Results for 2010

Car insurance rates rose slightly in some parts of the nation in 2010 despite the fact that average premiums for U.S. families fell for five consecutive years through 2009, reported the New York Times.

The increase is surprising because it hasn't corresponded with the usual indicators that industry experts use to predict premiums.

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

 For instance, the number of highway miles driven nationally rose in 2010, but not as much as they did the year before. Furthermore, there are less people consistently on the road as millions of unemployed drivers no longer have a commute to adhere to, and the number of fatal vehicle accidents have declined.

However, the newspaper said the cost of medical care and car repairs associated with accidents are going up, causing insurers to charge more.

The struggling economy also means that more drivers are unable to afford their car insurance premiums, prompting those with insurance to buy extended coverage that will protect them if their vehicle is hit by someone without coverage. Michael McShane, a risk management professor at Old Dominion University said in an interview that for every percentage point increase in unemployment, there is a 0.75 percent rise in uninsured drivers.

There are some steps consumers can take to lower their premium rates. For instance, many insurers are beginning to offer pay-as-you-drive policies that allow consumers to receive discounts on their premiums for driving less and for some companies, driving safely.

Louisiana currently has the most expensive auto insurance in the nation, with an average premium of $2,510 a year while Maine had the cheapest rates at about $903, according to Insure.com. 

New pay-as-you-drive car insurance policies are being offered in more than half of the states, despite concerns by some that the methods insurers use to track mileage warrant some privacy concerns, according to the New York Times.

The policies, which Progressive Insurance began offering a version of in 1998, allows consumers to receive discounts for driving less miles, which is tracked by a GPS system installed in their vehicle. When they began the program, Progressive intended to collect data on what streets the driver took, time of day they were on the road and how aggressively he or she drove to help determine policy rates.

Now, the company offers their plan in 27 states, known as the Snapshot Discount program, and removes the GPS device after six months of monitoring a driver and determining their discounted rate.

"Approximately one in four customers are choosing this,” said Richard Hutchinson, Progressive’s general manager for usage-based insurance.

While some may be concerned that monitoring driving may constitute an invasion of privacy, the article said the popularity of networking devices like Facebook and Twitter indicate that people are used to sharing information on the web and are more comfortable being tracked than they may have been in the past.

Insures like GMAC Insurance have found that collecting less information from drivers can also make them feel more comfortable with installing tracking devices in their cars. The company, which offers pay-as-you-drive insurance coverage in 35 states, only uses its GPS systems to confirm the number of miles driven.

“When you talk about time of day and speed, people become more concerned," Tim Hogan, vice president for national accounts, told the newspaper.

State Farm is launching their Drive Safe & Save program for California drivers in 2011, which the company said will save their customers an estimated $31 million.
 

Car insurance premiums in New Jersey have dropped for the fourth straight year although they continue to remain one of the highest in the nation, the Star Ledger reported.
The figures come from a new report released by the National Association of Insurance Commissioners that compares how car insurance rates have fluctuated in the U.S. The report, whose latest figures are from 2008, said the median premium for a new Jersey driver was $1,197, slightly lower than the $1,227 it averaged in 2007.

The cost makes New Jersey the third most expensive state for car insurance in the nation, a position it held for two years prior. Louisiana had the highest rates at $1,274, followed by Washington, D.C. at $1,262.

Marshall McKnight, a spokesman for the New Jersey department of banking and insurance, told the newspaper that rates in the state are so expensive because a sizable population drives expensive cars and buy extra coverage for their vehicles.

"In New Jersey, 85 percent of the cars have $250,000 of coverage," McKnight said, explaining how Jersey drivers buy extensive amounts of personal injury protection coverage, adding that premiums are also boosted because about 94 percent of licensed drivers live in nearby urban areas.

In 2008, New Jersey had approximately 5.3 million insured drivers and 74 different car insurance carriers, McKnight said.

There were 583 fatal traffic accidents in New Jersey during 2009, down from the 590 reported in 2008, according to the National Highway Traffic Safety Administration. Less traffic accidents can lead to lower car insurance premiums, indicating the state is heading in the right direction for lowering its rates. Consumers looking to save some bucks can also look into pay-as-you-go polices offered by some insurers, which allows drivers to pay lower rates for driving less.

Progressive Insurance is releasing a new program for its policyholders where they can opt to install a tracking device in their vehicle in order to receive a discount on their car insurance rates, according to The Detroit News.

The Snapshot discount program involves installing a monitoring device on vehicles that records driving times, frequency and how fast – and hard – a driver hits the brakes. Drivers who demonstrate responsible habits will be eligible to receive up to 30 percent off their insurance costs.

Heather Day, a spokeswoman for Progressive, told the newspaper that the devise is the size of a garage door opener and plugs into the computer diagnostic port of a vehicle. It does not contain a GPS tracker, meaning that the company will not be able to track the drivers location or even how fast they are going relative to the speed limit.

Detroit resident Tiana Kennedy told the paper that she signed up for the program soley for the discount, which has already saved her 15 percent on her insurance coverage.

Progressive said 100,000 have already signed up for an earlier version of the program, which has been introduced in 27 states.

John Egan, a managing editor of InsuranceQuotes.com, said in an interview that the program is beneficial for both the driver and the insurer.

"Lower-risk drivers are going to mean a lower number of claims," he said.

Other auto insurers have introduced similar programs that reward policyholders for safe driving. California approved of the state's first pay-as-you-drive program, where Automobile Club of California and State Farm policyholders can choose lower-mileage driving programs in order to save money on their insurance. State Farm said their Drive Safe & Save initiative, which will begin in February, will save their customers an estimated $31 million.