California Auto Insurance Blog

New York’s top court ruled Tuesday that the estate of a man run down by a homicidal driver is entitled to make insurance claims for injuries caused by an accident.

The Court of Appeals said that even though Ronald Popadich pleaded guilty to murder for killing Neil Conrad Spicehandler when he intentionally drove into Manhattan pedestrians in 2002, it was clearly “unexpected and unforeseen” from Spicehandler’s point of view.

State Farm Mutual Automobile Insurance Co. denied liability on the grounds that it wasn’t an accident, initially winning the case in court after Popadich’s conviction in 2005.

In a five-day crime spree, he had also shot two people, killing a neighbor in New Jersey and wounding a cab driver in New York, and running down 24 people at random. Spicehandler, struck on a sidewalk along Seventh Avenue, died of complications from surgery three days later.

The court majority in the 5-2 ruling said that Spicehandler’s estate is entitled to claims under his policy’s three endorsements for uninsured/underinsured motorist, mandatory personal injury protection and death, dismemberment and loss of sight.

“The occurrence, from the insured’s perspective, was certainly unexpected and unforeseen and should be considered an accident subject to coverage,” Chief Judge Jonathan Lippman wrote. “Contrary to State Farm’s argument, we perceive no danger that this result will frustrate efforts to fight fraud in the no-fault insurance system. Significantly, there is no allegation whatsoever of fraud in this case and it is patent that benefits should continue to be denied to those who intentionally cause their own injuries.”

Judges Carmen Beauchamp Ciparick, Victoria Graffeo, Eugene Pigott Jr. and Theodore Jones Jr. agreed.

“This result is also in keeping with a national trend toward allowing innocent insureds to recover uninsured motorist benefits under their own policies when they have been injured through the intentional conduct of another,” Lippman wrote. He cited case law from Iowa, New Jersey and Montana.

The minority said the uninsured motorist coverage should not apply since it was not an accident from the driver’s perspective. A divided midlevel court had reached a similar conclusion that only the other two coverage provisions should apply.

“Popadich could not have obtained indemnification from a liability insurer; and Spicehandler’s estate should not be permitted to recover under the UM endorsement,” Judge Robert Smith wrote. Judge Susan Read agreed.

They noted that limitation on auto liability policies apparently derives from established public policy that insurance may not indemnify someone for intentional wrongdoing, though courts in some jurisdictions have made compulsory exceptions, reasoning that the purpose of liability insurance is to protect victims.

“Whether such an exception is justified, and if so whether it should be created by judges or by legislators, are questions that we should not address until we have a case that presents them,” Smith wrote.

Calls to State Farm and its attorney and to the lawyer for John Robert Langan, Spicehandler’s domestic partner who submitted the claim under an automobile policy he had bought that insured Spicehandler, were not immediately returned Tuesday.

Debate has begun in Maryland as lawmakers discuss a bill that would bar car insurance companies from engaging in a controversial rating practice: using an applicant’s credit history to help determine the price of coverage. Although Maryland auto insurers are already restricted in their use of credit information, the bill would prohibit its use in the rating process altogether.

In some states, consumers can request a re-rating and receive a discount if their credit improves; in others, they can request that their insurer inform them how much of their premium is attributable to their credit. Regulations for each state can usually be found on the state insurance department’s website.

In Maryland, credit can have such a large effect on prices that scores can actually provide or restrict some drivers’ access to low cost auto insurance. According to the fiscal and policy note attached to the Maryland bill, “An insurer that rates a new policy based on the credit history of the applicant may, if actuarially justified, provide a discount of up to 40 percent or impose a surcharge of up to 40 percent.”

Supporters of credit scoring point out that many studies have verified the potency of credit history in predicting claims trends and that this helps insurers more accurately price policies. Opponents often recognize this but note that charging higher rates for the economically troubled can only hurt their situation.

According to the Insurance Information Institute, bills were introduced to limit insurers’ use of credit-based scores in 27 states last year.

The price of insuring U.S. autos continues to rise slowly, according to the latest report from the Bureau of Labor Statistics (BLS). The BLS’s latest edition of its monthly Consumer Price Index (CPI) indicated that the price of the average auto insurance policy rose by about 0.3 percent between January and February. The costs of coverage is rising at a slower rate than the price of goods overall.

