Smart Auto Insurance Blog

California auto insurance has had its ups and downs with auto insurance rates, and for 2011, California ranks 29th in auto insurance affordability according to the article from Mark Glover of The Sacramento Bee.  This was based on a new report released by InsWeb Corp.  This is actually an improvement from their ranking last year which was 34 in the Car Insurance Affordability Index survey.

In order to rank the states in their affordability, InsWeb looked closely at all 50 states and Washington DC.  InsWeb compared household incomes with the average auto insuance costs throughout the state to determine affordability.  For the 2nd year in a row, Massachusetts came in first place with a factor of 2.09%.  Louisiana came in last place with a factor of 6.76%.  California had a factor of 3.34% which was pretty close to average.

Being in one of the more expensive states for auto insurance makes it even more important to compare auto insurance online, or through an agent.  Rates can vary significantly from insurance company to insurance company.  They will look at many factors including location, driving record, and car make.  If you think you are paying too much for auto insurance shop around to make some comparisons.

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.

Every driver knows they should be carrying auto insurance to protect their car and their financial situation if they happen to be in a devastating accident.  Unfortunately, most people do not carry insurance for an earthquake or a tsunami and the Insurance Information Institute says the US is at risk for both of these natural disasters.

An article found through a link on the One Beacon Auto Insurance entitled “Few Homes Have Insurance Coverage for Earthquake or Tsunami, Although the US Is At Risk for Both” on iii.org, discusses the importance of making sure you have the right kind of insurance coverage for your specific living situation.  Most home owners insurance policies do not cover earthquake damage so individuals at risk need to shop around for either an endorsement or a completely separate policy to ensure they are properly protected.

Earthquake coverage is offered through various private insurance companies and can be affordable.  In California where earthquake risk is higher, insurance can be purchased through the California Earthquake Authority (CEA), which is a privately funded, publicly managed group.  In California, only 12% of people carry earthquake insurance which is down dramatically from 1996 when 30% carried protection.  During tough economic times people often eliminate unnecessary insurance products, but there is no earthquake season and you never know when you may be a victim of a catastrophic event.

California auto insurance companies continue to debate Prop 17.  According to the article “Consumer Advocates, Insurers Battle Over Prop 17″ by Sue Kwon on cbs5.com The Yes on Prop 17 campaign is spending millions in ads to spread their message.

With Prop 17, the clean record discount would follow the driver if they chose to switch companies.  Insurance broker, John Morton, with the Alliance of Insurance Agents and Brokers wants the measure to pass.  He believes it’s a win-win for his clients.  He sees the good driver discount as something a driver should have ownership over regardless of what company they go with.  Morton also thinks Prop 17 will cause companies to compete and drive down California auto insurance quotes.

The Executive Director of the Consumer Federation of California, Richard Holober, believes the opposite will happen.  California auto insurance companies, such as Infinity Auto Insurance, may end up charging more to certain customers including students, military, unemployed, or low-income drivers because they break continuous coverage within 90 days.  This is detrimental to drivers in these groups who may have perfect driving records and otherwise would not get their rates raised on them.

According to the article “Insurance Changes Would Help 80% of Drivers” by Mike D’Arelli on sfgate.com, California auto insurance is about to see some major changes.  Thousands of auto insurance agents support Proposition 17 which will extend an auto insurance discount to millions of drivers in California who are forced to pay hundreds of dollars more every year for their auto insurance rates if they switch insurers.  It looks to reward good drivers and save them as much as $250/year.

Prop 17 plans to fix an underlying issue current in the auto insurance system.  Drivers who keep auto insurance with the same company are eligible for a continuous coverage discount.  If a consumer decides to switch carriers they do not get this benefit and Prop 17 will fix this flaw.  Drivers who follow the law and keep coverage continuously will still get the discount even if they change insurance companies.

