People have strong opinions about insurance.

When it comes to South Asian Islamic clerics' feelings about life insurance, that's a bit of an understatement.

According to an Associated Press story, a prominent Islamic seminary in India has denounced the practice of buying life insurance. Clerics at the seminary say it violates Islamic law.

"Life is given by Allah and to insure it or assure it, is a crime in the eyes of Allah," clerics at the Dar-ul-Uloom seminary told the AP.

The seminary issued its directive on Aug. 7, saying "insurance is not permissible because it is a sort of gambling. Moreover, it also involves interest money which is illegal under Shariat." (Shariat = Islamic law).

Read the entire story.

Posted by Jeb Foster at 04:44 PM | Permalink | Comments (2)
 

Since January 2004, scholars, experts and politicos alike have disputed the merits of the Health Savings Account. The concept of allowing individuals to opt for an HSA in lieu of a traditional managed care plan was born out of the Medicare Prescription Drug, Improvement and Modernization Act signed by President Bush in late 2003.

An HSA is like a tax-sheltered savings account. You even get a debit card. You and your employer (if you have one) can continue to deposit money up to the maximum. If you don't deplete it this year, the remaining money rolls over into the next, growing at a tax-favored rate. What is left upon retirement you can cash in and upgrade to a bigger condo in Florida.

To be eligible for an HSA, you must have a qualified High Deductible Health Plan (HDHP,) which is an inexpensive, health-insurance policy with much higher out-of-pocket costs. Although the deductible includes all your medical expenses, the plan can cover preventative care, such as immunizations, pre-natal care and physicals. All other expenses, including prescriptions, are paid using the funds in your Health Savings Account. Each year, you can contribute to your HSA up to the deductible amount of your HDHP.

Proponents of the HSA contend it makes the insured more accountable for their medical decisions--maybe you'll see a doctor fewer times if the financial burden is yours. It reasons that if less people seek unneeded medical care, the overall cost of health care will decrease. However, critics disagree, saying this type of plan discourages people from seeking needed medical care, which could lead to chronic conditions that are more expensive to treat, consequently, driving up the cost of health care.

Whether HSAs will lower overall health care costs remains to be seen--their value for some people does not. Portable, flexible and, if you rarely seek medical care, affordable, an HSA is a better choice for some. An HSA is like an IRA, providing a place for you to deposit non-taxable money you can collect when you retire. And you'll likely save money on the HDHP because your health-insurance premiums will be much lower.

However, if you have a chronic condition that requires frequent medical care and numerous prescriptions, an HSA could get pretty expensive. You're required to pay those costs until you reach the deductible, which can be as high as $1,050 for an individual and $2,100 for a family.

HSAs yes or no? It's a personal choice that will likely affect many facets of your life, so bone up on the pros and cons before making the switch from a standard health insurance plan to an HSA.

Links:
http://www.treasury.gov/offices/public-affairs/hsa/
http://www.opm.gov/hsa/
Sterling HSA

Posted by maribeth neelis at 09:43 AM | Permalink
 

It's that time of year again, the time of massive dorm move-ins, rush week, tailgating and textbooks. Your student is off to college and you've covered all the bases. Except, perhaps, the insurance.

Insurance coverage is one of the most important, yet overlooked aspects of sending your child to college. Is your student adequately covered?

You can gauge if your student's coverage by asking yourself (and your insurance agent) four simple questions:

1. Are my student's belongings covered under my home insurance policy?
2. If my student drives another person's car, will she be covered by my auto insurance policy?
3. Is my student covered under my health insurance policy while at school?
4. What benefits will my health insurance policy provide to her while she's at school?

Not sure? You're not alone. Most parents aren't sure what protections their student has while they're away at college. But we've got some some tips and resources for you to make sure your student's coverages are up to snuff.

Renter's Insurance

Renter's insurance is a biggie. While some homeowner's insurance policies protect belongings outside of the primary dwelling (read: your house), most do not. Be sure to ask your agent whether your student's belongings and liability (in case, God forbid, they leave the hot plate on and torch the place) are protected by your policy.

If not, renter's insurance is the way to go. And cheap renter's insurance isn't hard to find. In fact, most annual premiums fall between $150 and $200 per year for $15,000 worth of coverage. Of course buying an additional policy will also save you some money on current policies like home and auto.

Auto Insurance

You could be in for some serious auto insurance savings (up to 20 percent) if you student doesn't take a car to college. However, most experts warn parents about dropping their son or daughter from the policy all together—if they get into an accident with a friend's car at school, they won't be covered.

Conversely, your premiums could go up if you're student takes a vehicle to school out of state (remember, some areas, like metropolitan areas, are associated with higher insurance rates). Either way, be sure to contact your agent to see what kind of coverages your student will have at school and what kind of premium adjustments to expect.

Health Insurance

Health insurance is another student biggie, what with all the germs flying around dorms and classrooms. Most health insurance policies do not cover college students if they're going to school part-time, or if they're over the age of 23. Some policies also do not cover students if they're going to school in a state other than where the policy was purchased. Make sure to contact your health insurer to verify what coverages are available for your student.

In the event that your student needs additional health coverage, your best bet is to see what kind of coverage is offered by the university's student health program. Various short-term medical insurance policies are also available through private insurers.

