Is it right for you to go for the minimum auto insurance quote?

About the minimumauto insurance quote

Taking out insurance is like making a bet that you never have a bad day. The industry is based on calculated risk management. A lot of mathematics, science, and guts go into the algorithms that determine risk. You may think that they are just out to make money off you, and you are right. Surprisingly though, they make the most money when they have loyal customers who come back year after year, and who trust them to take care of you when something goes wrong. If they have to spend all their profits chasing new customers, they don't make any money.

Finding ways to save money wherever they can, and cutting corners where it is possible is something everyone is doing these days, and it is because of a very tight economy that is affecting everyone right now. Sometimes, you might be inclined to go with whatever the state has deemed as the minimum liability insurance. Before you do, think about what that insurance is supposed to cover, and what you have to fill in the gaps is you do have an accident.

Things to consider when choosing the level of liability insurance are your own personal assets. No one in their right mind heads out on the highway looking to create an accident, but if you are in an accident, and you are at fault it can cost you over and above what your insurance is going to pay out. If you own property, or have assets that are in excess of what you have covered by your policy then you may be at risk of having to pay out the difference. Basic coverage n New Jersey is: bodily injury $10,000 for all persons, and $5000 for property damage. If you're at fault and the accident totals the other person's car valued at $15,000 and their medical bills pile up over $10,000 (and they do not have coverage for underinsured driver) you will need to find some way to pay the bill. The accident victim's attorney will put a lien against assets, like your house or bank accounts. Saving a few dollars, a year on your auto insurance is not a smart reason to be left living in your car. When comparing auto insurance quotes make sure you are looking at liability levels that match you level of assets. If your home is worth $250,000 and your other combines assets put you over $300,000 then $300,00 is the minimum you should be carrying. Knowing what is at risk for you can help you make the best decision on your coverage.

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Why auto insurance rates are loaded for inexperienced drivers

As you know getting a license to drive at 16 is no longer the automatic rite of passage it used to be. If we go back to the 1980's, about half all sixteen-year olds applied for licenses on their birthdays. That reduced to less than 30% in 2010. Ignoring the cost problems, the popularity of the internet and hand-held technology means teens can get together virtually. There's not the same pressure to actually meet each other face to face. At a national level, there's also a significant reduction in the number of miles we drive. This is not a recent phenomenon arising from the recession. The vehicle miles traveled has been falling over the last ten years. That's a welcome relief for parents because the death and injury statistics for teens in vehicles is alarming. When you put beginners into situations where there's a high element of danger, it's hardly surprising they make mistakes and injure each other.

For calculating the auto insurance rates, every newly licensed driver is given inexperience points. Should they pick up a ticket or make a claim, there's an increasing chance they will be forced out of the voluntary and into the assigned risk market. This will almost certainly occur if they are caught drunk or affected by drugs. The only way to loose these points is to go through years without a claim.

When a teen has a driving license, the parents must decide whether to add the name to their family policy. If there's any chance the inexperienced driver may drive a family vehicle, failure to insure will be counted as a form of fraud and the policy will be cancelled. But if the teen buys a vehicle in his or her name, a separate policy can be issued. Naturally, it will be more expensive than adding the name to the family policy, but it does teach responsibility to a young driver when the auto insurance rates react so precisely to the way the vehicle is driven.

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Seat belt laws and auto insurance quotes

There have been studies around the world and the conclusions are the same. Having seat belt laws and actually enforcing them reduces the seriousness and extent of injuries in traffic accident. The National Highway Traffic Safety Administration says that fatalities are halved through the use of the combined shoulder and lap belts. That's slightly more than 5,000 deaths a year avoided. When it comes to children, the statistics are even more impressive with about 70% of fatalities avoided. No matter what we may think about the use of seat belts, the evidence of their effectiveness is overwhelming. Yet, there's quite a wide discrepancy between states on the wording of laws and the way in which the laws are enforced.

