Save on Premiums with Data-Tracking Technology

Posted on 15th October 2011 in Articles

Insurance agencies use many factors to determine your rates. Credit, driving record, and age range help to estimate your potential risk as a client. But with today’s technology, companies can get an actual sample of your driving via electronic data-tracking devices, ultimately saving you money for responsible driving.

With the development of on-board computers in automobiles, every car now has a sort of “black box” that can record driving information and, with the right equipment, transfer information like top speeds and mileage. Several programs now exist in various parts of the United States, and they get you big discounts on your monthly premiums.

Device Tracking Programs

Allstate’s Drive Wise

This program offers discounts based on information collected from a device that you plug into your car’s onboard computer-available in all cars made since 1996. It measures mileage, hard braking, acceleration rates, time of day driven, and speed (when you exceed 80mph). This information is then automatically transmitted to Allstate. You can even check your performance online.

You receive a 10% discount just for signing up and up to 30% after your first policy period. The program cost is $10 per policy period.

Availability: Arizona, Illinois, Ohio

Progressive’s Snapshot

Similar to Allstate’s Drive Wise program, signing up for Snapshot transfers data to the insurance company for discounts measuring most of the same information.

You earn an initial discount after one month, and you send the device you installed back after 6 months. You are then eligible for another, permanent discount up to 30%. There is no cost to enroll and the data can’t hurt your rates.

Availability: 37 states

OnStar Programs

OnStar is a subsidiary of General Motors which allows subscribers a number of special features in their car, such as GPS navigation, emergency contact, vehicle diagnostics, hands-free calling, and other features. It is installed on all GM vehicles; new vehicles receive a free one-year subscription, and used vehicles receive a free 3-month subscription. This program has been integrated into two different mileage-based insurance programs.

GMAC’s Low-Mileage Discount

All GMAC customers who have a subscription to OnStar can enroll in this program, which is based entirely on mileage, for free.

Drive fewer than 15,000 miles per year and you will get a discount of at least 13% and up to 54% if you drive fewer than 2,500 miles per year.

Availability: 35 states

State Farm’s Drive Safe and Save

Also utilizing the OnStar system, Drive Safe and Save tracks your mileage and gives you up to 44% savings on your car insurance premiums. The driving is constantly updated though, so your discount will change every policy period based on your latest driving statistics.

Availability: California, Colorado, Illinois, Ohio, Texas

MileMeter

This Texas car insurance company offers insurance by the mile. Prices start at 2.5 cents per mile. No need any fancy electronic equipment for mileage tracking-all you have to do is send the company a picture of your odometer when you sign up and each time you renew your policy.

Availability: Texas only

Pre-1996 And Non-GM vehicles

Pre-1996 vehicles cannot be retrofitted with the OBD II diagnostic device. However, non-GM vehicles can be fitted with a custom rear-view mirror equipped with OnStar.

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Insuring unlicensed drivers

Posted on 10th October 2011 in Articles

In most states, all drivers have to carry key documents with them so that, if stopped by the police while driving, they can prove a license to drive, that they are insured and that the vehicle is properly registered. In California, you need all three to be legal on the road. Yet here’s an oddity. In California, no one can apply to register their vehicle unless they have insurance. So if someone proves ownership of a vehicle and has paid for an insurance policy, the Department of Motor Vehicles will accept the registration. This will be so even though the owner can’t legally drive, say, because the license has been revoked or suspended due to traffic violations. This produces the odd statistic that about 12% of unlicensed drivers in California are actually fully insured. Drivers may not care whether they break the law on licensing, but they do care whether someone might invite them to pay if there’s an accident.

This is not a secret. Indeed, many of the smaller insurers actively advertise this possibility and have found quite a substantial market of unlicensed drivers who do not want to risk their savings or credit limits should they get into an accident. This bends a more common rule used by some insurers to avoid payment. If an unlicensed driver fails to disclose the fact no license is held, this makes the driving illegal and insurers can cancel the policy. But if the Californian driver is honest to the insurer, all claims will be met even though the police might impound the car for driving it without a license.

