California Auto Insurance Blog

Staged accidents cost Florida drivers an extra $1,000,000,000 per year, because of medical payments or personal injury protection insurance rates. Florida drivers pay over 50% more than many other states.

The personal injury protection portion of car insurance premiums have been growing 30% per year in Florida, despite a reduction in car accidents.

Staged accidents occur when professional criminals get someone to rear end or run into them when they have the right of way. Then they incur medical bills up to Florida’s $10,000 no-fault limit. Many scummy car accident lawyers will hesitate to file fraudulent claims and run up legal fees.

Between the organized crime and personal injury lawyers, Florida drivers are being taken advantage of. Even if you have as spotless driving record, you have to subsidize those costs the insurers incur from fraud.

Florida has the highest rate of fraud in the US due to it’s no fault system. Florida no fault insurance was promoted as lowering litigation and car insurance cost by settling low value medical claims, but it’s done the opposite.

Since car crashes are the leading cause of death for 16-19 year olds, a brand new driver is going to pay a hefty surcharge on their car insurance. They have less experience behind the wheel and are def. high risk driver compared to drivers with more experience. You can find many affordable companies by inputting your zip code book on the right.

Don’t get your teen state minimal coverage. An injury accident could cost way more than the California minimums. Deductibles are a good thing, esp. if your teen is paying them. The premiums go lower and if you explain to your teen that they will pay, they somehow become more responsible.

Read a great article on Uninsuring your crazy teen driver.

Uninsured motorists is a great option to protect your teen from other crazy drivers besides themselves. Personal injury protection (PIP) is good to have if your teen does not have heath insurance or has a deductible.

Teenage Males

Teem (boys?) men pay more for auto insurance than women because they are greater risk takes, fast drivers and incur more in car insurance claims. Male teenagers can expect to pay more for another reason other than their sex. They are also inexperienced and studies show that less experienced drivers are less able to recognize hazardous situations and more likely to underestimate dangerous ones. In fact, the largest cause of teen accidents is excessive speed.

Young men pay higher premiums because they cause about 30% of injuries from motor vehicles per year. You must shop around and comparing rates from a few companies to get the best rate for your teen.

Governor Jerry Brown signed a bill into law that will stop local police agencies from impounding cars at sobriety checkpoints because the drivers are unlicensed. On average, DUI checkpoints impound seven vehicles for every drunken driver arrest.

The bill, written by Assemblyman Gil Cedillo, stops police officers from impounding a vehicle if the registered owner can be found or if the owner gives release consent to a licensed driver given the contacted driver is sober and the lone offense is being an unlicensed driver.

To get a release for an impounded vehicle, petitioners must have 2 licensed drivers present, have current registration and valid insurance on the vehicle and pay a $100 administrative fee. The valid insurance may be difficult hurdle if the legal owner does not have coverage. Usually people cancel their coverage for a variety of reasons, a DUI arrest, child support,, speeding tickets, etc.

Impounding a car can mean the end of your relationship with the vehicle if the fees equal greater cost than its worth. Drivers that don’t have to be worried their car will be impounded from no license can still get hit with surcharges when they finally decide to get car insurance.

Unlicensed drivers cannot have car insurance and often flee the scene of an accident, leaving victims to fend for themselves. Over 20% of drivers involved in fatal accidents are unlicensed, and a driver with a suspended license is 400% more likely as a licensed driver to be involved in a fatal accident.

Allstate is reducing agent commissions from 10% to 8% over the next 2 years. That’s a 20% reduction for all its agents, which are classified as independent contractors. They will supposedly take that money and pay it to the top performing agents as a performance bonus.

Allstate is also brokering loans so that larger agencies can buy up the books of smaller agents. in a clear attempt to reduce it’s agent force and motivate larger agencies. Of course, Allstate will have the final say if a smaller broker can sell it’s book to a larger agency. Allstate wants to focus on larger volume agencies because they have been losing market share in both home and auto insurance markets.

The larger agencies have proved adapt at vertical integration – selling more insurance products and services to it’s existing customers.

Allstate agents only average about $1.9 million in premiums per year, compared to State Farm agents who gross around $2.9 million in premium per year.

Many agents are obviously not happy with Allstate’s plans to reduce their pay. The National Association of Professional Allstate Agents (NAPAA) in August voted to join the the Office and Professional Employees International Union, because of the commission decrease. The top performing agencies are supportive of the increase, since it will benefit their bottom line in the future.