Eleven out of the past 12 month-to-month changes in the price of vehicle insurance have been increases. As a result, the BLS says that the price of a policy in February 2011 was 4.2 percent higher than it would have been in February 2010.

Source: http://bls.gov/cpi/cpid0211.pdf

According to the most recent data from the National Association of Insurance Commissioners (NAIC), the average premium for an American car insurance policy in 2008 was about $903. After factoring in subsequent price changes documented in the CPI, the same policy would cost around $989 today.

But the upward trend in costs does not necessarily mean that consumers are spending more on policies. This is because motorists have the option of shopping around and maximizing savings by adjusting coverage, finding competitive providers and utilizing discounts.

The Bureau of Labor Statistics bases its price-change estimates on a sample of more than 700 policies from all over the country. Changes in insurer rate calculations and state law are reflected in the monthly reports.

A study performed by a leading research firm examined the specific impact of vehicle glass claims on policyholder retention and found that policyholders who experience a glass claim are more satisfied than those who have not filed a claim. As a result, they are 5.4 percent more likely to renew with their insurer. Satisfaction was even higher among policyholders who had chosen Safelite AutoGlass(R) with 98 percent of Safelite AutoGlass customers responding that they intend to stay with their insurance company after experiencing a positive vehicle glass claim.

Considering $3.4 billion is spent by insurance companies in advertising each year, according to TNS Media Intelligence, and the high cost of obtaining new clients versus retaining existing clients, simply providing a positive glass claim experience can significantly save insurance companies money.

In the study, policyholders were asked to rate their insurance provider on a scale of 1 to 10 (with 10 being the best):

• The average score from policyholders who have not experienced a vehicle glass claim was 7.95
• The average score from policyholders who have experienced a vehicle glass claim was 8.38
• The average score from policyholders who have experienced a vehicle glass replacement claim with Safelite AutoGlass was 9.05
• The average score from policyholders who have experienced a vehicle glass repair claim with Safelite AutoGlass was 9.10

The third-party researcher also asked policyholders to rate the provider of their vehicle glass repair or replacement service, and Safelite AutoGlass received an “Excellent” rating 85 percent of the time compared to 83 percent of competitors. In addition, less than one in 20 Safelite AutoGlass customers experienced a service issue.

“We measure our customer satisfaction through the Net Promoter Score method, and while we’ve consistently had high satisfaction scores from customers who would recommend our service, we wanted to verify this data with independent research,” said Pete Pearson, a senior vice president at Safelite.

“This study confirms what was found in the 2010 J.D. Power and Associates National Auto Insurance Study, which also showed a correlation between policyholder satisfaction and key metrics like retention, intent to recommend, and intent to renew. Policyholders shop around more than ever, and the majority of those who shop because of a poor service issue change providers. One can therefore understand the importance of providing a positive glass claim experience. We’re proud to see that Safelite AutoGlass is the most likely to deliver that great experience,” he added.

Yesterday, Progressive, an auto insurance company, gave details about their new program called the Snapshot Discount. The Snapshot Discount is under the Pay-As-You-Drive program which gives the clients an opportunity to cut down more on the rates of their car insurance. Progressive declares that they are the very first auto-insurance company to introduce this concept to the market.

The Snapshot Discount device is placed in the On Board Diagnostic port which is found somewhere on the steering wheel. It works by analyzing the client’s driving routines for a period of six months and then it calculates the total discount earned by the client. This auto insurance device also secures the confidentiality of the client as it does not record the whereabouts of the car and how fast the client drives the car; this device is not equipped with GPS system.

After a month with the Snapshot Discount device, the client may see how much they have earned by logging in to their policy. This is very helpful for it allows the client to modify their driving routines to be able to earn more discounts. Given the efficient use of the Snapshot Discount device, the company proclaims that a client can secure a maximum of 30 % of their policy.

