Insurance Costs Rise with Medical Costs

One of the main reasons insurance rates are rising so quickly is that medical costs are rising quickly. Insurance companies have to be prepared to cover medical bills for people who are injured in car accidents. That means that they have to charge more up-front from all of their customers so that they will be ready when the claims begin to come in. Insurers also have to cover repair and replacement of the vehicles that are damaged in accidents, which can be far more expensive in these days of computerized engines and hybrid battery systems.

Gain More Cost Control with Pay-as-you-Drive Policies

One way drivers can play a more active part in determining how much they pay for car insurance is through a pay-as-you-drive insurance policy. The way it works is the car insurance company sends you a small electronic device that tracks how many miles you drive. Unlike a traditional policy that charges you based on an average number of miles driven annually, you are only charged for the number of miles that are actually recorded through your tracking device. How often and how far you drive is entirely up to you, but the less you drive the less you will pay for car insurance.

Look for Special Discounts

Every car insurance company offers special discounts for customers who qualify. Be sure to check with your agent to find out if there are any discounts you could use to cut your insurance bill down to size. Typical discounts include savings for attending driving school, being a homeowner, installing safety equipment on your vehicle, installing anti-theft equipment, or carrying more than one type of insurance policy through the same carrier. Each insurance company has different restrictions and offers different discounts, however, so you might need to shop around to find the best policy to fit your situation.

Take Advantage of Online Quote Comparisons

Another way to fight rising car insurance rates is to do your own rate comparisons through an online quote site. These sites allow you to enter your personal information into a single form that is then distributed to the insurance companies you would like to know more about. You receive a report from each of the companies you selected, which allows you to compare their prices and policies side by side on your computer screen. Online quotes give you a good overview of the rates you should expect based on your particular demographics. Once you have done the research, you can approach an insurance company as an informed consumer.

Understand the Terminology

Car insurance policies can use some terms that you might not be familiar with unless you are involved in the industry. Fortunately, we have a handy explanation of car insurance terms reference for you to use. Take a few minutes to read through it and keep it bookmarked while you look over your online quote results. It is important to know what each policy really covers before you make a commitment to a particular insurance company.

Read Quote Results Thoroughly

Don’t grab the cheapest quote and sign up right away. Sometimes the lowest quotes are so inexpensive because they offer very little real coverage. Read the policy results entirely from beginning to end. Use a pen and paper to take notes about things like deductibles, minimums and maximums, and exceptions. There is nothing worse than discovering exactly what a cheap policy will not cover when you are standing on the side of the road after an accident. It is worth paying a little bit more for the peace of mind that comes with knowing you will have the protection you need if you ever have to file a claim.

Compare Discount Offers

Many of the quote comparisons you receive from individual insurance companies will include lists of discounts that are available to qualified drivers. These discounts are a great way to directly compare one policy against another. Note the discounts you believe you would qualify for and see which company offers the largest number of possible discounts. Keep the best two or three companies and contact them directly to find out more about the discounts they offer. Selecting three or more insurance quotes will give you a wider range of options.

Compare Quotes Periodically

Once you have finished comparing your quotes, don’t sign up with the company you like best and then never look at your insurance policy again. Loyalty discounts are nice, but they are rarely enough to enough to make up for the savings you can get by switching companies. It is important to compare quotes at least once a year and preferably every 6 months. Changes in your life, such as marriage or credit rating shifts, can change how much you pay for insurance. If the crime rate or accident rate in your zip code goes down, your insurance costs will probably go down too. If you don’t compare rates regularly, you may never realize how much you could be saving.

Wisconsin’s New Law

Effective as of June 1, 2010, all drivers in the state of Wisconsin were required to have car insurance. No one may drive a car unless the insurance policy has a minimum liability limit of $50,000 for each person, $100,000 for each accident resulting in bodily injury and $15,000 for property damage.

If a driver is pulled over or is involved in a car accident, he is required to have proof of his insurance coverage with him at all times to show the law enforcement officers if necessary. If the policy has been recently renewed and the drive has not received a new insurance card, he is able to print out a document stating that the policy is still active. Those who cannot afford car insurance from major or local companies can still get coverage through the Wisconsin Auto Insurance Plan.

People are Committing Insurance Fraud

While Wisconsin has passed a new insurance law that requires every driver to have valid car insurance, most people are not following through with the process. In fact, without a regulation in place that forces policies to end if the payments are not made, drivers are realizing that they can get away with avoiding car insurance. Hypothetically speaking, a driver could buy a policy for six months or for one year, make only one payment and let the policy lapse, yet still prove that they are covered for the remaining months, even though the policy isn’t active anymore.

