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Here are our main messages on auto insurance, starting with advice on choosing
a company.
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If you would like quick, hassle-free claims service in the event of an
accident, some companies are much better bets than others. At the time
of our last full, published report, in our survey of policyholders, Amica
Mutual, for example, was rated “superior” for “simplicity of claims procedures”
by 85 percent of its surveyed policyholders—compared to less than 30 percent
for Fireman’s Fund and Boston Old Colony (CNA/Encompass). Other top-rated
companies for customer service were Electric, Plymouth Rock, State Farm,
and USAA (which is open only to active, retired, and former officers of
the military, FBI, Secret Service, Foreign Service, and Public Health Service,
and their dependents).
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Amica Mutual, USAA, Plymouth Rock, and Electric also had relatively low
numbers of complaints on file with the Massachusetts Division of Insurance—along
with One Beacon, Quincy Mutual, and Norfolk & Dedham.
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Although Massachusetts’ requirement that all companies use the same formulas
to set rates means that there is less company-to-company price variation
here than in other states, there are still opportunities to save by shopping—$200
or more per year for many policyholders.
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The biggest company-to-company price differences result from discounts
some of the companies give to groups—employees of specific companies, employee
associations, alumni associations, and others. Members of a few groups
get as much as 15 percent off standard rates, and many groups get 10 percent
discounts. You will do well to check the Division of Insurance website
at www.state.ma.us/doi/home.html for the list of groups so you can
see which ones you can qualify for. Several groups whose members can get
10 percent discounts are open to anyone. For example, at the time we went
to press, it is possible for anyone to join the Conservation Law Foundation
for a $30 annual membership fee and thus qualify for a 10 percent discount
off the cost of insuring with Plymouth Rock.
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A few companies offer “rate deviation” discounts to policyholders with
clean driving records. But currently the best of these discounts is five
percent, and none of the companies currently offering these discounts is
also offering group discounts.
Whichever company you choose, be careful to select just the coverage you
need and to explore any available price breaks based on your driving habits
and other circumstances—
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Consider purchasing a policy with high “deductibles.” By agreeing to pay
small losses out of your own pocket, you can avoid paying the company to
do a lot of paperwork.
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Consider dropping Collision coverage when your car’s value drops to a level
that you could lose totally without serious disruption to your life. Although
your company would not pay you much for the loss of an old car, it won’t
continue to lower your rates significantly once the car’s value drops below
a few thousand dollars.
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Try to take at least as high dollar limits on the coverage that protects
you if you are a victim of an uninsured or underinsured motorist as you
take on the coverage you buy to pay other people’s claims. Increased limits
on Uninsured and Underinsured motorist coverage cost relatively little.
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When considering how much to spend on Personal Injury Protection coverage
or Medical Payments coverage, consider whether you could spend the money
more wisely improving your family’s general health insurance or disability
insurance coverage.
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Keep your agent or broker informed of any personal circumstances that might
make you eligible for a lower premium. Be sure to inquire about price breaks
if—
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More than one car is insured by the same company;
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No one in the family has had an accident or traffic violation in the past
three years or, better still, six years;
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You drive a car less than 7,500 miles or, better still, less than 5,000
miles each year;
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You regularly use public transit;
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Your car is not used to commute to work;
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Your car has air bags, anti-lock brakes, or antitheft devices;
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You are driving a relatively inexpensive car and/or one with a relatively
good “loss experience” (the loss experience reflects how frequently a car
is involved in accidents or is stolen and how much it costs to repair it);
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You’ve moved to a less urbanized area;
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You are insuring no regular driver with less than three years of driving
experience or, better still, none with less than six years of experience;
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Any inexperienced driver you are insuring is only an occasional driver
of any vehicle, rather than a principal driver;
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Insured drivers with less than three years of driving experience have completed
driver training;
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You are 65 or over.
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Consider the cost of insurance along with the cost of gas and parking when
you are deciding how to commute to work. A car pool or public transportation
might save you $200 or more in insurance per year.
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Consider the cost of insurance when you are buying a new or used car. Some
makes and models of cars cost substantially more than others to insure.
Older cars cost less than newer cars.
You pay dearly for auto insurance. Be sure you get what you have coming
if you have a claim.
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Report claims promptly. But don’t sign any settlement until all your bills
are in or you know definitely how much you have lost. For auto body repairs,
insist on using a repair shop you can trust—as long as it charges reasonable
rates.
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Be sure not to overlook available claims. For example, your Medical Payments
coverage might pay for the deductible amount under your health insurance.
