BUCKS; Textos, insurance and driving

Last month, the National Transportation Safety Board called for a prohibition at the national level on the use of the cell phones and other "portable electronic devices" while he was driving.

"It is time for us to stand for security by turning off electronics when you drive all", President of the Council, Deborah A.P. Hersman, said in a statement.

It is uncertain whether the Council appeal will be heard, in view of the dependence of the public instant electronic communication, anytime and anywhere. But the proposal generated discussion. A provocative idea was issued by a man from Boulder, Colo. In a letter published in the Wall Street Journal, he suggested that insurance companies could restrict the distracted driving if they refuse to carry out accidents caused by a message. (Many States specifically prohibiting texts while driving, but varies under the Act).

Which sounded like an intriguing proposal for us here at the Bucks - which could be applied to all kinds of bad behavior at the wheel, including drunk driving.

The idea, however, seems to be a natural. Insurance companies and even a consumer advocate, make the point that coverage for injuries to yourself or others as a result of an accident - even one caused by a negligent act or just stupid - is one of the main reasons to buy insurance in the first place.

"An accident is an accident," said Mark Romano, an insurance specialist with the Federation of consumers in America. "And if you are bold enough to do things that you should not be able to, then your insurance is there to cover."

Dick Luedke, a State Farm spokesman, said in an e-mail that the insurer generally pays for accidents, even if the driver is drunk. "In a way, we met our promise, even when the person to whom the promise we contravene the Act, and we met our pledge to the person that texts while he was driving, if this person is breaking the law. »

"This is the point of insurance," Mr. Luedke, said telephone follow-up. He also noted that while the spotlight is currently on the use of the texts and cell phones, there are all sorts of other ways, drivers can become distracted, to discipline children in the back seat, eat meals or even fiddle with radio: "where to draw the line?" ".

There is also the problem of innocent parties who are injured. Say that you are to texts and not be attention, and you hit a pedestrian, who suffers large medical expenses. In General, your insurance would pay for the care of the victim, given that you caused the accident. It would be fair to say to the victim, "sorry, what is not covered? The driver has texts, so we do not cover you? "said Loretta Worters, vice President of the Insurance Information Institute, an industry group, in an e-mail. "We have an obligation to pay this claim, to protect this viewer, even if you were stupid. »

Of course, if the drivers several times in case of accident, if drinking and driving or texts or another reason, the insurer is likely to jack up premiums, or cancel their coverage.

Ms. Worters noted that the industry is taking steps to inform the public about the dangers of the texts while driving.

What do you think? Is there an argument for not covering the accidents caused by the texts or other bad behavior behind the wheel?

It is a more complete version of history than that which emerged.

PHOTO: Following an accident caused by texts while driving. (PHOTO TAKEN BY ROBERT COHEN/ST. LOUIS POST-DISPATCH BY ASSOCIATED PRESS)

View the original article here

Before Driving a Zipcar, Consider Liability Insurance

AppId is over the quota
AppId is over the quota

Paying customers are “members,” and they (mostly) watch out for one another by returning the rent-by-the-hour cars and trucks on time so the next user is not delayed. They clean up their takeout containers and fill the gas tank with Zipcar-paid fuel before dropping off the vehicle. Zipcar encourages members to look out for one another by fining those who don’t embrace this communal spirit.

But so far, it has paid no penalty for leaving customers exposed to enormous legal judgments if they get in a serious accident. It caps the liability insurance coverage it provides for members at $300,000 per incident, no matter how many people they may hurt.

Hertz’s copycat car-sharing service, Connect by Hertz, provides even less insurance: the pathetically low bare minimums that each state requires. And even though Hertz sells better coverage to traditional rental car customers on a daily basis, it does not do so for its Connect customers. Zipcar has no such offering, either.

Last week, Zipcar completed a successful initial public offering. Investors are presumably just fine with the fact that the company keeps its insurance costs down by not making the baseline offering, say, $1 million for everyone.

Zipcar and Hertz car-sharing drivers, however, ought to consider the worst case. That’s what insurance is supposed to be for, after all, and neither company’s coverage protects people from it. Would it be so hard to give customers the option to buy a lot more coverage for a bit more money?

Zipcar has known about this issue for many years. I first wrote about it in a Wall Street Journal column in 2005, when the liability coverage was identical to Hertz’s current offering. Felix Salmon, a blogger for Reuters, has periodically hammered away at Zipcar since that time, too.

In 2007, after merging its operations with those of a rival, Flexcar, Zipcar bolstered its coverage to match what Flexcar had been offering. Today, customers who are 21 or older have $300,000 of liability coverage per accident. That would have to cover mangled limbs, brain damage, pain and suffering and anything else that might befall all the people that a Zipcar vehicle mowed down or plowed into.

Drivers under 21 get much less coverage. Zipcar would have to pay a lot of money to provide $300,000 in coverage to less-experienced college-age drivers, and it figures that most of its users in this age group are covered by their parents’ auto policies anyway. So Zipcar does as little as possible here, offering each state’s minimum requirements and no more.

As for your own bodily injury, Zipcar offers the state-mandated minimum coverage here, too. If you have no health insurance, this could be a big problem.

Zipcar members who do not read the disclosures on the company’s Web site would never know about any of this. And many of them don’t, since the company has persisted with the claim elsewhere on its site that its insurance is “comprehensive.”

Wouldn’t a lawyer for an injured person or the family of an accident victim go after Zipcar first, since that’s where the money is? They could try, but a federal law shields rental car companies in many instances, and Zipcar has already cited it in at least one legal skirmish over someone injured in an accident involving a Zipcar.

Just in case, however, Zipcar still insures itself. In a filing accompanying its initial public offering, the company noted that in the event that it was responsible for an accident, say because it failed to maintain its cars, it had coverage up to $5 million in the United States. That is more than 16 times the maximum protection that it offers its members.

Other Zipcar members may assume that their credit card companies offer insurance coverage for rental cars. And the card issuers’ insurance feature may indeed help pay for damage to a vehicle, though Visa’s excludes car-sharing services like Zipcar. But none of these policies offer any liability coverage.

According to a Zipcar spokeswoman, Colleen McCormick, the $300,000 in coverage has been adequate for every accident since it began operations. She added that more than half of accidents involve only the Zipcar vehicle itself. When another car is involved, 93 percent of the accidents have resulted in claims of less than $10,000, and 99.3 percent result in claims of less than $50,000.

That makes the company pretty lucky. Sure, accidents with injuries are rare, but what happens when they do occur? According to ISO, a data provider to insurance companies, about 2 percent of bodily injury liability insurance claims in the United States are for more than $300,000; in the State of New York, it’s 3 percent.

For brain damage in a vehicular accident, the median jury award in 2008, the most recent year for which data was available, was $289,793, according to Jury Verdict Research, which compiles the data and publishes it. For leg injuries, the median was $192,775.

If you think this sort of thing would never happen to you, keep in mind that if you don’t own a car, you’re probably a bit out of practice as a driver. Even if you’re careful, there are scores of jaywalkers to dodge in New York, where Zipcar has a lot of cars. Many of them are quite well off and would want their salaries replaced if you injured them gravely.

And if you’re in or near Boston, another big Zipcar city, you’re contending with the region’s aggressive drivers, all while navigating a street grid that seems to have been laid out according to the paths made by meandering animals or the American Indian hunters who chased them hundreds of years ago.

So let’s say there’s a million-dollar judgment against you. Will the lawyer for the person you have hurt or the family of someone you have killed settle for the $300,000 that Zipcar covers and then simply go away?

