Michigan Nixes Car Insurance Financial Responsibility Fees

Posted & filed under Car Insurance, insurance news, Michigan Car Insurance.

With nearly 20% of the state’s drivers not carrying valid car insurance, Michigan has one of the highest rates of uninsured drivers in the nation according to the Insurance Research Council. Yet, in a curious legislative move, the State Senate has voted 38 -0 to roll back financial responsibility fees for drivers caught without driver’s licenses or proper car insurance coverage:

Sponsored by Sen. Bruce Caswell, R-Hillsdale, the measure would eliminate responsibility fees for motorists caught driving without insurance or a valid license, and those who have accumulated seven or more points on their driving record for offenses like speeding that don’t incur responsibility fees of their own.

Under current law, a motorist with seven points within two years is assessed a $100 fee with $50 for every point above that. Having no proof of insurance costs $400 over two years, unless the motorist can provide proof before the court date. Failure to purchase insurance under the insurance code merits $1,000 in fees over two years.

Michigan Uninsured DriversWith Michigan having such a large number of uninsured drivers, coupled with the lack of availability of affordable car insurance in the state, it seems almost backwards that surcharges for being caught driving without insurance would be eliminated. This disincentive for carrying proper car insurance doesn’t appear to make sense on a whole lot of levels.

In study after study, it’s clear that when there’s no path toward affordable, cheap car insurance in a state like Michigan, more drivers will choose to take their chances and drive uninsured. And, every motorist in states that have a high uninsured driver rate pay more for car insurance. It’s a no win situation.

What does make sense is for law makers to craft legislation overhauling auto insurance requirements to make Michigan car insurance more affordable to the average driver. Other states are actually increasing fees and fines for driving without mandated auto insurance coverage.

Is removing a legal incentive to get (or remain) properly insured really the right message to send to uninsured drivers?

YouTube Tuesday – Rental Car Insurance

Posted & filed under Car Insurance, Rental Car Insurance.

Anyone who’s ever rented a car has been confronted with a decision at the rental counter: Do you purchase car insurance being offered by the rental agency? Some consumer advocates say “no”, and point out that your personal car insurance or coverage provided by your credit card company will cover most (if not all) insurance needs on a rental vehicle.

However, the insurance landscape is changing when it comes to car rentals. In this video, the Insurance Information Institute gives you an overview of the types of coverage available from car rental agencies, and what may (or may not) be covered by your own insurance.

The bottom line? Don’t wait until you’re signing papers at the car rental counter to make a snap decision without some advance knowledge. Check with your insurance agent and credit card company before you leave on your trip.

Car Insurance Theft Rates are Down. Why?

Posted & filed under Auto Theft, economy, insurance news.

Over the past few weeks, we’ve been working on a major update to the state level pages at carinsurancelist.com. During the preparation of all 50 pages, one thing became pretty obvious: auto theft rates have declined substantially across the entire country over the past 10 years. It was also interesting to note that a high auto theft rate in a particular state was a fairly accurate predictor of high car insurance rates in that state.

The National Insurance Crime Bureau (NICB) recently released a report which reinforces the data we’ve compiled for each state. Still, there are some specific metropolitan area in the country which have high auto theft rates (interestingly, 8 of the top 10 are in California).

2010 car theft hot spots

According to the NICB report:

The FBI’s preliminary 2010 crime statistics published last month indicate a 7.2 percent drop in vehicle thefts from 2009’s number of 794,616. If that estimate holds when the final statistics are published in the fall, it would result in the lowest annual vehicle thefts since 1967.

These findings go against the grain of conventional wisdom. In a down economy, property theft crimes tend to increase rather dramatically. Why are auto theft rates bucking this historic trend, particularly coming out of the worst recession since the 1930s?

There are a couple of reasons that make sense.

The first is that newer model cars, even economy models, are now equipped standard with a fairly robust anti-theft system. Most of these systems are active, rather than passive, which means that the system is armed when you exit the vehicle and lock the doors. Starting circuitry is disabled, so hotwiring a car is not the easy task that it once was for a joy-riding car thief.

