Category: Online Auto Insurance

Online auto insurance quotes higher thanks to fraud

Let’s just recap on how insurance works. The insurers estimate how much we’ll claim, add enough to cover their costs and produce a profit, and divide that total among all us policyholders. Assuming the actuaries have done their jobs properly, the income will match the payouts and everyone will be happy. Unfortunately, there an increasing amount of fraud both in applications and claims. This costs the insurers hundreds of millions extra and, when they start running out of money, they increase the premium rates. Yes, that’s right. We end up paying higher rates because of all the fraud. So how does this work?

One of the standard ways of cheating is to describe your vehicle as being for farm use. For example, Californian insurers offer discounts of up to 20% for all vehicles used on farms. The reasoning is simple. When the only real risks are hitting a tree or unexpectedly dropping the front wheels into a gully, comprehensive and collision cover can safely be sold at lower rates. In a recent survey where investigators looked at some 80,000 vehicles claimed as for farm use, nearly 6,400 proved to be high-performance sports and saloon cars. In many cases, this was saving the vehicle owners several hundred dollars per year. The Californian insurers estimated their total losses were around $150 million last year. The same problem affects many of the other declarations made when people complete their applications. Discounts are often awarded purely on the word of the applicant and without any follow-up checks. Before you all start dishonestly claiming discounts, there’s one thing you should know. The lawmakers long ago recognized the risk to the insurance industry so, as soon as the insurer realizes the misrepresentation, it can cancel the policy and, if it has suffered any losses, it can sue you to recover whatever it has lost, e.g. paid out on one of your claims. In other words, the policy is void from the outset.

At the other end, there’s an increasing interest from criminal gangs to stage accidents and claim for the personal injuries sustained by the passengers. To make this possible, there are fake clinics established to write the medical reports and sometimes less than honest attorneys or paralegals prepared to push the claims. This type of fraud is most common in the no-fault insurance states where parties claim on their own insurance rather from each other. The aim of this type of insurance is excellent. When everyone is honest, removing the dispute as to who’s at fault saves at lot of money. In other countries, no-fault insurance programs produce lower insurance rates. Unfortunately, we’re more inclined to be dishonest so there are billions of losses from staged accidents. All these losses are, of course, passed on to the rest of us as higher premium rates.

So when the next auto insurance quotes come and you find they have all risen, go to your PC and send an angry email to your member of Congress and local state representatives. More money should be allocated to fight this type of fraud. Unless more law enforcement officers cooperate with the insurance companies and routinely prosecute everyone who falsely claims discounts or makes false claims, all the online auto insurance quotes from now on will be higher.

Auto insurance and those summer trips

Come the fall, the retired and monied folk who live in the northern regions look up in the sky and see birds getting ready to fly south. Like these snowbirds, they also seek leisure time where it’s warmer and drive or fly down to Arizona, Southern California, Florida and Texas. The same lifestyle itch affects most people as the summer months come along. This is also the time to hit the road and find somewhere by sea or lake, mountain or valley for a little rest and relaxation. But, before you set off, there are a few basic precautions to take. It starts with the vehicles. Hopefully, you had everything ready for the winter. You prepared for freezing weather with carburetor settings and the addition of antifreeze to the cooling system. Now comes the time to change the set-up for summer driving. As the temperature rises, there’s more of a chance of leaks so check the clips and hoses, make sure the belts are tight and the fluid levels are topped up. How are the tires? If you’re suddenly going to take off down the interstate at higher speed than usual, you want to avoid a blow-out. With the cost of gas still edging up toward the $4 per gallon, you want the engine running lean and change your own driving styles to a more even tempo. Less aggressive acceleration and braking saves gallons over longer distances.

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Now let’s come to the insurance policy. You can plan your road trip for months but, if things go wrong, there can be a mass of unexpected bills to pay. The first step is to make sure your policy covers you for out-of-state driving. Now assume you are stuck. What might you need? It could be something simple like a helpful mechanic to jump start the vehicle when the battery has run down or to deliver fluids to temporarily solve a problem of overheating. Even more annoying, suppose you locked yourself out of the vehicle. Solving any one of these problems involves a basic callout fee plus expenses plus an hourly rate plus the cost of any materials supplied. Then what do you do while waiting for essential repairs. Did you budget for overnight accommodation? Can you afford a rental replacement while the repairs are done?

There are a range of additions to the standard auto insurance policy that cover interruptions to your journey. But be careful what you buy. Some policies require you to be at least one-hundred miles from home or have other conditions to fulfill before you can claim. Then look at the amount of the cover. Most pay expenses up to $1,000 for the cost of essential repairs, accommodation and food. Are you feeling unlucky? More importantly, watch out for the anti-fraud conditions. Some policies ask whether the problem is one you should have fixed before you set out. It’s not unknown for dishonest drivers to try claiming the cost of routine maintenance as emergency repairs while on holiday.

Just as your vehicle could do with a tune-up before you set off, so your online auto insurance policy should be reviewed to ensure you have the right terms and reasonable limits on the amount you can claim.

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Auto insurance quotes and young drivers

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It makes no difference what the activity, when you’re learning something, you make mistakes. On the football field, it makes no difference if you crash into other players. You’re all players together and no innocent members of the public are at risk. But if you apply the same approach to driving, there can be a lot of innocent victims. So insurance companies group all inexperienced drivers together. The younger the driver, the higher the premium. But, as time passes, and you build up a track record of safe driving, the rate comes down. There’s a general policy to review your safety record on a regular basis between 17 and 29. In general, all drivers under the age of 25 pay the highest rates but, assuming no accidents, the rates will slowly scale down. Single males are judged the most dangerous. The statistics show young female drivers are significantly safer.

The rates come down faster if you marry and have children. Now as the owners of vehicles likely to be carrying your family, you are assumed to have a safer approach to driving. Even if you don’t marry, you still earn a lower rate if you’re the owner of the vehicle. It’s assumed you’ll drive your own vehicle more carefully. This leads to a more general point. If parents insure their children, they pay the penalty if there are accidents or convictions. Premium rates are likely to triple or cover may be refused if underage children are caught driving while intoxicated. The same can apply if they are caught for underage drinking even while not driving. The parents are likely to face nonstandard rates or surcharges. Perhaps curiously, DWI/DUI convictions can also affect other home-based policies like those covering a jetboat or snowmobile. These higher rates will stay in place until the child leaves the home and will no longer be a driver of the family cars. This makes it better to encourage younger drivers to take out a policy in their own names. The sooner they learn the cause and effect of financial responsibility the better.

Remember that, in many states, there’s an open records law and many convictions by young people are not considered confidential. The states will disclose anything relevant to an insurance company on request. So whether the application for insurance is made by the parents or the children, the fact of convictions is likely already known. If you find it difficult to find coverage, many states also operate a program to support high-risk drivers. If you are being refused, apply to the local office of the Insurance Commissioner and you’ll be assigned to a local insurer. Because this is a “forced” insurance, the insurer will usually charge a top rate but some cover is better than no cover. If you manage to go several years without a claim, you should shop around. Get online auto insurance quotes from as many different insurers as possible. As soon as you start receiving quotes and the rates are falling to more reasonable levels, your rehabilitation is complete and you can apply for regular cover. As with all services where there’s competition, auto insurance for younger drivers is available at lower premium rates if you look around and talk to as many agents as possible.