Car Insurance

AN initiative allowing young motorists to pay less for insurance if they avoid night-time driving was launched today.

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

As many as 40per cent of all accidents between 11pm and 6am involving young drivers result in death or serious injury compared with 20 per cent at all other times.

Despite representing only 10 per cent of all drivers, young motorists are involved in 28per cent of all accidents in which a driver is killed or injured.

The company’s new insurance scheme uses an in-car telematics system to track the time of day or night when a vehicle is being driven.

Drivers pay a reduced fee to insure their cars - 40per cent off More Than’s standard prices.

To encourage them to leave their vehicles at home between 11 pm and 6 a m , a n additional fee of Pounds 25 is charged if the car is driven during these hours. The company estimates that by reducing the number of young drivers on the road at night, its scheme could help reduce accident rates among 18 to 25-yearolds by up to 25 per cent.

Mary Williams, chief executive of the road safety charity Brake, said: “We need to find more innovative ways of preventing tragic deaths involving young drivers and their passengers on our roads.

Some small-business owners look at insurance as if it were a tax. It may be necessary, but if they can avoid it or keep it to a minimum, all the better. This view is penny-wise and pound-foolish. Insurance can give you advantages, as well as providing in the case of catastrophe. There are several kinds of insurance to consider for your business.

Four kinds of insurance are essential: fire insurance, liability insurance, automobile insurance, and workmen’s compensation insurance. In many businesses, crime insurance may be essential as well. Fire insurance can be embellished with additional protection against explosion, vandalism, malicious mischief, smoke, etc. at a minimal additional cost. A comprehensive all-risk contract may be the best buy for the broadest protection for the money.

Liability insurance is the shield for the business owner against lawsuits by customers who may slip and fall, or injure themselves with your product. A liability coverage of $1 million is not excessive. Remember, you may be legally liable even when you exercise reasonable care - in some cases even if the injury is sustained by a trespasser! Be certain whether or not property of customers that is in your care is covered.

It is a sad but true fact that in the United States, if you are in business long enough - any kind of business sooner or later somebody will sue you. We have a greatly disproportionate number of lawyers, and a mentality that says “sue businesses for all they’re worth” regardless of the stupidity of the “victim.” Remember the famous hot coffee spill in the lap?

Errors and Omissions Insurance is your protection against what in the medical field is called malpractice. While liability protects you if you do everything that “a normal prudent person” would do, that may not be enough. E&O insurance covers you if you fail to do something an “expert” would do. For instance, a prudent person wouldn’t stack 50-gallon drums full of acid without some safeguards against falling. An expert should have known that they should be marked in a particular way before shipping. If an injury occurs in the first case, liability insurance is enough. In the second, E&O would be necessary, because of your malpractice” in not properly marking the containers. In this case, the claim may not even be an injury, but it could be a fine imposed for the marking failure.

Workers’ Compensation is also a legal requirement, rates range from 0.1 percent of payroll for “safe” occupations to 25 percent or more far hazardous ones. The workers’ comp coverage premiums can be reduced if your accident rates are below average, and using safety and loss-prevention measures.

Business Interruption Insurance covers fixed expenses that would continue should you be closed down by fire or other reason. For in stance, if the City decides to tear up the road in front of your store, so that your customers cannot come in! A more common example is if you injure yourself so that for a short period of time you are unable to operate your business. The bills don’t stop when you do!

Britain’s motorists are likely to see a sharp rise in the cost of their car insurance after Norwich Union, the market’s second largest provider, raised its rates by as much as 40 per cent and urged the rest of the industry to follow suit.

On average, NU motor premiums will rise by 16 per cent when customers next come to renew their policies, the company said yesterday. But premiums for higher-risk groups, such as young male drivers, will shoot up by as much as 40 per cent. The company hopes the move will put an end to the recent price war in the market.

Patrick Snowball, the head of Aviva’s UK operations, which include Norwich Union, said the company was no longer willing to carry on writing loss-making business, and hoped the rest of the industry would follow its lead, rather than continue to offer cut- price policies.

“We are determined to lead the market on this and we would expect some sensible discipline in the market,” he said. “The pendulum has swung too far and rates have been too low - we have to act to ensure our business is profitable. We are prepared to sacrifice volume to achieve this.”

Mr Snowball said the company was giving away too much to its customers and not enough to its shareholders, claiming the balance needed to be redressed.

Royal Bank of Scotland, the UK’s largest motor insurer via its Direct Line and Churchill brands, gave a cautious welcome to Aviva’s pricing decision but would not be drawn on whether it intended to follow suit. Annette Court, RBS Insurance’s chief executive, said: “We agree that prices are unsustainable at the current level, given the rate of claims inflation and that prices need to rise.”

Like most motor insurers, NU has found the cost of its motor insurance claims and expenses is more than the premiums it is collecting each year. Its Combined Operating Ratio - a key measure of insurers’ profitability - deteriorated from 102 to 105 per cent during the first six months of the year. Any figure above 100 represents a loss.