Also, you can claim under your Comprehensive coverage for some losses that
are often overlooked—such as accidentally damaged upholstery.
You want an auto insurance policy that will assure you good service, protect
you financially, and cost you as little as possible. In this article, we
will try to steer you in the right direction.
Being in an accident is bad enough. You don’t want also to run into insurance
company obstacles. You want your insurance company to respond quickly,
pay your claims promptly and fairly without a lot of paperwork, and treat
you courteously. Our Ratings Tables we give you the results of our
survey of Boston area consumers who have had claims against their auto
insurers.
We surveyed CHECKBOOK and Consumer Reports magazine subscribers and collected
ratings of individual insurance companies from policyholders who said they
had made an auto insurance claim within the preceding three years. These
consumers rated their companies “inferior,” “adequate,” or “superior” for
“simplicity of claim procedures,” “adequacy of claim payment,” and other
elements of service. Our Ratings Tables show what percentage of policyholders
rated each company “superior” on each of these elements. Click here
for more information on our survey and
other research methods.
There is big company-to-company variation. For example, at the time of
our last full, published report, Amica Mutual and USAA were rated “superior”
for simplicity of claims procedures by 85 percent and 86 percent of their
surveyed policyholders, respectively, while Fireman’s Fund and Boston Old
Colony (CNA/Encompass) got such favorable ratings from fewer than 30 percent
of their surveyed policyholders.
Our Ratings Tables also reveal how companies compare on the frequency
of complaints filed against them with the Massachusetts Division of Insurance.
We show the number of complaints in 2002 and a complaint rate, which we
calculated as the number of complaints per $10 million of written premiums.
You can see that Fireman’s Fund, for example, had about eight times the
complaint rate of Amica Mutual. Amica and USAA look good on our customer
survey measure and also on the complaint rate measure. Fireman’s Fund scored
at the opposite end of the scale on both types of measure. But some companies
did well on one measure and not on the other. You are safest to choose
a company that looks at least reasonably good on both types of measure.
In Massachusetts, all companies have to accept anyone who applies for insurance.
And all auto insurance companies are required to set premiums using exactly
the same factors. In other words they must all give the same weight to
your age, the type of car you drive, your driving history, and other factors.
So you can expect to have exactly the same premium calculation for the
same coverage regardless of which company you choose.
But there are several forms of discounts or charges that can vary from
company to company, and the effect of these variations might result in
company-to-company premium differences of 10 percent of more. Ten percent
is not the kind of variation we see in other states where we have compared
insurance companies, but it is still serious money. Many Massachusetts
policyholders are paying $2,500 or more each year for auto insurance, and
the $250 saved with a 10 percent discount can add up when repeated year
after year.
Rate Deviations
Companies can apply each year to the Commissioner of Insurance for permission
to offer “rate deviation” discounts. These discounts apply to the entire
premium. Generally they are offered only to the drivers with the best safety
histories. These discounts are a way for companies to attract safe drivers,
who may be especially profitable because the cost of paying their claims
is lower than is reflected in the basic state-mandated rate calculation
formulas.
In some past years, discounts of 15 percent have been fairly common. But
for the most part, rate deviation discounts have dried up in 2004. Only
three companies are offering them—Fireman’s Fund (two percent), Amica (four
percent), and Electric (five percent)—and they are offered only to the
very safest drivers (SDIP Step 9—see discussion below). You can check the
Massachusetts Division of Insurance website (www.state.ma.us/doi) each
year to see which companies are offering discounts of this kind.
Group Discounts
Currently, the bigger opportunities for savings are through group discounts.
The Division of Insurance website lists hundreds of groups that have arranged
for discounts. Each of the companies that offers these discounts has specific
groups with which it has arranged discounts. These discounts are as high
as 15 percent for some groups, although the average group discount is about
seven percent.
Most of these groups are employees of specific employers like Cisco Systems
or the Danvers Public School District, members of alumni associations like
the Lesley University Alumni Association, members of unions and employee
associations like the Brockton Teachers Association, and other types of
groups that aren’t open to all. But there are some groups that anyone or
almost anyone can join. Some “open” groups with relatively high discounts
are the following—
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Massachusetts Audubon Society ($40 per year to join)—10 percent discount
with Plymouth Rock
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Conservation Law Foundation ($30 per year to join)—10 percent discount
with Plymouth Rock
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Appalachian Mountain Club ($50 per year to join)—10 percent discount with
Plymouth Rock
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WGBH Educational Foundation ($40 per year to join)—eight percent discount
with Liberty Mutual
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The Geological Society of America ($65 per year to join as an Affiliate
Member)—eight percent discount with Liberty Mutual
You can see all the available group discounts on the Division of Insurance
website. You might be eligible for several—for example, through an alumni
association, an employer, and a neighborhood association. See which affiliation
offers you the biggest discount and check on how to take advantage of the
discount by contacting the group’s administrative or membership personnel.
