Is Usage-Based Car Insurance Growing in Popularity?

It has been several years since Progressive first introduced what is commonly referred to as "pay-as-you-drive" car insurance. Most major insurers now offer usage-based policies. According to Lynx Research Consulting, it appears these policies are finally increasing in popularity. In their 2013 LexisNexis Insurance Telematics Survey, they indicate that nearly 40% of the more than 2,000 drivers surveyed are at least familiar with these policies. Perhaps more telling is that nearly 50% now like the idea of only paying for the miles they drive.

Why Drivers Have Been Reluctant to Buy These Policies

The results of this survey are in stark contrast to other reports suggesting drivers remain skeptical about usage-based car insurance. Previous surveys indicate the most common reasons drivers have stayed away from these policies include:

1.       Distrust of the Unfamiliar - as with anything new, many drivers simply do not trust that insurers can accurately track driver activity in a way that is beneficial to drivers. Some have a "wait and see" attitude so they will not consider purchasing this type of policy until someone they know does and recommends it to them.

2.       Lack of Understanding - older drivers do not have enough technology-based knowledge to understand how the tracking and monitoring process works. They worry they may do something wrong that can skew tracking results to such an extent they end up paying more for a policy that was intended to save them money.

3.       Privacy Concerns - younger drivers who do understand the GPS technology have issues with insurers knowing the details of their driving behaviors. These drivers are perfectly fine with the idea of tracking the number of miles they drive but do not want insurers to know exactly where and when they travel.

4.       Unpredictability - although drivers like the idea of lower rates, they do not like having to pay different amounts each month based on miles they drive. Older drivers in particular like to know how much they need to spend on necessities, including insurance, each month. Drivers with limited incomes or those on strict budgets are less likely to consider this type of policy.

Insurers continue to address these areas when they advertise their usage-based products. Their goal is to get consumers from knowing about these policies to actually purchasing them.

What Has Changed in Recent Years

Several factors may have influenced the dramatic changes in consumer knowledge and use related to pay-as-you-drive policies. It is difficult to know exactly the weight of each of the following factors in setting the new trend toward these policies:

·         Tech-Savvy Drivers - more drivers that understand the technology behind usage-based policies are now driving. In fact, it is drivers between the ages of 21 and 34 that are the prime target audience for usage-based products.

·         Greater Discounts - 36% of the drivers surveyed indicate they are willing to switch to a usage-based policy to receive a 10% discount on premiums. Many of the major insurers offer discounts as high as 50% to drivers who purchase these policies.

Additional factors that could sway consumers to consider this type of policy include the insurers offering trial periods or allowing drivers to opt out without charging a penalty if they buy a traditional policy from the same insurer.

Getting Car Insurance Quotes to Compare Policies

Approximately 33% of those surveyed indicated they would be willing to switch insurers to buy a usage-based policy. To determine if a usage-based policy is right for you, get online car insurance quotes from major insurers for this type of policy as well as a traditional policy. Consider coverage options, pricing, and additional requirements to determine the full "cost" to you. Carefully compare car insurance quotes before buying a policy. Review cancellation fees so you know what to expect if you decide you do not like your policy and want to switch to a regular one.

With only 3% of those surveyed actually having a usage-based policy, the idea of these policies being popular seems relative. The increasing concern for how insurers use captured data continues to be the deciding factor for many drivers. Until drivers can be confident insurers will only store data temporarily and can keep it secure at all times, it is unlikely this type of policy will every truly become "popular" among drivers.

Car Insurance Quotes: Avoid Discriminatory Pricing Practices

Drivers assume that all insurance companies use industry-approved practices when determining rates. Although this is true to an extent, some insurers also use methods that may not be standard for all companies. The Consumer Federation of America (CFA), a national advocacy organization, has recently accused many insurers of moving away from pricing practices based on solid actuarial standards. The CFA argues that these new practices of "price optimization" are discriminatory in nature and cause certain drivers to pay higher rates.

