Support is growing for pay-as-you-go auto insurance, essentially policies with premium levels that are tied to the actual number of miles (or hours) the driver is behind the wheel. It doesn’t take a rocket scientist to figure out the rationale. The less you drive, the less risk you will be in a car accident.
Here’s the interesting thing. Advocates are pointing out that going to this model of insurance would actually encourage people to drive less, which would have a corollary environmental benefit.
At the same time the insurance industry could potentially cut as much as $60 billion a year in auto accident claims paid out, we might also see a 2 percent drop in carbon dioxide emissions and a 4 percent drop in oil consumption — while the average American family would be cutting their annual auto insurance bill by about $270.
Heretofore, the pay-as-you-go model was difficult to verify, requiring certified odometer readings and periodic check-ins. Onboard computer systems on automobiles are taking care of that issue rather nicely.
For instance, GMAC offers a low-mileage discount to its OnStar customers. The program generates a monthly data report anyway, so miles driven is simply added as a monitoring factor. The result? Some OnStar customers are saving as much as 54 percent off their coverage costs.
Only 34 states currently allow some version of pay-as-you-go coverage, but we predict this will become an increasingly popular insurance model over the next year to eighteen months. It’s a win/win for all parties concerned.
We’re not sure if the folks in Colorado stole the idea from the kid in Maine who uses golf carts to shuttle ferry passengers, or if they just have a thing for small cars, but Erie, CO, just became the second city in the Mile High State to allow the use of golf carts on city streets.
Traditionally considered off-road vehicles, and insured as ORVs, golf carts are allowed on regular roads in both Lyons and Erie, but with certain caveats:
They’re only allowed on streets with posted speed limits of 25mph.
They must be operated by licensed drivers, aged 21 or older.
The drivers must carry liability insurance.
When asked, Erie, CO residents said that using golf carts was more environmentally friendly than driving cars for in-town travel.
A new survey from the National Highway Traffic Safety Administration (NHTSA) says that as many as 17 million people, or roughly eight percent of all drivers, have driven drunk at least once in the last year. The survey results were released just as the United States Department of Transportation was launching the annual “Drunk Driving: Over the Limit, Under Arrest” campaign, which is meant to keep drunk drivers off the roads.
Further results from the NHTSA study reveal that:
Four out of five Americans list drunk driving as a “major threat” to the safety of their families and themselves.
Roughly twenty percent of Americans have driven within two hours of drinking alcohol in the past year.
Those who admit to driving drunk tend to drink more regularly than those who drink but wait to drive.
More than a quarter of all drinking drivers – 28% – consume alcoholic beverages three or more days a week, while only 10% of those who drink but do not drive afterwards do so.
The national anti-drunk driving campaign includes law enforcement crackdowns that will involve thousands of police agencies from around the country, and will run through Labor Day (Monday, September 6th). In addition to law enforcement efforts there is also a $13 million media blitz on radio and television.
In a statement to the press, Transportation Secretary Ray LaHood said, “Drunk driving is deadly, it’s against the law, and unfortunately, it’s still a problem. With the help of law enforcement around the country, we are going to continue doing all that we can to stop drunk driving and the needless tragedies that result from this reckless behavior.”
NHTSA Administrator David Strickland also spoke, saying, “Our message is loud and clear. If you drive drunk you will be arrested and prosecuted. There will be no exceptions and no excuses. And if you’re below the age of 21, there is zero tolerance for any alcohol in your system whatsoever. That’s why we’re out there with law enforcement, tackling this major safety issue head on.”
Strickland brought up serious concerns about the rate of drunk driving among younger drivers, especially younger male drivers. While the number of 16 to 20-year-old respondents who admitted to drinking and driving in the survey was low, those who acknowledged the behavior said they drank more than five alcoholic beverages in a single sitting. While that rate of drinking was not limited to only drinking before driving the NHTSA feels that this means young drivers who drink are likely drinking more heavily than adult drivers.
This survey was conducted in 2008 via telephone calls to 6,999 participants, aged sixteen and over, with a higher than average proportion of drivers under the age of twenty-four.
We all know that getting caught in a speed trap is a surefire way to higher car insurance premiums, and most of us also know that, especially in the summer, cops are more vigilant on weekends, when teenagers and other reckless types are likely to be flooring it when they shouldn’t be. But do those weekend speed traps work?
The latest data from the Virginia State Police says that they do, at least according to a report in the Insurance Journal.
State troopers caught more than 4,000 reckless drivers, speeding motorists, and others over last weekend, during crackdowns on Interstates 64 and 66.
Specifically, “Operation Air, Land & Sea,” which is what the weekend “event” was called, resulted in traffic violations for 2,157 speeders, 394 reckless drivers, and a myriad of folks pulled over for drug violations, impaired driving, and safety citations.
This is the fifth such weekend enforcement effort since the first of the year, and was carried out by troopers on motorcycles, in cruisers, and in motor carrier teams.
According to State Police Superintendent W. Steven Flaherty, the saturation patrols are helping to increase the safety of Virginia’s highways.
While today’s offering from YouTube and a Florida insurance firm is geared toward insurance requirements in Florida, Personal Injury Insurance, or PIP, is something everyone should consider. What is PIP? Watch and learn!
Canada Newswire is urging Canadian drivers to renew their auto insurance before September 1st in order to keep medical benefits associated with their policies.
