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.

Discounts for Renewing with the Same Company

If you are happy with your current insurance company and plan to renew your policy with them at the end of the year, you should find out if they offer a discount for drivers who sign up for consecutive policies. In many cases, you will find that there is a standard savings applied for staying with a company for two or three years in a row. Remember, just because you are using the same company every year it doesn’t mean you have to have the same exact policy. Review your insurance needs annually and make sure your coverage matches the changes in your life so that you are always fully covered.

Save Money by Consolidating Insurance Needs

Another way insurance companies reward customer loyalty is by offering discounts for customers who sign up for more than one type of policy. Many car insurance companies also handle life insurance and home owner’s insurance. They generally have package deals that cut the cost of both types of insurance when you move all of your insurance needs to the same company. There is also a common discount for drivers who insure more than one household vehicle through the same company.

Earning Discounts for Periods without Claims

Driving for three years or more without filing a claim is a great way to earn additional discounts on your car insurance policy. In fact, some loyalty discount plans specify that the discounts only apply to drivers who have gone for a certain period of time without filing any claims. Keeping a clean driving record helps you save in many ways. Your overall insurance rates will be lower because of your safety record, and you should qualify for good driver and loyalty discounts through many of the most popular car insurance companies. Some insurance companies offer to lower your deductible without raising your rates for every year you go without filing a claim.

Getting Discounts You Deserve

Your car insurance agent may not openly offer these loyalty discounts to you when you renew your policy. As a car insurance customer, it is up to you to find out whether there are discounts you qualify for. Learning about loyalty discounts can be as simple as asking your agent to review your policy before you sign up for another year. You could also compare car insurance quotes online to see what discounts are available through different insurance companies. It is a good idea to always research your potential discounts instead of waiting for your insurance company to let you know when you qualify.

Raising Deductibles Can Save Money in the Short Term

It is a fact that insurance policies with higher deductibles are less expensive. You might think that the rates are cut because you are covering more of the costs of a claim, but the truth is the insurance company charges you less because they believe you will be less likely to file a claim if you carry a higher deductible. Your insurance rates are based on the probability of you filing a claim. If your deductible is high, you will probably skip an insurance claim on any repairs that would cost as much as or less than the deductible. Reducing your claims volume saves the insurance company tons of cash every year.

Deductibles that are Too High can be Risky

Before you consider raising your deductible, you need to examine exactly how much money you can afford to pay out after an accident. If the deductible is more than you have in your savings account, you could be left without a car while you try to raise the money to pay for the deductible before the insurance company will begin to provide benefits. The additional cost of losing your transportation can be far more expensive than choosing a deductible that you can really afford.

Savings May not be Worth the Potential Cost

In many cases, the difference between deductible levels does not make a big difference in the price of your premiums. Depending on the type of coverage you carry and the insurance company that carries your policy, you could be looking at a savings of less than $30 if you increase your deductible by a few hundred dollars. The small return on your deductible switch is not always worth the large increase in the risk of having to pay out a substantial amount of money toward your deductible.

Look for Other Ways to Cut Insurance Rates First

Insurance companies offer several discounts that you might not be taking advantage of. Look through your policy carefully to see if you qualify for lower rates on your existing coverage. Many insurance companies offer special discounts for vehicle safety equipment, including airbags and anti-lock brakes. They also offer discounts for theft deterrent and tracking systems. Read the fine print of your policy and make sure that you are being given all of the discounts that you really qualify for. It is also a good idea to compare quotes from several different companies to see if you might save money by switching to a different insurance carrier.

Vehicle Safety Equipment

Various types of safety features are available, whether they come standard with the car at the time of purchase or you upgrade your vehicle later. Here are some of the most commonly installed pieces of safety equipment on the market today:

Airbags

You can now install airbags all around your vehicle to protect you from every direction. Some are even designed to sense each occupant’s weight, size, and bodily position within the vehicle.

Anti-lock Brakes Did you know most insurance companies will give you a generous discount on your car insurance rate if your vehicle is equipped with an anti-lock brake system? Almost all of these systems are factory-installed considered standard equipment.

Daytime Running Lights 

Are these lights necessary? Studies show your running lights increase safety not only by helping you see farther down the road, but also by making it easier for oncoming traffic and pedestrians to see your vehicle.

Anti-theft and Car Recovery Systems

Even if you don’t have the fanciest anti-theft technology, any type system, including a steering wheel bar, shouts safety to a potential insurance company. Stolen recovery vehicle systems help law enforcement personnel locate your vehicle if it has been stolen, while window sketching helps deter thieves and prevents them from altering your vehicle’s identification number.

Tire Pressure Monitoring Systems

These systems are standard in cars manufactured in 2008 and later. By making sure your tires remain at the proper pressure, not only will you have a smoother ride, you’ll have a safer trip.

Cameras, Detectors, and Warning Systems

Although some come factory installed in newer cars, insurance companies look favorably on these additions. Rearview cameras limit accidents by showing you what you might not see in your side view and rearview mirrors, while a blind-spot detection system alerts you when there is an object in your blind spot. The lane-departure warning system has a wider range than the blind-spot detection system, and it tells you when it‘s safe to change lanes based on your speed and the distance of vehicles behind you.

Talk with Your Agent or Company

Different types of coverage can offer discounts based on different safety features. For example, anti-theft systems can lower comprehensive coverage, while airbags might help the policyholder save on medical payments and personal injury claims. If you discuss discounts with your insurance company, and your agent or representative hasn’t asked you about a certain feature, don’t assume a discount isn’t offered. Some features may be missed, so remember to mention all that are pertinent to your vehicle.