College is a big deal. And I can tell you from personal experience that adequate coverage is definitely a must-have. I had to make use of my auto and health insurance while I was in school and both my parents and I were glad to have it.

To read an extended version of this post, check out our article, Coverage for College-Bound Kids: Is Your Student Protected? Of course, if you find that your student does need insurance for school, you can always shop for student insurance using InsureMe's free referral service. I know it's a pathetic company plug, but I just couldn't help myself. :)

Feel free to post any questions about student health coverage; we'll answer them for you as best we can!

[Related post]: Surprise! College-Bound Kids Can $ave Your Money on Car Insurance

Posted by Megan Mahan at 11:14 AM | Permalink | Comments (2)
 

So you've decided to take our advice and combine your auto and home policies. You've already checked with your homeowners insurance provider and they're offering you a generous multi-policy discount. Next thing to do is cancel that auto insurance policy. That's simple, you say, I'll just let it lapse without paying it.

Bad idea jeans.

In fact, canceling an auto policy requires a little finesse; it's kind of like extricating yourself from a relationship--if you drop your insurer too hard, things could get ugly. If you don't give your insurance company enough notice, you could end up paying for a premium you don't need or, worse, you could see a ding in your credit report. Worst case scenario: you pay for an extra premium, see your credit rating suffer and find yourself labeled a 'high risk' insurance applicant down the road.

Don't assume you'll be gently let go if you don't pay your next premium, as many insurers automatically renew you at the end of a policy period unless you've given them instructions otherwise. Most companies allow you to cancel your policy at any time during the policy period, but to be on the safe side, don't wait until the day before renewal to cancel your policy. The more notice the better. Be gentle and things won't get nasty.

Lastly, make sure you coordinate your policy change so that you avoid a lapse in coverage.

Posted by Jeb Foster at 09:54 AM | Permalink
 

When our kids reach a certain point in their lives, we all know it's time for "the talk": that uncomfortable dialog in
which we explain the basics of life. And, though we don't exactly look forward to this discussion, we know it's for our children's best—and we'd much rather they heard it from us than the troublemaker down the street.

But do we take our own advice? No, I'm not talking about the birds and the bees. I'm actually talking about car insurance.

What? you're saying just about now. Let me explain.

We give our kids advice, teach them about life, groom them to be responsible adults and teach them to make wise decisions. But we often learn our own lessons the hard way—like discovering what a recent article on Bankrate.com calls "the auto insurance facts of life."

OK, so it's a cheesy analogy...but go with me on this one, would ya?

If you drive a car, you need auto insurance...it's really as simple as that. So, in the spirit of passing along tidbits of wisdom as we do for our kids, I'd like to offer up a few tips for making the most of your auto insurance policy, courtesy of Bankrate.com:

• Spend your money wisely. This may seem like common sense, but many people don't know what—or how much—to insure against. Talking to an insurance professional you trust is the only sure way to find a policy that works for you.
• Keep a strong credit rating.Many insurance companies use your scores to determine whether or not they'll insure you—and how much they'll charge if they do.
• Take advantage of every discount.If you haven't had a ticket for three years or more, you've earned yourself a discount. You can also save money on your premiums by storing your car in a garage, rather than parking it on the street; driving less than a set number of miles annually; installing safety or anti-theft devices, and other conditions which make you and your car less of a risk to your insurer.
• If your teen goes away to college, take him or her off your auto policy.This can save you some serious money; according to the Insurance Information Institute, teen drivers add from 50 to 500 percent to your premiums.

[For more tips on getting the most from your auto insurance, see the Bankrate article here.]

OK, that's enough parental wisdom for one day. Enjoy the weekend...and drive safely!

Posted by Penny Hagerman at 01:57 PM | Permalink | Comments (1)
 

Medicaid is the state-and federally-funded program that provides low-income, elderly and disabled Americans access to the health-care system, and it seems women are the majority of those receiving--and too often not receiving--aid. When it comes to health coverage, it appears to be women who are floundering most. A Kaiser Family Foundation report cites that in 2003, 11 million low-income women (19-64) were enrolled in Medicaid--nearly three-quarters of all adults on the program. Footing the bill for one-third of all births, over half of the publicly funded family-planning programs and HIV/AIDS care, and half of nursing-home services, Medicaid significantly affects the health of many American women throughout their lives.

One of the more controversial elements of the 2007 budget is the proposed changes to Medicaid, specifically the anticipated decrease in federal, Medicaid payments to hospitals and nursing homes that care for low-income individuals. The administration maintains that such Medicaid cuts are necessary to "ensure the fiscal integrity of Medicaid and curb excessive payments to health-care providers." However, less money from the federal government would place a larger financial burden on states already struggling to subsidize their share of the costs.

So what does that mean for the fairer sex? With less federal funding, some states might react by reducing Medicaid assistance or further restricting eligibility. The government uses the terms "mandatory" or "optional" to describe uninsured, low-income individuals, all of whom would benefit from Medicaid. However under current guidelines, only low-income individuals who are parents, pregnant, over 65 or disabled fall into the "mandatory" group, leaving a large percentage of low-income, uninsured people classified as "optional" Medicaid recipients.

