Car Insurance

Louisiana residents made more than 200,000 auto insurance claims after hurricanes Katrina and Rita yet insurance companies say no rate increases are coming.

However, insurance brokers say residents are paying more to increase coverage for this hurricane season.

Mandeville resident David De La Cerda is one. De La Cerda lived three blocks from Lake Pontchartrain and had four vehicles before Katrina - all covered only by liability insurance. He evacuated with his newest car, an Audi.

It became the only vehicle I had left, he said. The three vehicles left behind flooded and he received nothing under his liability policies.

De La Cerda won’t make the same mistake. He bought full coverage for his Audi, which would cover flood or other weather-related damages.

Before Katrina, he paid approximately $100 a month for liability coverage on four cars. Now he pays $120 a month for full coverage on his sole remaining vehicle with a $1,000 deductible. I intend to evacuate with it again, he said.

Rate rise

The Insurance Information Institute reports the nationwide cost of auto insurance is expected to rise 0.5 percent in 2006, the smallest increase in six years. The average annual cost is estimated at $867 - an increase of $4 per vehicle. In 2005, rates increased 2.3 percent from $844 to $863.

The cost of auto insurance is increasing by about one-sixth the rate of inflation and little more than a single gallon of gasoline, said Robert Hartwig, III’s senior vice president and chief economist. Many people who, for example, drive safe cars, have excellent safety records and good credit-based insurance scores may see their rates go down, often by 3 (percent) to 5 percent or about $25 to $50 per vehicle.

Insurance companies received nearly 674,000 claims for vehicles damaged or destroyed by last year’s storms, which resulted in a $3.2- billion cost to insurers.

Yet Allstate spokeswoman Kate Hollcraft said the company has no immediate plans to seek a rate change for automobile insurance in Louisiana.

State Farm, which insures about every one in three cars in Louisiana, also reports no change.

There has been no indication from State Farm that there will be a rate increase, said Ken Moore, auto claims section manager.

Moore said policyholders pay an average of $1,006 a year with the most common deductibles set at $100 and $500.

State Farm received 60,795 auto claims for Katrina damages and 7,903 auto claims for Rita damages.

State Farm’s payout for the storms topped $377 million and the company has settled 99 percent of storm-related auto claims. Moore says auto insurance claims are much more specific than homeowner’s insurance claims.

If you have comprehensive during a weather event, you’ve got coverage, he said.

According to Moore, driver’s insurance prices depend on the same variables they depended upon before the storm.

The restrictions are no different after Katrina or Rita than before. It’s based on what kind of a driver you are, he said. In other words, a driver’s insurance will depend more on whether or not that driver has had tickets or accidents than on any damage incurred by a storm.

Policywriting increases

New Orleans-area insurance brokers have not frozen auto insurance policy sales as has been done with new renter and homeowner policies.

The companies are beating my doors down, saying give me more (customers), said Barry Hebert, co-owner of Hebert/Wiltz Insurance in New Orleans. They (the insurance companies) see a big market in New Orleans and want a part of it.

Your choice of vehicle can have an impact on your auto insurance rates, says www.AutoInsurancePlanners.com. If you are aiming to qualify for the best value in a car insurance policy, think solid and sedate versus big and flashy.

Insurance companies consider many factors about you and your car when deciding how much to charge you in premium. Primarily, your car insurance rates are based on your driving record, your age and where you live. However, your car’s pedigree can be a factor.

Using their own claims data and information collected by industry rating organizations, insurers determine which cars are most likely to be stolen, average repair costs by model, and each car’s safety ratings.

These factors come into play on comprehensive and collision coverages. Collision covers damage to your car from an accident, while comprehensive covers damage to your car from other causes, such as fire, earthquakes, floods or theft.

For instance, your car could be more expensive to repair after a collision. Contributing factors to repair cost include body construction (frame versus unibody), value of the vehicle (consider luxury sedans, produced at relatively small volume, compared to mass-produced commuter cars) or safety ratings (two black marks against SUVs: they aren’t required to meet government bumper standards of passenger cars, and they are more likely to roll over in an accident).

Over 14 years, Kadaba Sreevatsan collected $507,000 in disability payments from the Milwaukee-based Northwestern Mutual Life insurance company, certifying again and again that he suffered from dementia so bad he couldn’t work, couldn’t manage his household and couldn’t read more than a page at a time without developing debilitating headaches.