Let's start with a simple piece of research evidence. It states the risk of injuries is reduced to anyone in the vehicle, i.e. it makes no difference whether you are sitting in the front or back nor which side of the vehicle you are sitting, wearing a belt is good for your safety. So if a state is going to mandate the use of seat belts, the mandate should cover the drivers and all the passengers regardless of age. Yet New Hampshire does not mandate the use of seat belts, and a significant number of states like Arizona only require belts to be worn by children. The adults are expected to act wisely and wear them because they know they will be safer. Some only mandate the use of seat belt in the front seats.

Then we come to the way in which the laws are enforced. Some states make the mandate a primary offense, i.e. the police officer can stop the vehicle if he or she sees a driver or passenger not wearing a belt. By its nature, this is the most effective form of enforcement. But seventeen states only use secondary enforcement, i.e. a ticket can only be written if the vehicle has been stopped for some other reason like running a red light. In those states, the official statistics show about 20% of the population routinely ignoring the laws. Since most of those people are teens and young adults, this explains the high fatality and serious injury statistics. Finally, we come to the amount of the fine payable on citation. In some states like Alabama and Alaska, the amounts for the first offense are trivial but in California, once you add in fees, the fine is about $100. In all states, the fines for a second offense are higher - in Maine, for example, the fines rise to $300 for a third offense. These are less trivial and, in states with the highest levels of fine and the most active enforcement, there are fewer deaths and serious injuries.

Calculating auto insurance quotes

One of the most important cost elements when calculating quotes is the medical expenses of those injured. So anything which reduces the seriousness of those injuries controls costs and potentially allows a reduction in the premium rates. In this case, we drivers get a double benefit. We are not only physically safer, but also get the benefit in the auto insurance rates we pay. This is not to say the rates will always fall. They may simply stabilize. But even that would be a benefit.

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Quotes for auto insurance could soon drop in Florida

Let's start by putting this reform into a proper context. If you look across the USA, there are about 6.5 million traffic accidents every year. People are injured in about half these accidents, with some 2 million having some degree of permanent disability. Overall, about 40,000 die each year. Florida is one of the twelve states (plus Puerto Rico) with a no-fault insurance scheme. In theory, this should keep costs low by avoiding disputes as to liability. Unfortunately, the reverse has happened as fraud on personal injuries has soared to record levels. As a result, the premium rates have risen far faster than inflation as the insurers passed on the cost of this fraud to policyholders. As a result, many drivers have been on the roads without adequate cover to pay for any personal injuries they might cause. Worse, the actual enforcement of the mandatory insurance law has been poor. For the responsible driver, carrying uninsured or underinsured insurance was a must. There is hope for the future following the passing of a consensus bill through the Florida legislature in March 2012, which is all thanks to the efforts of Chief Financial Officer Jeff Atwater and Governor Rick Scott.

This is a major victory as the history of insurance has been blighted by often angry disagreement about what should be done. The first signs of improvement came in 2002 when the Florida law enforcement agencies began to collaborate with the National Insurance Crime Bureau to put more effective strategies in place to crack down on the amount of fraud. The Medical Fraud Task Force began to analyze the volume of claims submitted to Florida auto insurance companies. As you can imagine this was an enormously demanding task. However, over time, patterns were identified. At first only individuals were prosecuted. Then entire criminal organizations were taken down, sometimes including medical professionals who were colluding to provide fake reports in support of the claims. The first step in the reform package has been a requirement that all clinics be registered and have a licensed physician as the medical director. The second step requires an alleged accident victim to request treatment within 14 days and for a licensed physician to certify that this is an emergency response to an accident. Without this certificate, the claimant will not receive the full PIP benefit of $10,000. Only $2,500 will be paid. Given the Insurance Information Institute has evidence showing Florida leads the country in staging accidents, reducing the payout to $2,500 is not going to solve the problem. Longer queues in both hospitals and clinics is the only thing that this will generate.

However, given that some reform is better than no reform, this is some progress. So long as the collaboration with the NICB continues to identify fraudulent claimants, the level of fraud will decline a little. Hopefully, in this breathing space, the Florida government can devise a better long-term solution. This level of fraud forces up the auto insurance quotes every year, burdening local drivers with ever higher rates to pay the fraudsters. HB19 is not a perfect law and not everyone got what they wanted, but auto insurance rates should stabilize as payouts are reduced. The first battle to be won is that there is, at least, an agreement that something has to be done between the public and their representatives in legislature.