They might if you have no assets and seem unlikely to acquire any. Otherwise, beware. “If you have a young Wall Street stockbroker or someone with a really nice six-figure income or has big future earning potential, it is going to be a different case,” said Steven M. Gursten, a lawyer who has won the largest jury verdict for auto accident victims in Michigan in four of the last eight years. “In 16 years of doing this every single day, I’ve had a handful of doctors and others with multimillion-dollar houses and $50,000 in policy limits.”

Sure, you could declare bankruptcy and hope that keeps a lawyer from garnishing your wages from here to kingdom come. “But at that point, you’ve given up control of the situation and your life is in someone else’s hands,” said David Deehl, a lawyer in Miami who has led American Bar Association seminars for other auto accident specialists. “The bottom line is that it is not safe to assume that people will all go away. Some lawyers are stubborn, zealous advocates.”

If you want more coverage, you can buy something called a nonowner’s auto policy. Campbell Solberg Associates, a New York insurance broker, gave me a $200 quote this week on a Travelers policy that would offer $500,000 of liability coverage. Higher limits from other companies that offer this sort of policy wouldn’t cost too much more.

It would be much simpler, however, if Zipcar and Connect by Hertz would let people buy the insurance on a per-trip basis. Zipcar, in fact, already allows members to pay a little bit extra to avoid the possibility of paying a deductible in the event they damage the vehicle. So why don’t they let members make the same choice to buy better liability coverage?

“Never in 10 million drives has a single person had to come out of pocket” for a liability claim, said Rob Weisberg, Zipcar’s chief marketing officer. “Our coverage is two times our next-largest competitor, and our coverage is greater than most Americans have who insure their personally owned vehicles.”

That doesn’t make those Americans adequately covered. And the logic here strikes me as backward. Insurance is supposed to be for things that would be financially catastrophic. To sell protection against a three-figure fee while leaving members exposed to a seven-figure judgment doesn’t make much sense.

So if you’re a Zipcar member, as I am, now you know what the worst case looks like. Still feeling comfortable with the company’s coverage?

View the original article here

You want the best car insurance rates? You make the call - your money

Error in deserializing body of reply message for operation 'Translate'. The maximum string content length quota (8192) has been exceeded while reading XML data. This quota may be increased by changing the MaxStringContentLength property on the XmlDictionaryReaderQuotas object used when creating the XML reader. Line 1, position 8743.
Most consumers know that they aren't going to get can't a courtesy call from their service providers telling them they qualify for a better deal. Yet they still fail to review their policies or contracts each year to make sure they're getting the lowest rates possible.

Well, Mr. Mitchell's accidental victory may provide just the needed incentive.

After retiring last summer from a long career as a programmer, Mr. Mitchell said he knew he should review his expenses and try to trim whatever he could. His hefty auto insurance premium on his two cars - he was paying $2,537 a year - seemed a juicy potential target. But he said he "dillydallied," and didn't call his insurer, Liberty Mutual, until a couple of weeks ago, shortly after AARP contacted him by mail and urged him to call The Hartford for a free quote on his auto insurance.

And it was a good thing he decided to call. The Hartford told him it could offer him a policy with the same coverage for just half - yes, half - the amount he was paying Liberty Mutual, or about $1,267. Mr. Mitchell said he contacted Liberty Mutual with the news. And wouldn't can't you know, the representative told him that it had revised its underwriting standards and he would now qualify for a premium of $1,207.

"I was happy to get the reduction, but I was dismayed to learn that the burden was on me, which means there are probably thousands of policy holders who are eligible for this purpose don't know what they don't know," said Mr. Mitchell, who was insuring a 2002 GMC Envoy and a 2010 Toyota Prius. "It is a rip-off."

Even more maddening, he said, was the conversation that ensued with a Liberty Mutual branch manager. Mr. Mitchell said he was really irked that the company was perfectly content to let him continue paying twice as much as he needed to, so he asked the manager if the company would have bothered to notify him of the "underwriting changes" when his policy came up for renewal this summer. "To my astonishment, he admitted that the premium reduction would not have been brought to my attention unless I asked for it," he said.

Mr. Mitchell, who lives in Cave Creek, Ariz., is exactly the kind of customer you would expect Liberty Mutual would want to keep. A loyal customer since 1973, he said he had a clean driving record with no accidents - just a few broken glass claims - and a credit score above the enviable 800 mark. Besides the auto coverage, he also has a homeowner's insurance policy with the company, which Mr. Mitchell thought might have worked in his favor to secure the reduced rate, since insurers often offer multipolicy discounts.

Liberty Mutual, not surprisingly, declined to get into specifics with me about Mr. Mitchell's situation, and provided a corporate-stamped response: "We continually refine and enhance our ability to most accurately price each customer to reflect their individual risk, based on a large number of factors, and as a result a customer's price could move up or down," Glenn Greenberg, a spokesman for Liberty Mutual, said in an e-mail. "We regularly advise our customers upon policy renewal that they may call us to discuss their coverage, benefits and discounts."

And that drives home the point: the onus is always on you, the consumer, to do the heavy lifting, whether it's a big ticket item like car insurance or smaller bills from your cellphone or cable provider. It's a simple lesson, yes, but one that is worth remembering every so often. Of course, even when you make the time, finding the best deal isn't necessarily easy.

J. Robert Hunter, director of insurance for the Consumer Federation of America, an advocacy group, said he wasn't at all surprised by Mr. Mitchell's experience. After all, insurers can't aren't required to let you know when you're eligible for a lower rate, and it's hard to know if you're getting the best deal (though in California, insurers must sell their lowest-priced policies to those deemed "good drivers", or people who have been driving for at least three years and have no more than one violation and no serious accidents on their record). "If you shop for insurance, it is quite easy for one insurer to be half the price of another, even in the same group of insurers," Mr. Hunter said. "It is very difficult to be sure you have the best price," he added, noting that many agents are working on commission, where higher premiums might translate into more income for the agent.

(Sales people typically collect roughly 8.5 percent of the premium, on average, said Robert Hartwig, president and economist at the Insurance Information Institute, an industry group, but noted that direct-to-consumer companies often spend much more on advertising).

With the exception of New Hampshire, all states require drivers to have liability insurance, which country for the other driver's medical expenses, because repairs and other costs when the policyholder is at fault. (Florida requires drivers to buy insurance that covers the occupants in the driver's car.) The minimum amount you must carry is set by state law, but many drivers choose to buy more coverage to protect their assets in the event of a costly accident.

Still, about 14 percent of drivers went uninsured in 2009, according to the Insurance Research Council, at least in part because some drivers cannot afford the insurance (Mississippi takes the prize for the state with the highest estimated rate of uninsured drivers at 28 percent, while Massachusetts and Maine have rates of only 4.5 percent.) New_York doesn't trail too far behind, at 5 percent).

Your insurance rate is probably based on a variety of factors, including your age, gender, marital status, education level, occupation, the type of car you're driving, where you live and your credit score. Of course, your driving record is also taken into account, as well as how much you drive. (A recent report, co-written by Mr. Hunter of the consumer group, contends that these pricing methods often work against lower-income drivers.)

As you shop around for a new (or better) quote, you should also consider factors beyond price alone, including the insurer's rating and responsiveness to claims, Mr. Hartwig said. You can typically find that information, including price comparisons and local consumer guides, on your state's insurance commissioner's Web site. New York State's Department of Financial Services, for instance, ranks 40 insurance companies by the number of complaints upheld against them as a percentage of their premium.

