Usage-Based Auto Insurance Benefits Drivers & Insurers

Big changes are coming to the auto insurance industry. These changes will result in enhanced pricing sophistication, increased profitability, better control of claim costs and differentiation between policyholder services and products. In addition to these changes, the outcome will result in a much better ability to improve the behavior of drivers. That will lead to a great reduction in the frequency and severity of accidents for policyholders.

Many larger insurance companies are already utilizing applications for usage-based auto coverage, which is commonly referred to as UBI. Midsize and smaller companies are expected to follow suit. Since the benefits of this new technology will be phenomenal, insurers are jumping on board with the changes quickly.

Although the long-term benefits are attractive, the main benefit is to obtain information that eliminates guesswork. This means insurers can identify drivers’ risks. Easier identification means insurers can measure the risks, and they can then take steps to reduce those risks. The benefits are not only for insurers. Drivers who have low-risk profiles and impeccable records can certainly benefit, but even drivers with tarnished records will favor the change. This is because it affords them the opportunity to learn safer driving behavior, which will lower their rates over time.

The following points sum up all of the benefits for drivers:

– Lowered frequency of accidents.
– Lowered severity of accidents.
– Better tracking technology to recover stolen vehicles.
– Quicker emergency response times after accidents occur.
– Less driving, energy consumption, pollution and traffic congestion.
– Better accuracy in deciding which party is at fault during claim settlements.

However, it is also important to look at the challenges this technology brings. Storing information, transmitting, analyzing and scrubbing the large amounts of data can be a tremendous task. While there are programs that cost less, the UBI technology can still be costly. In addition to this, products must be specifically designed to make sense from an economic point of view. This is true for policyholders and carriers.

So, what is in store in the future? Although there are obstacles to overcome, consumers’ acceptance of UBI has been very promising. This is especially true for consumers who have expressed the desire to improve their abilities on the road. If they want to demonstrate that they have learned how to drive responsibly, they may do so to obtain a lower rate. Insurers acting now to adopt UBI will be in the best positions for bringing and keeping the best customers. However, insurers choosing to enter the game later will have less selection and more struggles. 

Insurance & Lawsuit Considerations for Homeowners with Dogs

More than 30 percent of homeowners insurance claims result from dog bites. In 2011, insurers paid out more than $450 million for dog bite claims. Research shows that the average payout for a dog bite claim was about $29,000 in 2011. That number reflects more than a 12 percent increase since 2010. Between the years of 2003 and 2011, the average cost of a dog bite claim increased by more than 50 percent. This increase was due to rising medical costs and larger settlement award policies. However, awards have risen far above the normal rate of inflation. This information should have every homeowner who owns a dog concerned.

There are three types of laws regarding dog owner liability, but not every type of law applies in each state.

One Bite Rule
In some states, a dog’s first biting incident does not mean an owner will be held liable. However, the second incident will not be excused. Owners will be liable for dogs showing vicious propensity, which means such dogs repeatedly show aggressive behavior and try to bite others. Although some states still allow one bite to go unpunished, many states are doing away with this rule and holding owners liable for all incidents.

Dog Bite Statute
This law states that dog owners are liable for all injuries or damages resulting from a dog bite, and provocation of the dog is not considered.

Negligence Laws
Some states rule that dog owners are liable only if they are careless in controlling the dog. For example, a person who is bitten after entering a yard uninvited may not have a case, but a neighbor who is bitten when the owner is present and fails to restrain the dog will have a case. In almost every state, dog owners are not liable for injuries of trespassers who are bitten. This is especially true if the owner displays signs warning others that a dog is on the premises.

When owners are liable for dog bites, they must reimburse the injured party for lost wages, medical bills, property damage and pain or suffering related to the bite. Although some people buy dogs to protect their properties, security systems and deadbolt locks can be less expensive. In addition to this, these features can actually lower insurance premiums.

This does not mean homeowners should take their beloved pets to the pound. There are ways to stay properly insured and avoid costly legal battles. Most liability policies cover between $100,000 and $300,000, so homeowners are responsible for any amount beyond that. Keep in mind that the no-fault medical coverage is also awarded. Although most insurers are willing to work with dog owners, they will issue a higher premium after the first biting incident. In some cases, the dog may be excluded from coverage. Some policies exclude certain breeds that are known to have vicious tendencies. Not all insurers will drop the dog, but some may require dog owners to take behavior classes with their pets.

