insurance quote and see their rates have increased due to the drop in their credit score.

The use of credit scores is supported by most states, which use a model from the National Conference of Insurance Legislators.  Louisiana commissioner of insurance, Jim Donelon, says he doesn’t see anything wrong with the practice and he attended a public hearing with the NAIC’s Property and Casualty Insurance Committee where auto insurance companies defended their use of credit scores when determining auto insurance rates for customers.

It is becoming more widely known that many auto insurance companies use the credit score when calculating auto insurance quotes for those shopping around.  Whether you agree with it or not, insurers have found that credit history is a powerful predictor of what kind of driver you are.

According to the article “Does Getting An Auto Insurance Quote Hurt Your Credit Score” by DR on Doughroller.com, Progressive has data to show that consumers with the worst scores are often twice as likely to have an accident or file a claim compared to consumers with the best scores.  But a question that has been on the minds of many credit conscious consumers is how does it affect your credit score when you get auto insurance quotes from an insurer?

The answer is that it affects your score minimally.  Auto insurers are using what’s called “a soft pull” when they look at your file.  This is a way for people to look at your credit file without it affecting your score.  When you get pre-approved offers, are interviewing for jobs, or look at your own credit score these are all using “soft pulls”.  A “hard pull” is used when you are shopping for credit and it can negatively affect your score.  This is often known as a “voluntary pull” and it affects your score because seeking excessive credit is viewed as a risk factor.

According to the article “Allstate: More Customers Buying Auto Insurance Online” by Lavonne Kuykendall found on money.cnn.com, auto insurance companies who have relied on agents to bring in new customers are now adapting quickly to Internet sales.

Thomas J. Wilson, the chief executive of Allstate Corp, says their goal is to have fewer, larger agencies that offer a more consistent experience for policyholders.  He also said that half of its new auto insurance policyholders first make contact through the Allstate website.  Allstate is quickly adjusting to meet customer Internet demands.

The article points out that Allstate’s plan calls for fewer agents with an enhanced local presence.  About 87% of web site shoppers end up closing the deal with an agent so agencies continue to be an important part of their plan.  This is particularly true for homeowners with more than one car who often prefer using an agent because the policy can get complicated.

Carrying auto insurance is the law in most states, but according to the article “How To Cut Your Auto Insurance Bill” on bignews.biz drivers in record numbers are dropping their auto insurance policy because of unemployment and other financial issues.  The recession has taken a toll on us all.  But dropping your auto insurance can cause big problems and is not worth the risk.

Just one auto accident can ruin you financially if you are not insured, not to mention get you in big trouble with law enforcement.  If you are struggling to pay your bill, you are much better off in the long run to look for ways to decrease your auto insurance rate instead of dropping your policy altogether. 

One way to decrease your auto insurance rate is by raising your deductible to a higher level.  Another important step is to compare auto insurance quotes.  You can do so online, over the phone, or by visiting a nearby auto insurance agent.  Doing so can save you hundreds and the process is relatively painless.  Protect your assets and stay honest by keeping auto insurance policies in good standing if you are driving on the road.

Many auto insurance companies are starting to give coverage to customers’ pets.  The coverage is offered free of charge in case of injury or death in a car accident.  Many see their pets as children and they are extremely important to them.  Pets often ride along with their owners, so ensuring their pets are covered through their auto insurance can put their mind at ease knowing that vet bills will be covered if they are in an accident. 

Auto insurance companies started doing this a few years ago but it wasn’t always brought to the customer’s attention.  As more and more inquiries about the benefit surfaced so did the popularity of the pet coverage and more and more marketing is occurring.  See if your auto insurance carrier offers the benefit and if not it may be time to shop around for one that does.

When shopping around for auto insurance, it’s important to understand the different ways to buy and understand some of the pros and cons of each.  There is a huge market for auto insurance out there today and it can be overwhelming when you first start out your shopping experience.

One option to buy auto insurance is to go through a broker, such as Eastwood Insurance.  Brokers, in general, do the shopping for you which can save you time and money in the long run.  It’s important to know when you are going through a broker, because sometimes consumers may think the broker company is actually supplying the insurance coverage, when really a different company is, causing billing and customer service confusion.

Purchasing directly from an insurance carrier can have its benefits because you know what you are getting right off the bat.  You may see an advertisement on TV or the web and can call directly to get your price.  On the other hand, if you are interested in ensuring you are getting the lowest quote, shopping around by calling each carrier is timely and can be extremely redundant.  You can also use websites such as smartautoinsurance.com to help you shop around and determine if you are getting the best price.  It’s a competitive market, so the informed consumer definitely saves more.

A new program from Progressive Insurance allows drivers to go online and pick their own auto insurance premium. The Name Your Price tool on their website will show you the most package that best fits the price you entered. Then, you can gradually change the desired level of coverage with a slider (Want lower auto insurance rates? Up your deductible or lower your coverage limit). Pretty simple, right?

The insurer plans to take the Name Your Price tool nationwide this year. It’s currently available in these states:

• California
• Ohio
• Texas
• Florida
• Connecticut
• Kansas
• Georgia
• Maryland
• Indiana
• Illinois
• Oklahoma
• Michigan
• Pennsylvania
• Missouri
• Wisconsin
• Washington

Get your own Progressive Insurance quotes.