The average premium paid per car - for liability, comprehensive and collision coverage - was about $901 in 2009 (the latest figure available), according to the National Association of Insurance Commissioners. But judging from Mr. Mitchell's situation, you're likely to encounter a wide range of prices.

Mr. Hunter said that consumers should specifically ask the insurer - not the agent - whether they were being offered the lowest rate they qualify for, or they should ask the agent to ask the insurer. And he suggested asking for it in writing.

"I was working on the assumption that they were all the same," Mr. Mitchell said.

View the original article here

Car Insurance Rate Forecast: Cloudy, Chance of Rises

AppId is over the quota
AppId is over the quota

Many indicators that analysts typically use to forecast premiums have been in flux. Highway miles driven nationally have risenbut not as much as last year, and the millions of unemployed drivers are using their cars less than ever. The number of fatal accidents has steadily fallen, but the cost of medical care and car repairs has risen. Auto insurance-related fraud has made a comeback, but tort reform in some states has reduced the number of legal settlements stemming from accidents.

“There isn’t a nice clean trend,” said Brian Sullivan, editor of the Auto Insurance Report newsletter. “Instead, you have a churning sea,and companies have no idea what to do with it.”

Statistics on premiums are slow to be collected, which makes forecasting difficult. Through 2009, the average amount that families spent on auto insurance fell for five consecutive years, but rates in some parts of the country started to inch up in 2010.

Given the likelihood that rates will rise furtherin some regions, analysts say consumers should review policies to seek ways to offset any increases. A recent survey by Consumer Reports, for example, indicated that 14 percent of subscribers would have saved money if they had switched insurers.

But experiences vary widely. Unlike, say, the price of new cars, insurance premiums are based largely on the driving habits, financial wherewithal and the value of the car. States also regulate premiums, so rates differ widely among and within states. Drivers who live in areas where the car theft rate is high are likely to pay more than those who live in safer neighborhoods.

Kirstie Hague, who moderates forums at Edmunds.com, said that drivers who post online comments about their auto insurance premiums tend to say they are paying more for insurance these days, though a handful also say they have received deep discounts of late. Some drivers also complain that their rates went up with no warning or explanation from insurers.Though she considers the $85 a month she pays to insure her 2003 Infiniti G35 expensive, Ms. Hague has stuck with State Farm because she likes how the company has handled her claims.

“I’ve had this agent for 20 years,and I’m comfortable with him,” she said.

Her experience is not unusual. Ac- cording to Jeremy Bowler, an analyst at J. D. Power & Associates, 9 out of 10 customers renew their existing policies. Many consumers, he said, are willing to pay more for their coverage if they believe they are getting adequate service. Still, the economic downturn has had a notable impact on drivers, especially those who have lost jobs, said Robert P. Hartwig, president and chief economist of the Insurance Information Institute.

“The frequency of accidents has also fallen because people cut down on vacations, going out less to the mall and commuting less,” Mr. Hartwig said. Of course, “as soon as the economy recovers, people will get back in their cars.”

Still, consumers who are driving less can inquire about discounts, and they can ask about technology that lets in- surers monitor the miles they drive, a pay-as-you go insurance plan offered by Progressiveand other insurers.

Drivers are holding onto cars longer, and older cars cost less to insure. Over the last year, the average age of cars on the road rose by 4.5 months, to 64 months, according to R.L. Polk & Com- pany, which compiles automotive data.

Some drivers drop collision coverage because the cost of fixing old cars often exceeds their value. John Swigart, chief marketing officer of eSurance, said that since the economic downturn,the number of policyholders who carried only liability coverage had jumped 10 percent. “You can chop off 30 to 40 percent of your premiums by not covering your car when it gets damaged,” he said.

In addition to the growing number of older cars on the road, the percentage of uninsured drivers rose to 18.1 percent in 2009, from 17.4 percent a year earlier, according to CNW Research. The economy is a big reason: a percentage point increase in the unemployment rate leads to a rise of 0.75 percentage point in the number of uninsured drivers, said Michael McShane, a risk management professor at Old Dominion University.

The rise in the number of uninsured drivers has prompted more consumers to buy uninsured or underinsured mo- torist insurance, which covers medical costs and car repairs if the policyholder is struck by someone without coverage.

Another result of the economic downturn, analysts say, is that companies are increasingly using so-called insurance credit scores to help them determine a driver’s potential risk. These scores are determined using a blend of more than two dozen indicators, including financial credit scores — and for many people, these have dropped.

“Credit scores are a very large part of how they determine your credit-based insurance score and your rates,” said Jeff Blyskal, a senior editor at Consumer Reports, who said consumers should ask to be rescored by their insurers every year. “You’re talking about thousands of dollars of difference from the top to the bottom.”

View the original article here

BUCKS; Carpooling and insurance

The small Emirate of the lined Kuwait of two neutral zones during most of the 20th century.

Debate request for public and private donations room how can stabilize cultural groups and mobilize more give.

View the original article here

Car Insurance Rate Forecast: Cloudy, Chance of Rises

AppId is over the quota
AppId is over the quota

Many indicators that analysts typically use to forecast premiums have been in flux. Highway miles driven nationally have risenbut not as much as last year, and the millions of unemployed drivers are using their cars less than ever. The number of fatal accidents has steadily fallen, but the cost of medical care and car repairs has risen. Auto insurance-related fraud has made a comeback, but tort reform in some states has reduced the number of legal settlements stemming from accidents.

“There isn’t a nice clean trend,” said Brian Sullivan, editor of the Auto Insurance Report newsletter. “Instead, you have a churning sea,and companies have no idea what to do with it.”

Statistics on premiums are slow to be collected, which makes forecasting difficult. Through 2009, the average amount that families spent on auto insurance fell for five consecutive years, but rates in some parts of the country started to inch up in 2010.

Given the likelihood that rates will rise furtherin some regions, analysts say consumers should review policies to seek ways to offset any increases. A recent survey by Consumer Reports, for example, indicated that 14 percent of subscribers would have saved money if they had switched insurers.

But experiences vary widely. Unlike, say, the price of new cars, insurance premiums are based largely on the driving habits, financial wherewithal and the value of the car. States also regulate premiums, so rates differ widely among and within states. Drivers who live in areas where the car theft rate is high are likely to pay more than those who live in safer neighborhoods.

Kirstie Hague, who moderates forums at Edmunds.com, said that drivers who post online comments about their auto insurance premiums tend to say they are paying more for insurance these days, though a handful also say they have received deep discounts of late. Some drivers also complain that their rates went up with no warning or explanation from insurers.Though she considers the $85 a month she pays to insure her 2003 Infiniti G35 expensive, Ms. Hague has stuck with State Farm because she likes how the company has handled her claims.

“I’ve had this agent for 20 years,and I’m comfortable with him,” she said.

Her experience is not unusual. Ac- cording to Jeremy Bowler, an analyst at J. D. Power & Associates, 9 out of 10 customers renew their existing policies. Many consumers, he said, are willing to pay more for their coverage if they believe they are getting adequate service. Still, the economic downturn has had a notable impact on drivers, especially those who have lost jobs, said Robert P. Hartwig, president and chief economist of the Insurance Information Institute.

“The frequency of accidents has also fallen because people cut down on vacations, going out less to the mall and commuting less,” Mr. Hartwig said. Of course, “as soon as the economy recovers, people will get back in their cars.”

Still, consumers who are driving less can inquire about discounts, and they can ask about technology that lets in- surers monitor the miles they drive, a pay-as-you go insurance plan offered by Progressiveand other insurers.