“We believe Snapshot is a game changer-representing the future of auto insurance as our mobile and interconnected world gives us the opportunity to offer immediate and substantial savings to our customers,” the President and CEO of Progressive Glenn Renwick discloses. The Snapshot Discount device is as of now only available in 32 states, but Progressive tells that more states would be reached within the year.

Statistics show that teenagers are four times more likely to get into a crash than older drivers, and car insurance companies routinely charge younger drivers more for coverage in order to compensate for the increased risk. Parents and teens should ensure that beginning motorists get plenty of experience behind the wheel under low-risk conditions in order to minimize the chance of getting into an accident.

The new legislation introduced to both houses of Congress would make it a requirement for younger motorists to get a substantial amount of experience by setting a national licensing standard that, among other things, delays the issuance of permits until 16 years of age and of non-restricted licenses until the motorist is 18 years old. It would also call for passenger and nighttime driving restrictions, as well as a prohibition on non-emergency cell-phone use for those in the early stages of the licensing process.

If the legislation is eventually signed into law, states would face gradual reductions in federal highway funding if they did not adopt licensing systems that meet the law’s standards.

This type of licensing process, known as a graduated licensing (GDL) system, has been touted as an effective way to reduce the crash rate for the youngest on the road. “If every state had a strong GDL policy, we could save 175 lives and prevent about 350,000 injuries each year,” according to the Centers for Disease Control and Prevention.

A survey recently released by a major insurance company reported that a majority of teenage respondents were supportive of passenger, nighttime-driving and cell-phone restrictions for those just beginning to drive.

The Snapshot is a small dashboard device that plugs into an auto’s diagnostic system and records data that is transmitted back to Progressive via wireless technology. Customers can view the same info on a website set up for this specific purpose.

The information will then be used to determine if a customer qualifies for significant discounts based on safety, including how, how much and when the car is driven. Cars driven less often, in safer ways and at safer times of days are most likely to get a discount. Although Progressive and other auto insurers gather some of this information at the present time, it is based on the affirmative statements of policy-holders or applicants, without the ability to prove otherwise.

The result is that discounts are never as deep as they can be when the data is confirmed to be true. In essence, some of what we all pay for insurance coverage is based on collective risk. One person might pay less based on the assertion that only 7,500 miles are driven each year vs. the national average of 12,000. That discount can be made sweeter after use of the Snapshot when that precise number of miles driven are reviewed along with the other key data points collected.

Progressive has announced that some drivers will be able to reap the benefits of discounts up to 30% in as little as 30 days after information is gathered that demonstrates that they don’t drive aggressively and put few miles on their vehicle. The average time of usage is expected to be six months, after which the device gets returned to the company. If the six-month’s worth of information demonstrates that a driver is consistent in his or her good habits, low mileage and safety, discounts will become permanent.

Thirty two states allow for the device to be used and the company’s media release about the campaign claims that the 100,000 Snapshot devices are currently in use. The company has 11 million customers nation wide.

According to Advertising Age, Progressive’s competitors in the auto insurance market have nothing that even comes close to the sophistication of Snapshot. State Farm works with On-Star to collect mileage data on a small basis for a possible 10% discount and Allstate’s device is only available in the state of Illinois.

Critics will say that it is another piece of evidence that creeping Big Brother behavior is alive even in commercial companies’ relationships with its consumer base. Yet, to reduce premiums, many folks without anything to be afraid of will be able to demonstrate why they deserve to be paying less than they are at the present time.

As with all electronic and computer data that is stored by companies, when law enforcement and legal agencies come calling for information about individuals, it will have to be shared but only if accompanied by a subpoena. Since no location data is stored, Progressive will not be able to confirm where a policy holder lives or travels, but it will know how fast and how far you drive. In exchange for deeper discounts, the wary might be convinced it’s a great idea.

The top issue for consumers contacting the Office of Consumer Affairs and its agencies in 2010 was auto insurance-related questions and complaints. Over 7,000 people contacted the Office and the Division of Insurance with questions about denial of claims, adjusters, and claim delays.

Over 6,000 people called the Office of Consumer Affairs and Division of Insurance about health insurance issues, the second-highest number of 2010. Coordination of benefits and COBRA issues were the two most predominant reasons for complaints in the area of health insurance.