After the deadline, medical coverage will drop from $100,000 of medical coverage to $3,500 for all injuries classified as “minor” by the insurance industry, including whiplash. By renewing now, that $100,00 of medical coverage will stay with you for another year.
According to Consumer Advocate Lee Romanov, “By renewing now I’ve kept my $100,000 coverage for Medical Treatment 10 extra months.”
Medical coverage is not the only element of auto insurance affected by the cut to Accident Benefits that goes into force next week. $72,000 of Attendant Care, Housekeeping, and Care Giving Expenses have also been eliminated in the name of saving money, but, insurance experts say, the average savings is only 1%.
Romanov elaborates, “It’s adding insult to injury implying it’s a savings for consumers, when it’s obviously a savings for the insurance industry. I was paying $2,576 for my car insurance, I went online, found a rate for $1,634, cancelled my existing policy and had another policy issued. I’m keeping my $100,000 Medical Coverage an additional 10 months with a 36% rate decrease as opposed to the 1%. That’s a savings of $942 instead of $26.”
A new study from Quality Planning a company that validates policyholder data for car insurance companies, has shed new light on the use of odometer readings to predict annual mileage on private passenger cars.
In a quantitative study published on their website last week, Quality Planning found that when previous odometer readings are the sole method of estimating future annual mileage, more than half the vehicles rated will have an error of more than 25 percent. The failure is due to the erroneous assumption that vehicle usage stays the same from year to year.
Because annual mileage has a direct correlation to auto loss costs, insurance underwriters are driven (no pun intended) to make accurate estimates. Some insurers, and some regulators as well, believe that odometer readings are a good predictor of future annual mileage, and they collect readings either directly from the consumer, or from sources like service records and smog/inspection reports to make their estimates. Unfortunately, these sources are not actually accurate when it comes to predicting the future.
Dr. Raj Bhat, president of Quality Planning, explains, “Just because the methodology is based on measurable data, does not necessarily mean it is an accurate and acceptable method on which to base premium. Numerous factors directly affect driving behavior and therefore the total number of miles a specific vehicle is driven each year. Foremost among these are lifestyle changes and changes in the mix of household vehicles. It is essential to include these factors when predicting annual mileage, because a change in either can affect total miles driven.”
With annual mileage an important factor in calculating auto insurance premiums, Quality Planning’s study has great significance. It recommends that odometer readings be used only as a baseline, and says they should be supplemented with further data that addresses such factors as lifestyle changes, the number of vehicles in the household, and other similar conditions that could impact the actual number of miles each policyholder drives in a year.
The complete study can be found on Quality Planning’s website.
Golf Carts | Source: Morguefile.com | Click to enlarge
It seems like a great example of entrepreneurial talent: a nineteen-year-old Maine resident, Matt Rand, has started a golf card transportation service on Peaks Island, trading rides in his cart for tips from people riding the Peaks Island ferry.
Unfortunately, even bright ideas have a dark side. On Monday, the Portland City Council voted 5-3 that the carts must be licensed as taxis, and carry insurance just as any taxi service must.
Rand, however, says that he doesn’t make enough money to pay for the $5,000/year insurance.
According to the Portland Press Herald, the Peaks Island Transportation Service asked for the change because Rand was cutting into their business. They’re a non-profit organization that used $20,000 to buy a van for similar use.
Earlier this month Governor Ed Rendell urged the Pennsylvania state legislature to approve a network of cameras to identify uninsured motorists, an extrapolation on the concept of red light cameras. The plan was not only intended to regulate the number of insured drivers in the state, but also to address a $470 million revenue gap. The major problem cited by critics was the development of a real-time insurance verification system dependent on accurate information from insurers themselves.
Events in Oklahoma this week would seem to validate the position of those critics as lawmakers were forced to put the skids on a similar plan to identify uninsured drivers and in the process raise $50 million for the state. They simply could not find a company that could provide the needed verification information for all fifty states. That and some technical difficulties about funds allocation put that state’s proposed camera system on ice, with supporters making the obligatory statements about “next year.”
Truth be told, lot of folks have lots of problems with this proposed use of “big brother” cameras. The American Civil Liberties Union doesn’t like the assault on privacy rights and consumer groups don’t like the fact that the cameras seem to be more about making money than policing public safety. Since both governors did cite the revenue potential of the systems, it’s out there on the table as fair game for debate.
There’s also the “aren’t we shooting ourselves in the foot” angle? How is fining people who can’t afford insurance going to improve their ability to get or to be able to pay for coverage? If the fine involves a revocation of their license, that will negatively effect their ability to earn a living. In this instance, we have to agree with Jim Baxter, president of the National Motorist Association. Plans like these are counterproductive — and a little blatantly obvious. The states are hurting for cash. Red light cameras bring in a mint of money. Why not insurance cameras? Because it will create more problems than it solves and real-time insurance data with the current level of record keeping just does not exist. Bottom line? Fail.
If you read any insurance company reviews before you shop, you know that many insurers offer motorcycle insurance, though they don’t always make the offering very obvious.
For today’s YouTube Tuesday, we offer this video from Cruiser Customizing about motorcycle insurance:
Rate Watch, Technology, economy, insurance news | Cari | 
August 30, 2010 8:43 PM | 
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