What Price Optimization Really Means

All businesses engage in price optimization which involves identifying the value of products and services. The purpose of this process is to determine how much to charge consumers so the business realizes a profit. Insurers engage in price optimization each time they sell a policy at rates they determine are not too high for the consumer but high enough to be profitable for the insurer. The insurance industry uses a price optimization formula or algorithm that considers numerous factors that measure risk levels for insurers. It is intended to be a scientific way to determine rates that are most beneficial to consumers and insurers alike.

How Price Optimization Can Be Discriminatory

When insurers set aside standard practices like using actuarial principles for the sole purpose of increasing their profits, the resulting rates are unfair to drivers who end up paying higher premiums. It is the use of different standards that is discriminatory. The CFA maintains that lower-income drivers are less likely to use car insurance quotes to compare prices. You may be the victim of this type of pricing practice if you experience any of the following:

·         Premiums at Least 20% Higher Than Last Policy - if you have switched policies within the past year or so and, all other factors remaining constant, your current policy costs significantly more than your old policy, your insurer may be optimizing rates.

·         Discrepancies in Car Insurance Quotes - when you get quotes from insurers, in most cases the rates will not be substantially different unless one or two insurers artificially inflate rates to improve profitability.

Insurers rely on several factors in addition to consumer-specific considerations such as age, driving history, credit score, and vehicle to be insured when creating pricing strategies. Following are increasingly common elements included in an insurer's strategy:

·         Consumer willingness to pay a certain rate for coverage

·         Likelihood of consumer filing a claim during the term of the policy

·         Comparison of competitors' rates

·         Expected life of policy

In the 2013 North American Auto Insurance Pricing Benchmark Survey published by Earnix in August 2013, nearly 70% of insurers surveyed acknowledged that price strategies changed over the past year with an eye toward profitability.

Role of Regulators

The problem with price elasticity models is that insurers can have different pricing strategies for specific consumer populations. According to the Insurance Information Institute (III), these practices are not widely used if at all as suggested by the CFA. The discord between the CFA and III on this matter makes it difficult for drivers to really know how insurers are setting rates. State insurance departments regulate car insurance and must approve rate hikes. Regulators usually approve rate increases proposed by insurers. However, regulators can prevent insurers from employing price optimization strategies when calculating rates.

Practices that Benefit Drivers

Traditional actuarial standards remain most beneficial for consumers. Resulting formulas consider individual factors to assess each driver's risk to an insurer. You should not have to pay higher rates if you are unlikely to file a claim. Drivers with clean driving records and no claim histories benefit from actuarial-based pricing strategies by getting lower rates. These practices guarantee that drivers with similar characteristics pay comparable rates.

How Online Car Insurance Quotes Help

It is common to use online car insurance quotes to review coverage options before you buy a policy. Since more of the major car insurance companies are using price optimization practices today, you also should get quotes from smaller insurers for comparison. Ask each insurer about their process for calculating rates, especially if you notice any outlier rates. You can determine if you are getting a fair rate by shopping around, waiting a month or so and getting new quotes, and considering quotes from insurers of all sizes.

Be Careful What You Ask Car Insurance Companies

It is not uncommon for drivers to have questions about car insurance. When you do, you either call or send your insurer an email for clarification. There is no harm in that, right? Actually, there may be depending on where you live. Insurers in some states consider the types of questions policyholders ask when calculating car insurance rates.

What You May Not Know

Similar to the way certain credit inquiries impact your credit score, your insurance rates may increase when you pose questions to your insurer. It seems ridiculous to think that a simple question can raise the alarm for an insurer. However, that is exactly what has been happening industry-wide for years. Insurers use all available information during risk assessment, including general questions you ask.

Conversations to Avoid

You can continue to receive affordable car insurance quotes by following a few basic suggestions. Only answer questions posed by the insurance agent. Offering additional information may give them reason to increase your rates. You should also avoid having the conversations about the following:

·         Hypothetical Situations - often the best way to share your concern is by using a "what if" scenario. However, insurers are using these hypothetical questions to determine how much risk you pose to them. Most people tend to give hypothetical examples that either they have already experienced or are likely to experience. Insurers use your hypothetical questions to justify rate increases.

