Small cars

Small cars are generally quite cheap and rather comfortable in the conditions of a big city with heavy traffic. They typically have low engine volumes, top speed, get stolen quite rarely and are inexpensive to handle at repair. Nevertheless, auto insurance can sometimes be a bit costly for small cars because they tend to get damaged very bad during accidents. The laws of physics aren’t on small cars’ side during collisions because the smaller object tends to get the most damage regardless of the safety features the manufacturer has included. Due to this costly claims tend to arise more often with such vehicles, and the insurers respond with respective pricing.

Medium sized cars and family vehicles

Medium class cars are typically regarded as the safest and the cheapest to insure. Of course, it depends on the particular make and model, but the general rule is that these cars are quite safe, have low repair costs and theft rates, and tend to get damaged much less than smaller vehicles during an accident. As a result, you will usually get the best auto insurance rates for this car type.

SUVs

SUVs are certainly very comfortable and give you a whole different perspective in traffic. However, it’s the size that we all love that can be a problem with these vehicles. Due to their size and increased mass as compared to other vehicle types SUVs tend to produce more damage during accidents, especially involving other cars. The third party liability in case of an SUV is likely to be higher because the other car tends to get damaged quite bad and there are likely to be injuries as well. Added to the higher repair costs for such vehicles SUVs are usually more expensive to insure.

Sports cars

Sports cars often seem as an advantageous option for car buyers since they are both cool and cheap. However, when it comes to insuring a typical sports car, you will actually have a hard time finding cheap auto insurance because insurers tend to classify such cars as high risk. Increased top speed, engine volume, elevated theft and accident rates as well as the likelihood to produce a very serious car crash all contribute to expensive auto insurance rates for sports vehicles.

Luxury vehicles

It’s logic that expensive luxury cars will cost more to insure than other car types. Nevertheless, it’s not because they are costlier to purchase – insurers have other reasons to charge higher rates for such vehicles. First of all, they are usually very costly to repair, often requiring exclusive and overpriced repair parts that are hard to find in an ordinary repair shop. Moreover, such vehicles are often targeted by car thieves and burglars due to their value and exclusivity. So don’t expect to get cheap auto insurance for any luxury car.

When you put all these together, the disruption to the supply chain has been immense. Globally, the claims on Business Interruption Insurance has been more than $70 billion so far this year. The problem for the insurance industry is simple. Suppose one factory in Thailand owned by Toyota suddenly finds itself several meters underwater. That may be only one factory out of action, but suppose it supplies parts to fifty other factories around the world. Now there are fifty-one claims for business interruption. As it happens, Thailand is the world’s second-largest producer of hard-disk drives, has factories owned by Honda and Toyota, and so on. The highest rainfall in fifty years flooded some 1,500 factories. Now scale up the disruption. It’s affecting every major manufacturing country around the world.

If your own business is in manufacturing, assembly, logistics or distribution, and you depend on moving complete products or parts around the country, you need to review all those parts of your insurance cover for events affecting your supply chain. This is both direct and contingent interruption, i.e. your exposure depends on where you are in the value added chain and how easily replacements can be found. Insurers are now going to ask for a lot more transparency. In the past, this type of insurance was underwritten with a minimum of information. After this year’s experience, insurers are more likely to ask for detailed disaster plans to show how your business will respond if key suppliers are unable to supply on time. A failure to produce such a plan is likely to lead to a refusal of cover or very high business insurance rates.

The changes in the weather patterns are becoming more obvious and all business insurances rates are going to rise, both to cover property damage and business interruptions. This is not the time to sit back as winter approaches and assume there will be no problems with winter storms whether here in the US or elsewhere in the world. Proper planning will keep your insurance affordable.

For the more rational members of the community, there’s no such thing as too much help if there’s a disaster. The more Government or state aid, the more quickly the community can be put back on its feet. This help should not just look at the big picture of repairing roads and bridges so people can move around again. It also comes down to the individual level for those most in need. Not surprisingly, the federal government recognizes there are whole swathes of the population who either cannot afford health insurance or will end up underinsured – this includes those who think they are lucky enough never to be affected by a natural disaster. This brings us to the Federal Emergency Management Agency (FEMA). This federal agency has the responsibility for coordinating the response to any disaster. It can be man-made like an explosion at a nuclear power plant, an erupting volcano, or a hurricane producing a major storm surge. If the scale of the resulting disaster is more than a state can reasonably be expected to deal with on its own, FEMA steps in to offer its expertise.

