Knowing About Auto Insurance

American’s hold the number one position in the world of auto ownership per the ratio of the number of people in our country. Cars can be enjoyable, necessary and something that people take a lot of interest in but they can also cause great harm or death to people in society. In a blink of an eye you could be in a situation that is pretty traumatic and scary and you will need to be properly covered through insurance, to manage the financial implications of what an accident can cause.

There is a lot to consider with auto insurance and you need to ensure that you have insurance to cover all contingencies to the extent that your budget can afford to do so. The biggest financial problem you could become involve in is the lawsuit, the strategies you need to consider here are that you do not under insure the amount you need, otherwise you could be left out of pocket for quite a large sum of money. In determining insurance, it is very important to make sure that the automobile liability coverage limits is adequate for the three types of insurance categories; injury per person, injury per accident and property damage per accident.

Be careful that you do not under insure any of these categories, as you cannot transfer insurance between them and there will be times when you will need insurance for each category in just one accident. In deciding on what level of coverage you need for auto insurance base it on your needs, you should consideration the possibility that the other driver may be uninsured or no insurance at all. This will allow you to access the necessary funds that you will need for your health or property requirements now, rather than wait a quite considerable period of time to extract the money required from an uninsured or under insured driver. It does not seem fair you have to do this but if you are ever in the situation of needing medical assistance or fixing property damage, you need to move quickly. Auto insurance is a definite requirement you should have, as your life could change for the worse in a split second, if you do not have this insurance.

Auto Insurance Policy, Coverage and Cost Disparities – What You Must Know Before Buying

There can be vast differences among auto insurance quotes and auto insurance policies currently offered in the marketplace. Use of your favorite search engine with the terms “auto” and “insurance” quickly provides a plethora of coverages, coverage levels, rates, options, payment terms, insurance companies, and geographic availability, just for starters. With virtually limitless choices, how does one select a suitable policy?

First, remember what you are buying: risk coverage, pure and simple. You want this coverage to pay for any damages, bodily injury, medical care, or loss of life, for which you are found liable. Sounds pretty serious, doesn’t it? It is. Not only is it important to insure against the full range of risks under which you will operate your vehicle, it is of the utmost importance that you be indemnified (protected) against those risks by a company with the resources to do so. While those resources include the obvious financial ones, they also include customer service, and good will within the industry. An insurance company customer service function that is efficient, conscientious, and courteous can prevent a lot of distasteful complications. Similarly, good insurance company relations within the fraternity of auto insurers may greatly facilitate handling of your claim, or the claim of the damaged party. Basically, a lawsuit avoided is a win for all concerned parties. With risk coverage established as the primary consideration, all others, including cost, take a back seat. Nevertheless, no matter what selection process you utilize, keep in mind the following factors:

1. Buy only the insurance coverage you need, and cannot self-insure. If you’re driving a $2500 vehicle, and Collision coverage (which covers the cost of repairing YOUR car) costs $3000 per year, it should be obvious that you can self-insure total loss of your vehicle, and do so at a profit. It should also be obvious that any automobile in motion, regardless of cost, is capable of inflicting approximately the same amount of property damage, bodily injury, or death, and that these Liability coverages are necessities for all but the super-rich and the penniless. Many other coverage options allow you to customize your policy based on your aversion to specific risks and the premiums quoted to relieve you of those risks. Among the many factors that influence the amount of your premium, the coverage deductible, which you specify, offers the greatest opportunity for overall premium savings. These savings aren’t free, of course, as you are assuming the risk of covering the cost of the deductible should a mishap come your way, in exchange for a lowered premium.

2. Buy only from a reputable insurance company. These companies:

    • are generally corporations of, and hold corporate assets in, your country of residence, and are subject to local and national laws and court decisions;
    • are licensed to do business in your state;
    • compare favorably against their peers in the A.M. Best (http://www.ambest.com) Ratings for qualities such as:
      • financial stability;
      • customer service; and,
      • claims handling.