·         Possible Claims - you may not be sure if you should or should not submit a claim for damage or a specific accident. Perhaps you simply want to know what the claim process is before you purchase a policy. Insurers consider your claim questions in context of your likelihood to actually submit a claim. In other words, insurers believe if you ask about claims, you will probably submit one at some point which makes you a higher risk for them.

·         Additional Coverage - if you ask your insurer about the cost to have fire or theft protection included on your existing policy, you can expect a rate increase. Drivers who worry about thefts may live or work in dangerous neighborhoods. Your insurer will happily sell you comprehensive coverage but will charge you higher rates than you would have received if you purchased the coverage without specifically mentioning theft or fire protection.

·         Changing Vehicles - drivers who ask their insurer about costs associated with a different vehicle generally experience rate increases at the time of renewal. Drivers who often change vehicles may be more prone to accidents, either with a stationary object or with another vehicle. These questions are red flags for insurers that you may submit claims more often than drivers who do not change vehicles as frequently.

Knowing what questions to avoid when talking with an insurer keeps your rates lower. You do not want to mention anything that might cause the insurer to question your risk level.

Texas Car Insurers

Drivers who live in Texas may not even know their rates can increase just by asking their insurers questions. While the state passed a law effective September 2013 that prevents insurers from penalizing homeowners with policies for asking questions, the law did not extend to car coverage. It has been perfectly legal in Texas for decades now for insurers to raise premiums based on hypothetical questions posed by policyholders. Unfortunately, it appears this will remain the case for the foreseeable future.

A customer inquiry is any type of communication with an insurer that is not related to a particular claim in process. The inquiry focuses on policy terms and conditions. According to the Texas Insurance Code, even asking about the claim filing process or whether your policy covers a particular loss is consider a customer inquiry. Insurers are permitted to use these inquiries to increase premiums.

Handling Car Insurance Quotes

You can avoid these potential pitfalls by using online car insurance quotes. Use a site like ours that allows you to get quotes from several major insurers for easy comparison. It only takes a few seconds to complete the zip form and receive qualified online car insurance quotes from insurers licensed to serve your community. When you find the policy you want to purchase, complete the application required by the insurer. Visit their website to find answers you may have so your inquiries do not result in higher rates.

Lower Online Car Insurance Quotes and Other Military Benefits

Getting lower online car insurance quotes is just one of the many benefits that you may be eligible as a member of any branch of the nation’s military service.

Members of the armed forces have one of the most important jobs in the United States: protecting our country and keeping the world safe for democracy. Out of respect for this role, many companies offer discounts that are only available to military personnel, or sometimes military families and spouses.

Getting Around

It’s common for military personnel to have to travel quite a bit, whether going from home to basic training, getting reassigned across the country or shipping off on an active tour. The military itself doesn’t always arrange for all of the transportation that an enlisted person might need, particularly for personal trips.

Luckily, a lot of the major transportation companies have independently offered a number of discounts for those passengers in the military. AMTRAK provides a percentage off regular train tickets, as does Greyhound Bus. Several different airlines also have special military rates available for servicemen and women. And, upon reaching your destination, you’ll find that a lot of rental car companies provide discounted rates as well.

If scheduling flights, remember that Air Mobility Command (AMC) offers free flights between military bases anywhere in the world. Even if there isn't a base exactly where you'd like to go, the relatively large military presence afforded by the United States armed forces means there's likely a base that's pretty close to somewhere that would make a great vacation. Just remember that AMC travel requires a lot of flexibility.

Taking Vacations

Taking some time off is important for relaxing, de-stressing and spending time with family, all of which can be hard to come by in the hectic military life. Going on vacation can be a big expense, but there are a number of ways that military personnel can save when taking a trip, either solo or with the family.

Besides being eligible for discounts on getting to where you’re going, many vacation destinations offer cheaper rates to military families. This can start with your hotel; many well-known national chains have discounts for those in the military. Additionally, big theme parks can offer rate breaks too, including

SeaWorld, Knott's Berry Farm in California, Disneyland, Disney World and Universal Studios among others. Even many smaller operations like locally-run ski resorts and lift passes frequently offer lower rates for military members.