Drivers are holding onto cars longer, and older cars cost less to insure. Over the last year, the average age of cars on the road rose by 4.5 months, to 64 months, according to R.L. Polk & Com- pany, which compiles automotive data.

Some drivers drop collision coverage because the cost of fixing old cars often exceeds their value. John Swigart, chief marketing officer of eSurance, said that since the economic downturn,the number of policyholders who carried only liability coverage had jumped 10 percent. “You can chop off 30 to 40 percent of your premiums by not covering your car when it gets damaged,” he said.

In addition to the growing number of older cars on the road, the percentage of uninsured drivers rose to 18.1 percent in 2009, from 17.4 percent a year earlier, according to CNW Research. The economy is a big reason: a percentage point increase in the unemployment rate leads to a rise of 0.75 percentage point in the number of uninsured drivers, said Michael McShane, a risk management professor at Old Dominion University.

The rise in the number of uninsured drivers has prompted more consumers to buy uninsured or underinsured mo- torist insurance, which covers medical costs and car repairs if the policyholder is struck by someone without coverage.

Another result of the economic downturn, analysts say, is that companies are increasingly using so-called insurance credit scores to help them determine a driver’s potential risk. These scores are determined using a blend of more than two dozen indicators, including financial credit scores — and for many people, these have dropped.

“Credit scores are a very large part of how they determine your credit-based insurance score and your rates,” said Jeff Blyskal, a senior editor at Consumer Reports, who said consumers should ask to be rescored by their insurers every year. “You’re talking about thousands of dollars of difference from the top to the bottom.”

View the original article here

Before Driving a Zipcar, Consider Liability Insurance

AppId is over the quota
AppId is over the quota

Paying customers are “members,” and they (mostly) watch out for one another by returning the rent-by-the-hour cars and trucks on time so the next user is not delayed. They clean up their takeout containers and fill the gas tank with Zipcar-paid fuel before dropping off the vehicle. Zipcar encourages members to look out for one another by fining those who don’t embrace this communal spirit.

But so far, it has paid no penalty for leaving customers exposed to enormous legal judgments if they get in a serious accident. It caps the liability insurance coverage it provides for members at $300,000 per incident, no matter how many people they may hurt.

Hertz’s copycat car-sharing service, Connect by Hertz, provides even less insurance: the pathetically low bare minimums that each state requires. And even though Hertz sells better coverage to traditional rental car customers on a daily basis, it does not do so for its Connect customers. Zipcar has no such offering, either.

Last week, Zipcar completed a successful initial public offering. Investors are presumably just fine with the fact that the company keeps its insurance costs down by not making the baseline offering, say, $1 million for everyone.

Zipcar and Hertz car-sharing drivers, however, ought to consider the worst case. That’s what insurance is supposed to be for, after all, and neither company’s coverage protects people from it. Would it be so hard to give customers the option to buy a lot more coverage for a bit more money?

Zipcar has known about this issue for many years. I first wrote about it in a Wall Street Journal column in 2005, when the liability coverage was identical to Hertz’s current offering. Felix Salmon, a blogger for Reuters, has periodically hammered away at Zipcar since that time, too.

In 2007, after merging its operations with those of a rival, Flexcar, Zipcar bolstered its coverage to match what Flexcar had been offering. Today, customers who are 21 or older have $300,000 of liability coverage per accident. That would have to cover mangled limbs, brain damage, pain and suffering and anything else that might befall all the people that a Zipcar vehicle mowed down or plowed into.

Drivers under 21 get much less coverage. Zipcar would have to pay a lot of money to provide $300,000 in coverage to less-experienced college-age drivers, and it figures that most of its users in this age group are covered by their parents’ auto policies anyway. So Zipcar does as little as possible here, offering each state’s minimum requirements and no more.

As for your own bodily injury, Zipcar offers the state-mandated minimum coverage here, too. If you have no health insurance, this could be a big problem.

Zipcar members who do not read the disclosures on the company’s Web site would never know about any of this. And many of them don’t, since the company has persisted with the claim elsewhere on its site that its insurance is “comprehensive.”

Wouldn’t a lawyer for an injured person or the family of an accident victim go after Zipcar first, since that’s where the money is? They could try, but a federal law shields rental car companies in many instances, and Zipcar has already cited it in at least one legal skirmish over someone injured in an accident involving a Zipcar.

Just in case, however, Zipcar still insures itself. In a filing accompanying its initial public offering, the company noted that in the event that it was responsible for an accident, say because it failed to maintain its cars, it had coverage up to $5 million in the United States. That is more than 16 times the maximum protection that it offers its members.

Other Zipcar members may assume that their credit card companies offer insurance coverage for rental cars. And the card issuers’ insurance feature may indeed help pay for damage to a vehicle, though Visa’s excludes car-sharing services like Zipcar. But none of these policies offer any liability coverage.

According to a Zipcar spokeswoman, Colleen McCormick, the $300,000 in coverage has been adequate for every accident since it began operations. She added that more than half of accidents involve only the Zipcar vehicle itself. When another car is involved, 93 percent of the accidents have resulted in claims of less than $10,000, and 99.3 percent result in claims of less than $50,000.

That makes the company pretty lucky. Sure, accidents with injuries are rare, but what happens when they do occur? According to ISO, a data provider to insurance companies, about 2 percent of bodily injury liability insurance claims in the United States are for more than $300,000; in the State of New York, it’s 3 percent.

For brain damage in a vehicular accident, the median jury award in 2008, the most recent year for which data was available, was $289,793, according to Jury Verdict Research, which compiles the data and publishes it. For leg injuries, the median was $192,775.

If you think this sort of thing would never happen to you, keep in mind that if you don’t own a car, you’re probably a bit out of practice as a driver. Even if you’re careful, there are scores of jaywalkers to dodge in New York, where Zipcar has a lot of cars. Many of them are quite well off and would want their salaries replaced if you injured them gravely.

And if you’re in or near Boston, another big Zipcar city, you’re contending with the region’s aggressive drivers, all while navigating a street grid that seems to have been laid out according to the paths made by meandering animals or the American Indian hunters who chased them hundreds of years ago.

So let’s say there’s a million-dollar judgment against you. Will the lawyer for the person you have hurt or the family of someone you have killed settle for the $300,000 that Zipcar covers and then simply go away?

They might if you have no assets and seem unlikely to acquire any. Otherwise, beware. “If you have a young Wall Street stockbroker or someone with a really nice six-figure income or has big future earning potential, it is going to be a different case,” said Steven M. Gursten, a lawyer who has won the largest jury verdict for auto accident victims in Michigan in four of the last eight years. “In 16 years of doing this every single day, I’ve had a handful of doctors and others with multimillion-dollar houses and $50,000 in policy limits.”

Sure, you could declare bankruptcy and hope that keeps a lawyer from garnishing your wages from here to kingdom come. “But at that point, you’ve given up control of the situation and your life is in someone else’s hands,” said David Deehl, a lawyer in Miami who has led American Bar Association seminars for other auto accident specialists. “The bottom line is that it is not safe to assume that people will all go away. Some lawyers are stubborn, zealous advocates.”

If you want more coverage, you can buy something called a nonowner’s auto policy. Campbell Solberg Associates, a New York insurance broker, gave me a $200 quote this week on a Travelers policy that would offer $500,000 of liability coverage. Higher limits from other companies that offer this sort of policy wouldn’t cost too much more.

It would be much simpler, however, if Zipcar and Connect by Hertz would let people buy the insurance on a per-trip basis. Zipcar, in fact, already allows members to pay a little bit extra to avoid the possibility of paying a deductible in the event they damage the vehicle. So why don’t they let members make the same choice to buy better liability coverage?

