Car Insurance Articles
The Olympics pit the best athletes in the world against each other on their respective fields of play. Here at OnlineAutoInsurance.com, we decided to see how a handful of the U.S.’s top Olympic athletes would do back at home on our own field of play: getting the cheapest auto insurance prices.
We chose three of the top U.S. athletes to watch this year—swimming phenom Ryan Lochte, gymnastics up-and-comer Jordyn Wieber, and track and field star Allyson Felix—and put them in a head-to-head showdown for the best rates.
Let’s take a look at each of their prospects.
Ryan Lochte’s Prospects
Ryan Lochte, who has already won a handful of gold and silver medals this Olympics, has two major obstacles to overcome when it comes to getting a gold in this auto insurance heat. He’s male, which will hold him back, as will the fact that he’s from Florida.
Males routinely get charged more for coverage, and with good reason. According to Department of Transportation statistics, men’s crash-involvement rate in 2009 was about 32 percent higher than women’s. Since he looks like he may be a higher risk of getting into an accident, he’s likely to get charged more because of it.
When it comes to his geographical issues, the main problem is that the Florida auto insurance system has been proclaimed dysfunctional by members of the industry. According to them, the current system fosters rampant abuse that has led to insurers’ losing a lot of funds. The result? Higher average premiums. Florida did pass some reforms this year that should help bring coverage prices down, but they likely wouldn’t help Lochte out until the time the 2016 Rio de Janeiro Olympics roll around.
The usage-based car insurance market is getting crowded, and an announcement last month from—of all companies—Sprint may mean even more widespread availability of usage-based coverage options.
Usage-based coverage refers to policies with prices that are in part based on the actual behind-the-wheel habits of the drivers being insured. Coverage providers get that driving data with the use of telematics devices—small electronic thingamajigs about the size of a pack of cigarettes that plug into the diagnostic port located under the steering column of newer cars. They collect data on acceleration, braking, and when and how often the car is driven, and the insurer then adjusts the price based on how safe the drivers of the insured car are, giving cheaper insurance to safer policyholders.
Up until recently, Progressive was the only insurer to have a usage-based coverage program that was anywhere close to being considered widely available. Customers have access to their program, Snapshot, in more than 40 states across the country. Meanwhile, Progressive’s competitors’ programs are only available in a handful of states.
But last month Allstate told Online Auto Insurance News that it would be offering its Drive Wise usage-based program in seven new states by the end of the year (bringing total availability to 10 states), State Farm’s program has been expanded to 14 states, and Sprint just announced a successful partnership with Esurance on a usage-based trial program in Arizona that was recently expanded to Texas.
A report released last month by the R Street Institute ranking state insurance departments on their regulatory systems claims that credit scoring has been “the biggest factor” in getting drivers out of state-run high-risk pools and back into the open coverage market, where prices are much more affordable.
The R Street Institute—a spin-off of the Heartland Institute that supports “free markets” and “limited effective government”—docked points from states that limit or completely prohibit insurers from basing rates partially on a driver’s financial history. R Street says insurance companies should have extremely wide latitude to set rates in order for the free market to regulate competitiveness.
Credit scoring, also known as insurance scoring, is when insurers look at an applicant’s financial history in order to see what it might tell them about how good of a driver that applicant is. Why do insurers believe that things like bankruptcies, credit history, and debt ratios would be able to tell them how good of a driver an applicant is? Claims statistics and independent studies have shown that the worse of a financial history you have, the worse of a driver you’re likely to be.
Driving a more fuel-efficient vehicle can have a number of important benefits. Hybrid and electric-cars help their owners save fossil fuel, reduce their carbon footprint, and commute with the knowledge that they’re helping to preserve the Earth for future generations. Plus, it doesn’t hurt that driving an environmentally friendly auto can lead to significantly lower driving costs, even though they may initially appear more expensive to insure.
It’s no secret that gas prices have been steadily climbing since the invention of the automobile and show no signs of slowing down. Many of the people who purchase alternative-fuel-source vehicles do so to avoid watching their life savings disappear at the gas pump. But when they initially see insurance quotes for these vehicles, they may worry that an equal amount may be siphoned off by coverage costs.
For example, a premium analysis of 20 quotes from 10 different California insurers shows that, when comparing the cost of insuring a gas-only Toyota Camry with a hybrid version of the same model, on average motorists who own hybrids pay just over 10 percent more for vehicle coverage. This price increase is generally accredited to higher repair costs, but before writing off fuel-efficient automobiles as a cost-effective means of transportation, drivers should take discounts into consideration.
Coverage providers across the nation are beginning to offer special savings and rate reductions for insuring hybrids and other alternative-fuel vehicles. In California, for example, as of March 2012, there are at least three companies that offer insurance discounts as incentives for driving greener cars. These price reductions range from 5 to 10 percent, which could effectively nullify the increased coverage costs of having a hybrid or electric vehicle.
Motorists around the world are in the middle of a technological renaissance focused on keeping drivers safe while they cruise the open road. But safer cars with futuristic features means more than fewer accidents and injuries behind the wheel: It can also translate into cheaper car insurance. Producers rate applicants based on their accident risk, so if people are less likely to file a claim because of highly regulated safety features, policy prices might be lower.
State and federal government has made it a priority to ensure that all vehicle owners are as safe as possible while driving. To do this, legislation has been passed that requires all new motor vehicles to be equipped with certain safety features. For example, as of Sept. 1, 2011, all new light cars must be equipped with electronic stability controls (ESC). This feature detects and reduces loss of traction to help prevent drivers from losing control of their vehicles.
Once all light vehicles on the road are equipped with ESC systems, the National Highway Traffic Safety Administration estimates (based on extensive research) that between 156,000 and 238,000 automobile accident-related injuries could be prevented annually. In addition to having ESC systems, many modern cars also contain other advanced safety features, including lane-departure warnings, forward-collision warning, advanced air-bag systems, and many other features that can significantly reduce accident risk.