Technology

Game Changer: Pay as You Drive Car Insurance in Maine – Is Progressive Snapshot a Good Deal for You?

Posted on by Bob O'Brien

Let’s face it. Everyone thinks they’re a better-than-average driver. Most people think they drive fewer miles than the norm. And lots of us think that we’re paying too much for insurance because we subsidize those who are more aggressive,  less attentive,  less responsible drivers than we are. Soon, we will have a chance to put our money where our mouth is.

For years, green organizations like the Better World Club,  consumer advocates and transportation planners have called for lower insurance rates for people who drive less than average. Some call it ‘pay as you drive”; others call it “usage-based insurance”.

We’ve been watching this issue for years. We’ve shared our reservations about pay as you drive insurance and its cost – not only in dollars, but in lack of professional advice and lost privacy. While the concept sounded intriguing, we haven’t found a product we were comfortable recommending to our clients.

Until now.

“This is Our iPod”

Progressive Insurance is bringing its Snapshot auto insurance to Maine next month. With this product, they’ve refined the concept and addressed many of the concerns that we identified with the previous generation of usage based insurance.

Progressive says “this is our iPod”, a product that will change the way people buy and use car insurance. With Snapshot, Progressive offers discounts for quantity (driving less) and quality (driving better).

We think that usage-based Maine auto insurance has a good chance to redefine how car insurance is rated, and empower consumers as never before. It rewards safe driving habits by offering car insurance discounts for risk-reducing behaviors such as gradual starts and stops, driving fewer miles, and staying off the roads during the most dangerous hours.

Progressive appears to have respected the line between information gathering and privacy invasion. They’ve also removed the cost uncertainty that concerned us in the first generation product. Finally, they’ve integrated a cool feedback tool that allows drivers to self-monitor and compare their driving to others on the road.

We haven’t been fully briefed on Snapshot auto insurance, but these are some of the coolest rumored features:

Discounts!

Depending on your driving behaviors, you may earn up to a 30% auto insurance discount. You’re eligible for your first discount after 30 days. Your “final” discount will be set after your first 6 month policy term. Because the discount is based upon individual vehicle data, a different discount percentage will probably apply to each of your vehicles.

Voluntary and Flexible

You will be able to choose whether or not you want Snapshot or traditional rating. You’ll even be able to choose which vehicles you want to be rated in Snapshot. Let’s say you drive from South Portland to Augusta every day, but your spouse stays home to care for your toddler. You might choose traditional rating for the commute vehicle, and Snapshot for the other.

Truly Rewards Responsible Behavior

Maybe you’re a safe driving advocate, gas mileage fanatic or carpool rider. Maybe you use public transit or commute by bike. Snapshot is the first Maine car insurance that rewards your green behavior with green in your pocket.

We think that this may lead to safer roads, however marginally at first. Snapshot drivers are likely to try to reduce their car insurance rates by driving less and driving more safely. Who knows, maybe classes like Maine Clean Communities EcoDriving Workshop (offered in April for fleet drivers) will become popular with individuals, too?

Professional Advice

Snapshot is not a good idea for everyone. Because it will be sold by an independent Maine insurance agent, you will be able to talk with a professional about your situation, and determine if it’s a likely fit for you. If it’s not, an independent agent has other options for you.

No Up-front Cost

Unlike the first generation of pay as you drive car insurance, you don’t have to pay for the monitoring equipment. Progressive gives it to you; when your monitoring period (about 6 months) is over,  you simply mail it back to them in a prepaid envelope.

Cool Monitoring Tools

You can view your driving data up to the minute online. This just cries for an an update to the Progressive iPhone app. You will be able to see if you are tracking to get a discount within ten days of installing your device. Progressive will report how your driving compares to others. They will report how you drive, when you drive, and how much you drive. You’ll be able to use this feedback to improve your driving – and get a  lower car insurance rate.

Sounds Good. What are the Drawbacks?