More generally, it points to the fact the Californian insurers know which drivers are on the road illegally. Yet the police, the Department of Motor Vehicles and the insurers never talk to each other. Just think how easy it would be to enforce the mandate on holding a license and liability insurance if the three key players shared a database. Then the police could scan every tag as vehicles pass through a checkpoint and detect which are unregistered, whether the drivers are licensed and if there are valid policies of insurance in place.

As an example of how data sharing might help everyone, let’s move down to the border between Mexico and Arizona. One company is selling short-term insurance to drive on the US roads, ignoring whether the Mexican drivers have valid licenses. This company also offers to share all their data on Mexican drivers and vehicles with US law enforcement agencies. This is self-interested. The more uninsured drivers who are caught, the more Mexican drivers will be motivated to buy the short-term policies. But, in a state like Arizona which is deeply suspicious of immigrants, this will make it quick and easy to take uninsured drivers off the road. Now all we want is the same approach applied to US drivers.

Car insurance quotes will fall for all drivers if the mandate to carry liability insurance is properly enforced and the number of uninsured drivers falls. It’s actually the same for health insurance but that’s another article. The general rule is that, if all the affected parties pay their insurance premiums, everyone pays less. Only if people ignore the mandate does car insurance cost more.

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Do you want a right to repair?

Posted on 8th October 2011 in Articles

Go back thirty years and vehicle theft rates were rising steadily every year. It seemed almost anyone with a wire coat-hanger and a screwdriver could open a car door and drive it away in under sixty seconds (if you believe the movie). Then there was a slow revolution as electronic keys and alarm systems came to be standard, fitted by the factories and released into the wild. Then as the GPS satellites were launched, it become possible to fit tracking devices that would enable the owners or law enforcement agencies to track a vehicle and recover it (assuming it had not already been broken for spares. The final development was the fitting of immobilizers. These devices added to the protection offered by electronic keys so that even if potential thieves accessed the wiring systems, they still could not drive the vehicle away. The results have been the steady fall in vehicle theft rates. Although some makes and models remain relatively easy to steal, the majority are now only vulnerable to the more professional thieves.

All this has left one problem. If the vehicle breaks down and the owner leaves the site with the key, how does the repair shop get into the vehicle to return it to the shop for repair? Obviously, it’s also necessary to be able to start the vehicle to diagnose the problem and test whether the repairs have been effective. To make this possible there’s a secure database system open to licensed repair shops, locksmiths, law enforcement agencies and any others who have a legitimate reason for needing to override the vehicle systems. This database contains full details of the all the key and PIN codes to reset the immobilizer and start the engine.

Let’s now move over the Massachusetts which has enacted a law requiring insurance companies to give automatic discounts to all owners who have anti-theft and vehicle-recovery systems in place. At their maximum level, this can reduce the premium rates by 35%. This makes Massachusetts one of the most affordable states in which to insure. On average, local drivers spend less than 3% of their net pay on vehicle insurance. Not surprisingly, the number of uninsured drivers is also low tending to prove the point that, if you make insurance affordable, the majority of people obey the mandate. That said, Massachusetts now proposes to add a “Right to Repair” Bill to its statute books. This would make the currently secure database more widely accessible. All the “authoritative” bodies in the policing and insurance industry are against this proposed law. They believe it will lead to the information about codes falling into the wrong hands and reverse the falling trend of vehicle theft, not just in Massachusetts, but nationally. It seems if the local codes can be studied, it would be possible to deduce a method for cracking the codes in other states.

Fear is now the weapon. Pass this law, the insurance industry says, and the next round of car insurance quotes will be higher. Why higher? Because the rate of vehicle theft will increase and, to cover the claims, the premiums must rise. Who knows which side of the argument is right. The only certain thing is no one wants the car insurance rates to rise.

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Things that affect your insurance rates

Posted on 8th October 2011 in Articles

If you have ever taken the time to shop around for vehicle insurance you probably know that the rates you will be charged with depend on a wide range of factors. And depending on the data you specify in the quote form the policy you will want to purchase may end up being very expensive or very affordable. So in order to get the best rates possible it is very important to know what affects insurance rates in the first place. It may seem like information without a particular significance however it will certainly help you shop around more effectively and save more money by doing it. So what does affect insurance rates?

