Smart Auto Insurance Blog

Have you ever wondered how auto insurance companies recognize staged accidents and other fraudulent claims?  There are mechanisms in place with each insurer to limit fraud as much as possible and usually a whole department is dedicated to the efforts.  But there are some things you can watch out for to ensure you are not a victim of this crime.

The article “Staged Accidents And Scams: How to Spot Insurance Fraud” from The Car Connection website, says that stage accidents cost policyholders and insurance companies billions of dollars every year.  During the recession they’ve been increasingly popular according to the Insurance Information Institute (III).  Insurance fraud can take many forms from false claims, staged accidents, and huge fraud rings that stretch across the nation.

Some key warning signs that may indicate you are getting involved in insurance fraud include people who appear at the accident and insist you use certain lawyers and doctors, doctors who insist you file a personal injury claim even though you were not hurt, and when tow trucks appear without any calls being made.  Also, if after the accident you recognize other parties are inflating claims and misrepresenting facts you may be involved in someone participating in fraud.  It’s important to report any unusual activity to your insurer in hopes that they can get to the truth and not lose any more money on fraudulent claims.  It ends up costing everyone more money, not just the auto insurance company.

State Farm auto insurance offers pay-as-you-drive auto insurance policies in California, Ohio, Texas and Illinois.  Progressive Insurance offers it as well throughout the US.  It’s getting more and more popular.  According to the article “Low-Mileage Drivers Benefit From Insurers’ Pay-As-You-Drive Plans” by Eve Mitchell on BellinghamHerald.com, auto insurance rates are tied to part of the actual number of miles driven and many consumers are seeing big savings.

State Farm specifically calls their program the Drive Safe & Save program and drivers can self-report their mileage online or at an agent’s office before they renew their policy.  Customers who drive General Motors, Saab, and Saturn vehicles with OnStar technology and have a diagnostics account can have their actual mileage sent right to State Farm for updating.  Drivers are paying better attention to how they drive in hopes that it will ultimately save them money on their quotes on auto insurance.

The pay-as-you-drive momentum is party due to California’s Proposition 103 which was the landmark auto insurance reform bill passed by voters back in 1988.  It requires insurance companies to base rates primarily on the customer’s driving record, number of miles driven per year, and driving experience.  More recent regulations allow actual mileage to be a voluntary alternative to estimated mileage and it makes it possible for auto insurance companies to obtain mileage verification from devices inside the car.  Any savings from actual miles driven are applied once the policy is renewed.  Drivers who are not on the road that often really appreciate this initiative and are hoping to see big savings over time on their auto insurance.

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.

Auto insurance fraud is soon to become a felony in the state of New York.  Legislators are working on harsher penalties for those submitting false claims and other fraudulent activity according to the article “New York Senate Passes Bill Making Auto Insurance Fraud a Felony” found on the US Insurance Corner website.

The New York Senate is hoping that passing harsher penalties against perpetrators will not only encourage less fraud but will ultimately lower costs of auto insurance quotes for everyone in the state.  Fraud losses have to be made up somehow by insurers and unfortunately it ends up coming out of innocent, law-abiding customers.

Republican Senator James Seward sponsored the bill and on the Senate’s insurance committee as a chairman.  He believes the new legislation offers a strong deterrent to those considering fraud against their auto insurance company.  He also sees this bill improving highway safety and dropping auto insurance rates for everyone.  Depending on the history of the perpetrator and the circumstances around the fraudulent activity, a person could face a class B, C or D felony which translates to much harsher punishment.

The bill targets those who stage accidents since that is one of the more egregious acts, but this is not the most common type of fraud.  The State of New York Insurance Department says about 9 out of 10 fraud cases are related to no-fault injury claims.

Auto insurance is getting more and more competitive and price is not the only place to compete.  Customer service, reputation, coverage options, SR22 insurance, and extra perks are all something to consider when shopping for auto insurance quotes.  One perk that has received a lot of attention in the past year is accident forgiveness.  This is a sought after benefit as consumers want flexibility in case they happen to have an accident.  The automatic rate increase that has been associated with accidents scares consumers and this makes accident forgiveness very desirable.

More and more auto insurers are making accident forgiveness part of their policy packages.  Nationwide and Allstate have been advertising this perk for awhile and have found great success with the program.  According to the article “Car Accident Forgiveness Policies” found on US Life Daily’s site says accident forgiveness is one of the more highly searched for benefits which indicates it’s a growing need.  The idea that auto insurance rates will not be automatically raised after the first accident appeals to all demographics and ages so it really is a unique benefit.