If the discounts you are eligible for based on current affiliations are
not as good as those you could get from one of the open groups (taking
into account membership fees of the open groups), consider joining one
of those open groups. In all this shopping, you will, of course, want to
keep in mind service quality as well as cost at the companies offering
the discounts.
It is theoretically possible to get both a group discount and a rate deviation
discount, but currently none of the companies offering rate deviation discounts
is offering group discounts.
Multi-Car Discounts
All companies must offer a five percent discount off the cost of most elements
of your coverage if you or you and your spouse insure two or more cars
with the company and there are no inexperienced operators on the policy.
The discount applies only to automobiles that are not customarily used
in business. Be sure to check that you are getting this discount from whichever
company you use. While all companies must offer the five percent discount,
companies can, if they wish, offer larger multi-car discounts. As shown
on the Division of Insurance website, currently only Amica is doing so
and, unfortunately, is giving only an extra two percentage points, a seven
percent discount rather than a five percent discount.
Installment Payment Fees
A final element of company-to-company variation works in the opposite
direction—fees for paying on an installment plan. Some companies charge
as much as $5 per month. These fees are shown on the Division of Insurance
website.
While you will certainly want to consider choosing a company that is less
expensive than other companies, your costs will be affected even more by
your choice of coverages. We describe here the various mandatory and optional
coverages offered in Massachusetts and how coverage variations affect premiums.
Most of the text that follows is from the Division of Insurance’s guide,
“Ways to Save 2004.” We have inserted information on the actual cost impact
of some of the choices you can make.
The following is a breakdown of the costs of the various elements of coverage
for an illustrative driver. These are the costs for a single experienced
driver under age 65 who lives in Cambridge, drives a Ford Taurus LX (with
dual front airbags), and has had a clean driving record for the past six
years. This figure summarizes
the effects of various changes in coverage and driver variables on this
driver’s annual insurance costs.
| Part 1: Compulsory Bodily Injury to Others | $20,000 / $40,000 | $243 |
| Part 2: Personal Injury Protection | $8,000 (no deductible) | $78 |
| Part 3: Bodily Injury Caused by an Uninsured Auto | $100,000 / $300,000 | $24 |
| Part 4: Damage to Someone Else's Property | $50,000 | $235 |
| Part 5: Optional Bodily Injury to Others | $100,000 / $300,000 | $202 |
| Part 6: Medical Payments | $20,000 | $18 |
| Part 7: Collision | $500 deductible | $314 |
| Part 9: Comprehensive | $500 deductible | $138 |
| Part 12: Bodily Injury Caused by an Underinsured Auto | $100,000 / $300,000 | $46 |
| Total | $1,298 |
Part 1: Bodily Injury to Others
Compulsory Bodily Injury to Others coverage pays for damages (for example,
medical expenses or pain and suffering) to anyone injured or killed by
your car, but only in an accident that occurs in Massachusetts, up to a
basic limit of $20,000 per person and $40,000 per accident. Injuries to
the driver or passengers in your car are not covered under this Part. If
you want coverage when driving outside of Massachusetts or in places where
the public has no right of access, or for guests who ride in your car,
you will need Optional Bodily Injury to Others (Part 5) coverage.
Part 2: Personal Injury Protection (PIP)
Personal Injury Protection (PIP) coverage pays up to $8,000 to you or anyone
you let drive your car, anyone living in your household, passengers, and
pedestrians, no matter who causes an accident. Personal Injury Protection
pays for medical expenses, replacement services, and 75 percent of any
lost wages. PIP coverage includes protection for owners of cars and motorcycles,
and members of their households, if they are injured while occupying, or
struck by, a car that does not have Massachusetts Compulsory Insurance.
If you have medical insurance (a health plan), you can turn to PIP coverage
rather than your health plan for payment of medical expenses up to $2,000,
but if you seek payment from your PIP coverage for medical expenses in
excess of $2,000, PIP will pay only after these expenses have been submitted
to the health plan to determine what it will and will not pay. Your PIP
coverage will not pay for expenses over $2,000 that your health plan would
have paid if you had sought treatment in accordance with the terms of the
health plan.
