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Around the world, there are two approaches to insurance. Where the local culture is based on an adversarial system, the injured run to the nearest court and ask a judge to decide who is the more at fault. This involves a complicated set of rules called tort, and leads to findings of negligence. Lawyers who specialize in this branch of the law tend to be wealthy. Where the approach to problem-solving is to sit down and talk sensibly, the courts are kept out of the way unless there’s absolutely no other way of settling. This leads to the development of no-fault insurance. Essentially, this means that everyone has a contract of insurance and, if they suffer a loss, their own insurer pays out. It’s not necessary to decide who was at fault. This means all claims are settled quickly and efficiently. It also means lawyers tend to be less wealthy.

At first, we decided we liked the law of tort and all the states used the courts to decide who was at fault in all traffic accidents. But, after a while, some lawmakers asked whether all this investment in fighting was a good use of the insurance companies’ money. Surely a switch to no-fault insurance was better. That way, there would be less money spent on fighting, lower premiums and general happiness all round.

In the end, twenty-four states opted to switch to no-fault and, for a while, everything was wonderful. Premiums were lower than in the tort states and the general levels of happiness were higher. Today, only nine states remain no-fault and Minnesota has a bill that proposes repeal. Why is this?

The answer is complicated. The current situation across America is that ever more drivers are driving uninsured. This is driving up the risks and insurance premiums are rising. But the real complication comes from the increasing levels of fraud. In tort states, all disputed claims go to the courts and a judge hears the evidence. Lawyers cross-examine witnesses and look carefully at the medical evidence. It’s a lot more difficult to run a scam. But in a no-fault states, the insurance companies are more inclined to pay out if the evidence presented to them looks in order. So criminal gangs now specialize in traffic accidents with multiple passengers in each vehicle. There are medical mills where fake medical reports are produced and conveniently blind lawyers prepared to push insurers to accept the highest possible settlements. Put all this together and there’s certainly a need for reform if not repeal. more…

Lead Belly probably never imagined his lyrics would have been greeted by headline writers with such enthusiasm from the title to the line about jumping into the river to drown – there have been a number of people drowned in their cars, suddenly caught in water deeper than expected. So goodnight Hurricane Irene as it slowly makes its way up the coast as no more than a tropical storm. You have left us with a massive cleanup operation and a major bill for the insurance industry to pay. Initial estimates are in the region of $7 billion thanks to the damage to property in the wealthy parts of town in New York and Philadelphia. But the Atlantic Coast has some of the most expensive property in America and, when the claims adjusters start to sift through the claims, the bill could be a lot higher as returning residents find expensive contents lost or damaged. Fortunately, there does not seem to have been much looting. For once, the Brits beat us a couple of weeks ago as their youth went on a criminal shopping spree in some cities. Perhaps it was the early placement of police and the National Guard that’s kept us safer this time round.

If the estimates of $7 billion prove correct, this would make it one of the most expensive storms in history. Katrina was by far and away the worst, costing private insurers $45 billion, i.e. that’s not counting the flood insurance paid out by the federal program. Excluding the 7/11 attack on the World Trade Center, all the most expensive disasters have been hurricanes. If the scientists are right and global warming is going to make these storms and hurricanes more common, we have an expensive future ahead of us as the premium rates rise to match the claims being made.

Let’s be clear about the trend. This weekend may have been a spectacular moment, but it hides the sad reality that 2011 has already been one of the worst years on record for weather-related claims. This is draining the cash reserves of all the insurers and threatening their capital base. A M Best monitors the financial health of the insurance industry and it’s already issuing warnings. In part, this is because of the increasingly globalized nature of the insurance industry. Many of our insurers have been faced with major losses because of the Japanese earthquake and tsunami earlier this year. So when you put it altogether, we’ve had a bad year with major snow and ice storms, followed by fires in the Southwest, tornadoes, and flooding along the Mississippi. more…

In July 2011, New York legalized same-sex marriage. That day, there was a flood of couples in churches and courts getting married, no doubt for the love they bear each other. There is also little doubt that same-sex couples want to share the same financial benefits of marriage as heterosexual couples: tax breaks and insurance discounts.

