Results for December, 2011

The expenses incurred from vehicle collisions on the nation’s roads, almost $300 billion annually, are more than three times the $97.7 billion that congestion costs, according to a report released by AAA.

“The burdens associated with congestion are top of mind for many Americans as they travel to and from work each day,” said AAA Chicago president Brad Roeber. “However, at $300 billion annually, crashes cost our society more than three times the amount of congestion. This report further underscores the importance of a long-term, multi-year federal transportation bill that will provide the necessary and sustained investments that lead to better and safer roads for all Americans.”

The study, conducted by Cambridge Systematics, found the annual, per person cost of the nation’s vehicle accidents to be approximately $1,522, while congestion costs only $590 per person by comparison.

Congestion Costs

To determine the expense of congestion, researchers used data from the Texas Transportation Institute’s (TTI) Urban Mobility Report, which estimates how much congestion delays commuters, the extent of congestion during “rush hour” and the rest of the typical work day, and the economic impact delays have on businesses. Researchers noted the effect is not uniform, since businesses that rely on prompt or rapid deliveries are likely to suffer more than their counterparts from congestion, but others lose productivity as well. At the very least, they may indirectly experience decreased effectiveness and lost work hours due to employees caught in traffic.

Crashes and Collisions

Researchers calculating the economic price of crashes took into account not only the direct cost of repairing vehicles and treating injured drivers and passengers, but also looked at other expenses. For example, crashes occupy medical and emergency services and may reduce quality of life and household productivity.

Lost earnings may add financial strain, require long-term care, or impose funeral expenses and permanently reduce a household’s earning ability if an accident is fatal. Higher accident rates can also impose increased car insurance costs on individuals, families and residents of geographical areas.

Crash and Congestion Comparisons

Roeber noted almost 33,000 people die on the nation’s roads each year, which amounts to 635 per week. As a result, AAA suggests additional steps must be taken to promote traffic safety, and that the issue is more pressing than the problem of congestion.

The report found that, even in large cities where traffic congestion is worst, crash costs were nearly double those of congestion. Examining smaller urban areas revealed a larger disparity, with crashes costing as much as six times more than congestion.

When looking at car insurance policies, the deductible is one of the most important features to consider. Essentially, a deductible is the amount the policyholder will pay when an insured loss occurs. If an insured car sustains damage covered by the policy that is worth a certain amount, the owner will pay the deductible and the insurer will cover the rest of the cost.

For example, if a car insurance policy has a deductible of $500, and the vehicle takes $7,000 worth of damage, the owner would pay $500 and the insurer would cover the other $6,500. For damages worth $500 or less, the insurer would not contribute to the repair costs. Deductibles vary between policies and insurers.

Deductible Amounts

Deductibles are frequently a specific dollar amount, but that is not always the case. They may also be calculated as a percentage of the damages, which changes the calculations. For relatively small accidents, a percentage might mean paying less than a fixed deductible. As the expense of the accident increases, however, the deductible will increase at the same pace, which may mean paying more in serious cases.

If a policy stipulated a 10 percent deductible and a car took damages worth $7,000, then the owner would have to pay $700 while the insurer paid $6,300. If damages were only $400, however, the insured would pay only $40. Which is the better option can be difficult to determine.

Deductibles and Premiums

Higher insurance deductibles are often featured in policies with lower premiums. This allows insurance providers to remain profitable and stay in business, but also presents consumers with a choice. Paying higher premiums on a regular basis will likely mean less of a financial burden if an accident occurs, whereas a higher deductible will mean less money regularly spent to maintain a policy.

This means that if someone were to avoid car accidents and collisions completely, the high-deductible policy would be ideal, because premiums are lower. Since accidents are by definition not entirely under the driver’s control, however, assuming that they will not occur may be unwise.

Factors Influencing Deductibles

Car insurance is regulated by state governments, which may have laws restricting deductible amounts. In general, a range of deductibles will be available to consumers. One important exception to deductibles is liability claims.

Typically, according to the Insurance Information Institute, deductibles apply to collision and comprehensive coverage but not liability. Coverage for accidents involving uninsured and underinsured motorists may also have no deductible.

Parents may be particularly concerned about their teens that are going to begin driving in the winter, MetLife noted recently. The combination of inexperience behind the wheel and poor driving conditions resulting from rain, snow and ice can instill fear when teens begin pushing to learn how to drive or ask to borrow a car.

With the National Highway Traffic Safety Administration reporting that vehicle crashes are the leading cause of death for those between 15 and 20 years old, responsible for about one-third of fatalities in that age group, the worry is understandable.

Evaluating a Driver’s Readiness

Car Insurance provider Allstate notes some parents may have difficulty teaching and find having another trusted adult instruct their teen is a better choice. When interacting, parents should ensure they give new drivers the opportunity to evaluate and correct their own mistakes and praise them for good performance as well as pointing out flaws in their child’s driving. Talking to a teen too much may also serve as an unintentional distraction.

According to MetLife, parents may benefit from taking a turn as a passenger before teaching. If not, the change in viewpoint might affect their perceptions without them realizing it. They can also take the lead by demonstrating good safety habits, such as not texting or talking on cellphones while behind the wheel.

Helping Teen Drivers Learn

MetLife notes patience, preparation and a consistent approach can help parents have a major impact on how their teens drive. Reinforcing proper driving behaviors, such as turning, yielding and obeying speed limits appropriately can reduce the chance of teens getting into collisions.

“Numerous studies show that learning good driving habits with a seasoned driver is a very effective way to decrease the likelihood of crashes and fatalities for teens. This is especially important during bad weather months, when good driving is of the utmost importance,” said MetLife Auto and Home president Bill Moore.

Changing Auto Insurance Rates and Needs

When teens do begin to drive, they will need to either purchase their own auto insurance coverage or be added to their parents’ policies. Young drivers typically have higher auto insurance rates, and teens may be more careful if they are aware of the financial costs speeding and other violations can impose by causing those rates to climb higher.