The driver and passengers riding a motorcycle are not covered by PIP. But
the owner of the motorcycle must purchase this coverage to protect other
people who may be injured by the motorcycle.
You can save on your premium by agreeing to have a “deductible,” applicable
either to you alone or to you and other members of your household. The
policy will pay expenses for you, or you and your household members, only
up to the difference between $8,000 and the amount of your deductible.
The option of taking a deductible is more attractive if you have a health
insurance plan and a disability income plan. But even if you have a health
insurance plan, that plan may not cover all of your accident-related medical
expenses—such as cosmetic and dental services, co-payments, and deductibles—so
PIP coverage might still be of use to you. As this figure shows, taking an $8,000 deductible for the
policyholder alone would save only about two percent of the policy’s total
cost.
Part 3: Bodily Injury Caused By An Uninsured Auto
Coverage for Bodily Injury Caused by an Uninsured Auto protects you, anyone
you let drive your car, household members, and passengers (unless covered
by another Massachusetts Policy with similar coverage) against losses caused
by an uninsured or unidentified (“hit and run”) driver. A minimum limit
of $20,000 per person and $40,000 per accident is required. This coverage
does not pay for property damage or damage to your auto.
Part 4: Damage to Someone Else’s Property
Coverage for Damage to Someone Else’s Property pays not only for damage
to another person’s property but also for costs associated with the loss
of use of that property, when you, a household member, or another authorized
driver of your car causes an accident. A minimum limit of $5,000 is required
but you can purchase higher limits and might want to do so to protect yourself
in case you become liable for the kind of large expenses that might result
if you cause one or more other cars to be totaled or seriously damaged.
As this figure shows, the
difference between a $50,000 limit and the minimum $5,000 limit would be
only about four percent of our illustrative policyholder’s total policy
cost.
Part 5: Optional Bodily Injury to Others
Coverage for Optional Bodily Injury to Others extends your liability protection
(the basic $20,000/$40,000 limits under Compulsory Bodily Injury to Others).
This option provides coverage for accidents beyond Massachusetts to anywhere
in the United States, its territories or possessions, or Canada. This coverage
also pays for damages suffered by guests in your auto. And under this option,
you can increase the coverage limits above the $20,000/$40,000 limits for
Compulsory Bodily Injury to Others (Part 1).
You might want to buy coverage above the basic $20,000/$40,000 limits out
of a social concern for the possible victims of your negligence or out
of a personal concern to protect your assets from catastrophe. If you have
substantial assets (or expectations of substantial assets in the future),
that is a compelling reason to purchase sizable liability coverage: you
have a lot to lose; you are an attractive target for suit; and you might
get relatively little sympathy from juries.
As this figure shows, the
difference between $100,000/$300,000 limits under this coverage and $20,000/$40,000
limits would be about 12 percent of the total policy cost for our illustrative
policyholder. Moving from $100,000/$300,000 limits up to $500,000/$1,000,000
limits would add about 35 percent to our illustrative policyholder’s total
auto insurance cost.
Part 6: Medical Payments
Medical Payments coverage pays for medical expenses for you, your household
members, and passengers, over and above amounts covered by Personal Injury
Protection no matter who caused the accident. The minimum amount you can
buy is $5,000 if insuring an automobile and $500 if insuring a motorcycle.
This coverage is inexpensive—only $18 per year for our illustrative policyholder—but
still may not be a good option for you if you have a good health plan.
Part 7: Collision
Collision coverage pays for damage to your car in a collision, less any
applicable deductible, no matter who causes the accident. If your car is
financed, your lender may require this coverage as well as a particular
deductible amount.
Your deductible will be set at $500 unless you select a different amount.
You can save a substantial amount on your premium by choosing a larger
deductible. As this figure shows, our illustrative policyholder would save nine percent of his or
her total premium by increasing the Collision deductible from $500 to $1,000.
In determining the amount of deductible that is right for you, decide how
much you can afford to pay out of your own pocket in the event of an accident
or loss in which you are at fault, or the other driver is unidentified.
It doesn’t make sense to buy insurance of any kind—including Comprehensive
coverage described below and PIP coverage described above—for expenses
that would not be catastrophic for you. (Insurance generally costs more
than the company’s expected payout for losses because the insurer must
charge you not only for the losses but also for sales commissions, administrative
expenses, claims-handling expenses, fraud losses, and other costs.)
If your car is old and not worth much, it doesn’t make sense to buy Collision
(or Comprehensive) coverage; you don’t have much to lose.