3. Get the best price you can for the coverage you need. While this sounds like an endless process, it is self-limiting when restricted to obtaining an auto insurance quote from reputable insurance companies. Three auto insurance quotes should suffice, but get as many as you need to exhaust a given level of insurance company quality: if there are six top-rated firms, get six quotes, for the same coverage needs, in order to ease your selection. Since no two companies have the same customers, workforce, or business base, no two companies have the same experience (profit and loss) base, and therefore, no two companies will have the same cost history on which to predicate (future) premiums. Although companies must compete with their peers in the marketplace, a number of considerations (such as whether a company made a profit or incurred a loss, consumed or accumulated reserves, or added or lost policyholders) necessitate obtaining multiple rate quotes. While many people have reported substantial savings purchasing auto insurance online, it is critical that you purchase your insurance from a reputable insurance company. Remember, you’re buying risk coverage here. Don’t buy without checking the rating of your intended risk coverage partner.

4. Don’t invalidate your coverage by being less than completely candid during the application process. The quote an insurance company gives you is based on rating a number of factors concerning you and your driving habits. This includes your driving record; number of tickets; age; sex; marital status; location; daily and yearly mileage; vehicle use (business or pleasure); make, model, year, engine/hp; number of operators; number of vehicles, etc. Your driving record is public information readily available to your insurance company. You provide most, if not all, of the other rating factors. Doing so with less than complete candor is almost certainly not in your best interest. Most reputable insurance companies validate the information you provide. Those that don’t are not what you want in terms of a risk partner. Among the options available to companies that have unknowingly issued policies based on falsified information are correcting (raising) your rates or cancelling your policy, upon discovery of falsified information. Once again, remember that you’re buying risk coverage here. You don’t want to find out that your risk coverage partner has dropped you because of falsified application information AFTER you’ve had an accident or are involved in a lawsuit. This situation may be a rarity, but if you were the insurance company, and were being sued for millions in damages caused by a policyholder who materially mis-stated the factual basis on which your risk coverage contract was based, how hard would you try to invalidate the policy? Enough said.

5. Consider limited field of membership, and group affiliated policies. Due to the narrow slice of the risk pie that such policies cater to, rates may be substantially better than those available to the general public. Since this type of policy focuses on the lowest risk groups, it invariably raises rates for all other motorists, since the low-risk policyholders are removed from the general risk pool. If you fall into the field of membership for any of these policies or companies, be sure to compare their costs with your other quotes. Companies offering highly advantageous policies for preferred risk drivers include USAA (for US military members, retirees, spouses, veterans, and their children); GEICO (for government employees); and most major insurers in association with many fraternal and professional organizations.

6. Investigate “bundling” your insurance coverage needs. Some insurers offer discounts, favorable payment plans, or improved coverage for such things as multiple vehicles, multiple drivers, homeowners insurance, renters insurance, and life insurance policies purchased by the same policy holder. Get quotes.

7. Take advantage of all of your positive policy rating factors. These merit reduced rates for: High-Credit-Rating Applicants; Good Students; Anti-Theft Car Alarms; Anti-Skid Braking Systems; LoJack or similar systems; Electronic Stability Protection; Multiple Vehicles; Multiple Drivers; and, Safe Driver Discounts, for example.

Time to Shop With the foregoing factors in mind, you are now ready to quote-shop, via the internet. Www.insurance.com, or similar sites, are excellent starting points to obtain multiple quotes or more detailed information concerning policies and coverages over the internet. Companies such as Geico, Allstate, Hartford, State Farm, Progressive, Liberty Mutual, USAA, INA, Nationwide, Travelers, and most other large companies maintain an online internet presence, with quote capability. The advantage of using a multiple quote site is that the application information, which is as extensive as necessary for an accurate quote, need only be completed once, vastly reducing the time required to get the quote process started. Once you’ve got some baseline quotes, you’ll find the company-specific sites very easy to navigate, especially if you’ve printed out the input data you used to get your multiple quotes. Remember, you’re looking for “apples-to-apples” quote comparisons from reputable, well-rated insurers. Using the internet, you’ll avoid the ubiquitous automated call menus; being placed on terminal hold while waiting to speak to an agent; driving half way across town to get rates then repeating the process until you’re either satisfied or exhausted. It’s so much easier to identify the reputable, highly-rated insurers; mouse-click your way to one or two multiple-quote sites; fill in the input data, keeping a copy for later use; compare cost, features and qualities of the top insurers; and, make your selection.