Accident forgiveness a relatively new concept, but it makes sense.  Auto insurance companies still want to reward good drivers with superior rates, but they recognize even the best drivers can have an accident and they know customers do not want to automatically be penalized if an accident occurs, especially if they have had a perfect driving record for years.  If this is a perk you think would bring you value, check with your insurer to see if that option is available.  If not, it may be time to start to compare auto insurance quotes online.

A survey released earlier this week revealed some good news for Florida residents.  Insure.com released a survey which found Florida’s average annual premium for auto insurance was $1,476 which is $85 less than the national average.

Florida does happen to be one of the most expensive markets for property insurance, but the auto insurance market stays competitive according to the article “Florida Auto Insurance Cheaper Than Average, Survey Finds” found on FloridaTrend.com.  Compared to all of the other states and Washington DC, Florida ranks 29th overall in expensive auto insurance.  The most expensive states from the survey were Michigan at $2541, and Louisiana at $2453.  The cheapest auto insurance rates will be found in Vermont with an average premium of $995 and South Carolina at $1095.

Florida auto insurance quotes being lower is great news for residents since they are already paying higher rates for property insurance.  This is probably due to hurricanes which can devastate properties and cause homeowners insurance rates to soar.  Lower auto insurance quotes Florida help offset those costs.

We are bombarded with car insurance information all the time and it can often be challenging to sort out the facts from fiction.  According to the article “Experts Dispel Common Auto Insurance Myths” by Larry Printz found on The Ledger, AAA and the Insurance Information Institute have gathered the top car insurance myths out there right now and work to set the record straight.

The first myth is that red cars have higher car insurance quotes.  Color typically is not used when car insurers calculate quotes.  The second myth is that insurance costs increase as you get older.  Often times the opposite is true that rates decrease with driving experience.  The elderly can even take courses which will earn them discounts on their car insurance.

The next myth has to deal with your credit score.  Some people think it has no bearing on car insurance but it usually does.  If you have trouble paying your bills, car insurance companies can worry about you paying your premiums and some studies have shown a link between driving record and credit rating.  The fifth myth discussed clarifies that your policy does not automatically cover you for theft or damage to your car.  You have to carry comprehensive and collision.  Another myth is that the car insurance policy does not follow the car but it does.

One myth circulating is that soldiers end up paying more for car insurance, but this is not the case.  Many auto insurance companies actually offer discounts to military men and women.  The final myth says car insurance will cover you for business use of your car.  Depending on your situation you could find yourself uncovered if you happen to be using your car for business purposes, so double check to see what is included in your policy if you do use if for work purposes on occasion.

Hopefully dispelling some of these auto insurance myths out there will help consumers make more educated decisions and will carry the coverage that works best for their individual situation.

Auto insurance companies have been using gender as a pricing mechanism for many years when determining auto insurance quotes.  Women typically get lower auto insurance quotes because they are less likely to be in an accident, but despite this fact, many view this type of risk-based pricing as discrimination.

Things are looking to change in Europe when it comes to using gender in pricing.  According to the article “EU Court Bans Gender Basis for Insurance Cost” on DW-World by Andrew Bowen, the European Union’s highest court banned using gender as a factor when determining price.  The European Court of Justice ordered insurance companies to adopt a way of calculating rates without useing gender by December 21st of 2012.

This could have a negative effect on consumers over time.  EU law already banned using gender but the insurance industry had an exemption as long as the insurers regularly published statistical information on which their rates were based.  CEA, Europe’s insurance industry lobby, is against the decision and say the impact on price, benefits and consumer options could be huge.  Is this a trend that will make its way to the United States?  Only time will tell, but if it does it’s fair to say it will have a big impact on the way auto insurance rates are calculated and many will end up paying more for 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.

Auto insurance companies are constantly changing their policies to compete with other insurers and to ensure they are offering the most up-to-date benefits.  There are many optional benefits that insurance companies use as leverage such as road side assistance, online bill pay and even pet insurance.  American Commerce has numerous unique policies which helps them to stand out.

One of the more interesting policies offered by American Commerce is called the Peace of Mind Package.  This is an optional upgrade to any auto insurance policy that offers immediate accident forgiveness from day one, an automatic deductible credit and the ability to drop your deductible up to $500 for remaining accident free.  This really gives a huge incentive for good drivers to gravitate towards American Commerce.  It makes sense that unique benefits will attract more customers.

Another policy option they offer is called AutoMaster Plus.  This is available for upgrade on standard policies and it provides some extended benefits.  Some of these additional benefits include covering items such as computers, cell phones, child safety seats, pet injury, glass chip and personal belongings.  It can also include death benefits and even more.  Check with your auto insurance company to see how your benefits stack up.