Prop 17 will also increase competition among carriers and provide California drivers with many more options.  It will benefit up to 80% of drivers who keep continuous coverage.  It also contains some consumer protections to help those suffering from the economic downturn.  In addition, Prop 17 will protect our military men and women who are serving abroad and do not carry continuous coverage because they are not driving.  All of these provisions may seem like common sense, but it’s been the current law for awhile and it’s time for changes.  SR22 insurance will need to be still be carried by those high risk drivers who are required to carry this type of coverage.

Prop 17 is a proposal on the California ballot sponsored by Mercury Insurance which will allow auto insurance companies to charge many drivers for various reasons.  This includes military people who did not purchase auto insurance while living on base even if they didn’t own a car at the time.  This is according to the article “Nation’s Leading Insurer of Soldiers, USAA, Criticizes Prop 17; VoteVets.org Announce Opposition” found on InsuranceNewsNet’s website.

USAA, which was formed in 1922, says it cannot support the bill because of the negative impact it will have on active duty men and women.  The rating system does not take into consideration the special circumstances of our military men and women and USAA does not feel this is right.  VoteVets.org signed a ballot argument against Prop 17 and they represent 100,000 veterans and military families.

Under Prop 17 drivers, including soldiers serving stateside, who stop driving and did not need insurance for a certain time period would have to pay hundreds more for their auto insurance when they decided to restart the coverage.  Doesn’t seem fair to people who have legitimate reasons to stop carrying insurance for small periods of time, such as the military.

California Auto Insurance quotes are lower if you qualify for a special program that can get you affordable auto insurance.  According to the article “State Program Helps Connect Drivers With Low-Cost Auto Insurance” by Steve E. Swenson found on bakersfield.com says that the program offered in Kern County since 2006 is saving eligible drivers money.

The program is called The California Low Cost Auto Program and it offers coverage limits of $10,000 per person, $20,000 per accident, and $3,000 for property damage for as little as $254/year.  Quotes on auto insurance in California can be pricey and tickets for not carrying auto insurance can be extremely expensive, up to $786 according to court officials.

To qualify for the program applicants must be 19 years old or older, have a license for 3 years continuously, and have no more than 1 at-fault accidents, or 1 point for a moving violation in the last 3 years.  California Insurance Commissioner Steve Poizner believes the program needs to be supported, especially during the tough economy and high rate of unemployed drivers.

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.

There will be a voter initiative on the June 2010 ballot for Californians aimed at giving discounts to drivers who have had insurance for a long time according to the article “Californians To Vote On Auto Insurance Persistency Discount” by Patricia-Anne Tom on insurancejournal.com.  This discount would apply even if Californians switched carriers confirmed by the Secretary of State.

The Continuous Coverage Auto Insurance Discount Act will mean lower California auto insurance quotes for many but it’s facing criticism by consumer groups because the act will penalize drivers for not having previous auto insurance coverage.  The article says that the measure would legalize surcharges on auto insurance and penalize good drivers for accidents that weren’t necessarily their fault.  The group believes it could ultimately lead to more uninsured drivers on the road.

Kathy Fairbanks of CalFAIR says this ballot proposal will reward over 80% of responsible Californians who keep auto insurance coverage which is required by law by making them eligible for this discount even if they switch auto insurance companies.  Currently, the discount cannot be offered to new customers.  California drivers will be able to carry this discount with them if they choose to shop around for better rates and switch insurers.

According to the article “Drunken Driving, and Motorcycle Deaths Decline” by Gary Richards on The Daily Democrat, fatal motorcycle crashes caused by drivers who are under the influence of alcohol are on the decline in California.  This may end up affecting California auto insurance rates.

There are many factors that contribute to this statistic, but the author says that stricter laws, better law enforcement, and better education have contributed to fewer deaths.  Also, the economic downturn is causing more people to drink at home and save money by not purchasing motorcycles. 

Dairyland Insurance, which specializes in motorcycle insurance, may see an impact to their rates as crashes decline.  If you receive a DUI, it can stay on your driving record for up to 10 years and some counties are requiring even first time offenders to blow into a breathalyzer before their car will start.  These are just a few examples of the stricter laws that may be causing fewer accidents and fewer claims being filed by drivers.  This ultimately saves insurance companies money and allows them to offer lower premiums.