Privacy Concerns

The devil of this concept has always been in the details of monitoring and reporting. Just what information does Snapshot capture? With whom is it shared? The Snapshot device is not a GPS. It doesn’t record where you drive – only how and when. It records mileage, speed and time driven. It also uses an accelerometer (the way Toyota’s “glass of water” iPhone app does) to measure hard braking and jack rabbit starts. It transmits this information to Progressive via cell signal.

Progressive says they will not share this information with any third parties. But what if their data is subpoenaed following an accident? We have no doubt that the data would be provided. – and possibly become public information. And, while the device doesn’t have a GPS, it does use cellular technology. It’s not too crazy to think that one could identify where your vehicle is or was by what cell tower picked up your Snapshot signal. Whether that’s good or bad might depend on whether you’re trying to recover your stolen car or whether someone accuses you of causing an accident, and reports your license plate number to the police.

Privacy Rights Clearinghouse, a consumer privacy advocacy group, has testified their objections to pay as you drive insurance in the past. The publisher of Privacy Journal also expressed concern in this USA Today article. But as long as Snapshot remains an “opt in only” product, you can simply say no  if you think the cost of your lost privacy outweighs the insurance discount.

How Do You Know if You’re a Good Candidate?

Don’t drive much?  Have more vehicles than drivers? Have a “toy” for the weekends, or a truck that you only use for yard work and dump runs? Chances are good that usage based insurance will save you money.

Have Questions?

If you live in the Greater Portland area, contact Noyes Hall & Allen Insurance at 799-5541. If you live elsewhere, call your Maine independent agent who sells Progressive products. You can also see Progressive’s Snapshot page for more information.

Identity Theft in Maine – Can Insurance Help?

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Identity theft has been a hot topic in Maine recently. It’s a nearly unavoidable risk in our digital age. Many of our clients have asked about “identity theft insurance”.  We’re not aware of any insurance that can prevent identity fraud from occurring, or pay for fraudulent charges someone may make on your account. Some of the insurers we represent do offer solutions that can help if your information has already been compromised.

Experts recommend using the  3 D’s” to help you reduce the chance of identity theft, and deal with it if it does happen: Deter, Detect and Defend.

DETER Identity Theft

  • Shred financial documents before you throw them away.
  • Don’t give out personal info to anyone unless you have initiated the contact and know who you are dealing with.
  • Lock personal information at home, especially if you are having work done at your house, or have roommates.
  • Choose complex passwords. Avoid birth dates or easily guessed numbers or phrases.
  • Don’t print your Social Security Number on checks,  carry your card in your wallet, or give it out unless absolutely necessary (insurance agents may ask for it to quote your home or auto insurance; it’s not required, but does provide the most accurate quote).

DETECT by Monitoring Your Accounts

  • Inspect financial statements for charges you did not make.
  • Check your credit report for information that seems incorrect.
  • Be alert to bills that do not arrive as expected.

DEFEND Yourself as Soon as You Suspect a Problem

  • Place a “fraud alert” on your credit reports. To place an initial 90-day fraud alert, call one of the three nationwide credit reporting companies:
    • Equifax:             800-525-6285
    • Experian:          888-397-3742
    • TransUnion:     800-680-7289
  • Close accounts that have been affected. Ask for written verification that the account has been closed and any fraudulent debts wiped out.
  • File a police report.

Identity Fraud Insurance in Maine

Your Maine insurance agency probably sells products that can reimburse you from expenses incurred to help you recover from identity theft.

 Identity Fraud Insurance May Pay for:

  • Cost of notifying merchants, credit agencies and lenders.
  • Lost wages and incurred daycare expenses for time you spend notifying authorities and lenders.
  • A “resolution service” to work with you through the process.
  • Fees for re-applying and re-issuing government-issued personal documentation.
  • Loan application fees for re-applying if your application was rejected because of incorrect credit information.
  • Attorney fees for defense of lawsuits from creditors, criminal charges, or contesting wrongfully incurred tax liability.

 

Identity Fraud Insurance Does NOT pay for:

  • Fraudulent charges on a credit card (these are usually wiped out by the lender, provided you notify them promptly).
  • Extra expenses you may incur because your credit was frozen due to suspected identity fraud.

