Get Smart About Auto Insurance
By Sandy Praeger
Fall 2008
As a member of the military, your insurance requirements differ from the needs of other citizens. Frequent moves and lengthy deployments likely leave you with little time to address your personal or business affairs. Your insurance needs, especially, can be overlooked.
In fact, a recent survey of military personnel conducted by the National Association of Insurance Commissioners (NAIC) found many misperceptions and misunderstandings about insurance. For example, our nationwide survey found that 21 percent of service men and women said their auto policies did not permit suspension or reduction of coverage, while 31 percent were unsure whether their policy contained this provision. But did you know that some auto policies allow reduction or suspension of certain coverages such as liability when a vehicle is not being used for an extended period? Taking such action could reduce your premiums.
If you want to suspend auto coverage, contact your agent and state insurance department for the specific laws and policy limitations applicable in your state. Ask whether the following types of coverage can be suspended while you are deployed: liability, collision, uninsured/underinsured motorist, medical payments and personal injury protection (PIP).
You might need to file an affidavit of non-use with your state’s department of motor vehicles to avoid being fined for failure to maintain insurance. If you suspend coverage, however, you might not be able to recover money for damage to your vehicle due to weather (hail or tornado damage), “acts of God” (earthquake or flood) or acts by another individual (vandalism), unless you keep in force the coverage known as “comprehensive” or “other than collision.”
Be sure to check your policy renewal date and payment terms with your agent to ensure the necessary coverage will remain in effect during your deployment. If necessary, you might be able to renew your policy early or have your premiums paid by automated bank draft.
Before renewing or purchasing an insurance policy, ask your agent or company specific questions about how the company handles issues related to the military deployment of their policyholders. Compare prices and the level of service across a few different insurance providers. By shopping around, you might be able to find an insurer who specializes in the needs of servicemembers. Comparison shopping takes time, but it will save you money.
Auto insurance is an important and often mandated purchase for most Americans. The average annual auto insurance premium nationwide in 2005 was $879 per vehicle. The NAIC offers these tips to help you get the best value for your auto insurance dollar:
Type of vehicle: If you’re buying or leasing a new car, check the insurance rates before you make your final choice. Convertibles, SUVs and high-performance vehicles typically cost more to insure. Also consider lowering or eliminating physical damage coverages on older vehicles (unless a lienholder, such as a bank, requires it).
Safety devices: If you’re buying or leasing a new car, consider getting one with anti-lock brakes, side air bags, automatic seat belts and daytime running lights.
Anti-theft devices: Items such as an alarm system and global positioning system (to locate your car if stolen) can help reduce your premiums.
Where you park: You might benefit if you have access to a place that decreases the likelihood that your car will be stolen, such as an indoor garage or locked parking lot.
Geographic region: Areas prone to extreme weather (such as hail, tornadoes or hurricanes), higher traffic patterns or higher risk of theft might result in higher insurance rates. If you live in an area prone to extreme weather, check whether your policy includes comprehensive coverage on your car to cover potential damage from storms.
Driving record: Tickets, accidents, citations for driving while intoxicated or driving under the influence directly affect your premiums.
Number of claims previously filed: You might want to consider not filing claims for smaller events to avoid premium increases.
Policy deductible: The deductible is the amount of money you agree to pay as part of a claim before your insurer pays the remaining amount toward that claim. For example, if your vehicle incurred $1,000 in damages and your deductible was $250, you would pay the first $250 and your insurer would pay the remaining $750. The higher your deductible, the lower your premium.
Credit history: In some situations, your credit score can have a direct impact on your auto premiums. Be sure to maintain a good credit history.
Discounts: Be sure to ask about discounts such as multiple cars on a policy, completion of a driver’s education course, good student driver under age 25, mature driver (age 50-65), airbags and other safety equipment, anti-theft devices, low mileage, accident-free record, and auto/home insurance with the same company.
If you believe you have been treated unfairly in shopping for auto insurance or in getting a claim paid, please contact your state insurance department. You can link to your insurance department’s website by visiting www.naic.org. Click “NAIC States & Jurisdictions,” then click your state.
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Sandy Praeger is Kansas Insurance Commissioner and president of the National Association of Insurance Commissioners (NAIC), an organization of the chief
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Drive $marter
How you drive and maintain your vehicle can either increase or decrease your vehicle’s fuel efficiency and your gas costs. Consider these simple tips:
Drive sensibly. Around town, avoiding speeding, rapid acceleration and braking improves gas mileage by up to five percent.
Avoid idling. Idling gets zero miles per gallon! Cars with larger engines typically waste even more gas while idling than cars with smaller engines. According to Consumer Reports, as a rule of thumb, turn off your engine if you will be idling for more than 30 seconds.
Ditch “junk in the trunk.” An extra 100 pounds in the trunk cuts a typical vehicle’s fuel economy by up to two percent.
Slow down. Speeding costs money! Gas mileage usually decreases rapidly above 60 miles per hour. Each five miles per hour over 60 is like paying an additional 20 cents per gallon for gas.
Combine errands. If you combine errands into one trip, you drive fewer miles and use less fuel. Several short trips taken from a cold start can use twice as much fuel as a longer, multipurpose trip when your engine is warmed up and efficient.
Inflate your tires. Keeping your tires properly inflated is simple and improves gas mileage up to three percent, saving up to 20 gallons of gasoline per year.
Tune up. Fixing a car that is noticeably out of tune or has failed an emissions test can improve its gas mileage by an average of four percent, saving up to 25 gallons. Fixing a faulty oxygen sensor can improve mileage by as much as 40 percent.
Select the right oil. Using the manufacturer’s recommended grade of motor oil can improve gas mileage by one to two percent. Also, change your oil as recommended to extend the life of your vehicle.
Check and replace air filters regularly. Replacing a clogged or dirty air filter can improve your car’s gas mileage and keep impurities from damaging your engine.
Consider other transportation options. Investigate alternative options for getting to work and other places – public transportation, carpooling, biking, walking or ridesharing when possible.
Tips are calculated as annual savings, driving the national average of 12,500 miles per year in a vehicle with a fuel economy of 20 miles per gallon using regular grade gasoline. Individual savings will vary depending on how many miles you drive per year, the fuel economy of your vehicle, your region’s climate and your current maintenance and driving habits.
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