When you sign an auto insurance application, make your down payment and pay your monthly bill, your auto insurance carrier agrees to assume financial responsibility and pay for your driving mistakes during the policy period.

Example: Let’s say, you are driving home one evening. While approaching a red light, your accelerator sticks and you can’t stop your car. You drive through the red light striking another car. Not only is your car severely damaged, the car you hit needs to be towed and its occupant is taken to the hospital. By purchasing any type of insurance policy, the insurance company agrees to take on the financial responsibility of your negligence. They agree to pay for the damage and medical bills caused by your at fault accident.

When you have auto insurance with adequate liability limits, it will pay for all the damage you caused and will also pay to have a lawyer represent you if you are sued in court.  But what happens when an auto accident appears at first to be your fault, but was in, truth, caused by an auto manufacturer’s defect?

Unless you have lived under a rock or on a desert island for the last couple years, you would know Toyota Motor Corporation was forced to start a recall of over 8.5 million of their cars because of faulty accelerators or gas pedals. The cars in question had suffered a history of sudden acceleration which have resulted in hundreds of accidents world-wide.

This malfunction has been responsible for many car accidents and injuries. More vital; these accidents have also resulted in the deaths of 34 people. Hearings by the U.S Congress are pending a start date, while the National Highway Traffic Safety Administration (NHTSA) concludes its investigation into whether Toyota recalled their cars in a timely manner. Regardless, Toyota has opened themselves up to law suits which will play out in America’s courts for the next 25 to 30 years.

Toyota is battling a number of different types of lawsuits, including a few interesting ones. One is a Class Action lawsuit representing Toyota Car owners claiming their cars have lost value as a result of the recall.

These car owners feel when they attempt to resell their Toyota or Lexus (which manufactures Lexus) to another buyer, they will be forced to sell the car for less money than a car of equal value without the same type of recall issues.

Considering the purchase of a new car is the second largest purchase a family will make; this agent feels this class action law suit has some legitimacy.

Other lawsuits brought are product liability claims on behalf of people killed or injured in auto accidents caused by the Toyota accelerators. Others are looking for replacement of their vehicle purchase.

Although there has been thousands of lawsuits brought against Toyota and Lexus for all types of traditional reasons; this agent has not heard of any legal actions being brought against the manufacturer for recovery of an owners auto insurance claims paid as a result of accidents which were caused by the Toyota defect.

If you are a Toyota owner and you were involved in a car accident because of a sticking gas pedal; the state law where your car is registered would decide the accident to be your fault. The law states you must have control of your car at all times. If you have an accident because of a cars defect; you will be charged with an at fault accident.  This accident will cause your auto insurance to increase through no fault of your own.

Your auto insurance carrier would pay for both your car being repaired and the “Not at fault” driver’s car and injuries. Since, in all states, an auto insurance carrier has the right to subrogate against another carrier for claims paid on the other’s behalf, the same rights should apply in the situation of a factory defect.

Toyota Dealers received over 2,600 complaints of sudden acceleration from 2000 to 2010. When you think about how many potential every day auto insurance claims have been paid as a result of  Toyota’s latest recall, the amount paid by traditional auto insurance carriers could be in the hundreds of millions of dollars.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Most drivers don’t realize that accidents, tickets, violations, DUI/DWI, and suspensions no longer play as much of a role in driving higher auto insurance rates as they once did. Over the last 15 years or so, there has been a drastic shift in auto insurance carrier appetites and the way all insurers view drivers and their driving habits.

If we were to look back to 1989 and earlier, I suspect you would agree with me that there were only a few recognizable auto insurance carriers looking to write your personal auto coverage. You know the carriers I’m referring to; companies like State Farm, Allstate, Nationwide and Farmers are four of the majors everyone has heard of. If you did not qualify for their stringent underwriting guidelines, you were simply “out of luck.”

What did that mean? It meant if you did not qualify for their auto insurance program, you were forced to apply and pay for the only available game in town; the State Automobile Insurance Assigned Risk Program, commonly known as “Assigned Risk.”

