Smart Auto Insurance Blog

Many of the reasons for auto insurance rate increases over the past decade are beyond our control.  According to Moneywise’s “Why are your car insurance premiums rising?,” auto insurance rates have doubled in past decade.  There is a lot of talk about the rising gas prices eating into household incomes.  Not as much talk is made about rising auto insurance prices, but that may be because a lot of people just continue to pay their bill monthly without even keeping close track of price increases.

The cost of auto insurance went up 15% last year in the UK, and increased 110% over the past ten years.  This article states that the top reason for auto insurance rate increases is a dramatic increase in personal injury claims.  In the past, the majority of car insurance claims were paid out for repairs.  But half of claims are now paid out for injuries and medical issues related to car accidents.  Between 2010 and 2011, there was an 18% increase in medical claims like whiplash.  That is the largest increase they have ever seen in the UK.  Research has shown a link between the number of no win, no fee lawyers specializing in car accident claims and the amount of claims filed in a certain location.  There could be new legislation soon regarding the way that some claims lawyers do business.

Another reason for increasing auto insurance rates is an increasing cost to repair vehicles.  New technology is great for car owners, but it really increases the cost to fix the vehicles when there is damage.  One example is that of a broken headlight that used to need a new light bulb and maybe some glass if that cover were broken as well.  Now an entire sealed panel may have to be replaced just because of a broken headlight cover.

Some organizations believe that auto insurance companies are to blame for rising premiums because competition with other insurers is causing them to get more expensive repairs and rental cars when their insured was not at fault in an accident.  Rates have been going down this year slightly because of heavy competition in the auto insurance market.  It’s difficult when things beyond your control are setting your auto insurance rates, but the best you can do is keep the factors that are under your control in your favor to get lower auto insurance rates.

Louisiana Governor Bobby Jindal is working hard to make sure that everyone in his state driving a car is carrying auto insurance.  Currently, one out of seven drivers in Louisiana is uninsured.  But with the signing of HB 1053, Jindal is steepening the penalties for residents who choose to drive without auto insurance.  This information comes from Matthew Morrisset’s Online Auto Insurance News article “Uninsured Drivers in Louisiana Facing Greater Consequences.”

Police officers in Louisiana used to only be able to tow an automobile if it was causing some type of danger to the public, but they now have free reign to tow any auto where the driver has been caught without insurance.  Once you’ve gotten in trouble for not carrying Louisiana auto insurance, your fines can be anywhere from $100 for a first time offense to $700 for a third time offense.  These changes take effect August 1st of this year, so it’s definitely time to check out auto insurance rates if you don’t currently have coverage.

There is a “No Pay, No Play” rule in place in Louisiana.  Anyone involved in an auto accident in the state will be in big financial troubles if they don’t have an auto insurance policy, even if they were not at fault in the accident.  For the first $25,000 in property damage and the first $15,000 in medical bills related to the accident, any driver who did not have auto insurance coverage will not be paid out, even if the other driver was at fault.  That is financially scary and can be devastating, especially since you have little to no control when someone else is at fault in an auto accident.  The bottom line is that it is cheaper to carry auto insurance than deal with the risks you could encounter if you don’t have it.

If you’re looking to save money on your auto insurance, look for an insurance company using DriveFactor.  That is only if you are a good driver of course!  DriveFactor, which used to be known as Crimson Informatics, is a sytem that tracks your driving habits and could save you big money on your auto insurance rates.  According to a company press release, DriveFactor is expanding as more auto insurance companies decide to offer this discount system to their customers.

Mobile technology combines with informatics to monitor your safe driving habits and DriveFactor says that you can save up to 50% off of your auto insurance rates.  Usage-based insurance (UBI) programs are already being used by Progressive, State Farm, Allstate auto insurance and others.  A diagnostic device is placed in the vehicle to monitor everything from speed to distance between other vehicles.  After a specific time period of monitoring, drivers are given a DriveFactor Score.  Those with the highest scores get the highest discounts on their auto insurance.

DriveFactor benefits both drivers and auto insurance companies.  It is very cost-effective for auto insurance companies and allows them to offer discounts to drivers they know are less likely to drive dangerously and take risks.  Use of DriveFactor can give auto insurers quite an advantage in their industry and it also saves drivers money, which makes them happy.  The information gathered is really the best way to accurately price car insurance for customers.  DriveFactor is available in the United States and Europe right now, but will likely expand even farther in the future.

