Love thy neighbor? You may not, once you realize how much your neighbors influence your auto insurance rates.
Alyssa Willis, an agent at Annette Willis Insurance Agency in South Florida, says that in addition to factors like your credit score and driving history, your auto insurance rates are based partly on the experience that your insurance company has with all of the policies it issues. If an auto insurance company collects premiums totaling $1 million but pays out $2 million in claims, all of the company’s policyholders likely will see a hike in their rates, Willis says.
“Then companies look at what geographic areas have the highest percent of claims and raise drivers’ rates in those neighborhoods,” Willis says.
So if you live in a neighborhood with a lot of drivers who tend to crash or where a lot of car break-ins and thefts occur, you might pay more to cover the insurance company’s claims in that area.
Your neighborhood helps dictate how high or low your auto insurance premium is.Drivers in your area who have filed numerous claims — or even just one or two — will see heftier increases in their premiums than those with no claims and a spotless driving record. Nonetheless, Willis says, everyone in the neighborhood probably will experience a bump in rates.
How high might the rates soar?
Typically 20 percent to 30 percent, according to Steve Brooks, president of B & B Premier Insurance Solutions, a brokerage in Agoura Hills, Calif. “They could even double, depending on the number of claims filed by people in your area,” he says.
A shocking discovery
When Dale Martin moved just one town over, he got an unwelcome surprise in the mail — a notice that his auto insurance premium had gone up.
“I moved about 15 minutes from my old neighborhood and my car insurance premium jumped almost $200 a year,” says Martin, who lives in the Chicago suburbs.
Martin says his new neighborhood — which has a different ZIP code than his previous home –was rated as “on the decline” by Insurance Services Office Inc., a major provider of data to insurance companies, despite a drop in crime rates and a healthy rise in housing prices.
“I was shocked because my new neighborhood has not been on the decline in many, many years,” Martin says. “So even though I had never filed a claim and hadn’t been issued a ticket in almost 20 years, my rates still went up just because I moved.”
Asking his agent about the premium hike didn’t yield Martin much relief: “He said there wasn’t anything I could do. My ZIP code is what it is, and so are the rates associated with it.”
Switching car insurance companies eased some of the pain, Martin says. However, he saved only $80 a year, and his auto insurance rate hasn’t returned to the pre-move level.
Robert Hunter, director of insurance at the Consumer Federation of America, isn’t surprised. “Instead of judging each customer individually, insurance companies judge drivers by their ZIP codes and demographic region,” Hunter says.
Five-number code part of premium equation
Which demographic regions are likely to get punished most when it comes to auto insurance rates? Densely populated urban areas.
The car parked in your neighbor’s driveway or garage could be affecting your auto insurance premiums.According to the Highway Loss Data Institute, crashes that cause injuries or property damage occur more often in urban areas. A 2008 Insurance Research Council study of a national sample of insurance claims for auto crashes found that 80 percent of injury accidents happened in urban areas.
Willis says the tracking of ZIP codes helps auto insurance companies pinpoint areas — primarily urban settings — that pose the highest risk of claims being filed.
So you can expect to pay more for auto insurance if you live in a heavily congested ZIP code in New York City, Los Angeles, Detroit or Atlanta than in a quiet suburb of Des Moines, Iowa, or Louisville, Ky.
“There are more claims filed in areas that are heavily populated, so that means you’re going to pay more if your ZIP code is in an urban area,” she says.
But even if you live in – or move to – a ZIP code labeled on the decline or one packed with reckless drivers, you might be able to avoid sky-high auto insurance premiums.
“Each insurance company sets its own rates, so one high-claim ZIP code for one company might not necessarily be as equally risky for another,” Brooks says.
To secure the best rate for your ZIP code, Hunter suggests shopping around. “Get car insurance quotes from several companies or work with an independent agent who represents many different companies to find the best rate and coverage,” he says.
But Hunter cautions that you might have to look outside your neighborhood for an agent.
“Insurance companies don’t like to place agents in poor or high-risk areas like those rated as ‘on the decline,’” Hunter says. “So to maximize profits, car insurance companies place agents in rich areas and suburbs, because they don’t think there good drivers reside in poor or ‘declining’ areas.”
–Gina Roberts-Grey
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Filed under insurance by on Mar 4th, 2011. Comment. 
Could it be that Aquarius is the sign of road rage and Virgo is the sign of traffic safety? Yes, it’s true, astrologers say — as true as the existence of the sun, the moon and the stars.