Assigned Risk was enormously expensive and charged premiums which were actuarially higher than the premium dollars actually needed to adequately underwrite that risk. I would assume the insurance carriers loved the assigned risk programs because they were hugely profitable. The best part was; they had no competition in this segment of the marketplace.

The way the state assigned risk plans worked was very simple. Most state governments mandated that registered motor vehicle owners were required to maintain a minimum amount of financial responsibility or an equivalent auto insurance policy to cover the cost of claims in case of an at fault accident. That meant all vehicle owners were entitled to acquire car insurance regardless of their prior or existing driving record.

If a licensed agent determined a driver did not meet the underwriting guidelines of a specific auto insurance carrier or what the refer to as the voluntary market, they directly represent, an Assigned Risk application would be ready and submitted to a state-run clearing house which accepted only those deemed unacceptable market risks.   A poor risk can be classified as a driver with accidents, tickets, violations.  A driver with no prior insurance or allowed their previous auto insurance to cancel. 

In an Assigned Risk plan, every driver has the same rate for the same risk type. The Assigned Risk insurance application is then assigned to one of the many auto insurance carriers that wrote a voluntary vehicle insurance program in your state. Of course, such a policy was written at a higher rate.

As a rule, if an insurance carrier underwrote auto insurance in your state, they were required by state insurance law to take part in the Assigned Risk Program.

In the late 1980s, the rules changed regarding the no-fault insurance. Insurance companies like Progressive and GMAC emerged as an alternative to the highly uncompetitive Assigned Risk plans. Carriers like Progressive understood they could still be profitable by giving those drivers with Accidents, Tickets, Violations, DUI/DWI or no prior coverage a substantially reduced rate.

Not only could they do this; they could do it a profit.

Today; we see how the auto insurance carrier landscape has changed. There are now over 100 companies nationwide competing for your insurance dollar. We see them in telephone books, on the World Wide Web, and on cable and broadcast TV.

Example: look at the State of New Jersey and the exciting changes which have taken place there. Until very recently, the State Assigned Risk Program know as PAIP dominated the New Jersey auto insurance landscape.

Over the last few years; auto insurance carriers like Mercury, Encompass, Personal Service, Travelers and Progressive have entered the state marketplace to finally give New Jersey drivers a real alternative to paying the very high premiums and monthly payments NJ PAIP levies on its policy holders.

The payment plan in PAIP is so high and uncompetitive, most agents will subject their customers to financing the annual premium with a separate finance company at rates as high as 30% just to lower the high PAIP down payment.

Fortunately, auto insurance programs like Personal Service Insurance Company and Mercury Insurance have both down payments and monthly payments which are very low. If you qualify for programs like those of Travelers or Encompass, no down payment is even necessary.

Unfortunately, most agents do not have access to these low priced auto programs. Carriers need to be very selective when appointing agents to represent them. Agencies which have proven track records of profitability in their voluntary markets, which consistently meet volume requirements, and most important of all, have “a history of loyalty and fair play,” are the only ones awarded these appointment privileges.

InsureDirect.com and its holding company, Combined Insurance Group, Ltd. represents 30 Insurance Carriers Nationwide which underwrites all types of risk at a low price including those whose records show accidents, tickets, moving violations, driving under the influence penalties and license suspensions.

In fact, InsureDirect just added a new company to its carrier Inventory, Titan Insurance, a member of the Nationwide Insurance Company family. InsureDirect.com insurance customers will now have Titan rates compared at renewal along with our other carriers.

Yes, changes in the insurance landscape over the last decade have really improved the ability for every driver to really get a cheap auto insurance rate. Thanks to the many new options for getting a great rate on car insurance, it’s a wonderful time to be a driver.

As always, Insuredirect.com would be privileged to have the opportunity to give you a great rate for your car insurance. Fill out our Easy Quote online form or give us a call today at 800-807-0762. We’re confident you’ll be happy you did.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602