For the first time ever, the majority of Americans favor the legalization of gay marriage, so it is more likely that even more states will allow same-sex couples to marry soon. But does this necessarily mean that newly married couples will be able to enjoy the benefits when it comes to their insurance?

Read on to see which insurers extend marriage discounts to same-sex couples. STATES AND INSURANCE COMPANIES CURRENTLY OFFERING DISCOUNTS

Before New York changed their laws, only the two largest insurers in the United States extended discounts to same-sex married couples: Allstate and State Farm. However, they continue to do this only in states where same-sex marriages is legalized. We will list these for you later. If you have been married in a state other than where you live and your state of residence does not recognize same-sex marriage, Allstate and State Farm will not extend marriage benefits to you and your spouse. On the other hand, if your state does at least allow for civil unions or registered domestic partnerships in which you get spousal rights, you may still be able to get discounts.

Esurance too has made a foray into the same-sex territory, offering rate reductions to gay and lesbian married couples in just California, Illinois, Oregon, and Washington. If it makes financial sense, they are likely to expand into other states soon.

WHY DOES MARRIAGE MAKE A DIFFERENCE?

Insurance premiums are based on risk assessment. Most of the cost is determined by obvious factors, such as driving history, but more perplexing factors are sometimes used as well. Marriage is one of these, as statistics have shown that married people tend to be more responsible drivers than singles. Married couples also get discounts because they are guaranteeing that the insurance provider gets two customers, rather than risking each driver could get insurance somewhere else. more…

Why should I buy insurance for my car?

Vehicle insurance is a legal requirement in most states of the US. In some states it’s even impossible to get a plate number for your car without providing a valid insurance policy first. If you’re caught driving without a valid insurance policy the consequences will be negative depending on the state you’re licensed in. You can face a fine, license suspension, penalty points on your driving record or even time in custody. However, besides the legal requirement insurance is also a matter of common sense. In case of an accident it provides the necessary financial support that you could lack at the moment.

Why vehicle insurance is mandatory?

There’s a reason for vehicle insurance to be a legal requirement for all drivers. Not all drivers are conscious enough to realize the benefits and the importance of car insurance. By making insurance mandatory the government assures that all traffic participants are financially able to settle liability caused by traffic accidents. Because the repair costs and medical bills in case of an accident can be very high and exceed the financial abilities of an average person vehicle insurance is needed to assure that everything will be paid for.

What type of coverage should I include into the policy?

The only mandatory type of coverage that should always be present in your policy is third party liability, which includes bodily injury and property damage. However, you should also consider other insurance options in order to meet your exact needs. For example, comprehensive coverage will pay for the damage to your car caused by perils like fire, theft, vandalism and acts of nature. Personal injury protection will pay for any injuries caused to you or your passengers no matter who was at fault in the accident. Explore the possibilities and choose the types of coverage you really need. more…

They are estimates of what insurers will charge you for a certain coverage package. Car insurance quotes take the major factors used to determine rates, feed them into an algorithm, and give you a pretty good idea of what you will be charged by any given company.

Owning a car is a very pleasant and comfortable think. These days it’s even hard to imagine your everyday routing without driving a car, as for millions of Americans it has become a necessity just like having a place o live in. However, besides the comfort of being mobile there are certain responsibilities you have to meet in order to be able to operate a vehicle legally. One of these responsibilities is vehicle insurance and most of us will agree that this is one of the most irritating aspects of owning a car. The main problem for most drivers is that insurance rapidly becomes too expensive. If you’re one of those who has to pay a lot for keeping a car insured here are some tips on making insurance cheaper:

Review your policy

One of the most common causes for insuring becoming too costly is that the car owner doesn’t really understand what his or her policy actually carries. Quite often insurance policies include more types of coverage, some of which you may not need at all, and the more options and the higher amounts of coverage are included the more expensive your policy becomes. So the first thing to do when you want to cut your rates is reviewing your policy in order to adjust coverage amounts according to your needs and exclude those options that you don’t really require. Just make sure that your policy carries enough coverage to cover a serious accident when doing so, otherwise you risk becoming under insured. more…