Many of the insurance companies we represent sell Identity Fraud Expense Reimbursement coverage. To speak with an experienced Maine insurance agent, contact us at 207-799-5541.  For more information about identity theft, we recommend the FTC’s consumer web site.

 

Should You Insure Your Maine Middle Schooler’s Laptop?

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As another school year begins, our clients who are parents of middle school students are asking us about insuring the laptop computers issued through the Maine Learning Technology Initiative. As a Maine insurance agency, Our understanding is that the State does not have a “blanket” insurance program; however, many school departments appear to offer separate insurance coverage.

Apple laptop In general, we recommend that our clients buy the coverage through their child’s school. Here’s why:

  • School property – The laptop belongs to the school, not the student. Therefore, it’s not considered owned personal property as defined by a homeowners policy.
  • Lower Deductible – The standard homeowners insurance deductible is $500.00. Most school programs feature a $50.00 deductible.
  • Broader coverage – Most homeowners policies don’t cover such perils as dropping the computer, closing it in a locker, etc. The school contracts we’ve seen cover most damage, unless it’s intentional and willful.

Each school insurance program has restrictions; for example, some prohibit taking the computer out of Maine. Be sure to read yours before choosing how best to protect your child’s computer. For more information, contact us at Noyes Hall & Allen at 799-5541.

Watch What You Say Online – and Protect Yourself Just in Case

Posted on by admin

The internet: it’s not just for kids anymore. Almost 75% of Americans are now on the internet. Some people just surf the web and email, but more and more are participating in so-called “social media” like Facebook, Twitter and LinkedIn. And it’s not just kids. People 35-54 are the fastest-growing demographic on Facebook these days, (much to the chagrin of their children). Who knows how many blogs there are now? It seems that the world lost count somewhere after 60 million.

When Good Posts Go Bad
One thing about “social media” is that they are – well – social. Posts are called that for a reason: they’re publicly available for others to see. Blog posts and web site comments can range from informational to inflammatory, funny to foolish and ranting to R-Rated.

It’s not surprising that some postings have been accused of crossing the line – even relatively tame ones like the book reviewer sued for libel, or the blogger sued by a developer for defamation.

What if You’re Sued?
One question we’ve been asked is whether someone’s homeowners policy would protect them against such a suit. The answer is “it depends”. If your postings are purely personal – not on a business blog, and you purchased “personal injury” coverage, then you should have coverage against claims of libel, slander or defamation of character. Keep in mind that “personal injury” coverage is NOT part of a standard homeowners policy.

Hidden Value
Most people buy insurance thinking that it will pay for their legal damages because of liability of their actions. They’re right, of course. But even more important is the cost of legal representation that’s included in every homeowners policy.

Even a groundless suit can take many hours of attorneys’ time to resolve, and months of court resources. This can be more expensive than the actual damages awarded, depending on the circumstances. If you have a homeowners policy with personal injury coverage, you don’t have to worry about finding or paying for an attorney. Your insurance company takes care of that for you.

Of course, we don’t recommend conducting your online life in a reckless manner. But wouldn’t it be nice to know that if someone did accuse you of libel or defamation, your insurance would help you minimize the financial impact and stress?

Talk to a Maine insurance agent today about personal injury coverage.

 

Adventures in Car Insurance Shopping

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Let’s face it. No one shops for car insurance for fun. You’re getting your first car, moving off of someone else’s policy, combining coverage, moving to a new area, trying to improve your coverage – or save money.

Not only can it be a pain, but it can be confusing, too:

The Fallacy of The Caveman
Technology brings all sorts of information and power to the consumer quickly and easily. TV ads stress how fast and easy it is to get a quote. This is a great way to gather information before making a decision – and many consumers use it precisely this way. It’s not such a great way to buy insurance.

The danger is that getting your own quote turns you into your own insurance advisor. The computer will quote whatever you ask it to. Maybe you’ve entered all the information correctly; maybe not. Maybe your coverage is appropriate for your situation; maybe not.

Add to this the fact that not every company offers comparable limits and coverage, and it’s no wonder that shopping is confusing, and why some people report results like this:


Does anyone really believe that they’re getting the same coverage if they pay 10% of what they were before? For that matter, what does $162.00 insurance even cover?