In fact, because of the stringent standards, most women who don't fall into the "mandatory" category are unlikely to qualify, no matter how poor they are. According to the article "Medicaid: Supporting Women's Health, Fighting for Its Life," those limitations leave nearly 17 million women without access to Medicaid, and thus uninsured.

Although the proposed Medicaid cuts have the potential of leaving a large portion of the population uninsured, some may successfully reduce the deficit without adversely affecting Medicaid beneficiaries. The Kaiser Family Foundation provides more information about the specific Medicaid proposals. And a report by the Center on Budget and Policy Priorities offers further analysis of how the proposals would affect the state of Medicaid and its 50 million beneficiaries.

Posted by maribeth neelis at 03:07 PM | Permalink
 

Terror in the Superdome. "Brownie" asleep at the switch. Reconstruction money going to bottles of Dom Perignon and sexual reassignment surgery. FEMA trailers made of carcinogenic material.

In the year since Katrina, there has been little good news coming from Gulf Coast. That's either because there hasn't been much good news to report or, more likely, because bad stories tend to hog the headlines.

The other day I came across this story from Reuters about how most Gulf Coast residents are actually happy with the way insurers have handled their claims. The story reported on findings from the Insurance Information Institute—an organization Reuters notes is both non-profit and associated with the insurance industry. While I wish the evidence of this happiness came from an independent polling agency and not the Insurance Information Institute, I am confident the data is right on the money. (I don't mean to question the integrity of the III, but I think the results would have greater impact had they been issued by a polling agency without the word 'insurance' in its name.)

According the III, 90 percent of homeowners in Louisiana and Mississippi were satisfied with how insurers handled their claims. That not a small percentage, folks. Further, only 2 percent of Katrina-related homeowner's claims are in dispute, according to the report.

Clearly insurers are doing something right down there, even though headlines suggest otherwise. Here are a few other possible conclusions from the III's report:

• The media is fixated on bad news.
• Insurers actually aren't evil and are, in fact, doing a lot of good work.
• Insurers need to spend more of their giant profits on a PR campaign that highlights their contributions to the rebuilding of the Gulf Coast.

Here's the entire III release.

Posted by Jeb Foster at 01:37 PM | Permalink | Comments (3)
 

We're experiencing a bit of a slow insurance news day on this Tuesday afternoon, so I thought I'd take a peek into the InsureMe Insurance Resource Center and find a topic we haven't covered here at the Insurance Blog yet: gap insurance.

Quite simply, gap insurance can help you close the "gap" between what you owe on your car loan and how much the car is actually worth.

Think of it this way: your car suffers serious flood damage. You still owe $12,000 on our car, but your auto insurance will only cover the current value and cuts you a check for $5,000—leaving you with a $7,000 gap. Yikes. But, as the name suggests, gap insurance can help take care of that residual amount.

The good news is, more drivers are becoming wise to the gap insurance necessity and as a result, more lenders and car dealerships are making it easier to buy. I purchased a gap insurance policy through my lender last year for a few dollars per month.

But I'll stop yapping now and direct you to the gap insurance goods. :) Check out our article, Closing the Gap When You Owe More for Your Car Than It's Worth

Posted by Megan Mahan at 04:53 PM | Permalink
 

Want to know one of the surest ways to save money on insurance? Here it is. Get ready.

Buy more than one policy from the same carrier.

Simple, isn't it?

This isn't a state secret. In fact, I just spent a few minutes bouncing around various Web sites, and all of them I checked--Allstate, Farmers, State Farm, Safeco, Nationwide--state in very plain language that they will often charge you less in premiums if you buy a couple of policies.

I'm no student of the dismal science, but this is one economics lesson I do understand. The multi-line discount is, to use one of those puffed up terms economists use, a non-zero-sum game. In English: it's a win-win deal. Insurers win because they get more of your money in the form of two or more policy premiums. You win because you save money on those premiums. We're all happy.

According to Allstate's Web site, a home-auto combo can potentially save you 15 percent, depending on where you live and what kind of home you have. Farmers says an auto-home-life combo could save you as much as 17 percent on your auto premium and 19 percent on your homeowners. Safeco and Nationwide don't provide numbers, but they both say they'll cut you a deal when you go for two or more policies.

Multi-line policy offers another advantage--simplicity. Think: fewer bills and e-mails clutter to your already chaotic life. Lots of people pay more, not less, to make things easier.

One caveat: there may be rare situations where you won't save money by combining policies. Maybe you're already getting a killer deal on your auto insurance and you should just let it ride. Maybe your carrier doesn't offer that attractive a multiple policy discount.

For most of us, however, buying two or more policies from the same carrier makes good financial sense.

Posted by Jeb Foster at 10:34 AM | Permalink | Comments (1)
 

If you're one of those people who can't remember to pay your insurance premiums—or you'd like to know when your insurance company has received and posted your payment—one insurer is now taking steps to make things easier, according to an exciting update from the Insurance Business Review Online.

Enter Progressive Direct, one of the nation's largest auto insurance companies. As of this week, this forward-thinking insurer now communicates payment information directly with some of its customers through mobile alerts. When bills are due or payments are received, customers who sign up receive a text message reminding them it's time to pay up—or letting them know their most recent payment arrived safely.