Zodiac signs have long been considered predictors of everything from your love life to your work life. But they also have plenty to say about your driving habits, according to astrologers.
Astrologer Michelle Perrin says your sign offers clues about your predisposition toward tailgating, speeding, plodding along or darting from lane to lane. Of course, all of those behaviors can affect your auto insurance rates — for better or for worse.
“Your driving habits are literally written in the stars,” Perrin says.
Your zodiac sign indicates what kind of behind-the-wheel personality you have, astrologers say.Recently, there’s been plenty of fretting and hand-wringing about a supposed reconfiguration of the zodiac chart and the zodiac’s “newest” member, Ophiuchus. Now, many people are wondering, “What’s my real sign?”
Relax, astrologer Donna Stellhorn says. Nothing actually has changed. “The concept of the stars shifting has been around for hundreds of years. And the sign you’ve always followed is still yours,” Stellhorn says.
Using the zodiac “you’ve always followed” (minus Ophiuchus), here’s a look at how your sign drives your behind-the-wheel personality.
Aquarius (Jan. 21 to Feb. 19) — The sign of road rage. Don’t be surprised if an Aquarius cuts you off in traffic without realizing it, Perrin says, then fumes about you cutting him off — so the Aquarius retaliates and cuts you off again.
Pisces (Feb. 20 to March 20) — Not one to take risks, a Pisces is a passive driver. And a Pisces isn’t in a hurry, either. “They’ll cruise along at — or a few miles under — the speed limit and are surprised to find out that they were driving and just seem to arrive at their destination not knowing how they got there,” Stellhorn says.
Aries (March 21 to April 20) — Impatient, adventurous and prone to speeding. That’s what Perrin says to expect from an Aries driver. “They’ll probably tailgate because they get angry with other drivers, especially if they’re going too slow for Aries’ taste,” Perrin says.
Taurus (April 21 to May 21) — A Taurus typically drives along enjoying the music, feeling the comfort of the car — and isn’t aware of what speed he’s going. That lack of awareness could cause a Taurus to run a stop sign. But if a Taurus is in a hurry, watch out. “There is no one less patient and likely to weave in and out or traffic,” Stellhorn says.
Gemini (May 22 to June 21) — Behind the wheel, a Gemini is texting, checking his GPS and crooning along to tunes on the radio. “They are changing lanes, looking at the scenery and fixing their hair in the mirror, all while ever so slightly pushing the boundaries of speed limits, going just a few miles per hour over the posted limit,” Stellhorn says.
Cancer (June 22 to July 22) — Cancer is distracted, or is protective of his car and passengers. If a Cancer is cut off by another driver, he’ll remember it, Stellhorn says. “Heaven help the offender if they have a personalized license plate, because Cancers will find them at soccer practice,” she says.
Leo (July 23 to Aug. 22) — A Leo fancies flashy, fast cars. “It’s no stretch to assume Leos have a lead foot,” Perrin says. They’re also incensed when cut off and tend to stay angry awhile. “They’ll keep the person who darted in front of them in their sights and curse under their breath. But ultimately, unlike Cancers, they won’t go out of their way to get even,” Stellhorn says.
A Sagittarian driver is “very adventurous and enthusiastic,” astrologer Donna Stellhorn says.Virgo (Aug. 23 to Sept. 21) — Perrin says this is the safest driver on the zodiac chart. “They’re very safety conscious and is the one obeying the rules,” she says. A Virgo also is practical. “They’ll calculate the best gas mileage and shortest route to save a few cents,” Perrin says.
Libra (Sept. 22 to Oct. 22) — A Libra driver constantly chats on the phone (hopefully hands-free) or to his passengers. When driving alone, a Libra sings along to music on the radio. Don’t expect Libras to race around town, though. “They are happy to drive at the speed everyone else is driving because staying with the flow of traffic gives a sense balance that Libra loves,” Stellhorn says.
Scorpio (Oct. 23 to Nov. 21) — “They’re impatient with other drivers, so they might ride up a little too close to the other guy’s bumper,” Perrin says. A Scorpio also has excellent concentration, so he’s not easily distracted by kids fighting in the back seat and rarely rubbernecks when cruising past an accident.
Sagittarius (Nov. 22 to Dec. 21) — “A Sagittarian is very adventurous and enthusiastic,” Stellhorn says. That sometimes leads to going a bit too fast. The Sagittarian’s experience behind the wheel is more about the journey than the destination. “They like to meander along the road less traveled,” Perrin says. A Sagittarian also is more inclined to get lost on that winding journey.