Big Ticket Items

When it comes time to make a major financial commitment, being in the military can definitely pay off. Military-friendly organizations like the United States Automobile Association (USAA) have established partnerships with specific car dealerships to help servicemen and women buy cars at a discount.

The Department of Veterans Affairs (VA) home loan program allows those in the military to get great rates on a home loan even without putting anything down, acknowledging the future earning potential of these servicemen and women as well as recognizing the financial uncertainty that can sometimes come from the early days of a military career.

Everyday Life

It doesn’t have to be a special occasion for those in the military to enjoy discounts. In fact, a number of stores offer military discounts just for basic needs:

·         Discount Tires advertises a 10% discount for military folk who need new tires on their civilian vehicles. Other national chains may offer a similar deal.

·         Stores like Old Navy, Dick’s Sporting Goods and others offer a discount on every purchase made at the store in order to support those in the armed forces.

·         Car insurance providers typically offer lower car insurance quotes to those in the military, and online car insurance quotes can be easily obtained even while overseas. 

·         Apple computers has a separate military store that has lower rates on the latest technology to help military families keep in touch during deployment.

·         Movie theaters, fitness centers and grocery stores may all offer discounts on tickets, services and goods for military personnel.

Despite the challenges of life in the military, there are a lot of rewards as well. Knowing how you can make the most out of all the different military discounts available for service members can help your dollar stretch further even when running on a tight budget. The savings from travel, vacations and everyday purchases can add up very quickly to a nice nest egg in the future.

Low Car Insurance and Other Benefits of Telecommuting

With the amazing opportunities afforded by technological advances these days, there are more and more people working from home, either full-time or just a few days per week. So much of modern business can be conducted remotely via email and collaborative software that the modern workspace as we know it is definitely changing. There are a lot of great advantages to telecommuting, including the plenty of ways that it can save you money. 

More Flexible Schedule

One of the first benefits that springs to mind for most people when they imagine working from home is the ability to set their own schedule. There’s no expected time to start (or end) the workday, which means the focus is on meeting and completing specific project metrics rather than just being present from 9 a.m. to 5 p.m., whether or not you’re being productive. 

This flexibility also means that employees save companies money by not needing to take personal days on company time in order to take care of business that can’t be conducted on the weekends. Trips to the bank, scheduling a visit to the dentist visit or staying with a sick kid who’s home from school can all be accomplished without taking time off the clock, or costing your precious paid personal leave or sick day accrual.

Increased Productivity

Some companies mistakenly believe that sending employees home to take care of work will make them much less productive. In reality, the reverse is true. Spending time at the office means that workers are getting paid for just being there, not only for the times that they’re actually working. Getting distracted by a chat with a coworker, trips to the bathroom and time waiting for computers to reboot are all paid for by the company. While the workday is supposed to last eight hours, there are very few employees that work for every minute of those eight hours on any given day.

When employees work from home instead, they’re clocking their minutes rather than getting paid just for showing up. This means payroll isn’t covering the tiny breaks throughout the day; instead, workers are only getting paid for the time they’re truly being productive. An eight-hour day working from home consists of eight actual hours spent working, unlike eight hours at the office, which can mean working about seven hours plus an hour of accumulated goof-off time throughout the day.

Saving Money

Employees and employers can save tons of money by having essential workers connect from home instead of coming to the office. Since the benefits are mutual, both parties are often in favor of increasing remote work carried out at home. One estimate suggests that companies can save around $11,000 a year per employee if workers telecommute even just half the time. These costs come from savings in employee retention, increased productivity and more.

As for the employees, there are plenty of ways that telecommuting can save money:

·         Since no dress code is required for at-home workers, employees can save huge on clothing costs, not only for avoiding expensive wardrobe updates, but also from no longer needing dry cleaning services. 

·         The costs of driving back and forth to a physical office can add up very quickly, including gas money and higher car insurance prices.