Since many lawsuits exceed the maximum insurance allowance, it is best for homeowners with dogs to buy an umbrella policy. This type of insurance is similar to a safety net. When the maximum benefits in the homeowners policy are spent, the umbrella policy covers additional expenses up to a certain amount. Umbrella liability usually ranges between $1 million and $10 million. In addition to being properly insured with homeowners and umbrella policies, it is wise to take steps to prevent dog bites. The following tips are helpful:

– Purchase a muzzle for the dog to wear when introducing it to new people. Many pet stores sell muzzles that flex enough for the dog to drink water, breathe or vomit, so they are not dangerous to the animal.

– Keep the dog confined while guests are present. Dogs can stay in crates, other rooms or outdoors.

– Never leave the dog alone with visitors’ children. Dogs think differently than humans and may bite fearful children or timid adults.

– Enroll the dog in professional behavior training and socialization classes.

– Have the dog spayed or neutered to reduce hormones related to aggression.

How Reckless Driving Affects Insurance & How to Get a Better Premium

Inattention, driving under the influence of alcohol and excessive speeding are all reckless behaviors that have bad outcomes. Such drivers ultimately cause accidents, which may end the lives of innocent people. In addition to the expenses and punishments stemming from legal trouble, reckless drivers also experience higher auto insurance rates. Before this happens, their licenses may be suspended for a period of time. To have a license reinstated, a driver must usually take classes and pay a fee. Auto insurance following such a reinstatement is much more expensive than traditional rates.

When auto insurance companies calculate premiums, the most important issue they research is the customer’s driving history. Speeding tickets and auto accidents usually stay on a person’s record for more than three years. Age, gender, driving frequency, parking location, car type, desired coverage and credit history are also considered. Keep in mind that insurers use a different type of credit scoring than lenders do.

Although people do not have control over their age or gender, there are several other ways to keep rates down and prevent reckless driving. Safe driving is the key to lowering rates. To practice safe driving, policyholders should refresh their knowledge of road rules. Free booklets are available at any DMV office or online. Drivers should also avoid speeding and try to stay out of accidents. Driving defensively is the best way to avoid an accident. One important thing every driver should do is avoid cell phone use in the car. Texting, talking without a hands-free set and studying digital maps while driving can lead to accidents. Every driver should remember that reckless driving is not only expensive but also deadly.

Thousands of people die in vehicle crashes each year. In about 20 percent of cases, speeding is a factor. About 15 percent of crashes result from driving under the influence, and almost 10 percent are due to inattention. If drivers feel their abilities are lacking, it is best to enroll in driving classes. After receiving a ticket, there are also several steps to lowering insurance costs.

Request higher deductibles. For collision and comprehensive coverage, a higher deductible will mean a lower premium. It also means paying more upfront for an accident, but that is a good incentive for drivers to be more careful. Raising a deductible may help a driver save up to 40 percent.

Combine auto and homeowners insurance policies. Buying a homeowners or renters policy from the same company issuing the auto insurance results in a discount. If more than one vehicle is insured, there may be an additional discount.

Lower coverage for older cars. Some people have one or more older cars that are rarely used or just collect dust. If this is the case, lower the coverage for these vehicles. Every state requires liability coverage, so be sure to stay within the state’s minimum requirements.

Ask about discounts for low mileage. Insurers may offer discounts for drivers who do not drive excessively. People who carpool to work usually also qualify for this discount.

Improve and maintain credit. Insurers use a special formula for calculating the credit score they use, but a good FICO score and good credit history mean a better insurance score.

Ask about group insurance. Many insurers offer group discounts for drivers who obtain insurance from their employers’ plans.

Insurance companies have different discounts, and some companies have more offers than others. It is best to ask an agent about any other available offers. For example, some students qualify for discounts when they maintain a good grade point average. To enjoy a better rate, be sure to follow these tips and practice safe driving at all times. 

