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New England drivers can evade high auto insurance rates

Massachusetts and Rhode Island are two of the nation’s smallest states, but their accident rates and auto insurance rates are some of the highest.

Nonprofit research group MassPIRG estimates that Massachusetts and Rhode Island have the highest auto accident rates in the country – and even then, Massachusetts far outpaces its neighbor to the south. There are 40 percent more accidents in the Bay State than the Ocean State, MassPIRG says; getting Massachusetts rates to Rhode Island levels would result in an estimated 20 percent savings on residents’ auto insurance premiums.

Insurance costs did drop 8 percent between 2008 and 2009, the Massachusetts Division of Insurance reported in July, thanks to revised insurance laws. Before 2008, the state regulated insurance companies’ premiums. Between the early 1990s and 2008, the DOI says, “the number of companies offering private passenger auto insurance here [declined] from 35 to 19.” But in a move that insurance officials called “managed competition,” insurers could set their own rates beginning in April 2008 – and nine new insurers moved into the Massachusetts market as a result.

Older drivers in the Bay State benefit, too. A 32-year-old law grants a 25 percent auto insurance discount for over-65 drivers. It’s the largest discount in the nation for older drivers, and one of the few tied solely to age, reports the Waltham Mass.) Daily News-Tribune. Drivers over 65 are less risky on the roads than other age groups, notes the Automobile Insurers Bureau of Massachusetts – but the discount may be rolled back if public sentiment turns against it.

SB 646 – a bill in the previous Massachusetts State Senate session – authorized a review of insurance premiums as they related to road safety. The bill recognized that “the most effective way to reduce Massachusetts automobile insurance premiums is to focus on reducing the underlying costs” like the state’s high accident rates. But SB 646 only provides for an investigatory commission, and its results have yet to be published.

As SB 646 notes, Massachusetts and Rhode Island drivers pay more for auto insurance because of their states’ accident statistics, but drivers do have some recourse. Large insurers in both states recently announced that they’ll offer driver-tracking technologies to policyholders to better align driving habits with insurance costs.

In Massachusetts, a national insurance company will allow drivers to be tracked via iPhone or BlackBerry. Drivers who sign up will pay for auto insurance by the mile. Another insurance company has a similar system available in Rhode Island; in this case, a tracking device is plugged into the car. The device records mileage and time of day, even measuring driving habits. Policyholders who drive less aggressively at lower-risk times of day will enjoy a discount in their auto insurance.

That’s a good rule of thumb for any driver – tracking device or no. Even if drivers’ insurance companies aren’t rewarding them explicitly for good behavior, drivers can take precautionary measures when they get behind the wheel. Leave plenty of space between cars, say experts, and pull over if fatigue sets in. Consider buying a car that costs less to insure – even if it’s less exciting than other models on the road. And, if insurance costs are a concern, drivers should shop around frequently for auto insurance. Financial expert Clark Howard recommends on his website that drivers price auto insurance policies at least once every three years.

Learn how easy and convenient shopping for auto insurance can be. Get your free auto insurance quotes today!

Posted: November 09, 2009

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