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Test Your Auto Insurance Policy Knowledge

How much do you know about auto insurance? Do you know the meaning of important auto insurance terms?

How Is The Premium Determined For Auto Insurance

What Determines the Price of My Auto Insurance Policy?
The average yearly auto insurance premium is around $800, but there is wide variation around this average. Many factors can affect your auto insurance rate, and they all help determine how likely you are to have an accident. Perhaps surprisingly, many of them do a better job than just your driving record. Not all companies use all of these factors, and some might use factors not listed here. Your premium may depend on, in no particular order:

Your driving record.
The better your record, the lower your premium. If you have had accidents or serious traffic violations, it is likely you will pay more than if you have a clean driving record. You may also pay more if you are a new driver and have not been insured for a number of years.

How much you use your car.
The more miles you drive, the more chance for accidents. If you drive your car for work, or drive it a long distance to work, you will pay more. If you drive only occasionally—what some companies call “pleasure use”, you will pay less.

Where your car is parked and where you live.
Where you live and where the car is parked can affect the cost of your insurance. Generally, due to higher rates of vandalism, theft and accidents, urban drivers pay a higher auto insurance price than those in small towns or rural areas.

Other factors that vary from one area or state to another are: cost and frequency of litigation; medical care and car repair costs; prevalence of auto insurance fraud; and weather trends.

Your age.
In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. So insurers generally charge more if teenagers or young people below age 25 drive your car.

Your gender.
As a group, women tend to get into fewer accidents, have fewer driver-under-the-influence accidents (DUIs) and most importantly less serious accidents than men. So, all other things being equal, women generally pay less for auto insurance than men. Of course, over time individual driving history for both men and women will have a greater impact on what they pay for auto insurance.

The car you drive.
Some cars cost more to insure than others. Variables include the likelihood of theft, the cost of the car itself is major rate factor, the cost of repairs, and the overall safety record of the car. Engine sizes, even among the same makes and models, can also impact insurance premiums. Cars with high quality safety equipment might qualify for premium discounts.

Insurers not only look at how safe the car is to drive and how well it protects occupants, they also look at the potential damage a car can inflict on another car. If a specific car has a higher chance of inflicting damage on another car and its occupants, some insurers may charge more for liability insurance.

Your credit.
For many insurers, credit-based insurance scoring is one of the most important and statistically valid tools to predict the likelihood of a person filing a claim and the likely cost of that claim. Credit-based insurance scores are based on information like payment history, bankruptcies, collections, outstanding debt and length of credit history. For example, regular, on-time credit card and mortgage payments affect a score positively, while late payments affect a score negatively.

The type and amount of coverage.
In virtually every state, by law you must buy a minimum amount of liability insurance. The state required limits are generally very low and most people should consider purchasing much more than the state requirement—the recommended amount of liability protection is about ten times the average state minimum. If you have a new or recent model of car, you likely will also buy comprehensive and collision coverage, which pays for damage to your car due to weather, theft or physical damage to the car such as being hit by a tree. Comprehensive and collision coverages are subject to deductibles; the higher the deductible, the lower your auto insurance premium. While there is no legal requirement to purchase these coverages, if you finance the purchase of the car or you lease it you may be required by contract.

Perhaps just as important, insurers NEVER use race or religion to set rates. Such practices are illegal. Insurers believe them to be abhorrent as well.

Auto Insurance Coverage

What Is Covered by a Basic Auto Insurance Policy?

Auto Insurance Coverage Infographic

Your auto policy may include six coverages. Each coverage is priced separately.

1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.

It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.

2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.

3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.

4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you’re not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you’ll also be reimbursed for the deductible.

5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.

Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.

Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.

6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.

Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

Protecting Teen Drivers

While assisting consumers to manage their auto insurance costs is surely important, helping teenage drivers reduce their vulnerability to a life-changing accident provides an opportunity to deliver a much greater impact. By instructively managing conversations with parents focusing on cost, parents need to demonstrate to their teen drivers the value of adopting risk management strategies to better protect themselves and their passengers when operating an automobile.

Volumes of articles have been published examining the auto insurance coverage challenges that must be addressed when insuring newly licensed drivers. While addressing the auto insurance coverage issues is indeed important, this article will examine the safety risks facing inexperienced drivers and provide readers with resources, information, and actionable solutions to help better protect young drivers.

