Proposed Changes Could Result In Lower Car Insurance Premiums
In 2014, the U.S. Department of Insurance proposed significant changes to the auto insurance market in order to improve Americans’ propensity to purchase auto insurance and reduce unnecessary costs for consumers.
The new rules are a part of "Auto No-Fault" which is an initiative designed to make leading reforms within the United States automobile insurance system, fix state laws that have resulted in some consumers overpaying for car insurance and many underinsured drivers, and remove barriers that prevent insurers from offering certain types of coverage.
The proposed changes are intended to make coverage "safer, more affordable, more convenient for consumers, and fairer for policyholders." The changes provide that standard auto insurance with limits of at least $15,000 per person/$30,000 per accident shall be mandatory instead of being optional.
The new rules are expected to reduce the price of supplemental policies by approximately 30% and could result in lower auto insurer premiums. According to an analysis by the University of Michigan Transportation Research Institute (UMTRI), auto insurers will likely cut their rates by an estimated 1.7 billion dollars annually in response to these new rules.
The UMTRI predicts that vehicle repair coverage will become mandatory in all states or no-fault will be available at a premium for those who wanted it. Nearly half of the states have made no-fault optional. This change is expected to benefit insurance companies and will likely result in premium reduction for many consumers.
The changes are also expected to affect the individuals who cannot afford auto insurance, as such individuals are at risk of running up significant debt, which may not be able to be repaid even with their income. This change is intended to help ensure that then have auto coverage and reduce this potential debt for high-cost drivers.
In the majority of states, if an injured party does not have health insurance, then they are not eligible to receive compensation for their injuries. This situation is expected to change with the new rules. In states where no-fault is optional and health insurance is required, this change will allow auto insurers to provide coverage for injuries incurred by uninsured individuals who are involved in an accident with a driver who has purchased mandatory PIP coverage.
The proposed changes must be approved by June 30th of this year. Many people are waiting to see what will happen if these changes are approved or rejected. It will be interesting to see how the market reacts and whether or not consumers will benefit from the new changes.
Source:
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Conclusion
Auto insurance has become such a necessity that is difficult to imagine how life could even exist without it. However, with the rampant fraud and constant changes to laws and regulations, it is next to impossible to understand where your money is actually going. This article intends to show you how the car insurance industry works as well as cover some of its most crucial aspects that you need to be aware of. Hopefully after having read these few pages you will have a better understanding of what happens when your provide your information and buy auto insurance from insurers.
Conclusion
The focus of this article has been on how auto insurance works in the United States....