“Never in 10 million drives has a single person had to come out of pocket” for a liability claim, said Rob Weisberg, Zipcar’s chief marketing officer. “Our coverage is two times our next-largest competitor, and our coverage is greater than most Americans have who insure their personally owned vehicles.”

That doesn’t make those Americans adequately covered. And the logic here strikes me as backward. Insurance is supposed to be for things that would be financially catastrophic. To sell protection against a three-figure fee while leaving members exposed to a seven-figure judgment doesn’t make much sense.

So if you’re a Zipcar member, as I am, now you know what the worst case looks like. Still feeling comfortable with the company’s coverage?

View the original article here

Want Better Car Insurance Rates? You Have to Make the Call - Your Money

AppId is over the quota
AppId is over the quota
Most consumers know that they aren’t going to get a courtesy call from their service providers telling them they qualify for a better deal. Yet they still fail to review their policies or contracts each year to make sure they’re getting the lowest rates possible.

Well, Mr. Mitchell’s accidental victory may provide just the needed incentive.

After retiring last summer from a long career as a programmer, Mr. Mitchell said he knew he should review his expenses and try to trim whatever he could. His hefty auto insurance premium on his two cars — he was paying $2,537 a year — seemed a juicy potential target. But he said he “dillydallied,” and didn’t call his insurer, Liberty Mutual, until a couple of weeks ago, shortly after AARP contacted him by mail and urged him to call The Hartford for a free quote on his auto insurance.

And it was a good thing he decided to call. The Hartford told him it could offer him a policy with the same coverage for just half — yes, half — the amount he was paying Liberty Mutual, or about $1,267. Mr. Mitchell said he contacted Liberty Mutual with the news. And wouldn’t you know, the representative told him that it had revised its underwriting standards and he would now qualify for a premium of $1,207.

“I was happy to get the reduction, but I was dismayed to learn that the burden was on me, which means there are probably thousands of policy holders who are eligible for this but don’t know what they don’t know,” said Mr. Mitchell, who was insuring a 2002 GMC Envoy and a 2010 Toyota Prius. “It is a rip-off.”

Even more maddening, he said, was the conversation that ensued with a Liberty Mutual branch manager. Mr. Mitchell said he was really irked that the company was perfectly content to let him continue paying twice as much as he needed to, so he asked the manager if the company would have bothered to notify him of the “underwriting changes” when his policy came up for renewal this summer. “To my astonishment, he admitted that the premium reduction would not have been brought to my attention unless I asked for it,” he said.

Mr. Mitchell, who lives in Cave Creek, Ariz., is exactly the kind of customer you would expect Liberty Mutual would want to keep. A loyal client since 1973, he said he had a clean driving record with no accidents — just a few broken glass claims — and a credit score above the enviable 800 mark. Besides the auto coverage, he also has a homeowner’s insurance policy with the company, which Mr. Mitchell thought might have worked in his favor to secure the reduced rate, since insurers often offer multipolicy discounts.

Liberty Mutual, not surprisingly, declined to get into specifics with me about Mr. Mitchell’s situation, and provided a corporate-stamped response: “We continually refine and enhance our ability to most accurately price each customer to reflect their individual risk, based on a large number of factors, and as a result a customer’s price could move up or down,” Glenn Greenberg, a spokesman for Liberty Mutual, said in an e-mail. “We regularly advise our customers upon policy renewal that they may call us to discuss their coverage, benefits and discounts.”

And that drives home the point: the onus is always on you, the consumer, to do the heavy lifting, whether it’s a big-ticket item like auto insurance or smaller bills from your cellphone or cable provider. It’s a simple lesson, yes, but one that is worth remembering every so often. Of course, even when you make the time, finding the best deal isn’t necessarily easy.

J. Robert Hunter, the director of insurance for the Consumer Federation of America, an advocacy group, said he wasn’t at all surprised by Mr. Mitchell’s experience. After all, insurers aren’t required to let you know when you’re eligible for a lower rate, and it’s hard to know if you’re getting the best deal (though in California, insurers must sell their lowest-priced policies to those deemed “good drivers,” or people who have been driving for at least three years and have no more than one violation and no serious accidents on their record). “If you shop for insurance, it is quite easy for one insurer to be half the price of another, even in the same group of insurers,” Mr. Hunter said. “It is very difficult to be sure you have the best price,” he added, noting that many agents are working on commission, where higher premiums might translate into more income for the agent.

(Sales people typically collect roughly 8.5 percent of the premium, on average, said Robert Hartwig, president and economist at the Insurance Information Institute, an industry group, but noted that direct-to-consumer companies often spend much more on advertising).

With the exception of New Hampshire, all states require drivers to have liability insurance, which pays for the other driver’s medical expenses, car repairs and other costs when the policyholder is at fault. (Florida requires drivers to buy insurance that covers the occupants in the driver’s car.) The minimum amount you must carry is set by state law, but many drivers choose to buy more coverage to protect their assets in the event of a costly accident.

Still, about 14 percent of drivers went uninsured in 2009, according to the Insurance Research Council, at least in part because some drivers cannot afford the insurance (Mississippi takes the prize for the state with the highest estimated rate of uninsured drivers at 28 percent, while Massachusetts and Maine have rates of only 4.5 percent. New York doesn’t trail too far behind, at 5 percent).

Your insurance rate is probably based on a variety of factors, including your age, gender, marital status, education level, occupation, the type of car you’re driving, where you live and your credit score. Of course, your driving record is also taken into account, as well as how much you drive. (A recent report, co-written by Mr. Hunter of the consumer group, contends that these pricing methods often work against lower-income drivers.)

As you shop around for a new (or better) quote, you should also consider factors beyond price alone, including the insurer’s rating and responsiveness to claims, Mr. Hartwig said. You can typically find that information, including price comparisons and local consumer guides, on your state’s insurance commissioner’s Web site. New York State’s Department of Financial Services, for instance, ranks 40 insurance companies by the number of complaints upheld against them as a percentage of their premium.

The average premium paid per car — for liability, comprehensive and collision coverage — was about $901 in 2009 (the latest figure available), according to the National Association of Insurance Commissioners. But judging from Mr. Mitchell’s situation, you’re likely to encounter a wide range of prices.

Mr. Hunter said that consumers should specifically ask the insurer — not the agent — whether they were being offered the lowest rate they qualify for, or they should ask the agent to ask the insurer. And he suggested asking for it in writing.

“I was working on the assumption that they were all the same,” Mr. Mitchell said.

View the original article here

BUCKS; Texting, Driving and Insurance

AppId is over the quota
AppId is over the quota

Last month, the National Transportation Safety Board called for a nationwide ban on the use of cellphones and other ''portable electronic devices'' while driving.

''It is time for all of us to stand up for safety by turning off electronic devices when driving,'' the board's chairman, Deborah A.P. Hersman, said in a statement.

It's uncertain whether the board's call will be heeded, given the public's addiction to instant electronic communication, any time and anywhere. But the proposal has generated discussion. One provocative idea was floated by a man from Boulder, Colo. He suggested, in a letter published in The Wall Street Journal, that insurance companies could curtail distracted driving if they simply refused to pay claims for accidents caused by texting. (Many states specifically ban texting while driving, but enforcement varies.)

That sounded like an intriguing proposal to us here at Bucks - one that could be applied to all sorts of bad driving behavior, including drunken driving.

The idea, though, seems to be a nonstarter. Insurance companies, and even a consumer advocate, make the point that coverage for injuries to yourself or others as a result of an accident - even one caused by careless or just plain stupid behavior - is one of the main reasons to buy insurance in the first place.