Police in Wisconsin are finding it increasingly difficult to tell whether a driver has valid car insurance or not. They cannot pull over a driver simply to check to see if he has insurance; instead, the driver must have committed a traffic or motor vehicle violation that requires proof of insurance. Police sometimes need to contact the insurance company on a case-by-case basis in order to prove if the policy is still in effect or if the policy has ended.

Penalties for Driving without Car Insurance

Although an investigation may be needed, if a driver is caught without insurance, he can expect to receive a fine of $10 if he can later provide proof of insurance. On the other hand, if no insurance is shown, the driver will receive a $500 fine. If a driver tries to fake having insurance or provides false proof of coverage, the state patrol will slap him with a fine of at least $5,000. The reason for such a high fine is simple: to entice drivers to pay their premiums as required by law. The rates that a driver would pay for car insurance would be significantly less than if he was to get caught faking insurance coverage.

The ultimate penalty for driving without insurance is finding yourself in court for injuring someone in a car accident and having no insurance company to defend you or pay damages.

Massachusetts Car Insurance Rate Regulations

Massachusetts outlawed socioeconomic rating long ago, allowing insurers to charge based on driving history only. In April 2008, facing pressures from insurance companies that said the rates were squeezing them out of the state, Massachusetts changed to a competition based system in which insurers set their own rates within the Massachusetts Insurance Commissioner’s guidelines. So far, commissioners have stuck to the socioeconomic rating ban. But should a commissioner with sympathies towards insurance companies take office; that could change.

Legislation Seeks to Ban Socioeconomic Rating Practices

The Massachusetts Association of Insurance Agents wants to prevent that with a recently proposed 2012 ballot referendum and a legislative measure that ban socioeconomic factors when calculating car insurance rates. The association tried for legislation last year but failed, so it’s trying again and adding a ballot initiative this time. To be successful, the association needs nearly 69,000 signatures before December 8.

Insurance Companies Balk

Insurance companies believe the measure goes too far. Not only does it ban practices not allowed under current rules, but it’s also vague about what factors can be used for discounts. Such language could be interpreted to eliminate good student discounts or special group discounts. That would certainly backfire for residents, eliminating helpful discounts in place today.

Consumer Interest Groups Support the Legislation

Deirdre Cummings is the legislative director of the Massachusetts Public Interest Research Group (MassPIRG). The group fights special interest groups on behalf of Massachusetts residents. Cummings often finds himself stuck in the middle when it comes to car insurance rate hikes. Consumers don’t believe insurance companies have any business in their personal lives. Some say it’s unfair that a high school graduate who decides to enter the workforce right away gets no shot at a good student discount. A laid-off worker whose credit score suffers would suddenly have to pay more for insurance at a time he can afford it least.

“Sometimes people feel a little violated that somebody’s looking into what they feel is a personal financial matter,” Cummings said. “We’re the middle person that has to explain to them why they’re being penalized. It’s not exactly the kind of news you want to share with somebody.”[1]

It’s likely that such a law would help consumers overall, even if it eliminates certain discounts. The combination of open competition, underscored by certain legislative restrictions would allow Massachusetts drivers to pay rates that stem from their personal driving histories rather than rates based on arbitrary life situations over which one has little control. Some would pay more, but some, especially those facing the toughest economic times, would pay less.

New car replacement coverage replaces your old, damaged car with a brand new model or provides you with the cash equivalent of the vehicle. The coverage protects you from losing out on money, since sometimes the payment you receive for a complete write-off can be a lot less than you expect. The cost of this optional replacement coverage varies depending on the model, make and year of your car, though typically it is purchased for a car that is three years old or less from the model date.

MetLife

MetLife Insurance offers full replacement coverage with every policy that you purchase. There is no additional cost since the coverage comes standard, and your car will not depreciate in value for either the first 15,000[1] you drive it or within the first year, whichever one occurs first. There is also replacement coverage for shocks, tires and batteries for the entire length of your policy.

AARP

AARP Auto Insurance Program offers members a new car replacement option with their policies. If your car is totaled and no longer drivable within 15,000[2] after its purchase date or 15 months, whichever comes first, the insurance company will replace the vehicle with a similar car of the same make and model equipped with the same features without considering depreciation.