Why Hurricane Deductibles are so Important

People who live in coastal states need to consider their hurricane deductibles, which may be found on a homeowners insurance policy. This type of deductible determines how much policyholders must pay upfront before the insurer picks up the rest of the tab. Hurricane deductibles are listed in clear wording on a homeowners policy.

Hurricane season starts in June each year and lasts until November. Although it is best for homeowners to check their deductibles before the start of this season, it is good to also check it anytime there are questions. Every coastal homeowner should know what their policy includes. Although hurricane coverage used to be a separate policy, it is now included in most homeowners contracts in 18 coastal states.

Typical fire, disaster and theft deductibles are listed as flat dollar amounts. However, a hurricane deductible is usually listed as a percentage. The amount may vary between one percent and five percent of the insured value of a home. This means a policy with a five percent deductible on a home insured for $600,000 would require the policyholder to pay $30,000 upfront before insurance benefits kick in. It is also important for homeowners to understand when their policy benefits begin.

Deductibles are triggered by specific criteria. First, the National Weather Service must issue a classification of a Category One storm making landfall. Insurers may also have other criteria. Many companies have criteria for severity classifications. Deductibles vary by insurer and state. Since policies differ, homeowners should check their own policies. It is never safe to assume that a policy is identical or even similar to a friend’s. If there are questions about the deductible, what it covers and how to find the wording, it is best to discuss these concerns with an agent.

Insured homeowners in coastal areas may have the option to pay higher premiums in exchange for a set deductible. This means a dollar amount will be assigned instead of a percentage. This often depends on how close the dwelling is to the ocean. In high-risk areas, many insurers will not sell a homeowners policy without the inclusion of hurricane coverage. To find out if there is a flat amount available in exchange for a higher premium, discuss the option with an agent. It is important for homeowners to understand what hurricane coverage is and where it came from.

In 1992, the famous Hurricane Andrew brought more than $15 billion in insurance losses. As the most expensive storm in history for insurance companies, it sparked the creation of catastrophe-risk computer modeling. This showed that homeowners were vulnerable to extreme risks in coastal areas. Insurers also had trouble getting insurance for their businesses, which is called reinsurance. By requiring policyholders to bear a fair share of the costs, insurance companies were able to get insured again and offer coverage to consumers.

Notify an Agent Before Starting a Remodeling Project

In the upcoming year, home improvement activity is expected to rise. For those who plan to be a part of this rising number, it is important to have the right type of insurance and the right amount of coverage. Insurance should be in place during and after construction. Anyone considering a remodeling project should contact an agent before the process begins. Many people must alter their coverage or add more. Waiting until the project starts or is finished can be an expensive mistake, so take the following four important steps to avoid an expensive problem.

1. Discuss home improvement plans with an agent. Ask about updating a homeowners policy, and ask whether or not other types of insurance will be needed for protection during the construction process. Only those who are qualified to perform DIY projects should attempt them. People who are not construction workers should not help unless there is sufficient liability coverage for their protection. Many homeowners must raise their no-fault medical protection limit for such workers. For a larger project, it is best to consider a course of construction policy. This covers the home during the building process from weather or theft damages.

2. Make sure the contractor is covered. Before allowing a contractor to start work, ask to see his or her insurance policies. Contractors should carry both workers compensation and commercial general liability insurance. If one of the insured contractor’s workers sustains injuries, that individual will not be able to sue the homeowner. Contractors who are unwilling to provide insurance documents should never be hired.

3. Store all receipts and records. Be sure to take photographs before, during and after the remodeling project. This provides a virtual record of what the property looked like during each phase. Hold on to all contracts from contractors, and be sure to save the receipts for all materials purchased. Keep receipts for any other belongings bought for the home during the project.

4. Update insurance policies after the project. Let an agent know when any home improvements are made. Insurance amounts may need to be increased following a major renovation. All of the records and receipts may need to be copied and sent to the insurance company. This helps them assess needs and assign accurate values for the improvements. An agent will be able to recommend a floater or endorsement for more expensive items. More liability coverage may be needed if a pool or spa was added. An umbrella policy may be the right solution for this situation.

