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January 22, 2011

How You Save Money When Car Insurance Companies Sue One Another

How You Save Money When Car Insurance Companies Sue One Another If you're in an accident and it was the other driver's fault, you don't necessarily have to make a claim with the other driver's insurer. If you have collision insurance, you could make a claim on your own auto insurance policy.

But the story might not end there. After you consider the case closed, your insurer might launch a process called subrogation which, if successful, ultimately saves its customers money.

In subrogation, your auto insurance company asks the other driver's insurer to repay the claim cost and reimburse you for the cost of your deductible. The practice has matured in the last 20 years and become a higher priority for insurance companies.

"There's been a real change in the industry," says Jeff Baill, managing partner of Yost & Baill, a subrogation law firm in Minneapolis, Minn., and founder and past president of the National Association of Subrogation Professionals. "More and more companies appreciate what subrogation can do for the bottom line."

Car insurance companies make money from premiums you pay, investments they make and recovery of losses through subrogation.

"Oftentimes, the difference between profit and loss may be due to subrogation," Baill says. "In the last few years, for many companies, the revenue from subrogation was higher than revenue from investments."

The fine art of auto insurance subrogation

For auto insurance, the average success rate for subrogation is 12.5 percent, but some insurers achieve a 20 percent success rate, Baill says. Subrogated claims improve the bottom line, hold down car insurance rates and reimburse consumers for their deductibles."It's as much of an art as it is a science," says Robert Passmore, senior director of personal lines for the Property Casualty Insurers Association of America, an industry trade group.

The return of someone's deductible is no small matter. Twenty years ago, $50 and $100 deductibles were common, Baill notes. Today, a typical deductible is $500 or $1,000.

Passmore estimates that fewer than 1 percent of subrogation cases actually end up in court.

If the other driver is uninsured, your company will try to get the driver to pay the accident bill, setting up a payment plan if necessary.

In states with no-fault car insurance laws, you are generally reimbursed by your own insurance company for medical bills, regardless of who was at fault, and you're restricted in your ability to recover losses from others. But in those states, insurance companies are allowed to subrogate to recover losses for property damage, Baill says. The only exception, he says, is Michigan, where subrogation for car insurance claims is tightly restricted.

Getting your car insurance deductible back

You have a vested interest in the outcome of subrogation. Here's what you can do to help the process go smoothly.

Get all the information you can about the other driver if you're in an accident, including the name of the owner of the car, license plate number, contact information and insurance information. Some car insurance companies provide accident kits, which explain what you need to do at the scene of an accident. Keep the kit handy in your glove box.

Some insurance companies offer iPhone apps that offer tips about what to do at an accident scene. For example, State Farm offers a free "Pocket Agent" iPhone app, which lets policyholders use their phones to start the claims-submission process at the scene of an accident.

Your insurance company will want to talk with you about the car accident. Respond quickly and with all the information requested so it can move forward with the claim. If the case goes to court, cooperate with your insurance company, whether it's to provide information or show up on time to testify.

"You're helping them make their case, which is your case," Passmore explains.

Barbara Marquand is a writer with more than twenty years of reporting experience for newspapers, magazines and Web sites. She writes frequently about insurance and other business topics.

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Tags: Another, companies,, insurance, money.

Filed under insurance by on Jan 22nd, 2011. Comment.

January 21, 2011

Learn How Car Insurance Rates Work – and How to Save Money

Learn How Car Insurance Rates Work | insurance.com Home / Auto Insurance / Auto Insurance Basics / Article Learn How Car Insurance Rates Work – and How to Save Money

Posted 8/24/2009

Summary

Four major factors broadly determine your rate:Who you areWhat you've doneWhat you driveThe coverage you want Print Share RSS Bookmark

People often ask us how car insurance companies determine what rates to charge. (Well, no they don't. But we think it's important to clear up any confusion.) Many factors determine what premium rate you see when you ask for quotes. A common misconception is that rates are set by law and can't be changed. Although the methods each auto insurance company uses when setting rates are regulated by state laws, the rates themselves are not set by the state. This fact means that there will be different rates for each company. Once you understand more, you'll see why comparing rates from different companies can save you money.

How is my car insurance rate set?

Let's look at what happens when you submit an application for car insurance. First, you are sorted into an individualized group based on each piece of information in your application, as well as other sources. Once your customized group has been determined, the insurance company calls up the pricing information for that group. Finally, any discounts you qualify for are subtracted from the price, and your quote is returned. The entire process is completed by sophisticated software behind the scenes, based on information you enter online or an agent types into a computer.

Where Does My Premium Go?Why do insurance companies have such different rates?

Because each company has many different small groups and different prices for those groups, rates can vary considerably from one car insurance company to the next. Each company has its own set of claim payments and expenses, and they must set rates based on that information.

What can affect the auto insurance rate quotes you receive?

Depending on state laws, which often restrict the type of information an insurance company may use, these factors will usually affect your rates:

Who You AreWhat You've DoneAgeHad accidentsGenderGotten traffic ticketsMarital status"B" average in school (for students)Zip codeTaken a Defensive Driver course# of years licensedLet your policy lapseCredit historyFiled bankruptcyHome ownershipFiled lots of claimsOccupationWhat You DriveHow Much Coverage You WantYearBodily Injury and Property DamageMakeMedical PaymentsModelUM/UIMHybrid?Comprehensive and CollisionAnnual mileageRental reimbursementPriceRoadside assistanceSafety features

Here's the breakdown by percentage of premium for coverages on a sample car insurance policy for a sample driver:

Coverages by Percent of PremiumAre auto insurance rates discriminatory?