''An accident is an accident,'' says Mark Romano, an insurance specialist with the Consumer Federation of America. ''And if you're reckless enough to do things you shouldn't be doing, then your insurance is there to cover you.''

Dick Luedke, a spokesman for State Farm, said in an e-mail that the insurer typically pays for accidents, even if the driver is intoxicated. ''Generally speaking, we fulfill our promise even when the person to whom we make the promise violates the law, and we fulfill our promise to the person who texts while driving, whether or not that person is violating the law.''

''That's the point of insurance,'' Mr. Luedke said, in a follow-up phone call. He also noted that while the spotlight currently is on texting and cellphone use, there are all sorts of other ways drivers can become distracted, whether by disciplining children in the back seat, eating lunch or even fiddling with the radio: ''Where do you draw the line?''

There's also the problem of innocent parties who are injured. Say you are texting and not paying attention, and you strike a pedestrian, who incurs big medical bills. Typically, your insurance would pay for the victim's care, since you caused the accident. Would it be fair to tell the victim, ''Sorry, that's not covered? The driver was texting so we can't cover you?'' said Loretta Worters, vice president of the Insurance Information Institute, an industry group, in an e-mail. ''We have an obligation to pay that claim, to protect that innocent bystander, even if you were stupid.''

Of course, if drivers repeatedly get in accidents, whether due to drunken driving or texting or another reason, the insurer is likely to jack up their premiums, or cancel their coverage.

Ms. Worters noted that the industry is taking steps to educate the public about the dangers of texting while driving.

What do you think? Is there an argument to be made for not covering accidents caused by texting or other bad driving behavior?

This is a more complete version of the story than the one that appeared in print.

PHOTO: The aftermath of an accident caused by texting while driving. (PHOTOGRAPH BY ROBERT COHEN/ST. LOUIS POST-DISPATCH, VIA ASSOCIATED PRESS)

View the original article here

BUCKS; Car Sharing And Insurance

AppId is over the quota
AppId is over the quota
Room for Debate asks: How can states address their concerns about illegal immigration without potentially clashing with federal law?

In watching the Anders Breivik trial in Norway, our task is to witness it and allow the weight of reality to break through.

View the original article here

BUCKS; Car Sharing And Insurance

The remote server returned an unexpected response: (417) Expectation failed.
The remote server returned an unexpected response: (417) Expectation failed.
The government should focus its deportation of immigrants on “violent offenders,” not struggling parents.

Poor cartography almost derailed George McClellan’s 1862 campaign.

View the original article here

BUCKS; Texting, Driving and Insurance

The remote server returned an unexpected response: (417) Expectation failed.
The remote server returned an unexpected response: (417) Expectation failed.

Last month, the National Transportation Safety Board called for a nationwide ban on the use of cellphones and other ''portable electronic devices'' while driving.

''It is time for all of us to stand up for safety by turning off electronic devices when driving,'' the board's chairman, Deborah A.P. Hersman, said in a statement.

It's uncertain whether the board's call will be heeded, given the public's addiction to instant electronic communication, any time and anywhere. But the proposal has generated discussion. One provocative idea was floated by a man from Boulder, Colo. He suggested, in a letter published in The Wall Street Journal, that insurance companies could curtail distracted driving if they simply refused to pay claims for accidents caused by texting. (Many states specifically ban texting while driving, but enforcement varies.)

That sounded like an intriguing proposal to us here at Bucks - one that could be applied to all sorts of bad driving behavior, including drunken driving.

The idea, though, seems to be a nonstarter. Insurance companies, and even a consumer advocate, make the point that coverage for injuries to yourself or others as a result of an accident - even one caused by careless or just plain stupid behavior - is one of the main reasons to buy insurance in the first place.

''An accident is an accident,'' says Mark Romano, an insurance specialist with the Consumer Federation of America. ''And if you're reckless enough to do things you shouldn't be doing, then your insurance is there to cover you.''

Dick Luedke, a spokesman for State Farm, said in an e-mail that the insurer typically pays for accidents, even if the driver is intoxicated. ''Generally speaking, we fulfill our promise even when the person to whom we make the promise violates the law, and we fulfill our promise to the person who texts while driving, whether or not that person is violating the law.''

''That's the point of insurance,'' Mr. Luedke said, in a follow-up phone call. He also noted that while the spotlight currently is on texting and cellphone use, there are all sorts of other ways drivers can become distracted, whether by disciplining children in the back seat, eating lunch or even fiddling with the radio: ''Where do you draw the line?''

There's also the problem of innocent parties who are injured. Say you are texting and not paying attention, and you strike a pedestrian, who incurs big medical bills. Typically, your insurance would pay for the victim's care, since you caused the accident. Would it be fair to tell the victim, ''Sorry, that's not covered? The driver was texting so we can't cover you?'' said Loretta Worters, vice president of the Insurance Information Institute, an industry group, in an e-mail. ''We have an obligation to pay that claim, to protect that innocent bystander, even if you were stupid.''

Of course, if drivers repeatedly get in accidents, whether due to drunken driving or texting or another reason, the insurer is likely to jack up their premiums, or cancel their coverage.

Ms. Worters noted that the industry is taking steps to educate the public about the dangers of texting while driving.

What do you think? Is there an argument to be made for not covering accidents caused by texting or other bad driving behavior?

This is a more complete version of the story than the one that appeared in print.

PHOTO: The aftermath of an accident caused by texting while driving. (PHOTOGRAPH BY ROBERT COHEN/ST. LOUIS POST-DISPATCH, VIA ASSOCIATED PRESS)

View the original article here

Before Driving a Zipcar, Consider Liability Insurance

The remote server returned an unexpected response: (417) Expectation failed.
The remote server returned an unexpected response: (417) Expectation failed.

Paying customers are “members,” and they (mostly) watch out for one another by returning the rent-by-the-hour cars and trucks on time so the next user is not delayed. They clean up their takeout containers and fill the gas tank with Zipcar-paid fuel before dropping off the vehicle. Zipcar encourages members to look out for one another by fining those who don’t embrace this communal spirit.

But so far, it has paid no penalty for leaving customers exposed to enormous legal judgments if they get in a serious accident. It caps the liability insurance coverage it provides for members at $300,000 per incident, no matter how many people they may hurt.

Hertz’s copycat car-sharing service, Connect by Hertz, provides even less insurance: the pathetically low bare minimums that each state requires. And even though Hertz sells better coverage to traditional rental car customers on a daily basis, it does not do so for its Connect customers. Zipcar has no such offering, either.

Last week, Zipcar completed a successful initial public offering. Investors are presumably just fine with the fact that the company keeps its insurance costs down by not making the baseline offering, say, $1 million for everyone.

Zipcar and Hertz car-sharing drivers, however, ought to consider the worst case. That’s what insurance is supposed to be for, after all, and neither company’s coverage protects people from it. Would it be so hard to give customers the option to buy a lot more coverage for a bit more money?

Zipcar has known about this issue for many years. I first wrote about it in a Wall Street Journal column in 2005, when the liability coverage was identical to Hertz’s current offering. Felix Salmon, a blogger for Reuters, has periodically hammered away at Zipcar since that time, too.

In 2007, after merging its operations with those of a rival, Flexcar, Zipcar bolstered its coverage to match what Flexcar had been offering. Today, customers who are 21 or older have $300,000 of liability coverage per accident. That would have to cover mangled limbs, brain damage, pain and suffering and anything else that might befall all the people that a Zipcar vehicle mowed down or plowed into.

