Smart Auto Insurance Blog

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.

Pretty much everyone is looking to save a dollar where they can in this struggling economy and luckily there are companies out there willing to help their customers.  Auto insurance rates are causing many consumers financial stress, and these people often are not aware of the dozens of discounts out there that they may quality for.

Donegal Insurance is an example of a company going above and beyond to offer substantial discounts to their customers.  Their auto insurance policies not only offer a wide variety of options for every type of driver but they give discounts based on good behavior.  Some of these discounts include good student discounts, high chargeable accident thresholds, first accident forgiveness, extra edge discounts for superior drivers and a PACE protector endorsement.

According to the Donegal Group website, you can also save money on your auto insurance if you have passive seat belt restraints and/or airbags in your car.  There are additional discounts for anti-theft devices, and anti-lock brakes.  Even more discounts are made available for those who have completed a driver’s education course or who participate in car pooling.  There’s a multi-car discount and savings if you have multiple product policies with Donegal.  As you can see, there is a long list of readily available discounts for a variety of drivers on auto insurance

offered through Donegal which is headquartered in Pennsylvania.  This is great news for those of us pinching pennies, and it’s useful to know where we can save a little bit of money.  It adds up over time and can make a big difference.

According to the article “Pennsylvania Attorney General Charges 24 People With Auto Insurance Fraud” by Mark Mendell on topnews.in, 17 New Yorkers and 6 New Jersey residents claimed to be PA residents to obtain lower auto insurance rates.

This is a very serious offense and is definitely classified as insurance fraud.  Pennsylvania Attorney General, Tom Corbett, said the rate manipulation leads to $12-$15 million in claims on PA policies that affects the auto insurance rates of all the other drivers in the state.

Pennsylvania auto insurance quotes are significantly lower than rates in NY and NJ so it’s no surprise people would try to cheat the system to save a lot of money.  PA officials are taking this fraud very seriously.  The PA Attorney General spokesperson, Nils Fredericksen, says that the 24 defendant each face up to 7 years in jail and $15,000 in fines.

According to the article “Insurance Fraud Costs All of Us Money” by Jeanette Krebs on Pennlive.com, 7 out of 10 Pennsylvania drivers say they would not attempt insurance fraud.  That leaves about 2.5 million people who may consider fraud.  The same group of polled people believe that those who commit auto insurance fraud are rarely caught. 

Getting Pennsylvania auto insurance quotes already includes many factors most of which are based on individual information.  But the economy, business stability and fraud losses are all considered when auto insurance rates are determined.  This is why insurance fraud ends up costing all drivers on some level.  The worst part is that it is extremely difficult to catch these perpetrators.  According to the Franklin and Marshall University Poll about a quarter of respondents stated they would not report someone they knew involved in an insurance scam. 

In 1994 the fraud prevention authority was created as a funding mechanism, making funds available to law enforcement and prosecutors to manage insurance fraud.  The budget is approximately $11.6 billion which comes from insurance companies within the state.  Part of the money is also used to educate Pennsylvanians about fraud, such as TV ads letting people know they can go to jail for engaging in insurance fraud.

According to the article “Collision City” by Jeff Gelles from the Philadelphia Inquirer, Allstate Auto Insurance examined which cities have the best and worst driving record in their 5th annul Best Drivers Study.

The study shows that on average, Allstate’s Philadelphia policyholders have collisions once every 6.4 years. New Yorkers have eight years between accidents, Clevelander drivers 10.7 years, and  Sioux Falls, S.D., 13.5 years.  Philadephia was ranked worst among largest cities.  This does affect Pennsylvania auto insurance rates and if you live in Phillie you understand the high costs.

Pennsylvania state officials and traffic-safety experts aren’t convinced by the findings.  Spokeswoman for PA Department of Transportation, Jenny Robinson, stated that 2008 was Philadephia’s best year in a decade according to PennDot’s count of “reportable crashes” which include accidents that result in death or injury, or require a vehicle to be towed.  Martin T. Pietrucha is a civil engineer who studies the “human factors” in car crashes, and he thinks Allstate’s claims data may be skewed if Philadelphia drivers are more likely to report small accidents to their auto insurance companies.

Whether or not Allstate’s study is completely reliable, one thing remains sure.  Their findings ultimately translate to the cost of their customer’s auto insurance rates.

The first major impact on auto insurance brought on by the economic downturn that received a great deal of media attention was that many people were going without auto insurance because they couldn’t afford it despite the fact that it is required by law.  In less severe cases they were simply reducing their levels of auto insurance coverage.

Another impact to auto insurance has been cases of auto insurance fraud.

• In Hawaii, auto insurance fraud convictions are up 61% from 2007 to 2008.
• Cases of abandoning vehicles and then reporting them stolen are up 33% over same time frame
• Pennsylvania auto insurance fraud cases are up 30%

Industry experts say this phenomena is not unusual, auto insurance fraud increases are typically experienced during an economic downturn such as the one we are experiencing today.  Unfortunately, other drivers pick up the tab on the $6 billion in fraud cases in the form of excess auto insurance payments.

IFA Insurance Company, an auto insurer serving Pennsylvania and New Jersey residents has announced that they will next accept payment of auto insurance premiums via Paypal.  The integration of Paypal into their accepted payment methods, is a innovative convenience for policy holders I would not be surprised to see other auto insurance companies to follow suit.

More Information about Pennsylvania Auto Insurance, and New Jersey Auto Insurance.

The state of Pennsylvania offers some consolation to people paying expensive student loans, according to Jon Delano from KDKA Pittsburgh, but not for much longer if a state legislator has his way. Pennsylvania auto insurance companies currently offer reduced premiums to those who are better educated. Their justification is that people with more education are better drivers and less likely to make claims for an accident than someone with less education, like a high school dropout. Using that logic, it would make sense to give a rate break to individuals with advanced degrees, much like insurers raise premiums for teenagers because they tend to take more risks when driving, or lower them for married men since getting hitched supposedly calms them down.

However, the chair of the PA House Insurance Committee thinks these policies are discriminatory. Delano says that Representative Tony DeLuca wants to pass a law barring the practice, which I think will be an uphill battle. He points to the exceptions; the Ph.Ds unable to drive for beans and the amazing drivers who never finished the 5th grade. While those outliers do exist, insurance companies make decisions about their policies based on research of the majority’s driving behavior. Not all single males under 25 are reckless drivers, but statistics show that there are enough of them to justify higher premiums for that group.

DeLuca suggests that insurers should focus solely on a person’s individual driving history when figuring out their rates, which is probably best for everyone. It’s a good idea to get multiple auto insurance quotes and compare rates. But in that case, how will new drivers with no history get auto insurance?

(Photo credit: keithreifsnyder under CC 2.0)