This new service, available to customers who have their car insurance payments automatically deducted from a bank account or through a credit card charge, gives consumers advance notice when their account is about to be hit or the charge is about to go through. If a cancellation is imminent due to non-payment or insufficient funds, customers are now notified of this before it happens, too.

The mobile alerts work on all major wireless carriers in the U.S., the company says.

"A mobile alert sent directly to a cell phone makes it easy to know when a payment is due and when it has been made," said Toby Alfred, Progressive Direct customer experience general manager. "The beauty of it is the customer gets the information instantly—without having to be connected to email."

What a great idea! I hope other insurers will run with this idea, too. What do you think?

If I weren't so happy with my new auto insurance company, I might just switch to Progressive and sign up for mobile alerts myself....

Posted by Penny Hagerman at 05:23 PM | Permalink | Comments (2)
 

How does that Alanis Morissette song go? "It's like rain on your wedding day...." --which would be awful by the way, but less so if you had the foresight to purchase wedding or weather insurance. Several insurance companies have found a niche providing coverage for those quirks of fate, such as rained-out vacations, ruined wedding gowns and untimely kidnappings.

As strange as wedding insurance sounds, it's sort of genius. With the average cost of a U.S. wedding running upwards of $27,000, it may make sense to insure it against unforeseen events. Wedding insurance can protect against inclement weather, illness or injury, missing officiates or vendors and your location. How much is your peace of mind worth? If you said between $125 and $500, this type of insurance may be for you.

According to the Insurance Information Institute (III), kidnapping for ransom is on the rise. Picking up on the trend, many insurers have begun to offer insurance should such a tragedy occur. Mostly purchased by businesses, kidnap and ransom insurance is also available on an individual basis and even offered as part of homeowners' policies by a few companies. It covers things like hostage negotiation fees, lost wages and the ransom amount. However, the insurance company can't legally pay the kidnappers directly.

Are you a wine connoisseur with a wine cellar worth more than your home, or do you own a few choice bottles you'd hate to see perish? Wine insurance may be a viable option. An article on CNNmoney.com, details how to choose a policy and what is covered. If you only have a few, expensive bottles, you may want to just insure them under your homeowners' policy. However, if your collection is extensive, it's probably prudent to purchase a separate policy altogether.

Everyone knows the painstaking time and effort that goes into planning the perfect vacation. And what a drag it'd be if the weather didn't comply with your plans. That's why some insurance companies actually insure against the elements. You tell them the dates, place and type of weather that would be acceptable, and they'll quote you a price. Some policies even refund you if you have to end the trip prematurely due to a subpoena or quarantine.

So rest assured; no matter how capricious life can be, you likely can find some type of insurance that will cover you.

Posted by maribeth neelis at 04:43 PM | Permalink | Comments (2)
 

Even if you've mocked the guy tooling around in his Toyota Prius or rolled your eyes at your aunt's compost heap and 13 separate recycling bins, you can probably acknowledge the merits of getting off the grid--so to speak.

With energy costs on a constant climb, many are looking to an alternative energy source--the sun. Using solar panels is undoubtedly better for the environment than scarfing up nonrenewable resources. But you can also save money on your electric bill. And who can argue with that?

Although photovoltaic (PV)--solar panel--technology has been around since the '70s, it's still evolving, slowly gaining support as it shows its mettle. According to International Energy Association (IEA) statistics, 90,000 PV units were installed in 2004, bringing the total to 365,200 systems nationwide. Forbes.com reports that several companies have begun conducting research to make PV systems less expensive and more accessible. And some are developing smaller versions, so that eventually, the sun will be capable of charging your cell phone and other mobile devices.

On the most basic level, PV systems convert sunlight into energy, creating power for your home without noise or air pollution. Whether that notion appeals to the penny-pincher or tree-hugger in you, there are a few things to consider before going green.

On or Off the Grid
Many PV units actually are connected to a utility grid. That way, you can still receive electricity should your system fail to produce enough. Those who want to truly be "off the grid" can purchase a battery that will store backup power for future use.

The Cost
A solar electric system is a huge initial investment. Even though your electric bills will be lower each month, the up-front cost can be as much as $40,000 for a unit that will meet all the energy needs of a standard home.

Net Metering
You've probably heard the buzz that solar panels can make your meter run backward. This benefit, known as net metering, is mandated in more than 35 states. Your local utility will pay full, retail value for any additional power--not consumed by your household--your PV system generates, literally crediting you for that energy.

Insurance
If you're connected to a utility grid, you have an interconnection agreement with your electric utility, and they determine your minimum insurance requirements. If you aren't affiliated with a utility, your regular homeowners' policy should cover you. However, some companies may ask that you increase your liability coverage, which can be an additional several hundred dollars annually. For more information about PV systems and home insurance, check out the National Association of State Energy Officials (NASEO) Web site.

Incentives
Many states offer incentives to entice homeowners to purchase a PV system--from sales-or property-tax exemptions to income-tax credits. They may also offer rebates based on the rated power of your system. Find out more at the Database of State Incentives for Renewable Energy (DSIRE).

A PV system can be a great way to protect your pocketbook from future price hikes and help preserve finite fossil fuels. If the idea of using energy from the sun piques your interest, do a little more research; and tap into solar power.

Posted by maribeth neelis at 09:18 AM | Permalink
 

No one questions that there is an insurance crisis is Florida. What is open to debate is whether Florida's political leadership is in crisis mode.

