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Have you noticed how there’s a disagreement about the value of statistics. To some, there are “lies, damned lies and statistics”. To others, statistics are the factual basis on which to base the operation of a major business. No one would suggest a casino or legal gambling operation should not work out the odds of winning and losing. It’s the same when it comes to insurance. There are a mountain of statistics showing how often different claims are made. Whether it’s a question of life expectancy, or the chances of illness following in a family, or homes being affected by flooding, or makes and models of vehicle being stolen, the actuaries will be able to give you a precise answer. With this information, the premium rates are set. Those who are low risk, pay less. Those who are high risk pay more. In theory, this is fair.

When it comes to driving, all the evidence shows women to be safer drivers than men. There are a number of reasons for this. The list starts with the simple fact that women are more likely to drive within the speed limits. So, most of the time, they can stop in time and avoid crashing into other vehicles. If they are unlucky, the force of the collision is less. There’s less damage to the vehicles and injuries are less severe. This is confirmed by the number of tickets issued, the number of claims made, and the hospital records of those injured. This is not evidence that is affected by male law enforcement officers being seduced into walking away without writing a ticket. There’s hard evidence of their safety record. The records also show women buying less powerful cars, fitted with more safety features. Under the circumstances, it seems reasonable to reward them with lower premium rates.

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Many people look at all kinds of cost cutting tips when they are trying to trim their insurance premiums. Is that the best option?

What about an entirely different kind of insurance?

This week, Progressive announced that it is adding itself to the growing list of insurance providers offering pay-as-you-drive (PAYD) insurance policies. Many people are able to save hundreds, even thousands, a year in insurance by using PAYD. Could you?

What is Pay-as-you-drive Insurance?

This is a type of usage-based car insurance. It’s been used in Europe for a while, but is just now catching on in the United States. Here’s how it works:

• You drive
• Your miles are recorded/li>
• Your miles are reported to the insurer
• You pay a flat rate for how many miles you drive

Why is this cheaper?

With traditional auto insurance, you pay a premium for coverage over a set period of time. While rates are partial determined by your annual mileage, many people actually pay far more for coverage than they actual use on the road. Drive 100 miles? Pay for 100 miles. Drive 10, pay for 10. It’s that simple.
By paying by the mile, you pay for exactly what you use. If you barely drive one month, you won’t pay much at all.

People who drive less than the average driver can save good money with PAYD. For people who barely drive at all, you can save over a thousand dollars a year.
If you have a bad driving record, PAYD allows you to really control your rate by driving less.

How are miles recorded and reported?

This seems to vary by company. There are several methods:

• Checkups
  You check in with an agency approved mechanic, dealer, or agent to have your mileage recorded. They send it to the insurance company, who then send you a bill.
• Honor System
  Smaller insurers may simply ask you to look at your odometer and tell them what it says. While it seems like they are just relying on you to be honest – and I’m sure most of you are honest – if the numbers seem off, they will not let it go. Should you file a claim and the insurer find out you’ve been lying about your mileage, they can drop you and stick you with the bill, claim unpaid.
• Black Box
  A black box is a GPS chip that automatically reports the whereabouts of your vehicle to the insurer’s computer. This also tracks your mileage automatically.
  This also makes it easier to recover a stolen vehicle, which saves the insurer some money. As a result, your theft coverage will be very inexpensive.
• OnStar
  PAYD insurance through GMAC for vehicle with OnStar is easy and cheap. OnStar automatically reports your mileage to GMAC. Since it’s OnStar, you can talk to an operator at any time to get your current money owed. Read the rest of this entry »

Measure #1: Travel Insurance

If you need to buy insurance every time you travel, you are probably wasting lots of money. Travel agents, airlines, websites, and tours always offer insurance packages – and they almost always cost more than simply adding a travel package on to your existing insurance. Look on the internet for better deals.
Even if you only travel twice a year, an annual policy will save cash.

Measure #2: Eliminate Redundant Coverage

Think you need personal items covered in your car? Think again. First, they are almost never paid for in claims. Second, if you have home or renters insurance, there is a good chance that all your stuff is covered. Just make sure to keep the receipts.

Unless you are carrying expensive equipment around – which you will need special coverage for – it is cheaper to replace your things out-of-pocket than to pay all those premiums.

Measure #3: Muscle Up Safety and Security Devices

Look to add on extra safety and security features to bring down your premium. Some suggestions are:

• Driving detection systems
• Lo-jack
• Alarm systems
• Airbags
• OnStar
• Black Box

These things often cost some money up front, but the long-term savings are well worth it. Plus, you are actually a lot safer!
In terms of OnStar and Black Box, you can actually use these systems to save insurance money by allowing insurers to collect data on your driving habits. If you drive safety, it will prove you are safer and they will charge you less for coverage!

Measure #4: Drop the Bonus Malus or No Claims Bonus (NCB)

A Bonus Malus, also called a “no claims bonus/discount”, is a clause in your insurance agreement that gives you a discount for every year that you do not file a claim. The idea is to reward you for paying them premiums without getting any service back. Basically, it makes you feel better about getting only a sense of security back for your car insurance payments.

However, the principle of this deal doesn’t really make any sense. First off, NCBs cost you more in premiums every payment date. While a 50-70% discount for not filing claims is nice, this does nothing to stop your rates from skyrocketing if you do file a claim.
You can save some money on your premiums by removing the Bonus Malus now.

Measure #5: Pay for Small Things Yourself

If you have to make small repairs to your vehicle, the increase in premiums that might follow will likely cost more in the next year or two than simply paying for the repairs out of pocket. Depending on your insurer, you might be required to still make a claim but inform them that you will pay for it. Check with your insurance provider to be certain. Failing to report incidents may void coverage. Read the rest of this entry »