This includes its Individual Assistance Program, designed to help those who are uninsured or underinsured. This aims to offer practical help to move home contents into storage, provide temporary housing while reconstruction work continues, and cover the cost of any medical treatment for injuries sustained in the disaster. Note you cannot claim twice under an existing policy and then under the FEMA program. If there’s overlapping cover, you have to decide which one to claim against. But if your cover is not going to be accessible because you cannot afford the high deductible or because you were underinsured in any event, the FEMA program will help bridge the gap. Indeed, the FEMA program can be the difference between having nothing and having some clothes to wear and somewhere to live while the situation is stabilized.

If you live in an area which is prone to flooding or seems to be getting more than its fair share of catastrophic weather events, you should look at the FEMA Individual Assistance Program. It may not be a substitute for conventional homeowners insurance quotes from a private insurer, but you should know what additional help is available when you getting your next homeowners insurance quotes.

Technology has now come into play. Many new vehicles leave the factory with on-board computing power and transmitters. In the more sophisticated vehicles, this allows the vehicle to signal a garage when maintenance work is required. This technology can also be modified to monitor when and how the vehicle is driven, transmitting the results to insurers. For vehicles without the basic technology installed, black boxes have been developed. They can be plugged into the vehicle’s electronic systems and collect all the relevant data.

This is Big Brother technology to tell the insurer exactly when you drive and how many miles you travel. But it solves the problem of dishonest reporting. So many insurance companies are now offering plans directly based on the mileage traveled in a week. This is of immediate benefit to homemakers and seniors who only make short trips during the day. The most honest of the insurers are offering up to 40% discount to those who use the vehicle the least. It also helps the environment by encouraging people to use private transport less. If people walked more, it would make us less dependent on imported oil. It also reduces pollution. With better air quality, people with breathing difficulties have a better quality of life.

Not everyone approves of this technology. It’s considered an invasion of privacy. Indeed, with the right software, the insurers and anyone else who has access to the data will know exactly where the vehicle has been driven. This could prove involvement in criminal activity or suggest infidelity. Of course, the insurers protest they have no interest in making this data available to law enforcement agencies or anxious wives. But there’s a case about to be considered in the Supreme Court where monitoring a GPS transponder evidenced involvement in drug dealing. It will be interesting to see what our highest court has to say about this use of the technology.

As an example of an insurance plan, State Farm are promoting a Drive Safe and Save Plan in Illinois. This is based on the installation of a plugin device called In-Drive. Effectively, this enables drivers to pay for their insurance by the mile. Car insurance rates can be significantly lowered if you are prepared to accept positive monitoring of your driving. Look for the option the next time you get car insurance quotes from the top insurers. Big savings are available.

Apart from accepting a higher deductible, the main way of earning a discount with an insurer has always been to give the insurer more business. So, if your family owns three vehicles, you insure all three with the same company. If you also insure your home, want to cover your health costs or insure your life, a bundle has always been rewarded with sometimes quite substantial savings. But, here comes the problem. While insuring vehicles has consistently remained profitable, homeowners insurance has become increasingly challenging. Even though the US is one of the countries refusing any action on climate change in the current round of talks in Durban, the US insurance industry has recognized a major change in weather patterns over the last twenty years. That’s why you will now find it very difficult to get flooding coverage if you live anywhere near where the water level is known to rise, why hurricane damage is being defined to make it more difficult for you to claim, and why sinkhole, mudslide and earthquake coverage is getting more difficult in the areas at risk, i.e. the land drying out or being affected by more than the usual amount of rain.

In the past, companies would cross-subsidize, treating their profit on vehicle insurance as support for the other divisions. That’s no longer an option. The premium rates have been forced to rise faster than inflation because of the increasing levels of fraud and the rising costs of repairs. There comes a point when the other insurance divisions of home, health and life have to become more profitable. Allstate’s answer is to make it a condition of buying homeowners insurance that owners also buy vehicle insurance. The regulator in North Carolina has just allowed Allstate to drop 45,000 existing policyholders who refused to transfer their vehicle insurance. The same is happening in Arkansas. In most states, it’s lawful for insurers to give just 30 days notice of its intention not to renew. So here’s the big question for you. How will you react if you get a letter from an insurer threatening not to renew your homeowners policy unless you bundle cover together? Will this trigger a rush to other insurers who offer unconditional auto insurance quotes? Ironically, it may force you to discover other companies actually have lower car insurance rates.