Part of what you get when you consult an insurance agent (like us, for example) is advice on what to buy, and help comparing one company to another.

Check out this guy:

Just because you CAN get a car insurance quote in 15 minutes doesn’t mean you have to make your decision in that time frame! This guy couldn’t even wait for the company’s web site to come back up. Apparently price was his only consideration. But what did he buy? Does he really know that he got a good deal?
Insurance: Just a Promise
When you’re shopping, don’t forget that insurance is only a promise to pay in the event of a loss. Consulting a good local agent usually costs no more than doing it yourself – and an agent can help you decide what to buy, compare different proposals, and evaluate the insurance company behind the quote.
Our recommendation: Use the power and speed of the internet to do your research, but take your time, talk to others and choose wisely.


Car Sharing? Protect Yourself First!

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A Valuable Service

Car sharing is an economical way for people who don’t own a vehicle – or who need an extra one periodically – to access a private vehicle. Led by Zipcar, the service have been extremely popular in urban areas and at colleges – including Bates College in Lewiston. Now, it’s finally come to Portland, Maine – thanks to UCarShare, a division of Uhaul.

Zipcar logo

Car sharing is often seen as environmentally friendly, because it can reduce the overall number of vehicles on the road, cut down on the demand for parking, and allow people who prefer to use alternative transportation (public transportation, bicycle, scooter, walking), but still need to use a private vehicle from time to time. It encourages density, and helps to reduce sprawl by making city living more convenient. We support the idea, and have blogged about it before. Ucarshare logo

One Big Issue

There’s just one aspect that we think you should think about before joining a car share service: liability. Car share companies provide insurance for members while driving the car. But how much? Zipcar says they provide $300,000 of liability coverage (less for members under 21 years old).

The problem is, you can get into a lot more trouble than that. Maine’s Wrongful Death Statute allows up to $1,000,000 in damages per person, PLUS punitive damages. If you’re driving a Zipcar and cause an accident that kills someone, you could be looking at at least $200,000 of responsibility, out of your own pocket. Even worse, you’d have to pay your own legal defense expenses once Zipcar’s $300,000 limit was exhausted.

UCarShare appears to offer even less liability coverage. Their web site says that they offer state minimum limits: $50,000 per person, and $25,000 for property damage (They haven’t responded to my email to clarify this). Many cars on the road are worth more than $25,000, and it’s easy to imagine a highway accident that would involve several vehicles. Never mind that $50,000 of bodily injury coverage is only 10% of the wrongful death damage limit.

And, Maine’s minimum limits are higher than most. If you cross the border into New Hampshire, you’re packing protection of $25,000 per person. And, don’t get us started on Florida, with their $10,000 bodily injury limit per person and $10,000 of property damage.

You Can Protect Yourself

If you have a Maine auto insurance policy with liability coverage, it will cover you after the car share service’s policy limits are exhausted, provided that your liability limits are higher than the service’s.

If you don’t have a vehicle of your own, you can buy “named non-owner’s” insurance to protect you. Talk to an insurance agent – including us – about this.

One More Thing…

The car share services typically make you responsible for the first $500 of damage to the shared vehicle. Your Maine insurance policy probably won’t help you out with that. Also, read your car share contract carefully. You’re probably restricted to listed people driving the vehicle, and on certain types of roads and situations. Know the rules before you get behind the wheel!

Pay as You Drive (PAYD) Car Insurance

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Many Mainers, especially retirees and those who bike, walk,  bus or live close to work, drive less than the average American. That’s one reason Maine’s auto insurance premiums are among the lowest in the country, despite our harsh winters.  Still, many of our clients ask about Maine auto insurance discounts for driving fewer miles.