Plenty of Data To Explain the Higher Costs

While discussions with consumers about the cost to insure a teenage driver involve confusion and dismay, there is an abundance of evidence to substantiate, even to skeptics, the higher costs required to insure inexperienced drivers. With help from studies conducted by the National Center for Health Statistics, AAA Foundation for Traffic Safety, and the Insurance Institute for Highway Safety, the following statistics can be helpful in making parents and teenage drivers aware of the risks associated with insuring inexperienced drivers.
•For every mile driven, teen drivers have crash rates three times greater than drivers ages 20 and older.
•In 2012, teenagers accounted for 8 percent of motor vehicle crash deaths. Teenagers represented 10 percent of passenger vehicle occupant deaths among all ages, 6 percent of pedestrian deaths, 3 percent of motorcyclist deaths, 11 percent of bicyclist deaths, and 13 percent of all-terrain vehicle rider deaths.
•Motor vehicle crashes are the leading cause of death among 15- to 20-year olds. A total of 2,823 teenagers, ages 13–19, died in motor vehicle crashes in 2012.
•Why does it cost more to insure males? Almost two out of every three teenagers killed in crashes in 2012 were males.
•Why are some states more expensive? States with strong restrictions to teenage drivers (e.g., graduated licensing, bans on nighttime driving, and teen passengers) found substantially lower fatal crash rates and insurance claim rates.
•June and July are the months with the highest risk for teenage crash deaths.
•Fifty-three percent of motor vehicle crash deaths among teenagers in 2012 occurred on Friday, Saturday, or Sunday.
•The hours 9:00 p.m. to midnight have the highest percentage of teenage motor vehicle crash deaths (17 percent).
•A May 2012 report revealed the risk of 16- or 17-year old drivers being killed in a crash increases by 44 percent with one passenger, doubles with two passengers, and quadruples with three or more passengers.
•Research suggests 1 in 10 teens in high school drinks and drives. Drivers between ages of 16 and 20 are 17 times more likely to die in a crash when they have a Blood Alcohol Content (BAC) of 0.08 percent than when they have not been drinking.
•Males are more likely than females to have high BAC above 0.08 percent. Among fatally injured passenger vehicle drivers ages 16–17, 18 percent of males and 10 percent of females had BACs at or above 0.08 percent. Among fatally injured drivers ages 18–19, 30 percent of males and 17 percent of females had BACs at or above 0.08 percent.

The Reasons for the Alarming Statistics

While statistics reveal the risks are indeed much higher for young drivers and their passengers than for other age groups, numbers do not provide the real insights needed to help inexperienced drivers and their parents understand the reasons for the frightening results. Fortunately, there is ample research and a lot of helpful content to provide teens and their parents with the important answers explaining why the risks are so great.

To begin, there is scientific evidence to support the common perception that teenagers do not think like adults. Research reveals brain development in adolescents causes a very different way of perceiving problems, making decisions, and especially in judging risk (think back to your teen years). The developing adolescent’s limited ability to comprehend risk helps explain the many high-risk choices that contribute to the increased frequency and severity of accidents among teens. For those who are curious to learn more about this topic, I recommend “Brain Development and Risk-Taking in Adolescent Drivers,” by Erin Floyd-Bann, Ed.D., and William Van Tassel, Ph.D., published by the American Driver and Traffic Safety Association. While there is no remedy to address the cognitive development challenges facing teens, there are other challenges for which practical solutions do exist.

The Center for Disease Control and Prevention (CDC) provides this excellent two-page document, “Eight Danger Zones for Teens Behind the Wheel,” that risk advisers can distribute to consumers detailing the following “eight danger zones” that contribute most significantly to accidents among teens. This document also prescribes the actions parents can take to reduce each of these risks.

The CDC’s Eight Danger Zones
1.Driver Inexperience
2.Driving with Teen Passengers
3.Nighttime Driving
4.Not Using Seat Belts
5.Distracted Driving
6.Drowsy Driving
7.Reckless Driving
8.Impaired Driving

While seven of these eight factors are also dangerous practices for even highly experienced drivers, research reveals they are especially dangerous for teens with little driving experience and a difficulty understanding the consequences of risky behavior. Addressing several of these risk factors merits extra close attention, and there is an especially significant amount of quality research to provide teens and their parents to document the dangers of impaired and distracted driving.