According to a story in the Tallahassee Democrat, the current Republican leadership would prefer to wait until elections are over this fall before taking any substantive action on the lack of affordable property insurance in the state.

Not surprisingly, that leaves more than a few Floridians a little concerned, because November is a long way off and hurricanes don't wait for political solutions before making landfall.

Democrats, who hope to pick up seats in the legislature and take the top spot in Tallahassee, have spent a large chunk of their summer campaigns hammering the GOP's response (or lack thereof) to the crisis. Republicans have responded by saying that Democrats shouldn't "play politics" with such an important and complex issue. They both have good points.

While the property insurance crisis has created ripe conditions for demagogues, it nonetheless requires some kind of political action. Politicians on both sides, those Republicans who would rather ignore the issue until they're safely reelected, or those Democrats who'd rather bash Republicans instead of offering viable ideas, can be justly accused of not doing much, if anything, to solve the immediate problem: lots of uninsured people and a hurricane season that's far from over.

Candidates from both parties should be presenting practical solutions to the crisis, if for no other reason than to give the people of Florida the opportunity to compare ideas and vote accordingly this November.

Any solution has to be reasoned and fair. Of course, reasoned and fair solutions tend to take both time, something Florida residents and business owners don't have, and political compromise, something that is in short supply in an election year.

But those are not reasons to stall. Sure, the democratic process is slow, but it can move with great haste when there is a concerted effort. The Florida Legislature and governor's office proved as much last winter.

Florida resident Richard Wilkinson, quoted in the Tallahassee Democrat, appealed to the governor's political interests. "Now it is time for you and your administration to move with the same speed and resolve as you did with the Schiavo matter before a damn hurricane hits and economically wipes out many of your longtime supporters," Wilkinson said.

Posted by Jeb Foster at 08:18 AM | Permalink | Comments (1)
 

I found a great article by way of the Fort Wayne Journal Gazette the other day that highlights the most overlooked factor when starting a business: insurance.

Author Stephen Windhaus is small-business consultant in Florida and he's seen many clients purposely exclude insurance expenses in the business planning process because they wanted to minimize startup costs. They soon learned, he said, that no banker or venture capitalist would invest in such a business without insurance.

"Even if the company doesn't need capital, there are certain conditions you do not want to face without insurance," he says. "Property loss, business interruption and liability are three good reasons to consider coverage."

Indeed, covering your assets from the outset is always a good idea. Yes, that was a subtle and painful pun. My apologies.

If you're planning for a startup, physically protecting your property is likely to come to mind. Your property could range from your office space, inventory, equipment, machines and company cars to office furniture and cash. Windhaus points out that there are two types of property insurance for business owners—standard and all-risk:

Standard: covers each particular class of property. This means you have to work with an agent to determine your classes of property and secure a policy for each one.

All-Risk: covers all classes of property with a broader range of loss conditions.

Windhaus also points out that after creating a list of tangible assets, you'll need to learn the present, appraised and salvage value of your items. This is the list you'll need to have to shop for affordable business property insurance.

While property coverage can help you salvage your belongings after a natural disaster, it won't cover the losses incurred with having your business shut down while you clean up. Enter business interruption coverage.

A business interruption policy provides coverage against a loss of profits and continuing fixed expenses that result from having to close shop after a disaster. Florida-based Windhaus reminds readers that with the rash of natural disasters and the recent predictions for more, lenders and entrepreneurs are taking a look at this kind of coverage.

Lastly, every starter-upper should consider liability coverage for their business. Liability coverage can protect you from "actions or inactions" by you or your employees that result in the injury of someone else, or damage to someone else's property. Having this coverage is generally better than leaving a liability issue up to the law, says Windhaus.

With all due respect to the legal system, there are times when one lawyer conducts a better job than another. Innocence is no guarantee of winning the case. And how many times has a lawyer decided to settle out of court to avoid excess legal expenses? Regardless of guilt or innocence, you want to consider liability coverage.

Amen to that.

Now that you know what kind of coverages you should be looking for, here's one final business insurance tip for the road: shop around.

Remember that insurance is state-regulated and that private insurance companies can sell similar policies for very different prices. Compare price, coverage and service and pick the best policy that fits the unique needs of your business.

For more on starting a business, visit the US Small Business Administration at http://www.sba.gov/starting_business.

Posted by Megan Mahan at 01:49 PM | Permalink
 

The Western Insurance Agents Association offered the latest volley in what it calls a "war" over ZIP code-based underwriting, accusing California Insurance Commissioner John Garamendi of using his office to "pander" to voters.

Earlier this month, Garamendi, who is running for Lt. Governor, led a successful campaign to force auto insurers to drop ZIP codes from their rate setting formulas, saying location-based premiums put an unfair burden on minority and urban drivers. The new rule, which will go into effect in two years, requires insurers to use driving record as the primary factor in determining insurance rates. The rule is an outgrowth of a 1988 ballot measure mandating fair auto premiums for all Californians. Last week, industry representatives were denied in their request for a preliminary injuction to stop the change.

In a statement published in the Insurance Journal, the agents association savagely attacked Garamendi's motives: "Americans would be hard pressed to find anyone across the United States that has exploited his public position as an elected regulator for personal political gain more than California Insurance Commissioner John Garamendi," the release reads.