Be sure to ask an agent about discounts. When people install smoke detectors, stronger doors, deadbolt locks or burglar alarms, they may qualify for discounts. Some insurers also offer larger discounts to people who install more sophisticated burglar alarm systems, sprinkler systems, fire alarm systems or other devices. People who update their plumbing, electricity, roof or windows may also qualify for discounts. This is especially true if any energy-saving features were installed. In areas prone to strong storms, shutters, reinforced roofs and shatterproof windows may also result in discounts. If a remodeling project is the result of a growing family, be sure to consider other insurance changes that may positively benefit a new spouse, baby or adopted child. 

Your Mortgage, Your Homeowners Insurance and Forced Placed Coverage

When you take out a mortgage, part of the agreement is that you will purchase adequate homeowners insurance coverage. Adequate coverage usually means that you are insured for the replacement of your home to 100% of replacement value or that your home has enough coverage to address the amount of the loan. While the latter may mean that the mortgage company wants enough coverage to pay the outstanding loan balance, most homeowners policies do not cover the loan amount, just the rebuilding of a home. In a nutshell, the mortgage company wants to make sure that they are protected if your home suffers an insurable loss such as fire or water damage. If you are in a flood zone, they will require you to get separate flood insurance, as regular homeowners policies exclude damage caused by flood and ground water.

Your mortgage company will, at a number of times, prompt you to provide proof of home insurance. This typically happens when:

  1. Your first purchase your home; this will be done through your title company.
  2. At the annual renewal; however most homeowners policies automatically send the lender a copy of the renewal.
  3. When you refinance and there is a new lender, this is done by the title company.
  4. When a policy is cancelled, either at the renewal or for non-payment.

When you get a request, you should always forward the request, along with any instructions, to your homeowners insurance agent. If a title company is involved, you should always provide your agency information, phone number, fax and email address to the title company. If you are purchasing a new home, you should always contact your broker at least 3 weeks prior to make arrangements for a policy and notify your title company as soon as you can. Getting the request to your agency right away will allow for fewer problems and a quick resolution to complying with your homeowners insurance requirements.

Should there be any gap in your homeowners insurance, the mortgage company will force place coverage on your home and have the right to do this since it is in the mortgage agreement. This forced placed coverage is usually very expensive and more likely than not will protect the mortgagee’s interests, not your interests. The bottom line is, the coverages are probably very basic, will probably not protect you to the degree a regular homeowners policy would protect you and probably does not include liability insurance. The reason why these policy premiums are very expensive is the policy is not underwritten, and because of this there may be an assumption that you cannot get coverage on your own and that your property may be high risk.

To avoid this expensive forced placed coverage, attend to your lenders homeowners insurance requirement right away. Even if you have a three-day gap in your homeowners insurance, they can still come back and charge you for those three days, and it’s not cheap. Your agent is here to help you avoid things like this from happening. Maintaining good communication, either via email or phone, is the key for things to go as smoothly as possible.

How Much Should Consumers Really Pay For Car Repairs?

With the average vehicle on the road being about 10 years old, it is apparent that Americans are keeping their cars longer these days. There are benefits associated with owning an older automobile. Drivers with older cars do not have to worry about making loan payments, and insurance costs are much lower. However, there are also disadvantages. Unexpected expensive repairs can drain a savings account. In some cases, the repairs may cost more than what the car is valued at. There are several Web sites with helpful resources for evaluating repair estimates.

Both RepairPal and AutoMD are free to use. RepairPal, which was started in 2007, is run by auto enthusiasts. Estimates from this company are based on labor rates, cumulative car repair invoices and prices of parts. An online auto parts retailer owned by U.S. Auto Parts operates AutoMD. The staff consists of certified mechanics and auto data specialists. These workers use the data gathered from average labor costs for each zip code, real-time pricing data and repair time estimates. DIY repair cost estimates are also available from AutoMD. Both companies offer zip code estimates for repairs. Estimates also include those of independent mechanics and dealerships for comparison.

Researchers conducted tests on both sites. They found that sample repair data entered into both systems produced similar estimates. AutoMD’s estimate was comprehensive. In addition to time estimates, it included price ranges for parts and labor. Prices for both dealers and independent mechanics were included. The estimates provided by RepairPal are for a range of overall costs. In addition to this, there is a breakdown of costs for labor and parts.

