Auto Insurance Black Box Technology Meets Your Darkest Fears

Word Count: 568

Summary: Auto insurance is no longer based on how well you know your insurance agent. Insurance companies can now tell from their statistics who is likely to be a high risk driver. It’s the 'black box' that now determines how much you'll have to pay to insure your car.

Keywords: auto insurance, car insurance, automobile insurance

Article Body: Back in the days before computers, auto insurance was personal and subjective. The insurance agent actually talked to the man he knew in the main office, called in a few favors, and got their best customers the best rates. Male drivers under 25 were charged a lot. Young females, being perceived as less risk, were charged much less.

Now, in the computer age, auto insurance companies have large databases of accident and claims records. By number-crunching these records they can tell what type of person is more likely to be a good driver and what type of person is more likely to be an accident risk. This ‘Black Box' technology gives them insights into the background and behavior of the people who they think should pay more for their auto insurance. For example, people who carry minimum limits of liability are actually a greater risk than those who carry at least 50/100 ($50,000 per person, $100,000 per accident). And statistics have shown that those with bad credit scores are more likely to be involved in accidents.

In Texas, the minimum liability limit on auto insurance is 20/40. Yep. $20,000 per person, $40,000 per accident. Not much is it? And if that weren’t bad enough, the minimum property damage is $15,000. Guess who makes up the difference if you're in an accident that's your fault?

In most states, auto insurance is regulated by the state. But that is only the beginning. The state uses tables of ’loss ratios', exposure, and other conjuring words, to justify what the auto insurance companies want you to pay. Every once in a while, just to throw you off, they will even announce a state-wide REDUCTION in auto rates. When they do, hold onto your wallet!

After the state sets the base rate, the individual companies negotiate with them to adjust their particular rates, claiming either a better or worse loss ratio than average. So, after the elections are over, the legislature allows exceptions, amendments, and endorsements to jack them back up to something the auto insurance companies can make a ton of money from.

And there's more. Most states allow individual companies to set their own rules to determine who gets charged what. So, one auto insurance company rates a particular driver one way, while another company rates the same driver differently. Each company sets those underwriting rules.

So how are auto insurance rates determined? First, the state usually gets involved. Then companies toss the dice between staying competitive and making as much profit as they can for their stockholders. And finally, now that the ’Black Box' is here, auto insurance companies are taking a closer look at every driver. Career, credit score, past record, even the city you live in helps 'drive' the rates. They have even found that those who select low limits of liability are greater risks than those who select higher limits. So, by raising your liability limits, you may actually lower your auto insurance rate.

For some, the new ’Black Box' technology reduces rates by as much as 20% over those companies not using it. The bad news is, since credit scoring does play a part in ALL auto insurance rating, the worse your credit score, the higher your auto insurance will go. No more 'discounts', no more 'loyal customer' credits, and the like. You will be rated right down to your underwear, placed in a group of drivers almost identical to you, and charged accordingly.

Home News Tribune Police Blotter

STOLEN VEHICLE ARREST, 10:43 a.m. Wednesday. Officer Keith Milos received a LoJack hit for a stolen car while on patrol, police said. Dispatch informed him that the stolen vehicle was a silver 2006 Honda Ridgeline pickup, New Jersey plate UBG38T, stolen from Perth Amboy.

Tesla Motors' Devastating Design Problem [Tesla Motors]

# teslamotors Tesla Motors' lineup of all-electric vehicles — its existing Roadster , almost certainly its impending Model S , and possibly its future Model X — apparently suffer from a severe limitation that can largely destroy the value of the vehicle. If the battery is ever totally discharged, the owner is left with what Tesla describes as a "brick": a completely immobile vehicle that cannot ...

UK Tax Tribunal Ruling Crucial To Company Car Schemes

A recent tax court case offers a timely reminder for employers to check company car salary sacrifice arrangements, Deloitte has said.

Christchurch grapples with 'new normal' of tremors and power cuts

Locals are finding the rebuilding of their city – and lives – is taking far too long, writes KEITH LYNCHin Christchurch

Left out in cold without any cover

A householder tried to persuade the insurance ombudsman that their insurer should pay for damage from the September 2010 Christchurch earthquake, even though premiums on their house insurance had not been paid since 2006.

Study: Stroke victims recover much better after temporary stent procedure

A new way of opening blocked arteries in the brain using a removable stent system in people suffering strokes brought remarkably positive results in how those patients recovered from the strokes, according to a study presented Feb. 3 at the American Stroke Association's annual conference in New Orleans.

New bill would expand reasons for drivers to be pulled over

A new bill facing the legislature this session would expand the list of reasons drivers can be pulled over by a law enforcement officer. Authored by Rep. Steve Martin, R-Bartlesville, House Bill 2525 would allow a patrol officer to perform a traffic stop of any vehicle that is not covered by liability insurance.