Insurers have long insisted that ZIP codes enable them to accurately gauge claims risk. "Plain old common sense tells us that there is a higher risk of loss in an urban area like San Francisco than a rural area like Placerville, and the premium charged should reflect that risk of loss," said Michael D'Arelli, an official with the Western Insurance Agents Association.

D'Arelli insists the rule change amounts to a politically-motivated "subsidy" for urban drivers, who, he says, are now more likely to vote for Garamendi in November. "This takes pandering to a new level," he said.

The association's martial language comes toward the end of the statement:

Mr. Garamendi should limit the self-congratulatory praise coming from his press machine. Thursday's minor victory on the injunction is not a victory on the merits of the case, which may in fact be the war that is won by the insurers, as opposed the battle won Thursday on the injunction.

It's clear they don't like this guy Garamendi, and their ire isn't limited to the ZIP code issue. "Since January 1st, 2006, Mr. Garamendi has introduced over 40 regulations, many of which are a direct attack on the insurance industry. Mr. Garamendi knows that the more he fights with the insurance industry, the more press coverage he obtains, and the more he is able to pander to voters," D'Arelli said. (Pander appears four times in the statement.)

As entertaining as the statement is - read it here in its entirety - I wonder if it's wise for insurance industry representatives to use war metaphors in public statements. The tone of the release is so hostile it's not hard to imagine the colorful language the association uses to describe Garamendi when they speak off the record. In their passion they risk overstating their case and losing the battle for public opinion. Perhaps they've got a strategy for winning the broader war for public opinion.

Posted by Jeb Foster at 03:40 PM | Permalink | Comments (2)
 

If you're shopping for a new car, you're most likely thinking about comfort, size, function or gas mileage—especially as the price of fuel seems to continually climb day after day.

But if you haven't talked to your insurance agent about the price of insuring that sportscar, hybrid or SUV you're considering, you might want to do so ahead of time. Why? Because if the vehicle you're considering is expensive, particularly powerful or costs megabucks to repair, your insurance costs could greatly offset that all-important cool factor (and that would NOT be cool!).

Indeed, your choice of make and model can have a big effect on your auto insurance premium, confirms Russ Rader, spokesman for the Insurance Institute for Highway Safety. Cars that are decked out with all the options, have lots of horsepower under the hood or set you back more dinero are more likely to be stolen, stripped for parts or driven recklessly—and crashed.

That means increased risk for your insurer and higher auto insurance bills for you.

So which vehicles are cheaper to insure—and which set you back the furthest?

According to a recent article in MSN Money, some of the cheapest cars to insure include the Volvo XC90, the Chevrolet Malibu Maxx, the GMC Safari, the Buick LeSabre and the Nissan Pathfinder Armada, to name just a few. And why do these cars cost so much less to insure? Because they tend to be safer, well-built, sedan-type family cars driven by more middle-aged, safer drivers.

Coming in as the most expensive insurance-wise are the Mitsubishi Lancer Evolution (duh!), Mercedes CL-class vehicles, the Dodge SRT-4, the Subaru Impreza WRX and the Jaguar XK convertible. Why? Mostly because they are either sportscars—which inherently carry more risk—or considered highly-prized loot for thieves. [For a more comprehensive list, see the article here.]

So before you buy that new car, stop and think about these factors—and consider their long-term effect on your insurance rates. They could make quite a difference over the long-haul.

Posted by Penny Hagerman at 03:21 PM | Permalink | Comments (2)
 

Well, maybe not "the big screen", but we have uploaded our first video to YouTube. Click the play button (or the above link) to see how InsureMe helped Cindi and The Thor find each other.

More video fun to come!

Posted by Megan Mahan at 02:49 PM | Permalink
 

Youth has its perks; but cheap auto insurance isn't one of them. Generally, older, married individuals of the female persuasion snag the best rates. Factors like age, gender and marital status are widely known to affect insurance premiums. But if you're like most drivers, you're probably not aware that applying for several credit cards or financing an appliance or jewelry purchase could affect your insurance as well.

Although insurers have been using credit reports to determine insurance rates for over a decade, many consumers--approximately two-thirds of 1,578 people surveyed, according to a 2005 report by the Government Accountability Office--are still unaware of the effect their credit histories could have on their premiums.

Insurance agencies justify credit-based insurance scores by maintaining that there's a connection between an individual's money-management skills, or lack thereof, and their insurance risk. The Insurance Information Institute authored an article on the topic, which states, "[Insurance scores] are a measure of how a person manages his or her financial affairs. People who manage their finances well tend to also manage other important aspects of their lives responsibly, such as driving a car."

Although the reasoning behind credit-based insurance scores is fairly clear, what might help or hurt your score is not. That's because currently, no consistent scoring formula exists among insurance companies; you may be the epitome of financial responsibility with Progressive's model, but Farmer might perceive your recent loan inquiries as unstable.

According to Consumer Reports, Fair Isaac's Assist insurance formula, which several insurers use, relies more on your credit limits, balances and loan inquiries than your payment history to determine your score. The formula Progressive uses evaluates 12 items--things such as opening a credit card in the past four months or having a balance over 40 percent of your maximum will unfavorably affect your score.