The pages on these sites are printable, so consumers can take the information they collect to dealers or mechanics. People who are also in search of mechanics can find local shops by searching a zip code on the site. AutoMD’s list shows request statistics, the number of mechanics at various shops, hours of operation, map location, shop details and contact information. In addition to specifying whether shops install parts provided by AutoMD partners, the site specifies whether a shop uses Chilton or Mitchell labor standards. RepairPal’s list is not quite as extensive. However, map locations, hours, reviews and specialties are included. Both sites are helpful to consumers, but it is still important for people needing auto repairs to decide whether they should use parts from a dealer or aftermarket company.

6 Promising Car Safety Innovations

They may not make engines the way they used to – but they’re making cars safer and more crash-proof per pound than ever before.  Innovations in materials, GPS technology and microchips have made a wide variety of potentially life-saving technologies cost-effective and affordable for the car buyer.

Car safety devices and features can be separated into two categories: Passive devices such as seat belts and airbags, and active devices, which proactively help drivers avoid accidents, not just survive them.

In some cases, insurance companies may offer a premium discount for owning vehicles with some or all of these safety features:

Intelligent Airbags

In the old days, airbags could prove almost as dangerous to smaller drivers and passengers as the crash itself. They opened with such force that they could injure smaller and lighter crash victims. The new generation of bags can sense the size of the crash victim, and their forward speed, and automatically make adjustments to compensate, resulting in a safer airbag.

Distance Control Assist Devices

This active device uses radar or laser technology to gauge the distance between your car and the one in front of you. The computer system also monitors your forward speeds and your speeds relative to one another. If the distance between you is shortening rapidly, you will hear an alarm. Some models will even begin to move the gas pedal upwards to make it easier to switch to the brake.

Lane Departure Warning Devices

Lane departure warning devices use optics to monitor lane markings – and automatically generate a warning tone if you begin to drift out of your lane. Some higher end cars will even nudge the car back into the lane. These devices have been in use in commercial truck fleets for years, but are now making their way into the luxury sedan market.

Anti-Rolling Technology

Anti-rolling technology takes aircraft automatic pilot technology and applies it to your car. A system of sensors monitors whether your car is tilting one way or another – and automatically makes adjustments to prevent the car from flipping. The car may apply a combination of measures, such as reducing throttle, applying the anti-lock brake system, and adjusting steering to prevent a flip – and perhaps save you from a deadly injury. Chrysler calls this technology “rollover mitigation.” General Motors refers to this technology as “rollover avoidance.”

Accident Notification Systems

This is a passive technology, but can be a critical one:  It will call emergency responders when you can’t. If your car is in an accident, the accident notification system will automatically notify the manufacturer’s cellular link service (think “OnStar” but there are others), which will then notify rescue personnel using global positioning system technology. So if you are incapacitated after a wreck, or even if you forgot to charge your cell phone, help is on the way.

Emergency Brake Assist

An emergency brake assist feature uses computer technology to determine whether a brake application is a gentle, routine slow-down or stop, or whether it is a panic brake situation. If your brake application is combined with a frantic movement of the steering wheel, or if your foot release on the gas is faster than usual, or you are hitting your brakes unusually hard, a computer will automatically channel the emergency brake assist – putting more hydraulic pressure on the line and applying brakes faster and more powerfully to stop your car’s wheels.

Obviously, different carriers have different pricing systems – and discounts offered for equipping your vehicle with safety features vary from state to state, even with the same carrier. The newer features are still winding their way through the system, but many carriers offer discounts for anti-lock brakes, airbags or anti-theft devices – all of which have proven effectiveness in lowering claims.

It may be time for a policy reassessment. Can you qualify for a discount? Contact your auto insurance agent today and find out. 

Understanding Carfax and What is Included in a History Report

Carfax is a commercial service offering vehicle history reports to businesses and consumers. The company serves both the United States and Canada. Carfax was founded in Missouri in 1984, and the company is now headquartered in Virginia. One of the original purposes of the company was combating odometer fraud. The latter part of the company’s name came from their signature reports, which were sent quickly via fax machines. However, the most popular way to obtain reports today is over the Internet. To this day, Carfax is still a trusted name among consumers and used auto dealers.