Allstate

If you are in an accident that renders your car beyond repair within the first three model years of the vehicle, Allstate[3] will provide you with a brand new car instead of giving you money for the depreciated value of your previous one.

Liberty Mutual

Liberty Mutual allows customers the option to purchase replacement coverage that would not only replace your current car with a vehicle of the same make, model and year, but you are able to receive a car that is one model year newer and with 15,000[4] fewer miles on it than your current vehicle.

For example, if you have a 2005 vehicle with 25,000 miles on it, you will receive money for a 2006 model with 10,000 miles on it. The only stipulations are that the car must be a complete loss and you will have to pay the deductible. This type of coverage is not available in all states and it is not for motorcycles or leased cars.

Not only do drivers lose their vehicles when involved in a total-loss accident, but they also lose all of the money they put into the car for added safety features and the down payment. By choosing to add new car replacement to your policy, you can be sure you will receive the same or an even better vehicle.

[1] http://www.metlife.com/individual/insurance/auto-insurance/index.html#basics

[2] http://aarp.thehartford.com/Auto-Insurance/

[3] http://www.allstate.com/auto-insurance/auto-insurance-features.aspx

[4] http://auto-insurance.libertymutual.com/auto-insurance-coverage/understanding-auto-coverages/better-car-replacement

1. Multiple Policy Discounts

A multiple policy discount saves you money if you purchase more than one type of insurance through the same company. Most insurance companies sell more than car insurance. You can take advantage of special pricing packages if you add a homeowner’s policy or life insurance policy through your car insurance company. This discount is especially nice because it can save you money on two types of insurance premiums at the same time.

2. Low Mileage Discounts

Many insurance companies offer lower premiums for drivers who don’t drive very often. The fewer miles you drive, the lower your risk of being involved in an accident. If you aren’t driving a long commute every morning and evening, you might qualify for this discount. Each company has different ranges of mileage that qualify for this discount, so you will need to check with your insurance company to see if you qualify.

3. Good Driver Discounts

It is no secret that a good driving history can keep your car insurance costs down. Aside from the standard rate reductions that go along with being a low-risk driver, many insurance companies also offer substantial discounts for drivers who meet certain qualifications. These discounts can increase if you maintain a safe driving history for a number of consecutive years. Good drivers usually qualify for additional perks, such as accident forgiveness or lower deductibles, which can save you money if you find yourself needing to file a claim after a long period of safe driving.

4. Membership Discounts

Another lucrative car insurance discount can be earned by joining the right organization. Car insurance companies tend to affiliate with other groups or organizations to offer special discounts to the members of those groups. Being a member of AAA or an employee of a local manufacturer could earn you substantial discounts on your car insurance costs. You can find out about potential car insurance discounts by checking with your place of employment and any group, club, or organization that you belong to. If discounts are available, they will have a list of their car insurance affiliates in your area.

5. Good Student Discounts

The most expensive demographic for car insurance is between the ages of 16 and 25. Any discount that can cut down those high insurance costs is worth looking into. Almost every car insurance company offers some sort discount for high school and college students who maintain a 3.0 grade point average. The discounts can apply to a policy that is held by the student individually, or they can apply to a policy that is tied into a parent’s insurance coverage. Either way, good student discounts can ease the pain of buying the necessary car insurance coverage for an adolescent or young adult.

What Insurance Adjusters Do — and Why They’re Intimidating

After you’ve been in an accident, you will immediately need to call your insurance company and report any damages to your car as well as any injuries you’ve suffered because of the accident. In response to this phone call, they will send an insurance adjuster to your home — or wherever the vehicle is located after the accident – in order to inspect the damages and assess the amount of money it will take to repair or replace the vehicle.

Most drivers fear this part, as insurance companies typically send out one of their in-house representatives whose job is largely all about reducing the amount of money the insurance company has to pay for repairs. They’ll ask invasive questions, assuming that many of the dents, dings, and scrapes were pre-existing or the fault of the owner — and therefore not covered.

Because of this, customers often view insurance adjusters negatively. They are the people whose job it is to shield the company from over paying. Unfortunately, that can sometimes translate into making you pay large out-of-pocket sums to repair your vehicle.

How to Work With, Rather than Against, Insurance Adjusters

You can avoid the intimidating process of dealing with an in-house insurance adjuster from the first day you choose your insurance company. While many of these companies do use their own adjusters who they keep on their own payroll, an increasing number of insurance companies are contracting independent insurance adjusters in order to provide an unbiased assessment of a vehicle owner’s post-accident balance sheet.