For example, the following sites offer substantive content to examine the dangers associated with impaired driving.
•”Teen Drinking and Driving—A Dangerous Mix,” from the CDC
•”Facts about Underage Drinking and Driving,” from AAA
•”Underage Drinking,” from Mothers Against Drunk Driving (MADD)
•Video series on YouTube from the National Highway Traffic Safety Administration (NHTSA)

A Rapidly Growing Risk: Distracted Driving

While statistics indicate impaired driving among teens is on a modest recent decline, few will be surprised to learn that driving while distracted is a rapidly increasing trend among teenage drivers. In a 2015 study incorporating the use of video to examine the causes of accidents involving teenage drivers, the AAA Foundation for Traffic Safety found significant evidence that distracted driving is a far more significant risk than previously known. AAA’s unprecedented video analysis revealed driver distraction was a factor in nearly 6 out of 10 moderate-to-severe teen crashes—four times higher than was previously estimated on police accident reports.

As determined by AAA in Using Naturalistic Data To Assess Teen Driver Crashes, the most common forms of distraction leading up to a crash by a teen driver are interacting with passengers (15 percent), cellphone use (12 percent), looking within the vehicle (10 percent), looking outside the vehicle (9 percent), singing/dancing (8 percent), grooming (6 percent), or reaching for an object (6 percent).

The AAA Foundation for Traffic Safety should be applauded for this important research, and those in the insurance community should be directing consumers to review the complete report and these important findings and resources provided by AAA. Realizing that video footage can often have a greater impact on changing actual behavior, consider directing those you serve to this powerful YouTube video from AAA or to this series of videos provided by the NHTSA to more clearly demonstrate the consequences of distracted driving.

Many Resources Available To Manage These Risks

Parents and teen drivers should enter into a written agreement stipulating how the car is to be operated.  Many sample agreements they can use to try and establish clear expectations and safe-driving practices exist. There are several good ones available for free, including the following.
•”Parent-Teen Driving Agreement,” from the CDC
•”The New Driver Deal,” by Drive It Home
•”Parent Teen Agreement,” from AAA (just one of the many parent education tools made available on this website)

Technological Solutions for Technology Risks

Many parents are often unaware of the software applications that can restrict the use of cell phones while driving. Other apps allow parents greater control over their child’s phone, even being notified when the car exceeds a predetermined speed. The following are a few technological solutions of which parents should be aware.
•Cellcontrol is a subscription service that is vehicle-motion activated, preventing the driver from sending or receiving texts, e-mails, and phone calls; surfing the Web; taking selfies; or engaging in other dangerous activities.
•TextBuster® is a patented device that will disable the data functions to the driver’s phone only while inside the vehicle. This device prevents the driver from accessing all text, e-mail, or Internet functions while driving his or her vehicle, but does not block incoming or outgoing phone calls. This application requires a hardware purchase.
•Canary enables parents to know instantly when their teen is texting, tweeting, or doing anything else behind the wheel. It provides notifications the second a child makes or takes a phone call while on the road, enables parents to set maximum speed limits and curfews, and sends alerts when those are exceeded. Canary requires a paid subscription after a trial period.

What Teens Drive Matters Greatly

The criteria used by teens (and even parents) in selecting a first car rarely prioritizes safety. Arming parents with the research and safety insights from the Insurance Institute for Highway Safety (IIHS) can help them at least consider safety when making the important decision about the vehicle their inexperienced operator should be driving. The IIHS makes these four recommendations in selecting a safe car for teens.
•Avoid cars with high horsepower.
•Bigger and heavier vehicles provide better protection in a crash. There are no minicars or small cars on the recommended list.
•Electronic stability control (ESC) is a prized safety feature, as it helps young drivers maintain control of the vehicle on curves and slippery roads.
•Vehicles should have the best safety ratings possible. At a minimum, that means good ratings in the IIHS moderate overlap front test, acceptable ratings in the IIHS side crash test, and four or five stars from the National Highway Traffic Safety Administration (NHTSA).

The eye-opening safety report “Safe and Affordable: Updated Used Vehicle Recommendations for Teens” as another example of the information available.

National Teen Driver Safety Week

If you did not know there was such a week, neither did I until very recently. The NHTSA has developed a robust “5 to Drive” campaign to create extra attention on the five rules teen drivers need to follow to stay safe behind the wheel. The rules focus on the five greatest dangers for teen drivers: cell phones, passengers, speeding, alcohol, and safety belts.

