Car Insurance

Shrewd design practices can take the sting out of your customers’ fender benders. Is your company delivering them?

A dirty little secret of car ownership is the big bite insurance takes out of the total-cost pie. Owners fork out more for insurance than they do for fuel. Protecting against damage, theft and liability costs roughly the same as all the oil changes, tire replacements and tune-ups a car will need during its lifetime, In fact, depreciation is the only operating expense that sucks more dollars out of an owner’s wallet than insurance. According to the SAE, depreciation amounts to 27 percent of a vehicle’s total operating cost, versus 22 percent for both insurance and maintenance.

Given the competitive nature of the car business, you’d think some automakers might see the expensive-insurance situation as an opportunity instead of a headache. Actually, they have. But before that day of enlightnment dawned, a healing period was necessary to recover from the historically bitter relationship between insurance firms and car companies. Jay Minotas, a General Motors Corp. veteran of some of these battles, recalls, “In the early 1980s, we were at war with the insurance industry over airbags and passive restraints. We overcame that adversity and, by the mid-1980s, insurance companies and car engineers began cooperating to make vehicles more damage-resistant and easier to insure.”

In 1985, auto engineers and insurance experts put their heads together to issue SAE Recommended Practice J1555, aimed at insurance-cost containment. Consider this document the design engineer’s primer for factoring in damageability, repairability, serviceability and theft deterrence attributes at no sacrifice to crashworthiness, occupant protection and functional essentials.

Minotas, manager of the GM Safe Driving Program, and who helped create J1555, notes, “From the onset, insurance contacts were our best source of repaircost data. (State Farm’s analysis of claim statistics triggered the current Firestone radial recall campaign.) We knew that certain designs and parts were expensive to repair, but the insurance companies — especially State Farm — provided us with the first truly accurate look at average repair costs. With their help, we studied five Saturn competitors and set our repair-cost bogey at an early stage of that car’s development. After sending the Pontiac Fiero into the field with plastic body panels no one knew how to repair, we had no choice but to set higher standards for GM’s 1989 APV minivans. Two years before their introduction, we began working with insurance people to develop suitable repair procedures. Fiero and APV were the learning experiences that greatly benefited Saturn’s 1990 launch.”