Archive for the ‘Car insurance’ Category
Hard Times Mean Dangerous Roads as Americans Drop Car Insurance
A recent report in the Charleston (West Virginia) Daily Mail says more and more American drivers are opting to let their car insurance lapse in order to save money in this period of economic downturn.
According to Sam Belden, vice president of Insurance.com, an online insurance agency representing several different insurance companies, says that the number of uninsured motorists has doubled in the past year, nationwide.
West Virginia is no exception to this trend, falling roughly in the middle of the pack with regard to the percentage of uninsured motorists. Steve Dale, deputy commissioner of West Virginia’s Division of Motor Vehicles, says, “There are states which have higher uninsured rates and states with lower, but DMV would like to do more. It doesn’t really matter what the percentage is if you are the one that meets the driver that is uninsured.”
also says that that the number of drivers in his state whose licenses are suspended for lack of insurance has remained fairly consistently between 7,000 and 9,000 a year, and that each of them poses a risk to other drivers on the road.
But while the numbers in West Virginia are fairly constant, across the country it’s a much different story. Sam Belden says that 20% of drivers are not covered this year – as opposed to only 10% last year, and money is the primary reason why.
“Money is a little tight with people, and they decide if they need to skip on something, they’ll let their insurance lapse,” Belden told reporters. He went on to explain that this trend is directly related to the economy, and that, “…it’s exacerbated by premiums also rising over the past year. When people are squeezed the most, the insurance rates are also going up.”
On average, insurance premiums increased by 6 to 7% during 2008, and there are more increases coming in 2009.
More data is expected later this month, when the Insurance Research Council, an organization funded by the insurance industry, is due to release a study supporting the fact that several hundred thousand drivers dropped their insurance in 2008 at least in part because of the jobless rate. In addition, the study is expected to show that roughly 40% of callers who followed up on online applications in 2008 let their policies lapse – up from 10% a few years ago.
David Corum, vice president of the council, explained that the study will also reveal that a single percentage point increase in unemployment causes a half-point increase in uninsured drivers.
The last such study by the Insurance Research Council was released based on data from June, 2006, and showed that the highest rates of uninsured motorists were found in Mississippi, Alabama, and California, while West Virginia came in at around 10%, against a national average of roughly 15%.
West Virginia is one of twenty states that requires drivers to include insurance for un- and underinsured motorists as part of their policies, which increases premiums by seven to nine percent. In order to recover costs, over and above insurance, the only option is to sue an uninsured motorist.
Belden cautions that even in hard times, maintaining your car insurance is crucial, as drivers who allow policies to lapse are generally hit for a 50% surcharge for new policies. He also suggests that drivers talk to their insurance companies about switching to monthly payments, stating, “If you pay once every three months, the amount may look absurd. You can move to monthly payments to even it out.”
He also advises that some insurance companies will take partial payments from time to time, and that the worst thing you can do is not ask about your options.
Performance Insurance for Performance Cars
Whether you have a need for speed and maneuverability, or simply prefer the luxurious interiors and smooth rides of elite imports, you drive a car that has a certain cachet. You may not be among the world’s elite, but your car is, which means it’s an investment as much as a means of transportation, and investments must be protected, right?
The best way to protect your automobile is to make sure you have adequate insurance coverage, but elite imports, performance cars, and even restored classics present a challenge to many “standard” insurance companies. This is because insurance rates and coverage limits are based on tables of data that compare risk, and the more unique a car is, the less data there is. Insuring a Honda is easy, because hundreds of thousands of people drive them. Insuring a Lamborghini is a bit trickier because you just don’t see them on the road.
Specialty insurance, then, is the route to take, especially if your performance or classic car isn’t driven every day. The advantages of specialty insurance policies are:
* They’re less expensive than standard insurance, as they generally don’t have all the same options, and because there is less perceived risk.
* They are based on “agreed value,” a value for your car that you and the agent agree upon after examining the age, condition, rarity, and cost of your car, and factoring in any aftermarket upgrades.
* Policies for classic cars often have zero deductibles.
* Policies generally meet the “full coverage” requirements imposed by finance corporations.
Conversely, there are disadvantages that should be considered:
* There are generally restrictions on who is insurable – drivers must be adults with clean driving records and significant experience behind the wheel.
* An appraisal may be required, especially if your car has a great many unique features or aftermarket parts.
* The allowed mileage per year is usually quite low.
When shopping for specialty insurance, there are several steps you can take to ensure a fair deal with a reputable company.
1. Select the right insurer. Every specialty insurer has its own rules, so do research ahead of time. Network with members of the same car clubs or owners groups to which you belong, and check out auto enthusiast magazines like Hemming’s Motor News and Car and Driver for broker listings.
2. Examine your driving habits. If you think your performance car will be driven fairly regularly, consider talking to a standard insurance company – they may have an elite division, or may be able to work with you to determine a fair value for your car. If you car will be spending most of its time in a locked garage, specialty insurance is still your best bet.
3. Itemize everything. Before you talk to an agent, be sure you’ve compiled a list of every non-standard or aftermarket part in your car, with the approximate cost of the item. Enough of these will affect the value of your car, and engine mods can knock you out of consideration entirely.
4. Ask about discounts. Just because you’re driving an expensive vehicle doesn’t mean you have money to burn. Remember, “If you don’t ask, you don’t get.”
Elite insurance can cost up to 20% more than the insurance on a more conventional luxury car (think Lexus), but you usually get more coverage for the money. Classic cars will generally cost significantly less to insure. Either way, you can find appropriate insurance for your vehicle if you know where to look and what to ask for