The campaign is eager to support all organizations that educate teens and their parents by offering sample press releases, infographics for use on social media sites, flyers, and other materials that can be used to advocate for safe driving. Examine all of the content that can be customized to help your organization support this important cause in your community.


The resources spotlighted in this article reveal there is a great opportunity to provide families with teen drivers helpful insights and solutions to reduce the risk of accidents and heartache, as well as save money on your auto insurance policy.

Rental Car Insurance – Tips on What You Need to Know

 What you need to know at the Rental Car Counter.



Do I Need Rental Car Insurance?

Properly insuring a rental car can be confusing, frustrating and downright daunting. Unfortunately, many consumers do not even think about car rental insurance until they get to the counter, which can result in costly mistakes—either wasting money by purchasing unnecessary coverage or having dangerous gaps in coverage.
Before renting a car, the I.I.I. suggests that you make two phone calls—one to your insurance professional and another to the credit card company you will be using to pay for the rental car.
  1. Insurance Company Find out how much coverage you currently have on your own car. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car, providing you are using the car for recreation and not for business.
    If you have dropped either comprehensive or collision on your own car as a way to reduce costs, you will not be covered if your rental car is stolen or damaged in an accident.
    Check to see whether your insurance company pays for administrative fees, loss of use or towing charges. Some companies may provide an insurance rider to cover some of these costs, which would make it less expensive than purchasing coverage through the rental car company. Keep in mind, however, that in most states diminished value is not covered by insurers.
  2. Credit Card Company Insurance benefits offered by credit card companies differ by both the company and/or the bank that issues the card, as well as by the level of credit card used. For instance, a platinum card may offer more insurance coverage than a gold card.
    Credit cards usually cover only damage to or loss of the rented vehicle, not for other cars, personal belongings or the property of others. There may be no personal liability coverage for bodily injury or death claims. Some credit card companies will provide coverage for towing, but many may not provide for diminished value or administrative fees. Some credit card companies have changed their policies, too, so you may not have as much coverage as you thought.
    To know exactly what type of insurance you have, call the toll-free number on the back of the card you will be using to rent the car. If you are depending on a credit card for insurance protection, ask the credit card company or bank to send you their coverage information in writing. In most cases, credit card benefits are secondary to either your personal insurance protection or the insurance offered by the rental car company.
    If you have more than one credit card, consider calling each one to see which offers the best insurance protection.

At the Rental Car Counter

Since insurance is state regulated, the cost and coverage will vary from state to state. Consumers, however, can generally choose from the following coverages:
  • Loss Damage Waiver (LDW) Also referred to as a collision damage waiver outside the U.S., an LDW is not technically an insurance product. LDWs do, however, relieve or “waive” renters of financial responsibility if their rental car is damaged or stolen. In most cases, waivers also provide coverage for “loss of use,” in the event the rental car company charges the renter for the time a damaged car can not be used because it is being fixed. It may also cover towing and administrative fees.
    Waivers, however, may become void if the accident was caused by speeding, driving on unpaved roads or driving while intoxicated. If you already have comprehensive and collision coverage on your own car, check with your personal auto insurer to make sure you are not duplicating coverage you already have. Should you decide it is necessary, this coverage generally costs between $9 and $19 a day.
  • Liability Insurance By law, rental companies must provide the state required amount of liability insurance. Generally, these amounts are low and do not provide much protection. If you have adequate amounts of liability protection on your own car, you may consider forgoing additional liability protection. If you want the supplemental insurance, it will cost between $7 and $14 a day.
    An umbrella liability policy, however, may be more cost-effective. Umbrella liability insurance is so named because it acts like an umbrella, sitting on top of your auto and homeowners (or renters) liability policies to provide extra protection including accidents while driving your own car or one that you rent. These policies, usually sold in increments of a million dollars, cost as little as $200 to $300 annually for a million dollars worth of coverage and another $50 to $100 for each additional million.
    Those who do not own their own car and are frequent car renters, can also consider purchasing a non-owner liability policy. This not only provides liability protection when you rent a car, but also when you borrow someone else’s car.
  • Personal Accident Insurance Personal Accident Insurance offers coverage to you and your passengers for medical and ambulance bills for injuries caused in a car crash. If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance. It usually costs about $1 to $5 a day.
  • Personal Effects Coverage Personal Effects Coverage provides insurance protection for the theft of items in your car. If you have a homeowners or renters insurance policy that includes off-premises theft coverage, you are generally covered for theft of your belongings away from home, minus the deductible. If you purchase this coverage through the rental car company, it generally costs between $1 and $4 a day.
    If you frequently travel with expensive items such as jewelry, cameras, musical equipment or sports equipment, it may be more cost-effective to purchase a personal articles floater under your homeowners or renters insurance policy. With such a floater, your valuable items are protected at home as well as while traveling anywhere in the world and the coverage is broader.

