Pay-As-You-Drive Personal Auto Insurance – Recent Developments

California private auto was changed forever in 1988 with the passage of Proposition 103. Among other things the regulations provided that insurance companies must accept all good drivers (as defined by them) and rate auto on 3 primary factors: Driving Safety, Annual Mileage, and Years Driving (rather than age of driver).

Later some 40 other factors would have accepted onto a list of other permitted secondary factors, although insurance score is not one of them. Territories were abolished in factor of some statistically-built bands related to accident frequency and other factors. Occasionally, even the number and differentials between bands would be narrowed.

The effect of the original regulation and the consequential changes was to cause or increase subsidies for a variety of policyholders:

  • Drivers with accidents subsidize good drivers
  • Long annual mileage drivers subsidize short annual mileage drivers
  • Urban drivers subsidize rural drivers
  • Nearly everyone subsidizes low experienced male drivers

The existence of these subsidies causes shortages in the marketplace and influences behavior that may not be desirable. For example, if drivers with accidents pay too much overall, this may cause an incentive to under report accidents. Less data is usually not good – the absence of accidents in the database will extremely raise rates for the next lower level of accident-proneness, as the higher risk drivers seem to belong in the lower accident group based on their statistics.

Other effects of forced subsidies are the introduction of new companies that are specialists in the over-priced segment of the market, increases in the number of drivers in the temporary market, and rate increases for truly good risks.

Pay-as-you-drive insurance:

It is the limited number of categories for annual miles driven that catches the attention of regulators and others wanting a more refined rating plan. Number of miles driven looks like a reasonable way to measure exposure and is easily understood by policyholders. Presumably in combination with "where you drive" (territory, that is. Although this is not "where you drive", it's "where you LIVE"), it would seem to cover a driver's exposure very well (see next section for what research shows).

The new proposed regulation is being touted as a "green" provision, encouraging drivers to drive less by having their insurance coverage apply by mile driven. California Insurance Commissioner Steve Poizner has proposed this optional rating mechanism, allowing insurers to offer a voluntary option for consumers who are interested in pay-as-you-drive coverage.

Consumer groups are opposed, saying that there is not enough protections in the law for protecting the privacy of insured's everyday activities. Some tracking mechanisms include "OnStar" satellite and GPS-based meters similar to those used in cell phones.

Quoting from the article:

"The Environmental Defense Fund estimates that if 30% of Californians participate in this voluntary coverage, California could avoid 55 million tons of CO2 between 2009 and 2020, which is the equivalent of taking 10 million cars off the road. This would save 5.5 billion gallons of gasoline and save Californians $ 40 billion dollars in car-related expenses. Additionally, the California Air Resources Board has recommended the adoption of pay as you drive as one of the means to meet future climate change gas reduction targets. "

Hard to ignore potential emissions reductions like these numbers.

b> But the research shows:

The research shows that pay-as-you-drive insurance may not get at the true exposure to auto insurance claims for each insured. For liability coverages, age / gender combination, along with insurance score and geography are the largest claim level predictors. For property damage coverage, the model of the car takes over as the number on predictor (the others then follow). This information is from a research paper The Relationship of Credit-Based Insurance Scores to Private Passenger Automobile Insurance Loss Propensity, Michael Miller, FCAS and Richard Smith, FCAS, Epic Actuaries, June 2003.

Pros / Cons of Pay-As-You-Drive:
Pros:

  • Exposure for insurance tied to miles driven – easy to understand by drivers
  • The amount you pay for insurance would be directly controlled by the driver, rather than on factors such as sex, age, martial status, etc. that the driver has no control over.
  • The current proposal is for an optional credit, giving low mileage drivers a choice.
  • Reduced emissions

Cons:

  • The amount a driver pays should be as closely tied to his / her exposure to loss as possible, to avoid cross-subsidies and comply with Actuarial Standards and Principles.
  • Tracking mileage is difficult and some methods proposed inspire fear of lack of privacy in some consumers and consumer watchdog groups.

My opinion is that there are better, less complicated ways to refine the rating plan options when it comes to annual mileage, and still emissions lower emissions and "green" policies. One obvious one is to simply increase the number of mileage bands in the current plans and offer "green" discounts (and debits) based on the type of vehicle covered. Discounts for Prius's, debits for Hummers.



Source by Kimberley Ward

Most Common Types of Auto Repair

If you own a car, at some point, you are going to have maintenance. While some problems are more severe and not very common, other types of auto repair are far more common. When done periodically, these repairs can keep your vehicle operating for years.

Tires

Driving is hazardous to your vehicle’s tires. Nails, pot holes, and even curbs can cause damage to the rubber, forcing you to have it patched or replaced. If you can have the tire simply patched, it is pretty inexpensive, and most patches can hold until the tread is too worn to continue using. However, if there is no repairing the tire, you could be looking at an expensive replacement, especially if you have to replace multiple tires.