Part 9: Comprehensive
Comprehensive coverage pays for damage to or loss of your car, less any
applicable deductible, resulting from perils such as fire, theft, vandalism,
and striking an animal, but not a collision. This coverage also allows
up to $15 a day (to a limit of $450) for substitute transportation (rental
or other transportation costs including taxi, bus, and train fare) until
your stolen auto is recovered. Personal property is not covered unless
it is permanently installed in your car, as for example a tape deck might
be. If your car is financed, your lender may require this coverage.
You may be denied Comprehensive coverage or required to pay a higher extra-risk
rate if you own a high-theft vehicle that does not have a qualifying anti-theft
or recovery device. Coverage may also be denied or priced higher under
certain other conditions.
As with Collision and PIP coverage, having a relatively high deductible
under your Comprehensive coverage is a way to hold down your total premium
costs. As this figure shows,
our illustrative policyholder would save about three percent of total policy
cost by having a $1,000, rather than $500, deductible.
Part 10: Substitute Transportation
Substitute Transportation coverage reimburses up to $15 a day for car rental
or transportation costs including taxi, bus, and train fare (up to $450),
while your car is undergoing collision or other covered repairs (Comprehensive
coverage also pays for substitute transportation up to certain limits).
Substitute Transportation coverage of up to $100 a day (up to a limit of
$3,000) is available for much higher cost (for example, $300 per year for
$100 per day reimbursement versus $14 per year for $15 per day reimbursement).
Even if you have this coverage, some car rental agencies may refuse to
rent to you if you are under a certain age, are a poor credit risk, do
not have an acceptable credit card, or have an unacceptable driving record.
Part 11: Towing and Labor
Towing and Labor coverage pays up to $50 for towing and labor charges each
time your car breaks down whether or not there is an accident involved.
You are covered only for the on-site labor costs at the breakdown site
(not any parts) needed to get your car running again. This coverage will
generally cost just $8 per year. Coverage of up to $100 per disablement
is available for double the cost.
If you belong to a motor club, you probably don’t need this coverage since
many motor clubs’ services include towing and labor.
Part 12: Bodily Injury Caused By An Underinsured Auto
Coverage for Bodily Injury Caused by an Underinsured Auto pays for bodily
injury damages to you, household members, and passengers, unless they have
a policy of their own, or are covered by a Massachusetts auto policy of
another household member with similar coverage. The accident must be caused
by someone without enough bodily injury coverage to pay for your loss.
This coverage pays you up to the difference between the total amount collected
from the bodily injury liability insurance covering the owner and driver
of the other car and the limits you purchased for this coverage.
Massachusetts has relatively few uninsured drivers compared to many states,
but many Massachusetts drivers buy only minimum required amounts for Bodily
Injury to Others.
You may purchase both Uninsured Auto coverage and Underinsured Auto for
coverage up to, but no more than, the limits of the Bodily Injury to Others
coverage you carry. In general, it makes sense to purchase as much of the
Un/Under coverage, which protects you, as you purchase of coverage that
protects others.
Your Un/Underinsured coverages will not pay for damage to property.
The company you choose and the coverage types and levels you select are
critical to your costs, but so are various facts about you and the vehicles
you drive. Some of these facts are beyond your control; some you can change,
and in doing so substantially affect your annual insurance costs.
The best way to save money on auto insurance is to maintain a good driving
record—free of accidents or violations.
The Safe Driver Insurance Plan (SDIP) is a program mandated by state law
that encourages safe driving by rewarding drivers who do not cause an accident,
or incur a traffic law violation, and by making sure that high-risk drivers
pay a greater share of insurance costs.
Under the SDIP, you incur surcharge points for traffic violations and at-fault
accidents within the policy Experience Period, the six-year period immediately
preceding the policy effective date. You earn a credit point for each year
during the policy Experience Period for which you had no traffic violations
or at-fault accidents. If the first (oldest) traffic violation during the
policy Experience Period is a minor non-criminal traffic violation, you
do not incur surcharge points for this traffic violation, but you do not
earn a credit point for that year.
Your SDIP step is calculated using a starting Step of 15, and your driving
record during the policy Experience Period. Beginning at the neutral Step
15, add Surcharge Points for any Surchargeable Incident and subtract a
Credit Point for each incident-free year of driving. The result is your
SDIP Step. Each accident or violation remains on your record for six years
from the surcharge date.