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Auto insurance and pay-as-you-go

Privacy has been one of the hot trending issues over the last year. It really took off when Facebook began playing with its terms and conditions, but now it's all tied up with the extent to which anyone can collect information about your use of the internet. Today, with the technology falling in price and improving in quality, insurance companies are deciding whether to make pay-as-you-go one of the standard policies on offer. To understand what's involved, we need a simple explanation of how it works. To calculate your premium rate, insurers currently weigh factors including your age, gender, where you live, whether you are a student or employed, whether you have picked up tickets or make claims, and whether you appear to be a responsible person from your GPA, credit card score and other records. All these factors are reasonably reliable because they are facts you cannot influence directly. That's why insurers have always been reluctant to offer discounts for low mileage. It's possible drivers may lie or change the odometer. The new technology transmits information to your insurer giving your location, the time of day, and the distance traveled. Some insurers are also offering technology to monitor the way you drive, but this is a different issue.

In our modern society, the number of vehicle thefts has been falling but, in some neighborhoods, it remains a common problem. If all vehicles had a GPS transmitter, this would make the recovery of stolen vehicles easier. So the technology to track a vehicle's movements is almost certainly here to stay. This is also vital information to your insurer about whether you are at risk of an accident. If all your driving is around a suburb at off-peak times during the day, the risk of an accident is small. But if you commute long distances down an interstate every day, the risk of a collision is high. The more miles a year you drive in heavy traffic, the more likely a claim. Hence, if you are a senior, a homemaker or drive fewer miles than average, a pay-as-you-go policy will be good for you. Indeed, those who prove their driving records can earn up to 40% discounts if they sacrifice their privacy.

Nevertheless, pay-as-you-go is not the most popular policy with the insurance industry, particularly if the technology can also monitor how well the vehicle is being driven. Let's take this step-by-step. The idea is that the premium rate should be based on actual evidence of how safely we drive. If the times, places and distances prove us less likely to claim, we earn discounts. But suppose it turns out that, say, 50% of all drivers have low mileage and drive safely and they all claim their discounts. That means the remaining 50% are all the drivers most likely to have an accident and their auto insurance rates should rise. Remember, insurance is all about spreading the cost of the risk among everyone in the group. If the cost of all the claims remains the same but half the drivers now receive a discount, the remaining drivers must all pay more. So cheap auto insurance for the low mileage crowd and expensive insurance for everyone else.

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Insurance groups in auto insurance

The theory of buying a new car is always straightforward. You watch Top Gear, see something spectacular, toddle off to the nearest dealer's showroom, plonk down cash and drive away contented. Well, if that's your approach, you're either a company director who gets one of these eye-watering bonuses, or you've never tried to buy and insure a car before. Let's go back to Jeremy Clarkson and his happy band of cartoon-like presenters who often sacrifice intelligent comment for humour. Many of the cars shown are expensive to own and repair. Before you even begin dreaming of buying one of these often sleek speedsters, check which insurance group it belongs to. Remember, you're looking for cheap car insurance.

Until 2010, there were only 20 groups. This reflected a general feeling that insurers could predict the costs of repair with enough accuracy to set premiums. However, following work done by Thatcham, the motor insurance repair research centre, the groupings were expanded to 50. This is now adopted as standard by the Association of British Insurers and Lloyds Market Association. For each group, there's now an estimate of the cost of parts and labour following a crash test at 15 mph. The other factor influenced by Thatcham is vehicle security. This takes account of the locks and any other security features fitted as standard. So the car you would like to buy may be allocated to Group 18 and have an A for an adequate level of security (E shows the security provided exceeds the group expectation, i.e. the car would be shown as a 17E). For obvious reasons, it's unwise to buy a vehicle which has a D or U security classification.

The rule is that you get cheap car insurance when the car is in a low group. The majority of newly manufactured cars intended for the mass market are within the range 1-20. But do not assume that small underpowered cars will belong to a low group. Some of the Fiat Bravo range are in Group 17, the HGT is in Group 29.

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