buying Low-mileage drivers are at lower risk for accidents, but they usually pay just as much for insurance, study says

02:51  09 march  2018
02:51  09 march  2018 Source:   latimes.com

How Do Those Car Insurance Tracking Devices Work?

  How Do Those Car Insurance Tracking Devices Work? It may only be a matter of time before insurance companies require these devices.Over the last several years, auto insurance companies have been promoting tracking devices, known in the industry as "telematics devices," to follow the driving habits of their customers. Savvy drivers have wondered what they do, how they work, and if they really help drivers save money on car insurance premiums.

Have low mileage ? You may qualify for a 17% car insurance discount. "It's all about risk ," she says . "The more miles driven , the greater the chances of being involved in an accident ." However, many low - mileage drivers are likely to be missing out on discounts.

People who don’t drive much usually get in fewer accidents . People who don’t drive much are generally at lower risk for traffic accidents , but they may not always get big discounts from auto insurers, according to a new analysis.

a person driving a car: A new study shows what matters when it comes to how much you pay for car insurance.© Dreamstime/Chicago Tribune/TNS A new study shows what matters when it comes to how much you pay for car insurance.

When it comes to how much you pay for car insurance, being married and having good credit often matters more than how much or how well you drive, according to a new study.



The research, released this week by the Consumer Federation of America, found that major auto insurers provide little or no discounts to low-mileage drivers, even though they tend to have a lower accident risk.

The study looked at basic liability coverage at major insurers, including Farmers, Progressive, Geico, Bloomington-based State Farm and Northbrook-based Allstate. Drivers in 12 major U.S. cities were examined as part of the study, including Chicago, Atlanta, Baltimore, Cleveland, Houston, Minneapolis and Oklahoma City.

The great myth about car insurance costs

  The great myth about car insurance costs Consumer watchdogs say insurance companies are doing you no favors if you're one of these lower-risk driversThat's the counterintuitive, but probably accurate, picture drawn by two surveys of auto insurance rates -- one by the Consumer Federation of America (CFA), the other by Internet auto insurance search engine The Zebra.

It claims some low - mileage drivers would be able to save as much as £500 a year compared with a conventional annual policy. Cuvva’s founder, Freddy Macnamara, says he came up with the idea of paying for car insurance by the hour while discussing lending his car to a friend.

Low - mileage drivers are at lower risk for accidents , but they usually pay just as much for insurance , study says . Next wave of development will see drivers only expected to intervene when the car requests it, say researchers.

The study found that on average, motorists save only $30 per year - or 1.6 percent of their insurance premiums, on average - for every 5,000 fewer miles driven each year. In Chicago, drivers receive less than 2 percent savings for lower annual mileage.

The only exception was in California, where state law requires insurers to give a driver's annual mileage the second-most weight in determining premiums, according to the federation.

In California, motorists who drive 5,000 miles or less annually saved $81 a year on average, or 8.7 percent across the studied insurance providers. In Los Angeles, very-low mileage motorists who drive 2,500 miles or less annually saved $346 a year, or 30 percent compared with high-mileage motorists, the study said.

What Is Gap Insurance (And Why You May Need It)?

  What Is Gap Insurance (And Why You May Need It)? It helps protect motorists who are "upside down" on a lease or car loan.If you’re buying or leasing a new car or truck these days, you’ll likely be offered – perhaps required to purchase – so-called gap insurance. This type of policy covers the difference between what a given vehicle is worth and what the owner or lessee still owes on it, should it be stolen or become totaled in an accident. For the record, “gap” stands not for the above imparity, but for Guaranteed Auto Protection.

However, many low - mileage drivers are likely to be missing out on discounts. The Princeton study found that just 18 percent of drivers had ever informed their car insurance company that the number of miles they drove per year changed from what they previously reported.

In turn, the insurance company usually says , "Sure, I'll cover you if you have a loss, but will you agree to pay the first part of it by paying a deductible?" The higher the deductible, the lower the cost of your insurance .

At Farmers and Progressive, motorists outside of California received no discount at all for driving 2,500 miles or less annually. In fact, they paid the same rate whether they drove 2,500 miles annually or 22,500 annually. "You can drive 2,500 fewer miles per year and pay the same premium for your liability coverage," said Doug Heller, an insurance consultant at the federation.

However, locally based providers Allstate and State Farm provided some discounts for low-mileage drivers in Chicago.

At Allstate, the insurance premium for a motorist with an annual mileage of 2,500 is nearly 19 percent lower than what drivers with 7,500 annual miles are charged.

At State Farm, Chicago low-mileage drivers paid 10 percent less than those with an annual mileage of 12,500 or more. At Geico, low-mileage drivers paid, on average, 5 percent less than high-mileage drivers in Chicago.

When insurance companies diminish the impact of mileage in their pricing methods, lower-mileage drivers are punished by having to overpay for coverage, according to the study.

Consumer Group Blasts Auto Insurers for Paltry Low-Mileage Discounts

  Consumer Group Blasts Auto Insurers for Paltry Low-Mileage Discounts You might think your car insurance company will give you a price break for driving less. But not all insurers offer discounts to low-mileage drivers. On average, folks outside of California save $30 per year, or 1.6 percent, for every 5,000 fewer miles driven. That’s compared with an average savings of $81, or 8.7 percent, in California — which is an exception because its regulations require insurers to charge lower-mileage drivers less.Analyzing mileage discountsFor its research, CFA got premium quotes for basic liability coverage in 12 different U.S. cities — one in California, and the rest elsewhere.

NEW YORK (MainStreet) — The less miles on the road, the lower the risk of an auto accident — but most insurers, especially big ones, don't want to offer low - mileage deals, as those drivers help insurance companies absorb the risk of higher-volume drivers .

Who do not drive are usually at lower risk for traffic accidents , but they might not always find huge discounts from automobile insurance companies, according to a new investigation.

While Farmers and Progressive offered no discounts for low-mileage drivers, locally based Allstate and State Farm offered modest discounts across all markets of 2.9 percent and 3.2 percent respectively. Neither firm could immediately be reached for comment. Geico, also included in the study, showed an average 1.3 percent annual reduction for low-mileage drivers in the cities studied, according to the federation.

On a call with reporters, federation officials said the study is based on quotes received online by a fake standard applicant they created to test out insurance premiums in each test city: a single 30-year-old woman, who worked as a bank teller with a perfect driving record.

There are no figures on how a male applicant would have fared, federation officials said.

Facts such as credit scores and having a blue-collar job don't send risk signals to insurers, Heller said.

But "people do get that how far you drive is a very fair (measure of risk)," according to Heller.

If you are a low-mileage driver, "It's always a good idea to shop around, because there's probably a better deal for you," he said.

Visit the Chicago Tribune at www.chicagotribune.com

VW turns metal from car wrecks into iPhone cases .
Here's a novel and creative — if slightly eerie — way to get people to think twice about picking up their phones while behind the wheel. Volkswagen is teaming up with brand management company NordDDB in Sweden to make smartphone cases from crumpled metal salvaged from car wrecks caused by texting and driving. The project is meant to draw attention to a new law that went into effect in February in Sweden banning drivers from using their phones in a manner deemed "detrimental" to their driving, according to Swedish news outlet The Local. VW says that hasn't helped decrease the number of crashes.

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