Look for an insurance company that uses these independent insurance adjusters and you’ll almost guarantee a smoother process in the event of an emergency. They receive no benefit from the insurer for lowering estimates or damage costs.

Take Pictures and Know Your Options

Always take pictures of your vehicle’s damage immediately after the accident — and perhaps supplement them with pictures of your vehicle when you first began your policy with your present insurer. Having lots of information on hand is the best way to make sure you receive fair treatment the maximum protection your insurance policy offers.

Insurance adjusters will calculate two numbers: one that estimates the price of a high-end garage’s repairs to your vehicle, and another that estimates the cash value of the repairs at a local garage. If you’ve recently been in an accident, now is the time to consult your local mechanic and get his expert viewpoint on the cost of repairs. This is another way of being prepared, informed, and defeating the intimidating insurance adjustment process.

Conclusions

Many drivers regard insurance adjusters with fear for good reason. Their job is not a pleasant one, and the price tags they calculate can be even more unpleasant. Be informed, prepared, and ready to talk about your vehicle, and you’ll make the best of this process.

Minimum Standards

Most states require at least a minimum amount of liability coverage to pay for vehicle damages and injuries to the other party if a driver causes a wreck. This liability insurance covers the cost of medical expenses and property damage to other persons in case of a vehicle accident, but it usually does not cover the driver’s own losses. In case of even a minor accident, the police will check to see that all drivers involved are covered by insurance (or, in a very few states, a surety bond or self-insurance policy as a substitute). Police can also request proof of car insurance at vehicle checkpoints.

Proof of Insurance Requirements

Lenders require proof of insurance on financed cars. Often, lender requirements are higher than the states’ minimum liability coverage requirements. The lender will likely require comprehensive and collision coverage to protect the value of their investment in the vehicle in case it goes into repossession.

If the insurance policy lapses for any reason, the lender can force coverage by obtaining a policy on their own and charging the borrower for the cost. These policies are typically much more expensive than a regular insurance policy and they protect only the bank’s interest, not the interests of the driver. Forced coverage does not provide any liability insurance. If the lender forces coverage on your vehicle, the best thing to do is purchase a standard insurance policy as soon as possible and show the lender proof of coverage.

What if an Accident Happens?

If you are in an accident while driving without insurance, you can be liable for all the other party’s medical expenses. You will also be responsible for paying the costs to repair or replace the damaged vehicle. In addition, you may be charged with violating state motor vehicle laws, resulting in fines, court-ordered community service, or suspension of driving privileges.

Fines for driving without insurance can range from $500 to upwards of $5,000 depending on the state. In states with a punitive point system, 3 points or more may be added to a driver’s record for failing to have insurance. Some states even impose jail time of up to a year for driving with no insurance coverage.

Because car insurance companies run background and driving record checks on applicants, and since driving without a license is a violation of motor vehicle laws, which can add “points” to a driver’s record, being found guilty of driving without insurance can make it harder to obtain affordable car insurance in the future. Lapses in coverage may raise motor vehicle insurance premiums considerably or even disqualify a driver from obtaining a policy.

Lower Risk of Severe Injury

Most large cars are for families. This means they are equipped with the latest safety technology. Parents demand their cars be as safe as possible to protect their children in the case of an accident. Front and side airbags, curtain airbags, stability control, and anti-lock brakes are common on larger cars. The roominess of the interior also allows more space for passengers, making them less likely to become injured from striking other parts of the interior in a crash. Smaller cars can cause more injuries because the passenger spaces are so much smaller.

Safer Drivers

Not only are the vehicles safer, their drivers tend to be more responsible as well. People traveling with children tend to drive more defensively than if they were alone or with another adult. The accident rate for larger cars is lower because people driving them pay closer attention to the way they drive. In addition, many family cars have drivers that fall into the less expensive insurance range, based on marital status and age. Younger drivers don’t generally purchase large vehicles.

Sustain Less Damage in a Collision

The sheer size of a large vehicle makes it less expensive to insure, as well. When a large car runs into another car or object, the impact spreads over a wider area of the vehicle because the body is so big. This lessens the force to any one point in the vehicle. Large cars tend to sustain less damage, especially when in collisions with smaller cars that absorb much of the impact. For example, if a small car runs into a fire hydrant, the entire front end of the car could crunch up into the windshield. A larger car running into a fire hydrant will probably only sustain damage to the front bumper and possibly part of the grill.

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