Up and coming Allstate Agents that are trying to grow their agencies will be have a tougher time since 20% of their pay is being taken away. But the company should see some savings as many smaller agents leave Allstate. Many may take their policy holders with them depending on the no compete clause they signed and if the clients are considered Allstate property.

Roughly 14% of all drivers are uninsured in the US. With the continued recession and a run away illegal problem, huge numbers are uninsured. Many drivers can’t afford coverage and others with tickets and accidents would pay sky high premiums.

Even though the fines are high, unless the the driver is in an accident or pulled over for some infraction, the odds of getting caught are low. Sobriety checkpoint are used to check for paperwork. The national number has climbed during the economic downturn as many financially pressed Americans allowed their insurance to lapse.

Uninsured motorists and the unemployment rates correspond. Financial responsibility / car insurance is compulsory in every state except New Hampshire, said Loretta Worters, vice president of the Insurance Information Institute, but that doesn’t deter scofflaws.

Most states have not reduced the numbers of drivers who are uninsured,” she said. “Some drivers can’t afford insurance, and some drivers with surcharges for accidents or serious traffic violations don’t want to pay the high premiums that result from a poor driving record.

The number of uninsured motorist has climbed during the economic downturn as many financially pressed Americans cancel their car insurance.

Uninsured motorists follow the unemployment rate. The problem shows that even if you make auto insurance mandatory, a huge portion of people will still not be able to afford or willing to buy it.

Uninsured motorist coverage is a popular option, costing insured drivers billions every year, because many drivers fore-go insurance coverage.

Even with uninsured motorist coverage, you still could be hit with a hefty deductible. Then you are faced with trying to recover the deductible from the uninsured motorist, if you can ID them. Often an uninsured driver will take off for fear of arrest or having their driving privilege revoked.

When your car is damaged by an uninsured driver, you’ll also have to get other transportation while your car is being repaired. You may want to verify you have rental car coverage, and make sure it’s good for more than a few days.

George Joseph, chairman of insurer Mercury General Insurance Company thinks you should you penalized under the law if you previously did not have car insurance. As much as 50%! But he needs a law to make that happen, because it’s currently illegal thanks to Prop 103. Prop 103 has saved Californians’ tens of billions, by redlining, or prohibiting ZIP Code based premiums and charges based on prior insurance coverage. Ever since, premiums in California were based on the insured’s records like years driving, driving record and annual miles.

If you had your car repossessed, become unemployed, sold your car and didn’t need one for awhile, or telecommuted, or lived in the city, George Joseph thinks you should pay more. He’s putting up $8 million to get his initiative on the June 2012 ballot. And he’s spent millions in the past.

Voters have rejected George Joseph’s intitiatives for 20 years. The last reincarnation was Proposition 17
which the voters rejected last June (2010), even though the company spent over $10 million on the campaign. The latest life form of Mercury’s reverse discount exempts military and the long term unemployed. If you stopped paying for car insurance for a variety of other reasons, you could be charged over 50% more.

Outside of California, there’s no prop 103 protections, so Mercury jacks the premium over 50% higher for car insurance if you did not have prior coverage.

This initiative has great timing, with poverty rates hitting multi year highs. In the past, Mercury and others have charged inner city, higher crime areas a high premium. Not based on driving records or accidents, but only based on an urban higher loss zip code and not having prior car insurance.

Joseph has been trying to undo Proposition 103 since California voters enacted it. He claims he simply wants to woo other insurance companies’ longtime customers. His bet is that a conservative electorate turning out for the June 2012 Republican primary will be unconcerned about making coverage unaffordable for the working poor.

Since Mr. Joseph is paying for the new initiative personally, it’s not tied to Mercury. And He exempted the military, to win over veterans groups.

First Mr. Joseph’s initiative must qualify for the ballot, then vote for it in the general election. that people who don’t drive would be financially penalized for not having insurance.

A billionaire should not be able to abuse the political process by regurgitating the same initiative that’s been defeated over and over, simply to line his own pockets.

Car insurance premiums have less to do with your driving and more to do with gender, age, if you are married, the garaged address, and type of car.