Although the group has still managed to make an overall profit on the motor business, with the help of strong investment returns, Mr Snowball said the company was not willing to continue sustaining a negative underwriting result. He said all motor insurers had suffered in recent years, as the cost of claims - particularly personal injury compensation - had rocketed. Premiums have not risen at the same pace.

The AA, which runs a quarterly index monitoring motor premiums, said rates had remained almost static over the past year. Its managing director Kevin Sinclair said claims inflation had already exceeded premium income by 9 per cent this year.

Aviva’s bold move will grate against Norwich Union’s upbeat “Quote me happy” advertising campaign, which depicts rapturous drivers jumping for joy when they discover how much they can save on their motor insurance with NU. If its competitors do not follow suit, the move will leave NU among the most expensive providers in the industry.

In the United States, teenagers drive less than other age groups except for the very oldest group, yet their number of accidents and fatalities is disproportionately high. The accident rate per mile for 16- to 19-year-olds is four times higher than among older drivers. The newest drivers are at the highest risk; the crash rate per mile is three times higher for 16-year-olds than for 18- to 19-year olds. The California Highway Patrol (2000) reported that in California 37,532 teenage drivers (between the ages of 16-19) were involved in accidents in the year 2000. Out of those, 22,862 were the fault of the teenage driver. Over 20% of all traffic deaths in the United States occurred when a teenager was driving; for teenage passenger fatalities 63% occurred when they were riding with another teenager (Insurance Institute for Highway Safety, 2001).

Adolescent drivers tend to engage in numerous risky behaviors including speeding which has been found to significantly correlate with a greater risk for accidents (Elander, West, & French, 1993). They are more likely to exhibit and report greater risk-taking such as following too closely, unsafe accelerations, and rapid lane changes (Jonah, 1986; 1990; Preusser, Ferguson, & Williams, 1988).

Teenagers’ perceptions of their own skills and those of the drivers around them contribute to their risky behavior. Drivers who believe they are highly skilled are less likely to properly evaluate a risky situation. Young drivers in particular are much more likely to overestimate their skills (Finn & Bragg, 1986; Gregersen & Bjurulf, 1996).

It was also found that drivers of all ages who participate in one type of reckless driving were more likely to engage in other types (Evans & Wasielewski, 1982). Faster driving and tendency to commit traffic violations were correlated with increased crash risk (Elander, West, & French, 1993).

The Progressive Direct Group of Insurance Companies Continues to Advance the Science of Auto Insurance Pricing; Announces Driving Discount Program in Iowa

Many auto insurance companies ask customers to estimate their annual mileage when applying for a new policy; these up-front estimates generally have a minimal influence on the overall premium. And, these companies don’t ask for updated mileage readings over time. But what if your insurance company asked you to report exact mileage readings over time and, by doing so, you could control how much you pay for car insurance by controlling the number of miles you drive?

The Progressive Direct Group of Insurance Companies today announced a pilot program in Iowa that gives drivers the ability to do just this.

Progressive Direct has data that supports that there is a correlation between the number of miles customers drive and the likelihood of their being involved in a crash - if you drive less, your chances of being involved in an accident are lower. This information, when combined with other information used to price car insurance policies, could help advance the science of insurance pricing making rates even more accurate and tailored to individual drivers’ behavior.

How the Pilot Program Works

Progressive Direct customers who volunteer to participate will be asked to periodically submit odometer readings on the insured vehicle(s) they sign up for the program. It’s easy - customers simply log in to a password-protected Web site and enter their current odometer reading. Customers will report odometer readings when buying a policy and again at each renewal of the policy, or once every six months. Customers have the option of signing up all or just some of the vehicles on their policy.

What Discounts are Available

All customers will receive a five percent “participation” discount on a vehicle’s total premium simply for signing up the vehicle(s); this discount will be applied to every renewal policy as long as they continue to report their odometer readings. They may also receive an additional mileage discount of up to 10 percent, depending upon the number of miles driven, which will be applied to future policy terms. In all, customers could receive as much as 15 percent off a vehicle’s total premium for a six-month policy. With the average Iowa driver paying about $670 a year for auto insurance, that’s a potential savings of about $100 a year.

“This pilot is a win-win for everyone - all drivers can reduce their insurance costs simply by participating and, if they drive less over time, can save even more. We also have the opportunity to gather mileage data, which will help us better understand the correlation between how much a person drives and how likely they are to get into an accident,” said Ian Forrester, Iowa product manager, Progressive Direct. “We’re always looking for ways to more accurately price auto insurance and this program is just another way to achieve this goal.”

How to Sign Up

New Progressive Direct customers in Iowa may sign up for the odometer discount within 30 days of buying the new policy; existing customers may sign up at or within 30 days of renewal. After signing up, they’ll immediately receive the five percent participation discount which will be applied during the current policy term; this participation discount will continue on every renewal as long as they submit one mileage reading per policy term. Then, depending upon the miles they drive during that current term, they will be eligible for the additional mileage discount which will be applied during the next renewal term. Customers can share mileage data for as many consecutive policy terms as they’d like during the length of the pilot program.