Other Things to Consider

States have minimum age requirements for renting a car and most major rental car companies refuse to rent a car to someone who is under 21 and in some cases under 25. In addition, some rental car companies now investigate your driving record and/or credit history so check with the rental car company before picking up the car.
If you are planning to rent a car abroad, contact both your insurance agent and travel agent to find out what you need to do to be properly insured. Those driving a rental car from the U.S. into Mexico may find it progressively more difficult to rent a car as U.S. rental car companies are increasingly concerned about the rising crime rates in that country. The minimum required insurance coverage to drive in Mexico is civil liability insurance which covers you in case you cause injury or damage. Your American liability insurance is not valid in Mexico for bodily injury, though some American insurance policies will cover you for physical damage—check with your agent or insurance company representative. You can also buy Mexican car insurance in several American border towns; there are generally several storefronts selling Mexican car insurance near the border.
Note: If you’re renting a car abroad, you may need an international drivers license.



Verify Proper Coverage is in Place for Your Company Car

Verify Proper Coverage Is in Place for Your Company Car

Many employers provide employees company cars. Oftentimes, the employee is told that he or she need not worry about the insurance issues for this car; the employer will handle all of that. But this advice may be shortsighted since coverage gaps can crop up that may impact the insured employee in unforeseen ways. Thus, consider passing on the following tips to your clients who may have company cars.

Since your employer provides you a company car, consider the following risk management auto insurance coverage recommendations.

  • Verify that corporate insurance is in place and that it provides primary coverage. Also, check the liability limits to confirm that they are adequate. Carefully adhere to any restrictions on personal use, including possible prohibitions of other drivers.
  • For company cars, the extended non-owned coverage—vehicles furnished or available for regular use (PP 03 06) or related endorsement can be attached to your personal auto insurance policy to provide excess liability coverage for these types of vehicles. A key advantage of this endorsement is its broad protection for co-employees.
  • If you do not own an auto but do have personal auto exposure (e.g., company car, borrowing friends’ cars, etc.), you should purchase a personal auto policy and attach a named non-owner coverage (PP 03 22) or related endorsement. Note that this endorsement could also be necessary if you need to purchase a personal umbrella policy.
  • Consider a personal umbrella policy that provides first dollar coverage (no deductible) if you do not have a personal vehicle but only a company vehicle.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2013 International Risk Management Institute, Inc.


Why You Need Uninsured Motorists Coverage

Why You Need Uninsured Motorists Coverage

Uninsured motorists (UM) coverage provides insurance protection for bodily injury, and in some states property damage, caused by a motorist who is not insured. This coverage allows you to collect from your own insurance company as if it provided liability coverage for the negligent and uninsured driver. In contrast, underinsured motorists (UIM) coverage provides insurance protection for bodily injury, and in some states property damage, sustained by you when a motorist who is not sufficiently insured negligently causes an accident. The following list provides reasons why you should buy UM/UIM coverage.

  1. The chance of a negligent uninsured motorist hitting you is greater than you might think. In some states, up to 32 percent of all drivers lack automobile insurance. The countrywide average is 14 percent.
  2. UM and UIM coverage is broad, since it provides benefits for you and your family members’ injuries sustained (a) in your own covered auto, (b) in autos you do not own, and (c) as pedestrians.
  3. The cost for this coverage is very reasonable, compared to liability coverage and physical damage coverage for your own car. The increased costs for higher UM/UIM limits are quite affordable for most people.
  4. If your car is damaged by an uninsured driver, the deductible for UM property damage, if available in your state, is normally only $250. This amount is often considerably less than your collision coverage deductible.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2008, International Risk Management Institute, Inc.


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Pursue Those Auto Insurance Discounts


Pursue Those Auto Insurance Discounts

One way to avoid paying too much for your personal automobile insurance is to assure you are getting all the discounts you deserve. The following are discounts you should inquire about. Some may not be available in all states and from all insurers, but it doesn’t hurt to ask. These discounts may significantly affect your insurance premium.