Two companies are raising their Pennsylvania auto insurance rates, according to Matthew Morisset of Online Auto Insurance News.  In “Nationwide, Erie raising rates for some Pennsylvanians,” we learn that customers with certain good ratings will not see increases.  The Pennsylvania Insurance Department made the rate filings public for Nationwide and Erie’s projected increases.

Nationwide auto insurance operates three companies within Pennsylvania, but only one of them is currently writing new business.  Nationwide Affinity will be raising rates 7.9% for 202,000 new and existing customers.  Just last September, their customers saw average rate increases of 5%.  Customers renewing their policies with Nationwide Insurance Company of America will see an average increase of 6%, while Nationwide Mutual customers will see their rates increase 1.9%.  While the three companies will increase their money coming in by $18.04 million, $7.98 million, and $5.88 million respectively, their costs and payouts have skyrocketed as well.

Erie Insurance Company will be increasing rates 2.9% for their new and existing customers.  This will effect 16,900 people starting April 1.  Erie Insurance Exchange customers will actually see a small decrease of .1% in their rates.  This gives 823,000 drivers something to smile about and will decrease cash inflows to the company by $528,000.  If your auto insurance company is changing your rates, make sure you know the details and shop around for different coverage if you don’t agree with an increase.

Delaware auto insurance rates are going up for State Farm customers in that state.  According to Online Auto Insurance News’ John Pirro, “State Farm car insurance rates to rise for Delaware policyholders.”  Starting today, rates will be increasing around 1.9% in Delaware.  State Farm is the second biggest auto insurance company in Delaware behind Nationwide.  Their market share is 22 percent and they say that they’re raising rates so they can keep the financial promises they have made to those customers.

Many factors will determine the amount of individual policyholder increases, including their particular coverage and any discounts they maintain.  All liability and personal injury protection coverage will be increasing.  Collision and comprehensive costs, however, will be increasing for some but decreasing for others.  From 2006 to 2008, PIP claims increased 10% and property liability claims increased 4.5%.  State Farm is also raising Michigan and Wisconsin auto insurance rates, while they are decreasing Illinois, Alabama, and Georgia auto insurance rates.

The New York Times just published an article listing the cheapest and most expensive cars to insure this year.  In Ann Carrns’ article, “The most (and least) expensive cars to insure in 2012,” we learn that Insure.com made a list of the 20 most and least expensive cars to insure.

The least expensive car to insure is the Toyota Sienna LE minivan.  Average auto insurance rates in the U.S. are $1,100.  All of the other cars in the top 20 also had auto insurance rates under $1,200 and many others on the list were also minivans.  Individual vehicle’s rates are determined by how often the vehicle is involved in crashes, how much it costs to fix, and how much insurers have to pay out in total losses.

On the flip side, the most expensive car to insure is the Audi R8 Spyder Quattro.  This two-seater convertible costs $3,400 to insure this year.  It’s joined on the list of most expensive cars to insure by Mercedes, BMWs, and Porsches.  The list was determined by taking average rates for six different auto insurance companies, using ten zip codes per state, and the average coverage amounts for a 2012 vehicle.

The day after the Super Bowl is typically all about the commercials.  Today is no different.  While I didn’t notice any commercials from auto insurance companies, I sure did notice a lot of them from the auto companies themselves.  I guess it’s nice that your auto insurance company isn’t spending millions of dollars to advertise during a 30 second spot, maybe to help keep your auto insurance rates lower.

Some of the auto manufacturers who ran Super Bowl commercials succeeded with the most talked about ads.  Volkswagen had to compete with their much loved Darth Vader commercial from last year and they used a dog to fill that void.  Chrysler’s Halftime in America spot with Clint Eastwood had people crying, thinking, and hoping for America.  Toyota, Cadillac, Audi, and Hyundai ran some of the other memorable ads from auto companies.

With all of the money spent on these ads, I wonder if auto manufacturers will see a large increase in sales.  If so, that could mean big business for auto insurance companies including an influx of new quotes on auto insurance.  More demand or changing demand for auto insurance could mean more competition from insurers and better rates for consumers.  So while auto insurance companies weren’t spending big money on Super Bowl commercials, that doesn’t mean that they won’t be affected by auto companies’ commercials.