Technology Combines Seat Belts and Air Bags

Ford is touting this new innovative safety device as a combination air bag and seat belt. The belts inflate when they are triggered by quick pressure, which is similar to the way dashboard air bags are triggered. Unlike the front air bags, these seat belt air bags deploy more gently. Passengers don’t experience the same explosive inflation that is notorious for causing burns and other injuries in front seat passengers after air bag deployment. The small cushion of air that surrounds the shoulder harness of the seat belt provides just enough give so that the passenger wearing the belt experiences less force when thrown forward during an accident.

More Protection for Back Seat Passengers

Most of the passengers who ride in the back seat are children and the elderly. These passengers tend to be more frail and prone to injury during even a minor accident. The addition of inflatable seat belts could provide better protection for the passengers who need it most. Since the inflatable portion of the seat belt is along the harness part of the mechanism, it shouldn’t interfere with standard car seats for infants. It’s not clear whether Ford plans to include a way to turn off the inflation feature if necessary.

Dealers Can Reset Inflatable Belts

Unlike traditional dashboard air bags, the inflatable seat belts can be reset after they are deployed. Car owners must take the seat belt to a certified dealer for the repair. Inflatable seat belts are only effective when they are returned to their factory standard. Using the seat belts after they have been inflated could be less safe than traveling with a standard traditional seat belt because the harness has a different structure to allow for the inflation mechanism. It is important for rear passenger safety that the seat belt air bags be reset as soon as possible after inflation.

Belts Expected to be More Widely Available Beginning in 2012

Right now, Ford only offers inflatable seat belts as optional safety equipment in the 2011 Explorer. The auto manufacturer intends to use the innovative seat belts in a wider range of vehicles during the next model year. This test period with the Explorers will give Ford a chance to make any necessary changes or improvements on the inflatable seat belt design before it becomes more widely available. The slow release of new technology also allows time for the company’s mechanics to learn how to replace or repair the mechanism properly.

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.

Current figures show that there has been an alarming increase in the reduction of vehicle insurance coverage by vehicle owners trying to save some money due to the lagging economy.

This is not an illegal practice; however, engaging in this activity could end up having drastic affects should you end up in an accident.

Consider these points:

• As more and more individuals and families cut their insurance coverage or even drop it all together, driving becomes more dangerous for all concerned.
• If a person is driving completely uninsured, that is not only illegal but could have financial ramifications that could extend well into the future should the individual be caught without it or, even worse, cause an accident while uninsured.
• An un-insured or underinsured driver that causes an accident could easily be putting all of his or her assets on the line. They could conceivably be forced into bankruptcy and the liquidation of all unprotected assets.

Before you lower or drop your coverage all together, think about it.

This could very easily be a life changing decision of a negative fashion and it could affect not only you, but your family and or the passengers in your vehicle. If you cause an accident, you could also affect the life and financial future of the people in the vehicle you hit.

There are ways that you can reduce your insurance premiums without reducing your coverage.

It’s a much better idea to research those options rather than endangering lives and financial futures by taking negative steps such as reducing your insurance to too low a level or dropping it totally.

Keep an eye out for better insurance rates.

The more rate conscious the general public is, the lower the rates will remain, however, make sure in your comparisons that you are comparing apples to apples and not to oranges.

In other words, make sure the coverage is the same.

Many companies will try to cut corners in order to offer a really good looking deal. The old saying follows, if it’s too good to be true, it probably is.

• Because of the state of the economy, many people are out of work and still others are afraid for their current jobs.
• As the jobless rate goes up, so does the number of uninsured motorists on the road.
• Because of this, you will want to make sure that you are covered for uninsured motorists,
• but also because of this, rates may begin to go back up as insurance companies deal with more and more accidents caused by uninsured motorists.

A consumer’s best advice is to learn what the insurance companies base their rate quotes on. If you can learn what the quotes are based on, you may be able to change things around in order to lower your insurance rates.

In the area of transportation related costs, there are things students can do in order to help minimize the impact their insurance will have on the family finances.

• High grade point averages can mean lower insurance rates as high grade point averages are indicative of a student that is more mature and has accepted the burden of responsibility.

There is another interesting way that insurance premiums can be reduced without minimizing the amount of coverage the student receives.

• College freshmen can sign up for a completely different form of coverage. The rate for this coverage depends on how much the student drives each year.

This ‘by-the-mile’ type of insurance can provide struggling students with much lower premiums. This can amount up to 25% off the normal cost of premiums. This plan is suited for students that will drive 12,000 miles or less during the year.

Students can take advantage of this rate by only using their vehicles for transportation when other forms of transportation are inadequate.

Those forms of transportation can include the student’s own two feet, or a bicycle. In areas surrounding colleges, generally you will find plenty of sidewalks to walk on and plenty of bike lanes if the student chooses that mode of transportation. This is good for the finances, good for the health and good for the environment.

Recovery rates for cars that are stolen are approximately ninety percent for those with good traceable deterrent systems and approximately fifty-eight percent for those without that type of system.

The only state that actually recorded a higher percentage of cars stolen last year was South Carolina. Insurance providers and purchasers alike can breathe a great big sigh of relief as the financial burden of stolen cars can be reduced for both parties.

The vehicles that top the theft charts are:

•  the Honda Accord,
• the Honda Civic,
• the Dodge Ram pickup and
• the 2000 Dodge Caravan.

These vehicles generally have minimal security and there are a very large number of them on the road. The stolen vehicles provide cheap parts in large quantity on the black market.

If you drive one of these vehicles, it is highly recommended that you install some sort of traceable security device in order to not only deter thieves but also improve your chance of recovery before the vehicle is damaged beyond recovery.

This type of device can also help lower your insurance premiums.