The idea appeals to our common sense, doesn’t it? Even the Freakonomics guys agreed. Here’s some of what they wrote in their April 20 column in the New York Times Magazine:

Imagine that Arthur and Zelda live in the same city and occupy the same insurance risk pool but that Arthur drives 30,000 miles a year while Zelda drives just 3,000. Under the current system, Zelda probably pays the same amount for insurance as Arthur.
While some insurance companies do offer a small discount for driving less — usually based on self-reporting, which has an obvious shortcoming — U.S. auto insurance is generally an all-you-can-eat affair. Which means that the 27,000 more miles than Zelda that Arthur drives don’t cost him a penny, even as each mile produces externalities for everyone. It also means that low-mileage drivers like Zelda subsidize high-mileage drivers like Arthur.


Every auto insurer in Maine uses the system described above. They ask how you use your vehicle, and give a small discount to those who tell them that they use theirs for “pleasure use” or a “short commute”.

But one insurer, Progressive, has introduced a “pay as you go” system they’ve dubbed “MyRate“.  It promises discounts for driving fewer miles, not driving late at night, and driving defensively. Sounds good, huh? As with many seemingly simple ideas that appeal to our “common sense”, the devil is in the details.
Consider:
  1. The program requires credible monitoring that yields reliable results. Progressive has developed a chip that you plug into your car’s OBD (on-board diagnostic) port. The device monitors your speed, the time of day you’re driving, and how many miles you drive. It’s not a GPS – it doesn’t report WHERE you are – but the amount of data it does collect and send to Progressive has given pause to some who are concerned with privacy in the digital age.
  2. Your insurance rates can also INCREASE if your driving habits change (new job? take up hiking or camping? new long-distance love interest?), or reflect a higher risk profile (kid starts driving?). While you can quit the program, if you stay with Progressive, they may use the data about you that they’ve collected when rating your future policies.
  3. The device costs about $30.00 to buy, and the premium quote you used to evaluate whether to buy the policy was only an up-front estimate. So, even if you thought that your discount would more than pay for the up-front cost, that can change (see #2 above).
  4. MyRate is currently not available in Maine. In fact, it’s only available in 8 states, New Jersey being the closest. And, what we consider the biggest drawback of all…
  5. You can’t buy a MyRate policy from an independent insurance agent; the only channel where it’s available is from Progressive Direct. This means that you’re on your own in dealing with the insurance company if you choose to buy a policy this way.

Maybe MyRate makes sense for you after reviewing the facts of the program. We do like some of the features. It rewards safer driving and less-risky behavior. It also rewards those who choose to drive less, which is good for the environment and for our communities too.

What we don’t like is that Progressive chooses to only sell the product directly to consumers. Of course, part of that is self-interest: we’re insurance agents after all. If we don’t believe we add value to the insurance transaction, then we should just wither away to extinction. But most Progressive customers agree, and prefer to buy from an independent agent. The vast majority of their Maine auto insurance business is produced through local agencies.
Insurance is complicated enough; this new method offers its own twists, not to mention the privacy concerns mentioned above.  We wonder how many people will feel comfortable facing this new insurance model without a local professional to help, advise and advocate for them. Why not allow customers to use an agent to help them vet this model to see if it really makes sense for their situation?

Car Sharing Comes to Portland Maine – with Insurance?

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This week, the Press Herald reported that  Portland UHaul plans to bring its U Car Share program to town in the form of four white PT Cruisers. In August, we addressed the issue of car sharing and insurance in this post.

To reiterate: car-sharing services can be a great alternative for those who rarely need a car. They help to reduce parking congestion, greenhouse gases and other automobile-created problems. But don’t forget that when you get behind the wheel, you’re in a position to put all of your assets at risk. You’re relying on the car sharing service’s insurance to protect you. The U Car Share website doesn’t say what extent of liability protection their policy provides. We recommend that you get the answer to that question BEFORE you join.

 

Insurance Service in the 21st Century

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Our insurance agency prides itself on providing personal service. We figure that when people call us, they want to talk to someone as soon as possible. So, we avoid voice mail as much as possible, and give callers options to speak with someone who can help them – even if they're not the person they originally called for. 