If you have a number of surcharge points, putting you at step 18 or higher,
the Clean Slate Rule enables you to wipe these surcharge points out more
quickly than they would be eliminated by simply earning one credit point
for each incident-free year of driving. Under the Clean Slate Rule, if
you do not cause any accidents or incur traffic violations for the three
consecutive years preceding the policy effective date and your SDIP step
is 15 or higher, your SDIP Step will be set at 14.
The highest (worst) possible SDIP Step is 35 and the lowest (best) is 9.
As this figure shows, everything
else being equal, a driver at Step 35 will pay 228 percent more than a
driver at Step 9.
You incur surcharge points if you:
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Cause an at-fault accident,
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Are convicted of, or pay a fine for, a traffic law violation, or are assigned
to an alcohol education program.
At-Fault Accidents: An accident is considered an at-fault accident, meaning
that it will result in surcharge points, if you are more than 50 percent
at fault. You incur three surcharge points for Minor At-Fault Accidents
and four surcharge points for Major At-Fault Accidents. A claim payment
of over $500 up to and including $2,000 under your Collision coverage or
your coverage for Damage to Someone Else’s Property is considered a Minor
At-Fault Accident. If the claim payment is over $2,000, it is a Major At-Fault
Accident.
Traffic Violations: If you are convicted of, and/or pay a fine for, violating
certain motor vehicle traffic laws in Massachusetts or out-of-state, or
you are required to participate in an alcohol education program, the court
will notify the Merit Rating Board and you will get surcharge points—two
points for minor violations (such as, speeding, operating a vehicle without
a valid inspection sticker, or failure to obey traffic lights) and five
points for major violations (such as, operating under the influence of
liquor or narcotics, leaving the scene of an accident, or refusing to stop
for a police officer).
If there is more than one driver on a policy, the listed driver with the
highest SDIP Step is assigned to the vehicle with the highest combined
premium for Bodily Injury, Personal Injury Protection, Damage to Someone
Else’s Property, and Collision coverages. For each subsequent vehicle,
the listed driver with the next highest Step is assigned to the vehicle
with the next highest combined premium until no vehicles remain. When there
are more vehicles than drivers on a policy, the excess vehicles are assigned
the Step of the driver with the lowest Step.
Insurers are required to determine if a driver is at-fault in excess of
50 percent by applying state-mandated Standards of Fault. The Standards
of Fault are common accident types under which you are presumed to be more
than 50 percent at-fault. For example, the Standard of Fault, “Rear End
Collision,” presumes that you are more than 50 percent at-fault for an
accident when operating a vehicle that is in a collision with the rear
section of another vehicle. You might be able to reverse such presumptions
by appealing promptly (within 30 days of receiving notice of a surcharge)
and presenting evidence to the contrary to the Division of Insurance Board
of Appeal.
If you are new to Massachusetts and were licensed outside of Massachusetts
within the last six years, you will be initially categorized as an SDIP
Step 15 driver. If your Motor Vehicle Report (MVR) is electronically available,
an insurer will be responsible for obtaining it from the state or country
where you were licensed. If an MVR is not electronically available, you
can try to obtain an official driving record or a record from a previous
insurer and submit it to your Massachusetts insurer. Using your out-of-state
record, the Merit Rating Board will then adjust your SDIP Step.
You can’t control your age, but you can at least be sure that your premium
reflects an important discount if you are age 65 or older. The discount
is 25 percent. This discount is available only if the principal operator
is 65 years or older; there are no inexperienced drivers (0 to 6 years
of driving experience); and the automobile is not customarily used in business.
You are entitled to a 25 percent discount on your PIP, Medical Payments,
and Uninsured/Underinsured Motorist coverages if your car is equipped with
an air bag or automatic seat belts.
You are entitled to a 10 percent discount off your premium (except the
portion of the premium for Comprehensive, Substitute Transportation, and
Labor and Towing) if your verified annual mileage falls between zero and
5,000 miles. The discount is five percent if your verified annual mileage
falls between 5,001 and 7,500 miles. (Antique vehicles are not eligible
for this discount.)
You are eligible for a 10 percent public transit discount off the premium
paid for Damage to Someone Else’s Property and Collision coverage (up to
a maximum of $75 per eligible vehicle) if (1) you provide your insurer
with evidence of purchase of 11 months of commuter passes from qualified
transit systems, and (2) you do not drive your car to work or school more
than 10 days per month. Your insurance company or agent can provide you
with a list of the qualified transit systems. If you now drive to work,
this discount, combined with the discount for low annual mileage, may give
you an extra incentive to change the way you commute—given the possible
savings for some drivers of $250 or more per year (see this figure).