The less you drive, the less you pay. It sounds a really good deal, doesn’t it? Well, come this February, Californians will have two of its largest insurers competing in this market. State Farm and Automobile Club of Southern California are going green and looking to charge you for insurance by the mile rather than by a flat rate per month. This will save Californian drivers between 5 and 45% on their current premium rates depending on how far they drive. These are tough times and the companies estimate that about a quarter of their existing customers will convert to this type of policy.

So what exactly is driving this change? It would be good to think the insurance industry had finally woken up to the realities of climate change and were determined to use price to encourage us all to drive less. Indeed, when you look at the statistics, the combination of reducing the average gas consumption over the fleet and encouraging people to drive less will reduce the carbon emissions and reduce accidents. Ah, it will reduce the number of accidents. If people drive less, the risk of them hitting someone else is lower. That’s really good for the insurance industry. And if everyone is also driving more slowly to conserve gas (and reduce our dependence on the Middle East for our oil), the accidents will be at slower speeds. That’s less damage to the vehicles and people less seriously injured. This is saving on claims. So this is all self-interest rather than green concerns but, if it produces lower premiums, who cares!

Between the two companies, there will be a step ladder of rates by 500 miles. So you have control over how far you drive and how much you pay. You can opt to have a device fitted in your vehicle to transmit the mileage as it happens. Remember that, if you opt for self-reporting, both insurers are employing a small army of people who will randomly knock on your door and ask to inspect your vehicle’s odometer reading. No one trusts anyone these days. more…

Most of us aren’t very happy when the time comes to renew the insurance policy for the vehicle. A lot of drivers feel like they are overpaying for insurance and think that the insurance companies are to blame. However, when asked about the reason for the policies being so expensive very few of them state that their cars have an influence on the rates they are charged with. And that’s a very common and serious mistake. The car you drive is the main factor that influences your insurance rates. Even the type of car you choose to purchase has a significant impact on your premium. So how insurance rates change depending on the car type?

Insurance companies use a set of factors that determine the risk of insuring a particular vehicle. The most important risk-determining factors are repair costs, theft rates, damage to other vehicles, injuries to passengers and likelihood of accident. By using these parameters it’s really easy to classify mot common vehicle types with respect to car insurance costs:

Small vehicles

Smaller cars are usually cheaper, get stolen very rarely and aren’t expensive to repair. However, when it comes to safety and injuries to the passengers smaller cars get very risky. Simple law of physics make it evident that if a small and large vehicle collide the damage to the small vehicle will be greater due to difference in mass. So despite the lower price you are likely to get higher insurance rates with this type of vehicles. more…

During WWII, Washington lawmakers were sometimes persuaded to pass laws that, by modern standards, seem strange. Take the McCarran-Ferguson Act as an example. When Washington should have been protecting the ideals of capitalism and enforcing the principle of free markets, the lawmakers decided to create state-by-state monopolies for the insurance industry. Here’s what they did. If you want a book today, you can buy discounted books from a major internet retailer. Even when you add in the shipping, it can still be cheaper than buying at your neighborhood bookstore. But if you want to buy an insurance policy, you can only do so from an insurance company registered in your state. No company can sell a policy across state lines. The result is a lack of real competition. The insurance companies pick and choose where to set up, aiming to keep the number of companies low in each state. This allows them to parallel each others’ prices and maintain their profitability. Now you’re all saying this is not significant. Except the difference in premium rates between states can be great.

