Posts Tagged ‘Auto Insurance Premiums’
And that could be in the process of happening. When Americans spend less time on the road, the frequency of auto accidents declines. And when auto accidents go down, so do claims on auto insurance. That gets the ball rolling: When auto insurance companies see their costs on claims declining steadily, they typically respond to market conditions by lowering their auto insurance quotes and, ultimately auto insurance rates in a bid to stay competitive. And voila!, we write smaller checks for our auto insurance premiums.
With run-away gas prices, Americans are already driving less. The Federal Highway Administration (FHWA) reported in May 2008 that Americans are driving at “historic lows.” The estimated “vehicle miles traveled,” or VMT, for March 2008 fell 4.3 percent compared to March 2007, making it the sharpest dip for any month since the FHWA began tracking traffic-volume trends in 1942. Want to follow driving trends? The FHWA publishes monthly “Traffic Volume Trends.”
When auto accident claims go down, auto insurance companies can usually respond fairly quickly. To adjust premiums, they must file new auto insurance rates with every state in which they operate. They can file new auto insurance rates any time they want to respond to market conditions, and many states offer a “file and use” system, where auto insurance companies can file new auto insurance rates and begin using them immediately without prior approval from the state insurance department. Some states even have a “use and file” system, so insurers can implement new auto insurance rates and then officially file them shortly thereafter. This way auto insurance companies can begin passing on savings (or increases) right away.
The nation’s largest auto insurance companies are the first to see trends in accidents and claims payments due to the sheer volume of their claims data. For example, State Farm, the nation’s largest auto insurance company, handles about 19 million auto insurance claims a year (that’s a little over 17 claims per minute, all day, every day).
Robert Passmore, Director of Personal Lines for Property Casualty Insurers Association of America (PCIAA), an industry trade group, says, “This is where you see competition kick in.” He notes that if you live in a state that requires “prior approval,” it would take a longer time to see rate reductions. That means Californians and New Yorkers could be tapping their toes waiting for auto insurance rate reductions while everyone else pockets savings.
Auto insurance companies also note that auto insurance rates have been holding steady or declining over the past few years anyway. For example, State Farm customers in all states have seen rate reductions between Jan. 1, 2004, and Dec. 31, 2007, and customers in 39 of those states saw double-digit percentage rate decreases. (State Farm policyholders in New Jersey got the biggest drop of 29.19 percent.)
Passmore cautions that other factors could offset the trend in reduced driving specifically, medical costs from bodily injury claims, legal costs relating to claims disputes and repair costs that are, for now, rising faster than the rate at which auto accident claims are going down.
Darn those repair, medical and legal costs! If it weren’t for those, drivers could already be seeing lower auto insurance rates (as we sit at home). However, auto insurance companies generally agree that if we see significant auto accident reductions, lower auto insurance rates won’t be too far behind.
Perhaps at the $6-a-gallon mark?
Will reduced driving mean lower auto insurance rates?
Insure.com asked the nation’s top auto insurance companies whether high gas prices and reduced driving are translating to lower auto insurance rates yet. Here are their answers.
State Farm spokesperson Dick Luedke notes that State Farm auto insurance rates have been on the decline nationwide since 2004, but reduced auto accident claims are not yet leading directly to further auto insurance rate reductions: “Our actuaries look at claims data not just to see the recent past, but also to see what might change the future, like gas prices.”
Luedke says there’s no hard and fast rule as to what level of auto accident reduction would spark lower auto insurance rates, but says, “If we saw a reduction as big as 10 percent in accident frequency, we would have reacted long before that.”
Allstate spokesperson Kate Hollcraft says, “We have just recently seen a decline in automobile claim frequency and if this continues through the summer months, we would probably be able to attribute it to a rise in fuel costs.”
Progressive spokesperson Leah Knapp says, “We don’t speculate about future rate changes, but it would be accurate to say that we continuously review market and business conditions, including monitoring losses, so that we can ensure our policies are accurately priced everywhere we do business. When our analysis suggests our rates require adjustment, we may seek to either raise or lower rates accordingly.”
Nationwide Vice President & Policyholder, Standard Auto Product & Pricing, Larry Thursby, observes that “customers are having fewer accidents.” But he notes it’s been that way for a couple of years due to a variety of factors, like an aging population that becomes safer drivers, graduated licensing laws for teens and crackdowns in drunk driving. In addition, potential auto insurance rate reductions due to accident frequency are being offset by inflation in the usual suspects: medical and hospital costs, repair costs and legal costs.
Thursby says that Nationwide has been passing along cost savings by offering guaranteed renewability, lower surcharges and broader “forgiveness” for accidents, fender-benders and minor violations.
National leading auto insurance companies have announced a list of the top foods that cause more car accidents and result in higher auto insurance premiums. Drivers who consume while driving run the risk of raising the premium of their auto insurance.
It is a fact, although the insurance companies do not ask you if you eat while driving when taking out a policy. Consuming while driving is one of the most off-putting things you can do, according to the study that was released by the National Highway Traffic Safety Administration and the Virginia Tech Transportation Institute.
80% of all car accidents and 65% of almost car accidents were caused by the distraction of the driver. The N.H.T.S.A. said that “Distraction was most likely to be involved in rear-rend collisions in which the lead vehicle was stopped, as well as in single vehicle crashes.” Distractions such as consuming can become a major issue for drivers who can’t react fast enough to a sharp turn or another vehicle’s sudden stop.
Even just one accident can cause an increase in your auto insurance premiums as much as 25%. 10 foods to avoid consuming while driving
1.Coffee: Even when it has a lid attached, hot coffee can find its way out of the cup when a small bump in the road is hit.
2.Hot Soup: Many individuals consume it the same as they would coffee. It provides the same risks.
3.Tacos: Any type of food that can come apart and make your car look like an all you can eat salad bar.
4.Chili Dogs: Big potential for drippings and slop to find its way to your clothing.
5.Hamburgers: Due to the grease and the condiments, it can get all over your hands and then be transferred to the steering wheel.
6.Wings and Ribs: This can cause big distraction due to finger licking.
7.Fried Chicken: This causes really greasy hands and you have to try to clean them while driving, which causes both hands to leave the steering wheel.
8.Jellied Donuts: It is just not possible to consume one without wanting to look at the center and watch the jelly come out.
9.Soda: It contains carbonation that can fizz up into your nostrils. The lids can leak and cause spills.
10.Chocolate: Trying to remove chocolate that has melted on your steering wheel while driving can be very dangerous as it will not wipe off so easily.