So let’s start with the good news. Most insurers offer a discount for people who fit security measures to reduce the risk of a burglary. Check with your current insurer to see what gives the biggest savings. Now come back to your home with a little more confidence. You may still find the worst has happened, but you have done your best to prevent it. Now the practicalities: did you have enough cover? Whether you are a renter or an owner, it’s worth paying the full rate to cover the replacement value of all your possessions. Walk through the rooms and make a list. It’s too easy just to think of the more expensive items like the television, your computer(s), cameras and music equipment. You will be surprised how quickly the value of the contents rises when you actually list all you have.

In fact, there should be two lists. One should be the everyday possessions, the other the expensive items. This can be jewelry, artwork and other collectibles. Take photographs of all the expensive items. For all the larger electronic and domestic goods, make a note of the serial numbers. Insurance companies are always more comfortable if you have proof of purchase – yes, it’s a good idea to keep receipts and instruction manuals should a claims adjuster ask for them. Receipts are also useful to show the original value. If you have no receipts, look for evidence of payments on credit card and bank statements. Even PayPal may show payment when you bought online.

Although this all looks a lot of hassle, you are smoothing the way should you come back to a burglarized home. Now you have a master list, it’s easy to find what’s been stolen. The claims check is also likely to arrive more quickly, which should make you feel a little better. Now spend some dollars to make your home a fortress and the next home insurance quotes will not rise too much. When you claim, remember this will be recorded in CLUE and A-PLUS so, when you next come to renew your homeowners insurance, all insurers will know about your claims history.

That said, one of the consequences of all this disaster has been a rise in the premium rates for insuring property. Private insurers have already shown themselves unwilling to continue insuring against flooding, leaving it to the federal and state programs. With the increase in the number and severity of hurricanes and tornadoes, rates have also begun to rise in the states most at risk. As weather events grow more extreme, the ground has now started to show signs of damage. Geology used to be one of these sciences no one was interested in. Now experts are in demand to explain why long periods of drought followed by intense periods of heavy rain can cause mudslides. The science of the sinkhole is also developing rapidly in states like Florida. For those of you who live on solid ground without the risk of earthquakes or the less dramatic collapses, it may seem unlikely the ground can literally just disappear into a hole. Yet, in the space of an hour, a patch of ground can subside or open into a fissure. Houses built on this ground can be wrecked without the possibility of rebuilding.

It’s a standard term of mortgages that the owners carry a valid policy of insurance on the property. The lenders want reassurance the security for the loan is protected from all the usual forms of damage. Until a few years ago, this was not such a burden but, first the withdrawal of flood protection, and now the limitation of wind damage, is making life increasingly difficult for the home owner. Mortgage lenders are not the most forgiving of people. If owners fail to put a valid home insurance policy in place, the lenders buy cover at whatever rate they can find and add the premium, plus an administrative fee plus interest to the capital of the loan. This has produced some spectacular growth in the amount alleged to be owed on some mortgages. Take the cost of sinkhole insurance in Florida as an example of the problem. Private insurers don’t want to insure so Florida created the state-backed Citizens Property Insurance Corp. Until this year, it could not increase the premium by more than 10% a year. Now we see some counties where the risk of subsidence is the highest being asking to pay more than 2000% increases. Not surprisingly, those holding home insurance policies have said they can no longer afford the rates. Over time, this will force the mortgage lenders to repossess for default – not the most desirable of outcomes.

So why is it so difficult to detect fraud? Surely dishonesty should be obvious to an experienced insurance company? Well, sadly, detecting which claims are fraudulent is not easy. Let’s take a simple question. Both drivers involved admit there was an accident. One driver submits a medical report showing neck injuries. On what basis should the insurer challenge the medical report? Well, detailed investigation might show this particular clinic advertises for people to report accidents to them. Or this clinic may consistently be receiving business through referral networks. Either way, the clinic is found to specialize in the treatment of traffic accident injuries. This could make them highly skillful and deserving professional respect, or it could suggest the clinic exaggerates the injuries for its own profit when it bills for treatment, paying commission to referral agents and passing only some of the benefit on to “patients” who get settlements for their injuries. Is an insurer supposed to get a second opinion from an independent doctor on every patient from suspect clinics? Or suppose someone wants to get out of an auto loan so stages a small accident and pays a repair shop to set off the air bags and certify more serious damage so the vehicle will be totaled. If this is a one-off event and there’s no pattern to suggest this repair shop is dishonest, why should this particular claim set off alarm bells?