Let’s start at the bottom of the league table with a low-population state like Maine. In a recent survey, researchers got quotes for a “standard” man for all the major makes and models of vehicles. He was aged 40, drove an average distance to and from work, and accepted a $500 deductible. Averaging out the quotes allowed our average man to buy a policy for less than $1,000 per year in low-population and/or rural states. Why so low? When you only have a small number of drivers, even at peak commuting times, the risk of accidents is low. Indeed, the drivers in some of these states take a real pride in their skills and the statistics show significantly lower rates of claim for damage or injury. Now switch to a state with large population centers and heavy commuting traffic at peak times. Here the risk of accidents is far higher. Worse, because the standard of living is often higher, people are likely to be driving more expensive vehicles which cost more to repair. So our same standard man will be paying about $2,500 in Michigan. more…

Unfortunately we live in an economy where more Americans than ever before are struggling with bad credit. Sadly this is affecting many areas of their lives, as credit history and scores are used frequently when evaluating someone for a job, insurance, or even an apartment. Today the insurance industry has been using credit scores more frequently than they have in the past because the cost of accidents on the road are costing insurance companies billions of dollars a year. So they want to know that you can pay for your insurance so they can meet their obligations as well. Unfortunately for many Americans their credit score is not an accurate reflection on how responsible they are, but this isn’t how some insurance companies will view it. If you are having a tough time getting car insurance due to your credit history, here we will talk about how to overcome that.

Today car insurance is mandatory, and hope is not lost even if you have bad credit. It is inconceivable to think that every driver on the road has an immaculate credit report, so knowing this should give you comfort if you are looking for car insurance. Many insurance companies are getting more flexible about credit history reflecting on their customer’s premiums. Although it will take you a little bit of work, you can still get car insurance even if you have bad credit.

Finding out why bad credit affects your insurance record will be important before you begin looking for quotes. Insurance companies use claims studies to evaluate prospective customers, and they have simply found that over time, people with bad credit have a higher rate of insurance claims. So, while it may not be your credit score specifically that is keeping you from insurance, but the claims history on other poor credit customers that is affecting your scores. This means then that even if you do have bad credit, if you have no claims on your record, you are already seen as a good customer to your insurance company.

Statistically speaking people with higher credit scores cost insurance companies less overall, and this is why cheap car insurance is tougher to get for those with bad credit. The good news is that credit records can change with time, and you can start cleaning up your credit report for future rate decreases. In the meantime, you will need to shop around to see what insurance companies are willing to work with you. You may be eligible for a bad credit policy to start off with, or you may find an insurance company that does not use credit scores as an evaluation tool. more…

Urban myths come in all shapes and sizes from the faintly horrific stories about what might make your large pet dog ill, to the suggestion the color of a vehicle helps it go faster. The latter is usually justified by piles of statistics drawn from official and informal sources. The official sources are usually reports compiled from police and court reports, with additional material from ambulance staff and others attending the scene of traffic accidents. There are further statistics pulled from hardcopy newspapers and magazines, as well as all the digital reports now carried on the internet. When you put all these sources together, they appear to show more red vehicles involved in accidents than those painted black, blue or yellow. There also appear to be more tickets written for those driving red vehicles. Yet, if you were to ask insurance companies, they would all deny quoting higher rates for red vehicles. How can this be true?

It’s at this point we come to the way in which a literal mind works. Sometimes, it takes time to work out what the right question is if you want to hear the complete explanation. Let’s start with a statement of the obvious. A vehicle is a vehicle. On the factory production line, they all start off as parts which are assembled into a completed whole. Only at the end of the production process are the vehicles sprayed and fitted with their trim. So, allowing for mistakes in the assembly process and for some of the parts to be defective in some way, it’s random chance for any one vehicle to be red as opposed to black. Their performance should be identical regardless of color. This means the main variable between one vehicle’s performance and the next is the driver.

Some people are skilled and safe drivers no matter what the color of the vehicle. The safer the driver, the lower the premium rates. Now ask yourself which vehicles are most likely to be painted red. The answer is higher powered vehicles tend to be painted red and other primary colors. The manufacturers have done their research. They know people buy a vehicle not just as transport, but also as a personal statement about who they are. Psychologists confirm the color red attracts more attention. In the Asian and Chinese cultures, red is the sign of good luck. So, as a buyer looking to make a statement about who you are and whether you are a success in this competitive world, buying a red car will turn heads as you drive down the street. more…