Linda Finnegan, who spoke at today’s press conference, had trouble getting her claim paid after she took the trash out one morning and found her car stolen. Finnegan enlisted the help of the Division of Insurance, which intervened and helped Finnegan receive $5,800 from her insurer.

The Massachusetts Attorney General’s Office also assists consumers who are having problems with insurance companies. Last year the Attorney General’s Office received over 5,400 calls from consumers relating to insurance, with auto insurance calls topping the list. In 2010, the Attorney General’s Office recovered over $33 million for auto insurance policyholders.

“In these tough economic times, with consumers watching their budgets more than ever, there is no shortage of unscrupulous people looking to take advantage of others,” said Attorney General Martha Coakley. “A consumer must always do their homework, shop around, make sure that they are dealing with a reputable entity, and consider all of the terms before entering into any contract.”

Uninsured and Underinsured insurance is excellent coverage many people depend if tragedy hits them. There are many potential benefits of Uninsured and Underinsured Motorist.

The Uninsured and Underinsured option protects you, even if you are hit as a pedestrian. Uninsured and Underinsured covers you if you are injured by a under or under insured motorist even if you not in the vehicle on which you have the insurance policy.

The coverage protects you when the person in the car hurts but you does not have insurance, or when they have too little. Furthermore, your Uninsured and Underinsured portion may protect your family members and other occupants of your insured car.

Read your insurance policy declarations page to determine if your Uninsured and Underinsured coverage. Don’t take the word of your insurance carrier because they pays the claim, which presents conflicts and reasons to deny you have coverage.

Although people hit by cars depend on the your Uninsured and Underinsured portions of their insurance policies, so it’s good advise to make sure you are protected with as much U/UIM insurance as you can afford.

Even if you’re required to have a minimum or all of the types of coverage listed below and you can’t really make any changes, read the fine print. Plus, once you know what you’re actually insured for, you can figure out where you’re under or over insured. You don’t want to pay for unneeded coverage, but you also don’t want to be under insured in an accident.

Types of auto insurance coverage:

Property Damage Liability is mandatory in most states and pays for damage caused to another vehicle in the event of an accident in which you are at fault. Because new cars are usually expensive to repair or replace, as well as fixing damage to public property, choose over the minimum.

Bodily Injury Liability covers damages due to injury or death in an incident where you are at fault. It can also be used to pay your legal fees. Health care and legal costs are very expensive, so get over the minimums, unless you are flat broke.

Medical Payments are used to pay medical expenses incurred by you and your passengers during an accident regardless of who is at fault. This coverage is optional in most states with a no-fault law because the no-fault coverage will pay for these expenses as well as often covering things such as lost wages tied to the accident.

Uninsured Motorist Coverage is not mandatory. Many drive without auto insurance. there are many on the roads who drive without. This coverage protects you and your passengers in the event you are involved in an accident with an uninsured driver. Typically it covers medical expenses, but some states extend this to vehicle damage as well.

Collision Coverage covers damages caused to your own vehicle in a collision. Collision is required if you have a loan on the vehicle. When looking at collision coverage keep in mind the actual value of the vehicle that is being insured. Older used vehicles may have little or no use for collision coverage.

Comprehensive Coverage (like collision) will pay for damages (minus a deductible), from theft, fire, acts of nature, vandalism and animal collisions. if you finance your car, lenders will require comprehensive to protect their interest in the loan.

Read your policy to see if your coverage is low. For example, just $100,000 for damages due to the injury or death of somebody in an accident is virtually nothing these days when lawsuit settlements regularly top seven-figures.

Liability limits are displayed as 100,000/200,000/50,000. This means the coverage limits would be:

– $100,000 for injury or death for any one person in an accident
- $200,000 for injury or death for any number of people in an accident
- $50,000 for property damage caused to other cars or property in an accident

Given the expensive nature of damages in our society, it’s foolish to drive under insured. Collision and comprehensive is much easier to calculate in terms of how much to purchase. Since this coverage is used for paying for damage done to your own property, the deductible you select can be based on the value of the vehicle. Collision and comprehensive is only used for newer, more expensive cars.