There’s no doubt the level of fraud has been at epidemic levels for a decade and more. Several billion dollars a year are being sucked out of insurance companies by criminals. In turn, all these losses are passed on to us in higher car insurance rates. This makes insurance fraud a political issue, albeit mainly in the no-fault states where the levels of dishonesty seem to be higher. Although there’s a National Insurance Crime Bureau established with the task of coordinating the fight against fraud, there’s little sign of success. It will take a major cultural change to deter people from this type of crime when the chances of being caught are so low. Even when staffing levels are improved by the insurers and the law enforcement agencies, there’s little observed change in behavior. The fraudulent claims keep coming in and the auto insurance quotes keep rising.

First of all, let’s look at the causes behind such an apparent injustice that makes young drivers pay the highest insurance rates possible. Car insurance providers base the calculation of their auto insurance quotes on a precise assessment of how it is likely for the driver to end up in an accident and file a claim. From this point of view teen drivers are the most risky group because they tend to produce more claims than any other age group and have the most serious accidents because of their risk taking behavior. The statistics prove it and show that teens produce more accidents with more damage in all states. That’s why insurance companies give teens the highest rates possible. Of course, not all teens are bad drivers. But since there are more inexperienced car owners that produce crashes in this group everyone making part of it ends up paying more for insuring their vehicle.

Now, what can you do to avoid having higher auto insurance quotes when you are a teen? There are several strategies that can help you reduce your insurance costs and you can actually combine them in order to raise the chance of getting an affordable policy. Consider the following options:

Ask your parents to include you into their policy

Being a written driver with your parents, who usually have lower premiums will reduce your insurance rates as well. Sure it will raise their premiums a bit but it will still be more affordable than having separate policies. The downside of this option is that you won’t be able to accumulate your own no-claims discount while being a written driver. And if you are a good driver with no insurance claims that sure is disappointing.

Be a good student at school or college

If you have the potential of getting good grades at school or college now you have another reason for doing it. Most insurance providers offer substantial discounts to students with an average of B and higher. You will be required to provide a copy of your grade report periodically but this paperwork will give you lower auto insurance quotes, so it’s really worth it.

Shop around

Shopping around is the easiest thing you can do with all those sites letting you compare auto insurance quotes online. It takes only a couple of minutes and you will get all the information you need to buy the right policy from the right provider. Just make sure you know exactly what coverage types you want to get before shopping around. Define your needs first and then get busy comparing auto insurance quotes.

This is all smoke-and-mirrors. You can see a listing of perils covered which will include wind damage but, when you look at the clause on deductibles, you will probably find there’s a mandatory hurricane deduction. Unlike the auto insurance policies, this is not a fixed amount. These deductibles are a percentage of the value of your home and some insurers pitch the deductible up to 5% of your home’s value, e.g. $15,000 if your value is $300,000. For homeowners to have to find 5% as a lump sum to trigger the payment of the rest of the claim can be a major financial strain.

Now let’s comes to the theme of this article. One of the reasons why the claims process can slow down to a snail’s pace is disagreements over the difference between wind damage and water damage. The majority of policies exclude or restrict water damage. So, as an example, suppose a strong gust of wind removes the roof from your home. That’s clearly wind damage and the cost of rebuilding will usually be covered. Why “usually”? When the wind exposes the timber frame of your home, it can get wet and this can cause the frame to warp. Now the question is whether replacing the frame is responding to the damage by the wind or damage caused by the subsequent rain. You argue that the timber would not have gotten wet had the roof not blown off, so the main cause is the wind. The insurer argues the wind did not cause the timber to twist out of shape. That was the rain.

It would be good if all such arguments could be quickly resolved but, after Katrina, insurers are more defensive faced with large weather events. Worse, they have also been reducing the number of claims adjusters and everything now takes longer. This puts a heavy burden on home insurance policyholders. You’re often forced to take emergency measures to protect your property, e.g. when the roof blows off. Keep a detailed photographic record to show the before and after situation, keep all the invoices and bills for the materials and labor, and make sure you keep a constant stream of updating messages going to the home insurancecompany. It must always have the chance to monitor this work.