Critics of credit-based scoring assert minority and low-income consumers are unfairly impacted. The study "Costly Credit: African Americans and Latinos in Debt," provides some support, reporting that in 2001, 84 percent of African Americans and 75 percent of Latinos had credit card debt compared to 51 percents of whites. And between 1992 and 2001, the greatest increase of debt hardship fell on white families making less than $15,000--swelling from 19 to 28 percent.

It's certainly confusing, but not all bad. Insurance scores can decrease your premiums too. You are entitled to a free, annual copy of your credit report from each of the nationwide credit-reporting companies that can help you see what your insurer sees.

So take a look at your credit score before you shop insurance. Meanwhile, check out some tips that could help improve your score, courtesy of Consumer Reports.

Posted by maribeth neelis at 04:23 PM | Permalink | Comments (2)
 

A new report from the Insurance Institute of Highway Safety credits safer cars, not safer drivers, for the decrease in highway deaths over that past decade.

In fact, the report says that in the absence of improved safety features, crash fatalities would have increased over the past 12 years.

In other words, "an increasingly dangerous traffic environment has been offset since 1994 only because people are driving vehicles that are more protective," says IIHS president Adrian Lund.

According to the report, speed limit libertarians now have to eat their words. Proponents of higher speed limits have long gloated because rising speed limits have paralleled declining highway fatalities. According to the institute, however, they may now have to switch gears and find a new rationale for higher limits, because the numbers show that car safety improvements obscured the true cost of speeding.

The question implicit in report is clear and ominous: how long can we keep this up? If we're in the sweet spot right now, where advances in automotive safety are outpacing the increase in highway danger brought by higher speeds, more crowded roads, and more devices to distract us from driving, how long can we maintain it? Will advances in technology always outpace the dangers of driving?

Optimists will say yes, and they've got some impressive inventions to back up their claims--electronic stability control being one of them. (See Penny's post for more information on this feature.)

Here's a question to ponder: Do safer cars make us more nonchalant behind the wheel? No one wants to get in an accident, but does the person who buys the armored SUV with ESC take more risks than the next guy?

[Links]:
Insurance Institute of Highway Safety
MSN: The Least-Safe Cars of 2006
Forbes: The Safest Cars of 2006

Posted by Jeb Foster at 02:01 PM | Permalink | Comments (2)
 

Insurers are studying the impact of global warming on insurance rates, and homeowners could start to feel the heat.

The Boston Globe reported this week that a small but influential segment of the insurance industry is studying whether climate change is partly to blame for more intense hurricanes in the North Atlantic, which caused an estimated $90 billion in losses in 2004 and 2005. The findings could elevate home insurance rates for those along coastal regions from Maine to Texas.

Risk Management Solutions (RMS), a leader in quantifying and measuring catastrophic risks (whose models are used by over 400 insurers and financial institutions worldwide) has already adjusted the computer model it uses to simulate and anticipate future weather trends. According to the Boston Globe, RMS released this new model in May, estimating that annual insurance losses will increase by as much as 30 percent along the coastal Northeast due to elevated hurricane activity.

The debate over whether global warming is contributing to coastal storm activity is indeed fierce. Last year, MIT scientist Kerry Emanuel published a white paper about the increase of hurricanes along the coastal Northeast, saying that "human-caused global warming" was probably the cause.

And while some scientists agree that global warming has contributed to hurricane activity in the U.S., other scientists argue that we could be experiencing a natural hurricane cycle which could end within the next 25 years. It's because of the scientific impasse that top risk modelers, as well as state officials, are researching whether they should add climate change to their insurance risk models.

"It behooves us to research this in a scientific way," said Karen Clark, president and CEO of Boston risk modeler, AIR Worldwide Corporation. "We want to quantify the effect of global warming on hurricane activity."

RMS, who developed their new risk model after convening with a panel of four specialists (including Kerry Emanuel of MIT), has already upset two consumer groups. The consumer advocates argue that RMS altered its risk model to tip the scales towards insurance companies.

I'm not entirely sure that I support that claim. I agree that significant research needs to be done to determine the effects of global warming on Mother Nature, who seems to be quite ticked off as of late. And while I feel for the homeowners on the coast (and their pockets), I have a hard time believing that any of them actually expected rates to decrease from here on out. My two cents.

Check out the Globe article here; I've regurgitated some of the facts here, but it really is worth a read.

I'll be sure to keep an eye out for updates and post them as they come.

[Related reading]:
The RMS Hurricane Brochure for the United States

Posted by Megan Mahan at 09:57 AM | Permalink
 

The Denver Post, my city's major daily, recently ran a feature on the rise of "scooter nation." Aside from using one too many puns in the headline, the article was an interesting exploration of an urban phenomenon that's spurred by environmental awareness and old fashioned thriftiness.

While the environmental benefits of scooters, also called mopeds, can be debated--"I would never discourage anyone from buying a scooter, but you have to be realistic about the environment impact, which really is not much," a Denver Department of Health official tells the Post--the argument for their thriftiness is airtight.

According to the article, scooters get 85 miles per gallon, making even Toyota Prius drivers burn with envy. Additionally, the Post notes that some scooterists [my term] suspend their car insurance during the warmer, scooter-friendly months. Insurance for scooters costs much less, about $100, according to the article. (Some states don't require insurance, but I recommend coverage for any activity that involves high speeds, metal and pavement.)