A Final Warning! We cautioned earlier concerning the absolute necessity of dealing with an insurance company that is reputable and well-rated among its peers. While the internet offers the possibility of substantially reducing your premium costs, it also brings into your field of view unscrupulous insurers that pay few claims, use stalling tactics, or worse, while offering coverage at premiums well below most of the quotes you obtain. Living through one claim with one of these insurers will convince you of the wisdom of buying from a reputable, highly-rated insurer, despite any advertised savings from lesser companies. Unrealized savings, coupled with unpaid claims, relieve you of your premium dollars and leave you basically self-insured, at risk for whatever damages the insurer avoids, escapes, or evades. You’ll find it far better to reduce your premium through the many other means mentioned here, than to stint on the quality of the company you pick to assume your risk. As the headline above advises, all auto insurance policies and companies are not created equal. Having thus far tried to hammer the concept home, one last repetition seems in order: buy from a reputable, highly-rated insurer, reducing your premiums through the many means presented herein, and sleep soundly, knowing your risk-partner’s got your back!

5 Factors that Affect – Influence Auto Insurance Rates

The world of auto insurance is complicated and premiums payable for a given policy vary from person to person. Simply put who you are determines how much you will pay as car insurance premium. Automobile insurers use a large number of risk factors to compute how much premium is payable by any individual.

Basic factors that determine how much you need to pay for auto insurance are:

1. The age of the driver. Young and old drivers need to pay more insurance premiums as they are more likely to have accidents than middle aged drivers. In addition premium payable is determined by the car you drive. If you drive a sports car or any mean machine then your premium will hit the sky as compared to a sedan or compact car.

2. The gender of the driver. Insurance companies have determined that women drivers are not affected by hormone surges or machoness and are so better drivers than men. Statistically women are proven to be safer drivers so a woman driver will pay lower auto insurance than a male.

3. Where you live can change your car insurance rate. Auto insurance companies compute risk by where a car owner resides. Those living in rural areas or suburbs pay lower insurance premiums than those who live in a city.

4. Safe Driving is a factor that influences your premiums. Most insurers lower premiums payable for persons who have a safe driving record for three years and more. So speeding tickets, accidents, parking violations, and running red lights are all factors that can save you money.

5. Your credit history. Most insurance companies consider an individual with a good credit history and score as a lower risk and offer lower premiums on auto insurance. The credit report reflects the fact that you are a responsible individual and are dependable.

Other factors that can lower auto insurance premiums are: safety features in a car; anti-theft devices; eco-friendly fuel use; use of car pools and public transport; exclusive use of vehicle only for personal use and so on.

Insurance companies set premium rates based on factors like make of car, cost of parts, and sticker price of car. In case an individual updates his driving skills regularly and follows all safety norms and rules laid by the highway and road patrols then the insurers offer lowered premium rates.

If you have a membership at the AAA or any other professional body then you may be automatically eligible for a discount on auto insurance rates. Lately if auto insurance is bought online the rates are much lower than when bought through an agent or office. And, different insurers base the premiums on auto insurance based on their experience so while one may consider the occupation of the individual a risk another may give more emphasis on whether the vehicle is used for commercial purposes. The module for calculating risk factors varies from company to company as also the premium rates on auto insurance.

So it is best to get at least 3-4 quotes from different auto insurance providers before making a decision.

Auto Insurers Moving Towards Telematics for Usage Based Insurance

Insurance telematics and Usage Based Insurance (UBI) programs continue to roll-out across the globe. The rapidly changing landscape is making the insurers select the accurate business models to ensure success. However, many programs are out with a focus on price discounts resulting in a foreseeable race to the bottom; but the industry is moving in the direction to subset the companies to succeed.