But we try to be tech-friendly, too – for those clients who want to communicate that way. We're proud to offer:
  • Real-time chat support. Clients or prospective clients can click on an icon on our home page which opens up a chat window. This is great for those who have relatively simple questions that might take a minute or two to answer: "was my payment received?" or "how much do I owe on my car insurance?", or the ever-popular "can you send me another insurance card so I can register my car?". Clients can work or play on their computer while we research their question. We can even send documents -an insurance card or payment receipt – right in the chat window. It's perfect for multi-taskers. It's also good for those who might be hard of hearing, or who want a written transcript of our answer (one can automatically be emailed after we're done). After business hours, the "chat button" automatically generates an email to us that we can answer later.
  • Extensive email capabilities. We can email virtually any form, application or documentation that we can mail, speeding up the turnaround time by hours or days compared with faxes or snail mail. 
  • Web-based request forms. Our commercial clients can request Certificates of Insurance, and our other clients can easily download forms for discounts, electronic payments or underwriting information.  
  • This blog, which we hope provides timely information on various risk-management trends, tips and topics. There's even an RSS feed, so you can have updates automatically emailed to you. 
  • Text messaging to cell phones and PDAs.  Let's suppose that your mortgage company pays your homeowners insurance premium. Except, they sold your mortgage last year, or changed addresses, and your insurance policy wasn't updated. When the insurance company doesn't receive your payment by the due date, they send you a cancellation notice. The only problem is you're away on an extended trip, so you don't get the notice. Wouldn't it be helpful to get a reminder that your policy is about to cancel tomorrow? That's one example of when text messaging (SMS) to a cell phone can be handy. We have that capability, if you notify us you'd like to be contacted in that way.

Insurance will always be a people business, no matter what the 800 number and web site insurance sales people say. But, technology can help a good agent provide excellent service. Our goal is to be positioned on the busy intersection of service and technology, providing the best insurance experience we can.

Car Sharing and Insurance

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Our last post talked about a new condo development proposed for downtown Portland, ME that featured shared cars for unit owners. Coincidentally, Joseph White’s column in today’s Wall St. Journal discusses the growing appeal of car-sharing services like Zipcar. Essentially, it works like this: you pay a membership fee to join a service, which gives you access to several vehicles parked in various locations around larger cities. You reserve a car, pick it up at the designated spot, and pay only for the time, tolls and parking when you use it.

I’ve seen Zipcars in several major cities, and even a few in Maine (probably Boston folks escaping the city for the weekend), and some of them put my ride to shame. They have everything from Mini Coopers to minivans, SUVs to BMWs. The concept makes sense for non-car-owning city dwellers who need access to a good vehicle periodically.

Sharing ownership of anything doesn’t always come naturally to many Americans. We tend to be picky about our “stuff” – especially our cars. What if the last driver left the car a mess? Or low on fuel? Or in the wrong lot? Who maintains the vehicles? Of course, the car-sharing services address these and other issues.

What about insurance? In our agency, we haven’t actually seen a car-sharing contract, or been asked by our clients yet. However, our understanding is that at least one car-sharing company buys a blanket auto policy providing $300,000 liability coverage (much lower limits for those under 21), and assesses a $500 fee for damage you cause in an at-fault accident. Presumably, a condo association would buy similar coverage. Most insurers would be reluctant to insure lots of different unrelated drivers; they would probably charge more as a result. And, what if one of the condo unit owners was a poor driver? Would the other drivers have to pay more money for their exposure?

Another issue: many individuals have assets higher than $300,000. And Maine’s Wrongful Death Statute allows up to $500,000 in damages per person, PLUS punitive damages. Many members, if they don’t own other vehicles, may have no auto coverage of their own. They would be out of luck if an accident exhausted the $300,000 limit, and would be responsible for the remainder of the damages “out of pocket”.

Possible solutions: One could buy a “named non-owner” policy, or a personal umbrella policy. How the latter would respond to a “shared car” situation is an interesting question that has (to our knowledge) not been presented.

Sometimes, societal changes happen faster than the insurance industry can react, but the industry’s mission is to help the public manage risk. Car sharing services are gaining in popularity. It’s a matter of time before personal auto insurers develop procedures for addressing the exposures they present. We suggest that you confer with your agent if you are thinking about joining a service.