Brakes

One of the most common types of auto repair will be the brake system. Over time, your pads will wear out, causing you to have to replace them. This can happen multiple times during the life of your car. While this is a fairly inexpensive replacement, if the drum or rotor needs to be replaced you could be looking at hundreds of dollars in maintenance costs. If you are having trouble stopping, it is most likely the pads are worn out, as the brake lines rarely need maintenance.

Oil Changes

Another common form of maintenance is having regular oil changes. While you may not see this as auto repair, it does keep your engine from being damaged. Fresh oil, with a new filter, every few thousand miles can make a significant difference in how your engine performs. Without this maintenance, carbon deposits can build up, wearing out your piston rings and even seizing up your engine. The cost to replace those parts and clean the block is far more expensive than the occasional oil change.

Fuel System

If you are someone who prefers to fill up their car only half way and then drive it until the warning light comes on, you may be doing more damage than good. Vehicles that are regularly driven with less than a quarter tank of gas run the risk of having their fuel filters clogged up. Additionally, you should have the injectors cleaned and fuel filter replaced by a professional on a regular basis.

Ignition System

Eventually, your battery will wear out. Most are rated to last seven to ten years depending on the brand of battery you purchase. The price depends on the battery and the length it is supposed to last. You might be able to recharge your old battery for much cheaper. However, it will eventually need to be replaced.

Another part of the ignition system that commonly needs to be replaced is the starter. While it is not the most expensive replacement, it can be more expensive than a simple battery replacement. Usually, if you are having trouble starting your vehicle, it is either the battery or the starter. Your local mechanic can test them and tell you which part needs to be replaced before you are left stranded.

Auto repair is part of owning a car. If you take the time to maintain your vehicle, it will last longer than expected.



Source by Ace Abbey

Keep Your Old Car Looking and Feeling New With Regular Automotive Servicing

Well you have sheled out a hefty amount of money to own your dream car, but one day after years down the line you realize that you need to pay heavy expenses because your engine requires to be replaced. The majority of automobile owners do not service their "ride" properly, resulting in costly repairs and also safety hazards. It is often frustrating to encounter any form of car trouble, particularly if you are in a hurry or are far from an auto shop.

So to save yourself from such an unnecessary head specifically when you might be headed to a very important meeting or an emergency appointment you should regularly receive your automated serviced at regular intervals, and in case of mechanical problems one should immediately attend to them to save one self from further expenses. Most effectively these types of accidents can be avoided only if you are able to regularly have your car checked. Regular car maintenance and repair can help prevent the possibility of you being stuck in these situations. Maintenance of your car can range from basic car maintenance to an overhaul or car check-up done with the help of a professional like automated service phoenix.

To maintain safety and reduce the cost of car repair, as a responsible vehicle owner it is important that you have your car inspected regularly. Regular mechanical inspection should be done and not just a visual inspection but also a thorough professional part inspection inspection of your automotive is necessary, since many components of your car can not be inspected visually. It is vital that you seek assistance from a good mechanic and subject your car to a diagnostic check-up to determine if all parts are in working order. Whenever your car needs repair automotive service phoenix is ​​a very viable option available. A car diagnostic tool will help pinpoint problem areas in your car without having to gut out your car.

For auto repair general guidance is a must to keep you on the road. Failure to service your vehicle will leave you stranded. This means expensive auto repairs. Remember the service recommendation is provided by manufacturer for a reason. Utilizing this information will help you financially and will help you keep your dream car looking new just the way you bought it.



Source by Ravi Srivastava

Car Breakdown Abroad – Planning Ahead

We've all heard time and again that it's important to read the fine print. This is especially true when it comes to automative insurance, particularly coverage for driving in foreign countries. Missing one small detail could mean a lot of hassle for you and your companions.

When you are in the market for car insurance overseas you want to think ahead. Consider situations that you wish to be protected from. What if your vehicle breaks down in a rural area? You may find yourself in need of a return back to civilization, a tow, emergency repairs and replacement parts. These are important parts of quality foreign car insurance. The last thing you need to be worried about after an unpleasant accident is whether or not your insurance provides all the coverage you require.

When your insurance company works for you and your policy protects you from all the things you face, you can rest easy. For those who desire the greatest peace of mind, comprehensive overseas coverage is recommended. This exceeds collision and injury coverage to shield you from natural disasters and civil unrest. With comprehensive coverage you do not need to worry about being told that your policy will not cover the situation you have encountered.

Thanks to the internet we're now able to learn about our insurance policies easily. By utilizing the web to your advantage you will be able to save money by getting the policy you need while making sure that you have done everything possible to save yourself while traveling abroad.



Source by Edward Fresco