If $3 gas prices have you considering a Vespa or other diminutive motorcycle, make sure to check with your state's DMV to learn about motor scooter regulation before you put the For Sale sign on your car or suspend your car insurance. Also ...

• Don't drink and scoot. This includes lattes.
• Wear a helmet. Buy a cool, expensive helmet if it'll mean you're more likely to wear it.
• Drive defensively. You're almost as low on the highway food chain as the guy on the ten speed.
• Again, check with your state's DMV to see what its scooter restrictions are regarding licensing, registration and insurance.

If you're looking for an automotive alternative that's a little less Euro and a little more techno, there is always the Segway, which enables one to steer clear of the gas pump entirely. And Progressive offers specialized Segway insurance.

[Links]:
http://www.vespanomics.com
http://www.segway.com/

Posted by Jeb Foster at 04:07 PM | Permalink | Comments (2)
 

The saga continues.

This story begins in 1988, when California voters approved Proposition 103, a ballot measure mandating that driving record, not the zip code in which you park your car, be the biggest factor in determining your auto insurance rate.

Despite this straightforward exercise in participatory democracy, Californians today are still paying zip code-based premiums.

So what happened?

According to a recent editorial in the San Francisco Chronicle, Prop. 103's driving record mandate was shelved because of the appointment, in 1996, of state Insurance Commissioner Chuck Quackenbush. The Chronicle says Quackenbush "was the industry's water boy until he was chased out of office in a corruption scandal."

California's current insurance czar, John Garamendi, who was elected, not appointed, to the top insurance post, recently decided to revisit Prop. 103's mandate and compel insurers to drop their practice of zip code insurance pricing.

The resulting battle between the auto insurance carriers and the state department of insurance has been particularly bitter. There have even been allegations that industry representatives threatened to torpedo Garamendi's upcoming bid for lieutenant governor unless he backed off the issue. (Garamendi reported the alleged extortion in a letter to the FBI.) Visitors to California's department of insurance Web site will notice an unusually combative tone in the office's releases on the subject.

Garamendi, as well as various consumer and taxpayer rights groups and most of the major media outlets, says zip code rate-setting is both discriminatory and arbitrary. He says driving record is the best way--and should be the only way--to determine how much a driver should pay for insurance. Zip code pricing, Garamendi says, hurts poor drivers, who end up paying more than wealthy drivers even if their records are completely clear.

The state's major insurers spent millions on television ad campaigns in an effort to prevent implementation of the rule. They say the change would increase premiums for Californians, particularly those living in rural areas.

In a break from the pack, the Automobile Club of California, a relative of AAA and one of the biggest insurers in the state, decided last month to abandon zip code rate-setting. The club then announced that their customers' premiums would drop significantly, poking a huge hole in the rates-are-going-to-rise-if-we-abandon-zip-code-based-premiums argument promulgated by the rest of the industry.

Toward the end of last month, the big insurers lost a major, and one would think decisive, battle when the state Office of Administrative Law ok'd Garamendi's rule change. Insurers have been given 30 days to submit proposals on how they plan to implement the rate formula adjustment and two years to put the changes into effect.

But the war isn't over. Three insurance trade groups have sued to prevent the rule from taking effect, and they continue to assert that they're fighting the rule change in the interest of consumers.

We'll keep you posted on this case as it develops.

Posted by Jeb Foster at 01:09 PM | Permalink
 

Living in your first (albeit cramped) digs, outfitted with your very own messy roommates, dining on Top Ramen and searching for that ever-elusive dream job have become rites of passage.

For those who have made it through the transition into adulthood, the mention of such things may evoke sentiments of nostalgia; for those still in the midst of it--possibly panic. But we can probably all agree this uncertain time can be trying--even more so in the past few years.

Why? Because scads of young adults are without health insurance--approximately 1 in 3, compared to 1 in 6 Americans overall.

During this tumultuous time, young people often go without the societal support offered children and older adults. It's not that those crazy kids just don't know the value of a good health plan, either. In fact, according to a 2002 study conducted by The Kaiser Commission for Medicaid and Uninsured, 70 percent of young adults rate adequate health insurance one of their top priorities when choosing a job. Unfortunately, frequent career changes, lack of job-based benefits and stints of unemployment beget inevitable periods without health insurance.

According to a Commonwealth Fund publication, 40 percent of uninsured 19-29 year olds received no preventative health care in the past year. And half of uninsured young adults with low incomes did not receive needed medical care.

Although this age group is generally considered healthy, they're actually at higher risk for certain acute conditions, such as HIV and sexually transmitted diseases. Case in point: the Commonwealth Fund reported people 19-29 receive one-third of all HIV diagnoses. Of the 21 million women ages 19-29, 3.5 million become pregnant annually. And individuals in this age group are more likely than children or older adults to sustain injuries that require emergency care.

Whether you've recently turned 19 and been booted from your parent's coverage; you're leaving fun-filled college life and your student health insurance behind; or you're working somewhere that doesn't offer benefits, you do have options. If you were covered under your parent or legal guardian's plan and are no longer considered dependent (read: you've turned 19 and are not enrolled in college), you could qualify for COBRA. You may also wan