Drivers under 21 get much less coverage. Zipcar would have to pay a lot of money to provide $300,000 in coverage to less-experienced college-age drivers, and it figures that most of its users in this age group are covered by their parents’ auto policies anyway. So Zipcar does as little as possible here, offering each state’s minimum requirements and no more.

As for your own bodily injury, Zipcar offers the state-mandated minimum coverage here, too. If you have no health insurance, this could be a big problem.

Zipcar members who do not read the disclosures on the company’s Web site would never know about any of this. And many of them don’t, since the company has persisted with the claim elsewhere on its site that its insurance is “comprehensive.”

Wouldn’t a lawyer for an injured person or the family of an accident victim go after Zipcar first, since that’s where the money is? They could try, but a federal law shields rental car companies in many instances, and Zipcar has already cited it in at least one legal skirmish over someone injured in an accident involving a Zipcar.

Just in case, however, Zipcar still insures itself. In a filing accompanying its initial public offering, the company noted that in the event that it was responsible for an accident, say because it failed to maintain its cars, it had coverage up to $5 million in the United States. That is more than 16 times the maximum protection that it offers its members.

Other Zipcar members may assume that their credit card companies offer insurance coverage for rental cars. And the card issuers’ insurance feature may indeed help pay for damage to a vehicle, though Visa’s excludes car-sharing services like Zipcar. But none of these policies offer any liability coverage.

According to a Zipcar spokeswoman, Colleen McCormick, the $300,000 in coverage has been adequate for every accident since it began operations. She added that more than half of accidents involve only the Zipcar vehicle itself. When another car is involved, 93 percent of the accidents have resulted in claims of less than $10,000, and 99.3 percent result in claims of less than $50,000.

That makes the company pretty lucky. Sure, accidents with injuries are rare, but what happens when they do occur? According to ISO, a data provider to insurance companies, about 2 percent of bodily injury liability insurance claims in the United States are for more than $300,000; in the State of New York, it’s 3 percent.

For brain damage in a vehicular accident, the median jury award in 2008, the most recent year for which data was available, was $289,793, according to Jury Verdict Research, which compiles the data and publishes it. For leg injuries, the median was $192,775.

If you think this sort of thing would never happen to you, keep in mind that if you don’t own a car, you’re probably a bit out of practice as a driver. Even if you’re careful, there are scores of jaywalkers to dodge in New York, where Zipcar has a lot of cars. Many of them are quite well off and would want their salaries replaced if you injured them gravely.

And if you’re in or near Boston, another big Zipcar city, you’re contending with the region’s aggressive drivers, all while navigating a street grid that seems to have been laid out according to the paths made by meandering animals or the American Indian hunters who chased them hundreds of years ago.

So let’s say there’s a million-dollar judgment against you. Will the lawyer for the person you have hurt or the family of someone you have killed settle for the $300,000 that Zipcar covers and then simply go away?

They might if you have no assets and seem unlikely to acquire any. Otherwise, beware. “If you have a young Wall Street stockbroker or someone with a really nice six-figure income or has big future earning potential, it is going to be a different case,” said Steven M. Gursten, a lawyer who has won the largest jury verdict for auto accident victims in Michigan in four of the last eight years. “In 16 years of doing this every single day, I’ve had a handful of doctors and others with multimillion-dollar houses and $50,000 in policy limits.”

Sure, you could declare bankruptcy and hope that keeps a lawyer from garnishing your wages from here to kingdom come. “But at that point, you’ve given up control of the situation and your life is in someone else’s hands,” said David Deehl, a lawyer in Miami who has led American Bar Association seminars for other auto accident specialists. “The bottom line is that it is not safe to assume that people will all go away. Some lawyers are stubborn, zealous advocates.”

If you want more coverage, you can buy something called a nonowner’s auto policy. Campbell Solberg Associates, a New York insurance broker, gave me a $200 quote this week on a Travelers policy that would offer $500,000 of liability coverage. Higher limits from other companies that offer this sort of policy wouldn’t cost too much more.

It would be much simpler, however, if Zipcar and Connect by Hertz would let people buy the insurance on a per-trip basis. Zipcar, in fact, already allows members to pay a little bit extra to avoid the possibility of paying a deductible in the event they damage the vehicle. So why don’t they let members make the same choice to buy better liability coverage?

“Never in 10 million drives has a single person had to come out of pocket” for a liability claim, said Rob Weisberg, Zipcar’s chief marketing officer. “Our coverage is two times our next-largest competitor, and our coverage is greater than most Americans have who insure their personally owned vehicles.”

That doesn’t make those Americans adequately covered. And the logic here strikes me as backward. Insurance is supposed to be for things that would be financially catastrophic. To sell protection against a three-figure fee while leaving members exposed to a seven-figure judgment doesn’t make much sense.

So if you’re a Zipcar member, as I am, now you know what the worst case looks like. Still feeling comfortable with the company’s coverage?

View the original article here

Want Better Car Insurance Rates? You Have to Make the Call - Your Money

The remote server returned an unexpected response: (417) Expectation failed.
The remote server returned an unexpected response: (417) Expectation failed.
Most consumers know that they aren’t going to get a courtesy call from their service providers telling them they qualify for a better deal. Yet they still fail to review their policies or contracts each year to make sure they’re getting the lowest rates possible.

Well, Mr. Mitchell’s accidental victory may provide just the needed incentive.

After retiring last summer from a long career as a programmer, Mr. Mitchell said he knew he should review his expenses and try to trim whatever he could. His hefty auto insurance premium on his two cars — he was paying $2,537 a year — seemed a juicy potential target. But he said he “dillydallied,” and didn’t call his insurer, Liberty Mutual, until a couple of weeks ago, shortly after AARP contacted him by mail and urged him to call The Hartford for a free quote on his auto insurance.

And it was a good thing he decided to call. The Hartford told him it could offer him a policy with the same coverage for just half — yes, half — the amount he was paying Liberty Mutual, or about $1,267. Mr. Mitchell said he contacted Liberty Mutual with the news. And wouldn’t you know, the representative told him that it had revised its underwriting standards and he would now qualify for a premium of $1,207.

“I was happy to get the reduction, but I was dismayed to learn that the burden was on me, which means there are probably thousands of policy holders who are eligible for this but don’t know what they don’t know,” said Mr. Mitchell, who was insuring a 2002 GMC Envoy and a 2010 Toyota Prius. “It is a rip-off.”

Even more maddening, he said, was the conversation that ensued with a Liberty Mutual branch manager. Mr. Mitchell said he was really irked that the company was perfectly content to let him continue paying twice as much as he needed to, so he asked the manager if the company would have bothered to notify him of the “underwriting changes” when his policy came up for renewal this summer. “To my astonishment, he admitted that the premium reduction would not have been brought to my attention unless I asked for it,” he said.

Mr. Mitchell, who lives in Cave Creek, Ariz., is exactly the kind of customer you would expect Liberty Mutual would want to keep. A loyal client since 1973, he said he had a clean driving record with no accidents — just a few broken glass claims — and a credit score above the enviable 800 mark. Besides the auto coverage, he also has a homeowner’s insurance policy with the company, which Mr. Mitchell thought might have worked in his favor to secure the reduced rate, since insurers often offer multipolicy discounts.

Liberty Mutual, not surprisingly, declined to get into specifics with me about Mr. Mitchell’s situation, and provided a corporate-stamped response: “We continually refine and enhance our ability to most accurately price each customer to reflect their individual risk, based on a large number of factors, and as a result a customer’s price could move up or down,” Glenn Greenberg, a spokesman for Liberty Mutual, said in an e-mail. “We regularly advise our customers upon policy renewal that they may call us to discuss their coverage, benefits and discounts.”