  • “Defensive Driving Discount.” This discount can save you 10 percent on most of the major coverages under your auto policy, such as liability, medical payments, and collision coverage. Defensive driving courses can cost as little as $20 and last as few as 5 or 6 hours. However, the discount normally applies for 3 years. For example, if your auto insurance premium is $100 per month, the premium is $3,600 for 3 years. If liability, collision, and medical payments or personal injury protection coverage constitute 85 percent of this $3,600 premium, the resulting premium subject to this discount is $3,060. In this scenario, the actual premium savings would be $306 (10 percent of $3,060) for that
    3-year period. To get the true savings, you must deduct the cost of the defensive driving class. If the cost is $26, the savings in this example would be reduced to $280. If you spend 6 hours taking the class, you are earning $47 per hour in savings—not an unproductive way to spend a Saturday!


  • “Good Student Discount.” Statistics show that good students tend to be more reliable and mature than students with marginal grades, leading to better driving decisions. Therefore, many states allow a 5 to 10 percent discount if your student driver makes good grades, usually an overall “A” or “B” average in high school or college. If your child has to pay his or her own automobile insurance, this will be another motivator for him or her to make good grades.
  •  “Home/Car Discount.” Many insurers offer discounts of 10 percent or more if they provide both your homeowners and personal automobile insurance. This can lower your costs on both policies.
  • “Auto Safety Features.” Most insurers recognize that owners with cars containing safety features may have fewer accidents and reduced injuries. Many insurers encourage drivers to purchase cars with antilock brakes by giving small discounts for these safety features. Other insurers give discounts for vehicles with airbags and daytime running lights.
  • “Auto Club and Professional Organizations.” Some insurance companies offer auto insurance discounts if you are a member of AAA or similar organizations.
  • “Multicar.” Many insurance companies provide generous discounts up to 15 percent if you have multiple cars on your policy. This reduces the insurance company’s administrative costs, on a per-vehicle basis, in issuing the policy.
  • “Long-Term Customer.” More insurance companies are offering discounts of 5 to 10 percent if you stay with them at least 5 years.
  • “Claims-Free Customer.” If you have been insured with the same insurance company for at least 3 years and have not experienced any losses, inquire about a claims-free customer discount. These discounts help insurers retain customers with excellent driving records.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2008, International Risk Management Institute, Inc.

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Auto Insurance Competition Benefits Consumers

Auto Insurance Competition Benefits Consumers

A highly competitive auto insurance marketplace is making coverage more widely available and affordable for all drivers, according to the Insurance Information Institute (I.I.I.), even though insurance is also a heavily regulated industry.

The I.I.I. made the observations in response to a release issued today by the Consumer Federation of America (CFA), which asserted that insurance industry underwriting and rating practices were increasing auto insurance prices for drivers lacking either certain academic credentials or holding what is deemed to be a less responsible job.

“No matter their station in life, dozens of auto insurers are competing for the business of every driver who resides in the cities the CFA surveyed for its report,” stated Dr. Robert Hartwig, president of the I.I.I. and an economist. “These market forces have created a favorable situation for the nation’s drivers when considering what they’ve had to pay for other products and services essential to their daily lives.”

Rather than looking at price quotes, the National Association of Insurance Commissioners examined what the typical US driver actually paid annually in auto insurance premiums, determining it was $786 in 2002 and $791 in 2010. The I.I.I. projects that the per annum expenditure for auto insurance grew to $819 in 2012, only 4.2 percent more than that same driver paid in premiums to his or her auto insurer in 2002.

In contrast, the Consumer Price Index for the 10 years concluding at year-end 2012 cumulatively grew at a rate of 27.6 percent, according to the US Department of Labor’s Bureau of Labor Statistics (BLS). Meanwhile, gasoline prices soared 168.5 percent and medical care costs rose 45.3 percent in the 10 years prior to year-end 2012, the BLS reported. Bodily injury expenses are a significant cost driver for auto insurers.

New Free Mobile App To Help When In An Auto Accident

You were just in an auto accident; will you remember everything you need to do? 

The National Association of Insurance Commissioners has just produced  a new free mobile app called “Wreck Check” that will help guide you in the steps that you need to take after having an auto accident, and also help you with the insurance information that will be required.  The app is downloadable for both iPhone and Android smart phones.




Auto Accident Checklist