It’s also no small matter that there are a lot fewer older vehicles on the road today as compared to just a few years ago. The government-sponsored “cash for clunkers” program in 2009 got a lot of older vehicles off the road that may not have had active theft deterrent systems.

A secondary reason is that with the general acceptance of remote entry devices (key fobs), the simple act of locking a car and arming the theft deterrent system requires no more than pushing a button (beep beep!) when exiting a vehicle.

The biggest deterrent to car theft is making it more difficult for a potential thief to steal your car. Anything that adds a layer of security and takes a thief more time to disable (steering column lock, an electronic cutoff, etc.) or that makes your car easily identifiable or traceable is going to make your car a less attractive target for someone who wants to steal it.

Video Tuesday: Michigan State Senator to Introduce Cheap Car Insurance Alternative

Posted & filed under Car Insurance, Michigan Car Insurance.

Detroit, Michigan is the most expensive city in the U.S. in which to insure a car.  It’s not even close.  According to the Insurance Information Institute, average car insurance premiums in Detroit are $5,948 / year, which is over $2,000 more than the next most expensive city – New Orleans.

There are several reasons why car insurance is so expensive in Detroit: the crime rate in the metro area, the number of uninsured motorists, and (most importantly) the fact that Michigan is one of the only states requiring uncapped personal injury protection coverage.

A Detroit area State Senator, Virgil Smith, is set to introduce legislation that could lower car insurance premiums for low income Detroit residents by as much as 30%. The proposed legislation is similar to California’s recently enacted Low Cost Automobile Insurance Plan. Essentially, the proposed legislation would provide a means test for auto insurance rates, and would require that any covered driver have a good driving record:

Under Smith’s plan, auto insurers could offer a stripped-down policy without unlimited medical coverage to Detroit residents who make less than $30,000 a year, drive a vehicle worth $20,000 or less and have a clean driving record.

The legislation would lower minimum personal protection coverage to $50,000 or $100,000 for a five-year trial period and, Smith hopes, cut insurance costs to as little as $1,000 a year for qualifying drivers.

…Smith’s program would start in Detroit, but it could eventually expand to the rest of the state.

Sen. Smith provides more details in an interview:

Low-Cost Auto Insurance Could be on its Way to Detroit: MyFoxDETROIT.com

Many Michigan Drivers Could Be Scam Victims

Posted & filed under Insurance Fraud, insurance news, Michigan Car Insurance.

Insurance regulators in the state of Michigan said today that there could be hundreds of drivers in the Detroit area mistakenly purchased fake auto insurance that was issued on behalf of a company based in Texas.

According to Jason Moon, a spokesperson with the Michigan Office of Financial and Insurance Regulation (OFIR) said that his organization had, “…reason to believe there may be as many as 1,000, if not more…” drivers who bought fraudulent insurance certificates.

Last week, the state ordered Don Diamond and Ethos Insurance Michigan, Ethos Insurance Group, and Ethos Mutual Insurance Group to cease their fraudulent activity. The bogus policies claimed to provide coverage through legitimate companies like Farm Bureau Insurance and Dairyland Insurance, and were issued under the Ethos or Diamond names.

When Texas-based Mr. Diamond was contacted, the result was that Detroit-based subcontractors were blamed for writing sham policies and taking money from consumers. Diamond said that Ethos did notify state authorities when the problem was discovered. He said he thinks the number of victims is more like 200, and has promised to return funds to anyone with a legitimate receipt for their fake policy.

Speaking to the press, Diamond said, “We don’t want any consumers to have any problems. We’ve been in business since 2000 and have never had a problem like this.”

Detroit-based motorists who think they may have been scam victims should contact the OFIR offices at 877-999-6442. This is especially urgent as they are technically driving without insurance.

OFIR’s investigation of the situation found many low-cost auto insurance policies in various locations around Detroit. Moon said that concerned policyholders contacted the state after they didn’t receive proper insurance documents. Their investigation will continue, but Michigan Attorney General Bill Schuette’s office has been given the results gathered so far for review.