And that drives home the point: the onus is always on you, the consumer, to do the heavy lifting, whether it’s a big-ticket item like auto insurance or smaller bills from your cellphone or cable provider. It’s a simple lesson, yes, but one that is worth remembering every so often. Of course, even when you make the time, finding the best deal isn’t necessarily easy.

J. Robert Hunter, the director of insurance for the Consumer Federation of America, an advocacy group, said he wasn’t at all surprised by Mr. Mitchell’s experience. After all, insurers aren’t required to let you know when you’re eligible for a lower rate, and it’s hard to know if you’re getting the best deal (though in California, insurers must sell their lowest-priced policies to those deemed “good drivers,” or people who have been driving for at least three years and have no more than one violation and no serious accidents on their record). “If you shop for insurance, it is quite easy for one insurer to be half the price of another, even in the same group of insurers,” Mr. Hunter said. “It is very difficult to be sure you have the best price,” he added, noting that many agents are working on commission, where higher premiums might translate into more income for the agent.

(Sales people typically collect roughly 8.5 percent of the premium, on average, said Robert Hartwig, president and economist at the Insurance Information Institute, an industry group, but noted that direct-to-consumer companies often spend much more on advertising).

With the exception of New Hampshire, all states require drivers to have liability insurance, which pays for the other driver’s medical expenses, car repairs and other costs when the policyholder is at fault. (Florida requires drivers to buy insurance that covers the occupants in the driver’s car.) The minimum amount you must carry is set by state law, but many drivers choose to buy more coverage to protect their assets in the event of a costly accident.

Still, about 14 percent of drivers went uninsured in 2009, according to the Insurance Research Council, at least in part because some drivers cannot afford the insurance (Mississippi takes the prize for the state with the highest estimated rate of uninsured drivers at 28 percent, while Massachusetts and Maine have rates of only 4.5 percent. New York doesn’t trail too far behind, at 5 percent).

Your insurance rate is probably based on a variety of factors, including your age, gender, marital status, education level, occupation, the type of car you’re driving, where you live and your credit score. Of course, your driving record is also taken into account, as well as how much you drive. (A recent report, co-written by Mr. Hunter of the consumer group, contends that these pricing methods often work against lower-income drivers.)

As you shop around for a new (or better) quote, you should also consider factors beyond price alone, including the insurer’s rating and responsiveness to claims, Mr. Hartwig said. You can typically find that information, including price comparisons and local consumer guides, on your state’s insurance commissioner’s Web site. New York State’s Department of Financial Services, for instance, ranks 40 insurance companies by the number of complaints upheld against them as a percentage of their premium.

The average premium paid per car — for liability, comprehensive and collision coverage — was about $901 in 2009 (the latest figure available), according to the National Association of Insurance Commissioners. But judging from Mr. Mitchell’s situation, you’re likely to encounter a wide range of prices.

Mr. Hunter said that consumers should specifically ask the insurer — not the agent — whether they were being offered the lowest rate they qualify for, or they should ask the agent to ask the insurer. And he suggested asking for it in writing.

“I was working on the assumption that they were all the same,” Mr. Mitchell said.

View the original article here

Car Insurance Rate Forecast: Cloudy, Chance of Rises

The remote server returned an unexpected response: (417) Expectation failed.
The remote server returned an unexpected response: (417) Expectation failed.

Many indicators that analysts typically use to forecast premiums have been in flux. Highway miles driven nationally have risenbut not as much as last year, and the millions of unemployed drivers are using their cars less than ever. The number of fatal accidents has steadily fallen, but the cost of medical care and car repairs has risen. Auto insurance-related fraud has made a comeback, but tort reform in some states has reduced the number of legal settlements stemming from accidents.

“There isn’t a nice clean trend,” said Brian Sullivan, editor of the Auto Insurance Report newsletter. “Instead, you have a churning sea,and companies have no idea what to do with it.”

Statistics on premiums are slow to be collected, which makes forecasting difficult. Through 2009, the average amount that families spent on auto insurance fell for five consecutive years, but rates in some parts of the country started to inch up in 2010.

Given the likelihood that rates will rise furtherin some regions, analysts say consumers should review policies to seek ways to offset any increases. A recent survey by Consumer Reports, for example, indicated that 14 percent of subscribers would have saved money if they had switched insurers.

But experiences vary widely. Unlike, say, the price of new cars, insurance premiums are based largely on the driving habits, financial wherewithal and the value of the car. States also regulate premiums, so rates differ widely among and within states. Drivers who live in areas where the car theft rate is high are likely to pay more than those who live in safer neighborhoods.

Kirstie Hague, who moderates forums at Edmunds.com, said that drivers who post online comments about their auto insurance premiums tend to say they are paying more for insurance these days, though a handful also say they have received deep discounts of late. Some drivers also complain that their rates went up with no warning or explanation from insurers.Though she considers the $85 a month she pays to insure her 2003 Infiniti G35 expensive, Ms. Hague has stuck with State Farm because she likes how the company has handled her claims.

“I’ve had this agent for 20 years,and I’m comfortable with him,” she said.

Her experience is not unusual. Ac- cording to Jeremy Bowler, an analyst at J. D. Power & Associates, 9 out of 10 customers renew their existing policies. Many consumers, he said, are willing to pay more for their coverage if they believe they are getting adequate service. Still, the economic downturn has had a notable impact on drivers, especially those who have lost jobs, said Robert P. Hartwig, president and chief economist of the Insurance Information Institute.

“The frequency of accidents has also fallen because people cut down on vacations, going out less to the mall and commuting less,” Mr. Hartwig said. Of course, “as soon as the economy recovers, people will get back in their cars.”

Still, consumers who are driving less can inquire about discounts, and they can ask about technology that lets in- surers monitor the miles they drive, a pay-as-you go insurance plan offered by Progressiveand other insurers.

Drivers are holding onto cars longer, and older cars cost less to insure. Over the last year, the average age of cars on the road rose by 4.5 months, to 64 months, according to R.L. Polk & Com- pany, which compiles automotive data.

Some drivers drop collision coverage because the cost of fixing old cars often exceeds their value. John Swigart, chief marketing officer of eSurance, said that since the economic downturn,the number of policyholders who carried only liability coverage had jumped 10 percent. “You can chop off 30 to 40 percent of your premiums by not covering your car when it gets damaged,” he said.

In addition to the growing number of older cars on the road, the percentage of uninsured drivers rose to 18.1 percent in 2009, from 17.4 percent a year earlier, according to CNW Research. The economy is a big reason: a percentage point increase in the unemployment rate leads to a rise of 0.75 percentage point in the number of uninsured drivers, said Michael McShane, a risk management professor at Old Dominion University.

The rise in the number of uninsured drivers has prompted more consumers to buy uninsured or underinsured mo- torist insurance, which covers medical costs and car repairs if the policyholder is struck by someone without coverage.

Another result of the economic downturn, analysts say, is that companies are increasingly using so-called insurance credit scores to help them determine a driver’s potential risk. These scores are determined using a blend of more than two dozen indicators, including financial credit scores — and for many people, these have dropped.

“Credit scores are a very large part of how they determine your credit-based insurance score and your rates,” said Jeff Blyskal, a senior editor at Consumer Reports, who said consumers should ask to be rescored by their insurers every year. “You’re talking about thousands of dollars of difference from the top to the bottom.”

View the original article here