GPS based discounts are becoming more popular for good reasons. Insurance carriers offer discounts. Progressive’s system called Snapshot, is in 37 states. With Snapshot, you plug a palm-size tool into the diagnostic port in your car and it pulls data from the car’s computer and sends it to Progressive over a cell signal. The tool tracks the time of driving, mileage, and hard acceleration and hard braking. After 30 days, you can earn a safe driving discount; after 6 months, you send the tool back and save up to 30%. There’s no cost for the hardware, and (supposedly) Progressive won’t raise your rates if it turns out you are hell on wheels.

Allstate offers Drive Wise in Arizona, Illinois and Ohio. The tool collects similar data as Snapshot, and the number of times you exceed 80mph. Allstate will give you a 10% for installing Drivewise, and 30% on your renewal.

Allstate charges $10 to get started in Drivewise, but need to keep it installed to keep the discount every policy renewal. Neither Progressive nor Allstate tracks GPS location info, so your travels stay private.

General Motors’ OnStar system offers discounts to low-mileage drivers. OnStar is free for the first year for new GM vehicles; subscriptions cost $19 to $29 per month.

State Farm’s Drive Safe & Save program is being offered in California, Colorado, Illinois, Ohio and Texas. They also use OnStar. You get a 5% discount for signing up and after 30 days the discount can go up to 44% based on mileage. The discount is recalculated with each policy renewal, so you have to keep the onstar subscription.

GMAC Insurance offers customers in 35 states and averages an 8% discount only for having an active OnStar subscription. You have to enroll in OnStar and drive under 15,000 miles per year, to get at least a 13% discount. If you drive under 2,500 miles per year, the discount could be as large as 54%.

Car insurance professionals are not pleased with General Motors’ new free insurance incentive to generate new GM car buys. What about consumers who have more than one vehicle? What about high risk drivers? What happens after the year of free insurance, if a consumer no longer can afford the comprehensive coverage?

GM is collaborating with MetLife Home and Auto to provide a no-cost, one-year car insurance policy as an incentive to attract new car buyers. GM is testing the program in Washington and Oregon, areas with heavy imports.

It is innovative, but is it legal? 18 departments have approved applications for the free car insurance plan. The Indiana Department of Insurance requested MetLife Home and Auto to withdraw its filing, so it was rejected because they felt it was not legal.

Obviously the insurance agents in WA and OR are not happy, because when a consumer buys a car, they must go out and shop auto insurance. But not with this program. The Professional Insurance Agents Western Alliance claims the program may not be legal. GM spokesman Tom Henderson says the auto maker is testing the program “to determine consumer appeal of insurance as a new standard feature,” like a warranty packaged in the cost of a new vehicle.

I understand the program makes buying a new GM vehicle more affordable, if they do not raise the price in some other area, say financing or lack of other rebates.

Using cell phones while driving could cost more in California if a bill that would increase penalties becomes law.

The new proposed law raises fines and fees for breaking the state’s existing hands-free laws. You cannot text on your phone, hands free. The bill would also add a point to a texter’s driving record, which would raise auto insurance premiums.

Talking or texting on a cell phone has been illegal in California since 2009.

State Sen. Joe Simitian of Palo Alto, wants tougher penalties to make roads even safer.

The bill would:

Raise the cost of a first strike from about $190 to more than $300.

Expand the law to include bicyclists

Add a point to the driving records

Points on your driving records will increase your insurance premiums or get you canceled. California and 33 other states prohibit texting.

A large minority in California regularly text or talk on the phone while driving.

Over half of the U.S. population will cohabit with a partner at some point in a lifetime. The direct auto insurance writer, Esurance markets to cohabiting couples to streamline their finances by purchasing one policy per household, regardless of their official marital status.

Now State Farm and Allstate have started giving what is referred to as the marriage discount to domestic partners. This is a very common discount given to almost all married couples. As long as the partners live in a state that approves of civil unions or domestic partnerships. Married couples save an average of 10-20%.

Younger couples 25-30 can save the most because car insurers discount policies on a percentage basis. Marital status helps offset inexperiance the car insurance companies charge more for, so savings could be around 15% for domestic partners.

Muti car discounts also help save if you have more than one car under the same policy, because of potential carpooling and reduced miles. People that are mo married of in a registered partnership can’t qualify for the discounteven if they live together, because there’s no evidence they drive togeyher or are more responsible.

Same sex marriages or domestic partnerships are a very small minority of the overall couples so auto insurers should not have to raise premiums to cover reduced profits. And the lower income could be more than offset by domestic partners flocking to State Farm and Allstate.

Still, their are always unintended consequesces, but when it’s lower prices for consumers, everyone wins.