There is a fairly unique system in place regarding auto insurance rates in North Carolina.  The Daily Reflector published an article by Gary D. Robertson of the Associated Press entitled, “NC lawmakers look at auto insurance risks, costs.”  This article explains the current debate in North Carolina over whether it is more important for overall auto insurance rates to be low or for individual drivers to pay more based on their risk.

About 20% of North Carolina’s 7 million insured car owners are in a high risk insurance pool.  Called the North Carolina Reinsurance Facility, the high risk pool is for drivers that cannot otherwise get insurance from companies because of their past history of riskier driving.  Rates are around 30% higher for those in the high risk pool, but 70% of those in the pool haven’t had any type of risky driving is over three years.  These drivers don’t pay the extra 30% premium, so their premiums fall flat of covering their expenses and losses.

There is a clear divide in the state as to whether this pool needs to be altered or dismantled.  Insurers like State Farm, Geico, and Progressive agree with trade associations that want the ability to better match rates with driver risk.  This would call for the elimination of the North Carolina Rate Pool, which sets the rates that North Carolina insurers are allowed to charge.  But Nationwide and other insurance companies think the system works well and point out that North Carolina has the 7th lowest insurance rates in the nation.  North Carolina’s insurance market is competitive, their insurers make profits, and their overall rates are low.  But many believe that their huge high risk pool needs some changes.

Written by Sara Smart

Follow me on Twitter: https://twitter.com/#!/SaraSmart55

The continuous stream of auto insurance commercials on TV bragging about their lower rates may have consumers believing rates are down.  Unfortunately, this is not the case.  Auto insurance rates have increased about 10% between 2008 and 2010 based on smartmoney.com’s report from the Insurance Information Institute.  It doesn’t stop here.  Rates are expected to rise further this year by around 4%.  In the last 10 years, rates have risen by 30% causing financial strain on millions of Americans.

The executive director of advocacy group Consumer Watchdog, Douglas Heller, points out that this is a very different picture than what is painted in the media.  Many consumers don’t even realize they are paying so much more for their auto insurance coverage.  Larry Thursby, vice president of personal auto insurance for Nationwide Mutual Insurance says it’s cost-based pricing and as costs increase for the insurers, price hikes are passed on to the consumer.

The article “Auto Insurance Rates On the Rise” by Jason Collazo on Forbes.com talks about how increasing medical costs are making auto insurance rates higher.  Exorbitant medical bills auto insurance companies have to cover for injuries due to auto accidents are making rates increase.  This is in addition to more expensive parts and more expensive labor.  These high rates are pushing more drivers to go without auto insurance even though that is against the law.  About 16% of drivers are currently unemployed, and this number could increase as rates go up further and the economy continues to struggle.

Written by Sara Smart

Follow me on Twitter: SaraSmart55

Auto insurance quotes in Florida continue to rise and this is causing some serious concern for consumer advocate groups in the state.  According to the article “Fla. Consumer Advocate Focusing on Auto Insurance” by The Associated Press on MiamiHerald.com, Florida’s insurance consumer advocate is forming a solid group to address the issue of increasing auto insurance rates.

Robin Westcott, appointed by Chief Financial Officer Jeff Atwater, points out that one of the main reasons rates continue to soar is because of the no-fault coverage for personal injuries layout of Florida auto insurance law.  Westcott is encouraging those who have stake in the personal injury protection system including lawmakers to considering these groups and join to show support.  This would be a huge move in the industry to work towards bringing rates down for the residents of Florida.

Westcott says she hopes to submit the group’s research to Atwater and the Florida Legislature by November of 2011 and make serious strides towards a solution.  Florida’s rising rates have been an issue for many years now and the way the law is set up is encouraging rates to keep rising.  Something needs to change to protect Florida drivers from experiencing some of the highest auto insurance quotes in history.  The time and effort it will take to implement changes is huge, so the more support they can rally the better.  Florida residents need a voice to ensure rates are kept affordable.  Times are tough enough without the rising costs of auto insurance.  Since auto insurance costs are necessary for most Florida residents, it should be a top priority for lawmakers.  Time will tell if their efforts will pay off in the end.

Written by Sara Smart

Follow me on Twitter: http://twitter.com/#!/SaraSmart55