Despite the fact that all companies use different methods of calculating their rates the insurers use the same set of factors to determine how much it will cost for a particular driver to insure his vehicle. While some of these factors may seem strange from the customer’s point of view you should remember that the most important thing for the insurer is the risk involved in covering a particular driver. And each factor used by the insurance companies and indicated in the quote form lets the provider asses the risk and set his rates accordingly.

There are two sets of factors that determine the risk for the insurer. The first set concerns all the details of the car being insured: its make and model, production year, modification, safety features and ratings, repair costs, theft rates, potential harm to passengers and damage to other vehicles in the course of the accident, top speed, engine volume and other less significant things. These factors help the insurer determine the general probability of the car ending up in the accident and the approximate value of the claim being filed. For example sports cars are more prone to ending up in accidents than luxury vehicles, yet the latter have more significant costs involved when insuring them. So the company wants to know from the start what will be the cost involved in insuring a particular vehicle.

The second set of factors refers to the person willing to get coverage for their vehicle. These factors help the insurer determine how it is likely for that person to file a claim, since there are many links drawn from statistics that reflect such a risk. So when buying car insurance you will be asked to indicate your age, gender, place of residence, education, driving record, credit rating, marital status and other optional data that is usually used for statistics. All these factors give the insurer a clear idea of whether the person will use car insurance coverage often or won’t need any coverage at all for a long period of time. And the rates will be set accordingly. For example people with higher education are less prone to end up in accidents while people with a poor credit rating file insurance claims more often.

Keep all these things in mind when looking for car insurance. The good news is that each company uses different weight of factors in their formulas. So if there’s a particular factor that isn’t as favorable as you would wish to there are still companies that will pay less attention to it. And your aim will be finding such a provider when shopping around for car insurance.

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Uninsured motorist cover

Posted on 7th October 2011 in Articles

No matter where you live, there’s an increasing chance the next driver who crashes into you will be uninsured. The national average is about 20% of drivers uninsured. In California, the celebrate because it’s only 15%, i.e. a one in seven chance you will be in an accident with no insurance company to begin covering your losses. This means you either buy your own cover or you must be prepared to pay all your own losses out of your own pocket. This is not to say you can never recover losses from an insured driver. The courts exist. There are laws to enforce payment of damages. But since the usual reason for being uninsured is a lack of money, there’s no point in spending your money on court fees and a fancy attorney if the driver at fault has no cash and does not earn a good pay check to garnish. That’s just adding insult to the existing injury. So the Californians have been carrying out a little research to see exactly how much we have to pay to buy uninsured motorist cover.

The team put together a profile of a single male driver, aged 30. He had no tickets and lived in a modest ZIP code area. They picked a 2010 Toyota Corolla as his vehicle and showed him willing to accept a $500 deductible. All UM policies come with banded cover for personal injuries with the first number being the maximum payable to the first person injured and the second being the total maximum for all medical expenses no matter how many injured. The profile was sent out to all insurers licensed to sell policies in California. The range of the quotes was quite wide with the lowest being $28 for adding 15/30 to the existing cover while the most expensive was $106. If the model driver opted for 25/50, the lowest quote was $60 and the most expensive $148.

California is an interesting state to study because it has a law requiring insurers to quote for UM cover. The lawmakers believe you should always know the cost of rejecting the additional cover. In most other states, you have to ask for a quote. The Californian driver has to opt out of buying the cover. So, given the odds of being hit by an uninsured motorist, is it worth paying a maximum of $148 or $12 per month? Given the cost of hospital treatment it may look a good premium rate to avoid taking the hit on your savings or maxing out your credit card(s). But all this does raise the question why states like California continue refusing to fund effective enforcement of the mandate.

There’s no doubt we would all find our auto insurance quotes falling if all 47 states with a mandate enforced the law. Yet every time the question of funding the centralization of record-keeping comes up, the agencies ask for millions to make their computer systems compatible. When police cannot routinely check whether a driver has valid insurance, you know the system is broken. So until politicians get a little backbone and force uninsured motorists off the road, our auto insurance quotes will continue arriving on the high side.

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