Capricorn (Dec. 22 to Jan. 20) — To a Capricorn, there’s no such thing as being too cautious on the road. Even though the Capricorn finds commuting tedious, “they tend to follow the speed limit,” Perrin says.
Not only does your sign leave you prone toward road rage or distracted driving, astrologer Katherine Metcalf says it can dictate the type of car you drive, too.
Here’s a guide to who Metcalf says is most likely to …
• Drive a practical family car: Taurus and Cancer.
• Drive a luxury car: Capricorn.
• Drive a small, fuel-efficient car: Gemini, Libra and Aquarius.
• Drive a red sports car: Aries, Leo and Sagittarius.
• Drive a “clunker” until the wheels fall off: Virgo.
• Drive a boat-size gas guzzler: Scorpio and Pisces.
–Gina Roberts-Grey
Filed under insurance by on Jan 27th, 2011. Comment.
The actual means of monitoring varies from company to company and may include:
Sending a notification to Mom and Dad when the teen does something incorrectly Providing verbal feedback to the teen driver Transmitting video of the teen's driving via a two-way cameraSuch monitoring "gives you a very robust bread crumb trail" to track where your teens have been and how proficiently they drove to get there, says Dave Flower, national business director of MobileTEENgps, headquartered in Marietta, Ga.
Systems like MobileTEENgps plug into your car's onboard diagnostic port and use GPS to keep tabs on the vehicle. You can choose what you want to monitor, including speeding, arrival and departure times, when a car is moved and where it goes.
If your teen does something he or she isn't supposed to, you'll be notified. This can be done via e-mail, text or a phone call.
"The major effectiveness of the product is the fact the child knows it's on the car," Flower says. That knowledge might prevent them from doing something they shouldn't, he says.
Another system, tiwi, provides real-time verbal mentoring to drivers. If a teen exceeds the speed limit, the device asks the driver to slow down. Fail to obey and a notification will be sent to Mom and Dad.
The device also monitors things like seat belt usage, hard braking and cornering, and jack-rabbit acceleration.
The goal is to identify "what behaviors we can see before a crash," says Todd Follmer, chief executive officer of inthinc, the Salt Lake City company behind tiwi.
DriveCam – created by the San Diego-based company of the same name – is a monitoring system that uses a two-way camera. If it senses risky driving, it records a few seconds of what the driver is seeing, hearing and doing. The teen's driving then is scored, with the hope that parents and teens will view the video together and discuss the driving that's been recorded.
Generally, the devices cost several hundred dollars per unit, plus a monthly monitoring fee. But some companies have formed alliances with auto insurance companies.
For example, 21st Century Insurance and Financial Services, based in Wilmington, Del., pays for the MobileTEENgps system and the first month's monitoring for policyholders.
While there is no discount on car insurance, having the system installed provides "peace of mind," says Irene Grugan, 21st Century's director of business integration.
"Inexperienced drivers need some guidance," Grugan says. "Just because you have a license doesn't mean you're ready to drive on the road responsibly."
At Safeco Insurance in Seattle, the Teensurance program provides a discount of up to 15 percent on auto insurance rates if a GPS monitoring device called the Safety Beacon Convenience and Protection system, a GPS monitoring device, is installed on vehicles.
"We want to create a tool that helps parents and teens having a discussion about what safe practices are," says Shawn Anderson, product innovation architect at Liberty Mutual Insurance, which owns Safeco.
While some teens might view monitoring as an invasion of privacy or a criticism of their driving, Safeco spokesperson Mike Plaster says "families use it to have teens prove themselves as drivers, and that can result in increased freedom."
So far, use of monitoring devices has been limited, says Bill Martin, senior vice president of Farmers Insurance Group in Los Angeles and a board member of the Insurance Institute for Highway Safety.
"I'd be surprised if it was more than one in 100 [vehicles] at the moment," Martin says.
One limiting factor is the cost of the devices and monitoring. Those costs may wipe out any car insurance rate discounts policyholders receive, he says.
Thus far, there have been only limited studies on the benefits of the devices. The auto insurance industry isn't sure if more safety-conscious teens and families install the devices, or if the devices make teens more cautious.
Either way, "they're safer drivers, so maybe they deserve a discount," Martin says.
Filed under insurance by on Jan 22nd, 2011. Comment.