During the same period, prosecutors say, Sreevatsan ran businesses that won contracts with the U.S. Department of Defense.

After a three-day trial, a federal jury on Monday convicted Sreevatsan, 62, of six counts of mail fraud, agreeing with Assistant U.S. Attorney Matthew L. Jacobs’ contention that Sreevatsan was faking mental illness. Sreevatsan faces up to 30 years in prison and a fine of $3 million when he is sentenced in November.

Sreevatsan, of Westbury, N.Y., bought a disability insurance policy from Northwestern Mutual in 1986 and started receiving payments of $3,000 a month two years later, according to court records. He submitted periodic forms to verify his continued eligibility for the money. Yet until at least 1994, his mom-and-pop machine shop was awarded about a dozen government contracts of between $10,000 and $100,000 each to produce small components for military equipment, Jacobs said.

Insurance officials became suspicious when they learned of two New York lawsuits regarding Sreevatsan’s wife’s car accident in September 1992, Jacobs said. In addition to suing the driver of the other car, the couple sued Equitable Life, another insurer, when it refused to pay disability benefits to Sreevatsan’s wife.

Northwestern Mutual hired a private investigator, who reviewed records in the lawsuits and records for Sreevatsan’s businesses, Tafal Associates and Devipu Technologies Inc., Jacobs said. The investigator also posed as a potential buyer for Sreevatsan’s car in February 2001.

A little comparison shopping can pay off with a policy that costs hundreds less.

Accidents happen. In cars, they happen nearly 100,000 times a day, and insurance can be the only thing standing between you and financial catastrophe. But you don’t have to resign yourself to paying sky-high insurance premiums, even if you have a less-than-perfect driving record.

To find out just how much real people with real driving experiences could save, we picked a family and a single man and did the shopping for them. Among the startling results:

* The highest semiannual premium quoted for our single man’s policy ($1,727) was more than triple the lowest premium ($533)–for exactly the same coverage.

* The highest six-month rate for our family’s policy ($2,100) was more than double the lowest rate we found ($890).

* The companies with the best deals for our family quoted rates that were among the worst for our single man.

The enormous price differences and lack of consistency illustrate the most important point about searching for affordable auto insurance: You have to shop around. Every insurer has its own formula for setting premiums–a complex combination of variables including your age, sex, driving record, where you live and the kind of car you drive. You will be richly rewarded if you take the time to find the insurance company whose criteria shine the best light on you and your family.

Reality check #1

The family we shopped for includes a teenage son who started driving a couple of years ago–a notoriously expensive addition to any family’s policy. When we priced policies last year, he had already received two speeding tickets, and Mom had also gotten pulled over for speeding. Such incidents aren’t terribly out of the ordinary, but the combination made the family untouchables in the eyes of some insurers.

For the past few years, they had relied on an independent agent to get them the best deal on insurance for their 1989 Mazda MPV minivan and 1990 Toyota Celica. They were paying $1,061 every six months for car insurance, including:

* $100,000 liability coverage for bodily injury and property damage;

* $2,000-per-person medical payments coverage;

* $100 deductible on comprehensive coverage;

* $200 deductible on collision coverage; and

* $100,000 uninsured- and underinsured-motorist coverage.

AN initiative allowing young motorists to pay less for insurance if they avoid driving after 11pm was launched today.

The scheme, from insurer More Than, is designed to reduce the casualty rates among 18 to 25-year-olds between 11pm and 6am.

Up to 40 per cent of all accidents between those times involving young drivers result in death or serious injury, compared with 20 per cent at all other times. Young motorists are involved in 28 per cent of all accidents in which a driver is killed or injured, despite representing just 10 per cent of drivers.

More Than research showed that 912,000 young people had been in, or knew someone who had been in, an accident at night in the past three years.

The new insurance scheme uses an in-car gadget to track when the vehicle is being driven. Young motorists pay reduced premiums - 40 per cent less than More Than’s standard prices - but an additional fee of Pounds 25 is applied if the car is driven between 11am and 6pm.

Road safety charity Brake welcomed the scheme, saying it was an excellent first step towards reducing risk for young drivers.