Carfax Services
Carfax offers four free services: lemon checks, record checks, problem car checks and recall checks. While the free services can be helpful in gathering only the information indicated in their names, they do not include all of the detailed data provided in a full Carfax report.

The history report is the company’s most detailed product. It includes data about previous wrecks and other recorded incidents. With over 34,000 sources, the company has access to data in every American state and 10 Canadian provinces. Police departments, Highway Patrol offices, DMVs, auto shops and several other agencies. Information is connected to a vehicle’d identification number, which is commonly called a VIN. Reports include all or some of the following details:

– History of flood damage.
– Past and present title data.
– Total number of owners.
– Any available odometer readings.
– The emission inspection history.
– All available service records.
– Whether the vehicle was ever labeled a complete loss.
– Whether the vehicle was ever part of a rental car fleet or other fleet service.
– Reports from accidents the vehicle was involved in.

Carfax Limitations
While a Carfax report is a valuable tool for all auto shoppers, it is important to keep the other crucial details of buying a car in mind. Consumers should still take a vehicle for a test drive in the city and on the highway before making a purchase. It is also wise to take a vehicle that is being considered to a trustworthy mechanic for an inspection. Although a Carfax report has details about the car’s past history, it may not contain information about its current condition. For example, a car could have a completely clean history, but it could be sitting on the lot due to an engine problem that causes the warning light to come on from time to time. Whether the dealership is unaware of the problem or they choose not to disclose it, potential buyers may not know anything is wrong if it does not come on during a test drive. By having a mechanic inspect the vehicle, it is possible to pinpoint several problems.

When shopping at a used car dealership, it never hurts to ask if the company has recently received a Carfax report for the vehicle. In some cases, they may provide it, but do not count on receiving one for free. However if you cannot obtain one from the dealer or you are buying a car from a private party, getting a Carfax report in relatively inexpensive may be well worth the investment. 

New Catastrophe App Helps iPhone Users Prepare For The Worst

The Insurance Information Institute released a free mobile disaster preparedness app that provides safety tips, communication tools and checklists for common disasters. This helps people prepare for severe winter weather, wildfires, earthquakes, hurricanes and other types of disasters.

One of the best ways to make it through a catastrophe is to be prepared beforehand. The Know Your Plan app has several checklists containing preparedness steps and property protection steps. App users are also able to build their own customized checklists from scratch. Every list allows users to set completion dates, record progress and add personal notes to various tasks.

There are also other options. App users are able to share their lists with friends and family members. In addition to this, there are resources available for planning evacuations. This also includes evacuation of pets. The helpful app also provides up-to-the-minute data about disaster details and local evacuation routes. Know Your Plan is available from iTunes, and it can be found by searching for the Insurance Information Institute on the iPhone App Store.

During the past 10 years, insurance companies spent almost $250 billion in settling the claims of disaster victims throughout the United States. The overall cost of catastrophes is rising continuously, so insurance companies are looking for every helpful tool they can find to help speed up the repair process and prevent unnecessary injuries to humans.

The I.I.I. partnered with the Insurance Institute for Business & Home Safety to develop property mitigation information. The IBHS is a respected organization specializing in building science research and communications. This organization tries to reduce the negative effects of disasters through research, maintenance, improved construction and encouraging preparedness.

In 2011, many communities throughout the United States experienced record-breaking catastrophes. The IBHS and the I.I.I. want to lessen the amount of future damage from such strong catastrophic occurrences. With so many people using the iPhone, the two organizations knew it would be possible to reach out to millions of people to help them take control of risks through proper preparedness. Some of the new app’s features include the following editable checklists:

– Earthquake
– Flood
– Hurricane
– Tornado
– Wildfire
– Severe Cold
– Emergency Kit
– Evacuation
– Blank Checklist

There are also note-taking features for individual tasks, and users have the option to select due dates for their checklists. A countdown feature is included for progress tracking. There is a Google Crisis Response feed allowing access to emergency information from local sources.

This app is the second in a series of apps created by the I.I.I. The first app is Know Your Stuff, and it includes home inventory information. Know Your Stuff is available for both Android and iPhone users. For more information about preparing for catastrophes, discuss concerns with an agent.