Anti-theft discounts of up to 36 percent of the premium paid for comprehensive
coverage are available for automobiles with various types of qualifying
anti-theft devices. Your insurance company or agent can provide you with
a list of the qualifying anti-theft devices and the corresponding discounts
available.
How much driving experience you have has a strong relationship to your
likelihood of having accidents and claims, and therefore has a big effect
on your rates. Although one of the aims of the Massachusetts rate setting
system is to make the rate differential between experienced and inexperienced
drivers smaller than it would be in a less regulated system, inexperienced
drivers do pay much higher rates than experienced drivers.
In Massachusetts, drivers are classified into three length-of-experience
levels—inexperienced drivers licensed less than three years, inexperienced
drivers licensed three or more years but less than six, and experienced
drivers (licensed six or more years). Inexperienced drivers are further
classified according to whether they are the principal operator of a vehicle
or only an occasional operator. As this figure shows, a principal operator with three or more but
less than six years experience can expect to pay about 35 percent more
for auto insurance than an experienced operator. A principal operator with
less than three years of experience will face nearly twice that big a rate
differential. An inexperienced driver who is added on to his or her parents’
policy as an occasional driver will not face such a large differential,
but still will dramatically increase the cost of the parents’ policy.
A 10 percent discount will be applied to the premium paid for Bodily Injury
to Others, PIP, Damage to Someone Else’s Property, and Collision coverages
for inexperienced drivers with less than three years of experience who
have completed an approved driver training course.
Message to parents: have your kids take driver training. Message to not-so-considerate
kids: even if you don’t have much interest in driving, think about getting
your license as soon as you can so that you put in some or all of your
time at the high inexperienced driver rates while your parents are picking
up the tab.
You probably won’t want to choose the car you drive based on insurance
costs. But the differences among cars are substantial, as this table
shows. The policyholder for
whom we made comparisons on the table would pay $671 more in insurance
costs each year to drive a BMW 530i than to drive a Dodge Grand Caravan
2wd Sport. Even among cars that are more nearly comparable, there are substantial
insurance cost differentials—for example, a $445 annual premium differential
between an Acura 3.2 TL and the BMW 530i. It is not unusual for car-to-car
insurance cost differences to total more than $2,000 over the time a policyholder
will own a car.
Keeping an old car, or buying used, can also have a substantial effect
on your insurance costs. In the illustration on this figure, having a 2004 Ford Taurus would result in
insurance costs about 14 percent higher than the costs with a 1997 Taurus,
even assuming the driver maintained Collision and Comprehensive coverage
on the older car. As mentioned above, canceling these coverages on an older
car, the loss of which would not be a financial catastrophe, will save
even more.
Insurance costs are even less likely to influence your choice of where
to live than to influence your choice of the vehicle you drive. But you
may be interested in knowing the cost differences from area to area. As
Figure 1 shows, our illustrative policyholder would pay 31 percent less
if he or she lived in Arlington rather than Cambridge, and would pay 57
percent more if he or she lived in Roxbury rather than Cambridge. An objective
of the Massachusetts rate setting rules is to level out the insurance cost
differentials among geographic areas, but the differences are still large—more
than $1,000 per year for some drivers between the highest cost areas and
the lowest cost areas.
In shopping, you will want also to be alert to news of a company’s financial
instability. You will not want to sign on with a company that may go out
of business soon, forcing you to begin your shopping again.
On the other hand, there is no reason for great anxiety about insurer stability.
If a company goes bankrupt, policyholders may have to wait to recover money
owed them but generally are protected from major losses. A special “insolvency
guaranty fund” exists in every state with the duty to assess all insurers
doing business in the state on a pro rata basis to pay off all outstanding
claims of an insolvent company and reimburse each policyholder’s paid-in
premium. The claims reimbursement (including unearned premiums) in Massachusetts
is subject to a $300,000 limit, but there is no deductible.
You can check on a company’s financial soundness using any of several sources:
You should be able to find copies of ratings from at least one of these
sources in the reference section of your local library. If you are unable
to find them, or if the ratings in your library are outdated, you can contact
the services directly. All four services will provide ratings over the
phone or on the Web, at no charge. On the Web, you can learn about the
specifics of the rating criteria each of these sources uses.
If you or someone on your behalf gives your insurance company false, deceptive,
misleading or incomplete information concerning the description and place
of garaging of the vehicles to be insured, the names of operators required
to be listed, and the answers given for all listed operators, your insurance
company may refuse to pay your claims under any and all of the Optional
Insurance Parts of your policy.