·         Staying from home cuts way back on fuel expenditures, and should help you find much lower online car insurance quote as well, since car insurance quotes are based largely on the annual mileage put on your vehicle.

More Time with Family

While work benefits are great, a healthy balance between work and home life is essential. For many of those working from home, telecommuting offers the perfect chance to do just that. Working remotely allows for the expected eight-hour day to be scheduled a lot more creatively. For example, parents may choose to work an hour early in the morning, then get up and feed the kids breakfast before driving them to school. They can come home and work for six more hours till the kids are done with classes, then spend time with their family until after bedtime. Once everyone is asleep, they can put in that final hour for a total of eight. For many, this type of scheduling makes working from home truly a win-win proposition.

Getting Lower Car Insurance Quotes for Teens

Car insurance quotes for your teen will be much lower if you can help them become a safer driver. Here are some tips for keeping your newly licensed teen safe behind the wheel.

Getting a driver’s license is a major rite of passage that every teen looks forward to. Not only is it a sign of gaining more independence, a license also gives teens more freedom to go out and do fun things with their friends without mom or dad providing the transportation. Yet, for every teenager who can’t wait to get behind the wheel, there’s at least one parent who’s pretty nervous about them being on the road at all. Luckily, there are a number of ways that parents can help teens become safer drivers while still letting them enjoy their newfound semi-autonomy.

The Process of Getting Licensed

The steps that teens need to follow in order to get a license vary somewhat from state to state. However, the majority of states do follow a few specific guidelines:

·         Teens must take an approved driving education class

·         Teens need to have behind-the-wheel training with a certified instructor

·         Teens have to have a permit for a certain amount of time (between six months to a year) before they can take their license test.

·         Teens cannot get their permit until they are 15, and cannot take their license test until they are 16. 

Like every rule, the guidelines listed above may have some exceptions from state to state. For example, states that are highly agricultural may allow teens to get their permits younger, or drive farm equipment without a permit or license. However, for most other states, 16 remains the magic number for finally moving forward with the next stage of life.

Safety in Stages

The American Automobile Association (AAA) reports that only 7 percent of the driving population is made up of teenage drivers. Yet, young drivers account for 14 percent of fatalities in car crashes; traffic accidents are the number one cause of death and injury for teenagers between the ages of 15 and 19, whether or not they are driving yet themselves. The Insurance Institute for Highway Safety reports that over 3000 teenagers died in car crashes in 2010. Out of this total, 59 percent of teen passenger deaths occurred in cars that were driven by a teen driver.

The reason so many teens are having problems with road safety is due to a number of factors:

·         Lack of driving skills and experience

·         Poor judgment about which decisions to make in a crisis

·         Taking too many risks on the road

·         Driving with too many distractions (cell phones, texting, music or friends in the car)

·         Excessive hours on the road during high-risk times of day (11 p.m. – 5 a.m.)

·         Drug and alcohol consumption

Looking at this data has led many states to implement a safer approach toward teenage drivers: Graduated Driver Licensing (GDL). This system meters out driving freedom in stages during the most critical early years when teens are still getting used to the road.

GDL programs allow teens to get their license at age 16, as expected. However, even after getting a license, there are still limitations on driving. For example, although they may drive alone without adult supervision, any passengers in the vehicle have to be adults. They may also be limited to the number of passengers they can have. At age 17, some GDL programs allow teens to have up to one other teen in the car, but only in the backseat, and only with an adult in the front seat. Cell phones use is typically not permitted until after age 18.

By slowly increasing the amount of responsibility teens have behind the wheel, these new drives have a chance to get used to being on the road without distractions like friends or phone calls. This allows them to gain valuable driving experience and build up the appropriate knowledge base and reflexes to become safe drivers.

Positive Benefits

There are a number of benefits to GDL programs and helping your teen become a safe driver. For one thing, your car insurance quotes will likely drop considerably. Historically, teens have the highest car insurance rates of any age bracket; going through a safe driver program will offer much better premium costs that can be leveraged further when comparing online insurance quotes. More important than just saving money, however, is knowing that your child is more protected on the road, both from other drivers and from themselves.