The recent innovation by auto insurers – Usage Based Insurance (UBI) is more closely align the driving behaviors of premium rates for auto insurance, while the mileage and driving behaviors are tracked using odometer readings or in-vehicle telecommunication devices such as telematics which are typically self-installed into a particular vehicle port or already integrated equipment installed by car manufacturers. The essential idea of telematics auto insurance is to monitor the driver’s behavior directly while the person drives. With the help of these telematics devices, you can measure a number of elements of interest to underwriters-miles were driven; time of day; rapid acceleration, where the vehicle is driven (GPS); hard breaking; hard cornering; and air bag deployment. The level of data collected will generally reflect the telematics technology employed and the policyholders’ readiness to share personal data. Then the insurance company assesses the data and insurance charges or premiums accordingly. For example, when a driver drives long distance at high speed will be charged a higher rate than a driver who drives short distances at minimal speeds. While UBI premiums are collected using a variety of methods, including utilization of the gas pump, direct billing, debit accounts and smart card systems.

About a decade ago, the first UBI programs began to shell in the U.S. and this is the time when Progressive Insurance Company and General Motors Assurance Company (GMAC) began to offer mileage-linked offers through combined GPS technology and cellular systems that tracked miles driven. These offers are still in combined with ancillary benefits such as roadside assistance and vehicle theft recovery. The current accelerations in technology have augmented the efficiency and cost of using telematics, enabling insurers to detain not just how many miles people drive, but when and how they drive too. Such strategies helped to result in the growth of several UBI variations, including Pay-As-You-Drive (PAYD), Pay-As-You-Go, Pay-How-You-Drive (PHYD), and Distance-Based Insurance.

Usage Based Insurance Pricing

The pricing schemes for UBI are included greatly from the traditional auto insurance. Traditional auto insurance relies on actuarial studies of aggregated historical data to create rating factors which include driving record, personal characteristics (age, gender, and marital status), credit-based insurance score, vehicle type, garage location, vehicle use, previous claims, liability limits, and deductibles. You can find premium discounts on traditional auto insurance which are usually limited to the bundling of insurance on several vehicles or types of insurance, insurance with the same transporter, protection devices, driving courses, home-to-work mileage and more.

While policyholders think of traditional auto insurance as a fixed cost, or can be assessed annually by usually paying in lump sums on an annual, semi-annual, or quarterly basis. But, studies show that there is a strong correlation between loss and claim costs and mileage driven, particularly when existing pricing factors defers (such as class and territory). Maybe this can be one reason, many UBI programs seek to change their fixed costs associated with mileage driven costs that can be used in combination with other rating factors in the premium calculation.

Usage-based insurance has an advantage of utilizing individual and current driving behaviors, rather than relying on aggregated information and driving records of past trends and events, making premium pricing more individualized and precise.

Challenges

The challenges like tracking the mileage and behavior information in usage-based insurance programs have raised privacy concerns; as a result, some states have enacted legislation requiring disclosure of tracking practices and devices. Furthermore, some insurers limit the data they collect. This is not for everyone although; but acceptance of sharing the information is growing as more mainstream technology in devices such as smart phones, tablets, and GPS devices. And moreover, social media networks like Facebook and Twitter also enter the market.

Implementing a UBI program, mainly one that utilizes telematics can be expensive and resource-intensive to the insurer. In addition, UBI is an emerging area and therefore there is still much hesitation in selecting and understanding of driving data and how it should be integrated into existing or new price structures to maintain profitability. This is very much important; as the transitioning of lower-risk drivers into usage-based insurance programs offers lower premiums could put pressure on overall insurer profitability.

Advantages

Usage-based insurance programs offer many advantages to insurers, consumers, and society. The main aim is to link the insurance premiums more closely to actual individual vehicle or fleet performance. This increases affordability for lower-risk drivers, many of whom are also lower-income drivers. It also gives consumers the ability to control their premium costs by incenting them to reduce miles driven and adopt safer driving habits. Fewer miles and safer driving also aid in reducing accidents, congestion, and vehicle emissions, which benefits society.

The usage of telematics help insurers to more accurately estimate accident damages and reduce fraud by enabling them to evaluate the driving data during an accident. In addition, the ancillary safety benefits accessible in conjunction with many telematics-based UBI programs also help to lower accident and vehicle theft related costs by improving accident response time, by allowing the stolen vehicles to be tracked and recovered.