Some things are always prohibited from consideration by law, such as race and religion, and others are sometimes not permitted, such as credit history, ZIP code, and the first speeding ticket. However, other factors that may seem unfair, such as age, gender and marital status are often considered. Since each company places a different weight on each factor, it's important to shop around to find the best company for your situation.

Let's see how much you've absorbed about car insurance rates and how the premiums are used. All of the answers can be found in this article, but it's more fun if you don't look! If you want to find out more about certain questions, you can click their links to read an article that explains the answer.

1. Your car insurance rate could be higher if you:

2. Your rates will always increase if you get a speeding ticket.

3. The color of your car is used to determine your rate.

4. All companies offer the same auto insurance discounts.

5. Which statement is true?

6. Uninsured/underinsured motorist coverage is expensive and unnecessary.

7. Car insurance companies often use race and religion when setting rates.

8. Car insurance companies often use credit history when setting rates.

9. Most of your auto insurance rate is the legally-required liability portion.

10. Car insurance premiums are mostly used to give the insurance company a profit and pay for their miscellaneous expenses.

Please scroll down for the answers.

Answers:

All of the above. False False False Rates can vary a lot because each company has different experiences with claims and expenses. False False True True False

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Tags: insurance, Learn, money, rates.

Filed under insurance by on Jan 21st, 2011. Comment.

January 17, 2011

23 Tips to Save Money on Auto Insurance

Get 23 Tips to Save Money on Auto Insurance | insurance.com Home / Auto Insurance / Saving Money / Article 23 Tips to Save Money on Auto Insurance

Posted 9/24/2009

Summary

Try one (or two or three) of these tips to save some change on auto insurance.

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In these economic times, we're all trying to save a buck. A little off the phone bill. Maybe a couple of cappuccinos less each week. Why not save some change on auto insurance, too? Here are 23 tips that could save you a chunk of cash on auto insurance.

Tip #1: Earn a Low Mileage Discount

Carpool, take the bus or cut back on trips. If your annual mileage is 10,000 or less, most insurers will offer a discount.

Tip #2: Study Hard

Students with B or better average qualify for a Good Student Discount in high school and college. Provide proof of your GPA annually.

Tip #3: Take a Defensive Driving Course

Many states offer a discount to mature drivers who take a certified defensive driving course. Ask us which companies do.

Tip #4: Drive a Hybrid

Travelers and others offer a hybrid discount. Other fuel-efficient cars often cost less to insure than gas guzzlers. Compare rates before you buy.

Tip #5: Get a Multi-Policy Discount

Insure your home, motorcycle or boat with your auto insurer and get a discount on your car insurance. Ask us for a quote.

Tip #6: Switch to $500 or $1,000 Deductibles

You can save as much as 15-20% of your Comprehensive & Collision premiums, especially for cars less than 5 years old.

Tip #7: Buy Gap Insurance

It costs a little more, but can cover your loan payments, if you have a total loss of a new car that’s worth less than your outstanding balance.

Tip #8: Don't Let Your Policy Lapse

It’s illegal – and you could pay 25% more for a new policy when you’re ready to buy one. Some insurers offer a transfer discount, too.

Tip #9: Protect Your Credit

In many states, missed payments can lower your credit rating, making it more expensive to get car insurance coverage in the future.

Tip #10: Insure Everyone in the Household on One Policy

You’ll earn a multi-car discount, and can be certain there’s coverage for driving each other’s cars.

Tip #11: Don't Speed Excessively

Traffic tickets will increase your rates hundreds of dollars a year. And, tickets are chargeable for the next 3 years.

Tip #12: Insure Your Home and Auto Wisely

Always buy Uninsured Motorist coverage to protect yourself from drivers without insurance. Uninsured accidents are costly.

Tip #13: Drop Comp & Collision Coverage

If your car is 8 to 10 years old, it might be time to “self-insure” it. Consider the trade-offs, as you’ll have to pay to fix it.

Tip #14: Pay The Small Claims Yourself

We know you buy insurance to cover losses, but paying a small claim is often cheaper than getting a rate increase in the future.

Tip #15: Avoid High Theft Cars and Trucks

If your car’s a target for thieves, you’ll pay more for Comprehensive coverage. A higher deductible will help manage costs.

Tip #16: Go Paperless

Some companies offer discounts for using online billing and service options. And, for using E-signature to complete your policy forms online.

Tip #17: Earn an Early Shopping Discount

Compare rates more than 2 weeks before your renewal date and you may get an early shopping rate. Ask us how to qualify.

Tip #18: Get Discounts for Anti-Lock Brakes and Airbags

Safe cars are cheaper to insure. And, most insurers give a discount for safety features and anti-theft devices.

Tip #19: Earn Payment Discounts

Consider paying in full if your company has a discount for it. And, using EFT for payments saves monthly installment fees.

Tip #20: Take a Driver's Training Class

While Driver’s Ed is not required in every state, many companies offer teens a discount for their first few years on the road.

Tip #21: Earn Renewal Discounts

When you shop for new rates, consider whether you’ll qualify for a renewal discount with your current company. You may save more.

Tip #22: Ask About a Homeowner's Discount

Many insurers offer a 5% to 10% homeowners discount, even if you don’t insure your home with them. It’s a sign of stability.

Tip #23: Get Married

Rates for couples are lower. Get quotes from both insurance companies before you merge your coverage. And, buy higher limits if you own a home together.

Do you currently have auto insurance?

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