If any of your children who are household members obtain a driver’s license,
you must notify your company within 60 days of that date. You must list
all licensed household members and any other licensed person who will customarily
operate your auto.
To be sure of getting the best insurance deal, you have to learn about
the different companies’ offerings yourself. It is best not to rely blindly
on an agent. When choosing an insurance agent, find out which companies
different agents represent. If the agent represents only one company and
that company is not one that is offering the best available group discounts
or rate deviations, you won’t hear about them. Even if the agent represents
several companies, these may not be the best companies. Also, be aware
that company-to-company differences in the commissions, bonuses, and other
rewards they give agents might bias an agent toward signing you up with
a company that, while the best deal for the agent, is not the best deal
for you.
At the Scene of the Accident
1. Stop! You are required to stop your car.
2. Give all possible aid to the injured. Stop severe bleeding and keep victims
warm. Do not attempt to move a seriously injured or unconscious person.
3. Call the police as soon as possible. If someone is injured, tell the
police when you call.
4. Prevent further damage to your vehicle. Flares, warning signs, or signaling
by a police officer or pedestrian should alert oncoming traffic. Aside
from the safety consideration, you may be liable for the cost of any further
damage to your car if such preventive measures are not taken.
5. Get the driver’s name, address, license number, and name of the owner
for any car involved in the accident and give information on yourself to
any person whose property is damaged, or who is injured.
6. Get the names, addresses, and phone numbers of any witnesses who may
have seen what happened.
7. Be careful in discussing the accident. Cooperate with the police, but
if you are not composed, or if you feel that your answers to questions
from a police officer or anyone else could bear on future liability, you
do not have to discuss the details of the accident until you feel better.
Do not disclose any information about your insurance coverage except the
name of your company, your agent, and your policy number.
8. If you are asked by a police officer to submit to a breathalyzer test,
or any other test to determine the amount of alcohol in your blood, it
is advisable to comply. Refusal will be grounds for the suspension of your
license. You may want to request such a test as evidence that you were
not drinking.
9. Note carefully the circumstances of the accident, especially any special
hazards such as faulty traffic signals or road obstructions that might
have contributed to the accident.
After You Have Left the Scene of the Accident
1. Fill out an Accident Report Form from the Registry of Motor Vehicles
(RMV) within 5 days if the damage to any one vehicle or property was more
than $1,000 or if anyone was injured.
2. After any serious accident, contact your insurance agent or company as
soon as possible. A contact by phone is sufficient. It is a good idea to
report to your company any accident if it is serious enough to be reported
to your department of motor vehicles.
3. If you have been injured, do not sign any waiver or release with an insurance
company or anyone else until you are certain all expenses (wages, medical,
etc.) have been determined. Keep a record of all medical costs incurred,
loss of earnings, or any other inconvenience.
4. If your car has been damaged, do not sign any waiver or release right
away. Do not accept a cash settlement for the damage to your car until
you are certain exactly what it will cost to have it repaired, or to have
it replaced if it is considered a total loss.
5. If you do not have Collision coverage, you can collect for the damage
to your car only if the other driver was at fault. Submit the bills to
the insurance company of the other driver. Include any costs you incur
for a rental car.
6. If you do have Collision coverage, some insurance companies will pay
your repair bill (minus any deductible) and collect on their own from the
other driver or the other driver’s insurance company. When your company
collects, it must refund your deductible (or a pro rata share of the deductible
if its net recovery is less than your original claim). Letting your own
company handle all the work can save time, aggravation, and delay in recovering
the amount necessary to repair your car—although, in some circumstances,
particularly when the other party admits fault, the other driver’s insurance
company may be willing to pay you fully and promptly.
7. Before you have repairs done, give the company that will be paying a
chance to estimate the damage to your car. This is required if you will
be relying on Collision coverage and desirable if you intend to collect
from the other driver’s company.
8. If you have Collision coverage, within a few days your company should
arrange for an appraiser or adjuster to inspect your car and estimate how
much the company will pay to repair or replace it. It is a good idea to
get your own estimate of the repair or replacement cost in advance and
in writing from a reliable body shop. At the very least, insist on taking
the car to a shop you trust for the needed repairs.
9. If you have a dispute with an insurance company, complain to the Division
of Insurance:
Office of Consumer Affairs and Business Regulation
Division of Insurance
One
South Station
Boston, MA 02110-2208
617-521-7777
www.state.ma.us/doi
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