Do Higher Speed Limits Cause More Accidents?

The Texas Department of Transportation is in the midst of a debate about increasing the speed limit on a stretch of highway to 85 mph.   If this happens, then this section of road will hostthe highest speed limit in the United States.  Should Texas then expect to experience more car accidents on this highway then?

What is the relationship between speed limits and accident frequency?  Will higher speed limits always lead to more accidents?  In nearly every study made, the answer is no.  However, when accidents happen at higher speeds, the damages and injuries are much more severe.  Fatality rates in high speed accidents are always higher than in those at lower speeds.  Given that, how do traffic engineers determine the safest speed limit on any given stretch of highway?

Well, the formula that is most commonly used now is to set the speed limit at a speed  at which 85% of the drivers would drive at any given location in optimum weather conditions.  This is because the real factor in determining the likelihood of an accident is the speed disparity between the fastest and the slowest cars.  The majority of drivers rarely drive faster than their speed comfort zone.  This might seem ridiculous given how many drivers you see risking their life and everyone else’s by texting and talking on the phone while they drive.  These behaviors are much more dangerous than driving fast, but people understand intuitively that speed can kill them and so they rarely drive faster than they can control their vehicle.  Texting and talking on the other hand are activities that few drivers recognize as deadly at this time in our cultural development.  That will change in time.  When traffic engineers choose a speed limit that suits 85% of the drivers, then the police can then more easily spot the speeding outliers who need to be controlled by ticketing.

But wait, isn’t driving slower always safer?  Well no.  It turns out that in  both state and federal studies it is consistently shown that the drivers most likely to get into accidents are those traveling significantly below the average speed of the other drivers on the road.  If you are on the highway driving 10 mph slower than the average vehicle speed  then you are more likely to be involved in an accident than if you were driving 10 mph faster than the average speed. 

One thing that everyone should remember when driving at higher speeds is that that you need to allow significantly longer stopping distances between you and the car in front of you.  It will take you nearly twice as far to stop at 85 mph as it will at 60 mph.   So increased speed limits need to be accompanied by some changes in driver habits and that doesn’t always happen.

If those driving on highways at speeds above the speed limit are less likely to get into accidents than those traveling at speeds below the speed limit, then why do auto insurance companies charge you higher rates if you have speeding tickets on your driving record?  In my opinion this is an example of archaic rules still on the books.  Here in NC it is a bit ironic that you can get your ticket reduced to less than 10 miles over the speed limit and have your insurance points waived.  However, if you get a speeding ticket for going more than 75 mph in NC, which in some cases might be only 6 mph over the speed limit, then you could face a 4 point surcharge which would increase your insurance costs dramatically.  You can quickly see that this approach flies in the face of all research and does not make any actuarial sense at all.  I think with the increased use of on board monitoring systems for auto insurance rates, that eventually some of the speeding ticket insurance surcharges will be changed or removed from the books completely.

Clinard Insurance Group is an independent insurance agency located in lovely Winston Salem, NC.  We insured thousands of families all across North and South Carolina.  If you need any help with your auto insurance policy, your homeowners insurance policy, or your life insurance, please call our office, toll free, at 877-687-7557.  We look forward to answering your questions and helping you.

NC Workers Compensation Insurance Standoff – the Industrial Commission Blinks

Workers compensation insurance was designed as a compromise to keep businesses running and to more quickly return injured workers back to the job.  The simple agreement took away most of the employee’s rights to sue the employer and in response they were guaranteed certain benefits if injured, made sick or killed on the job.  The rules of the North Carolina Workers Compensation System have been presided over by the NC Industrial Commission.  These rules have favored the employer over the employee for quite some time now and this month the Industrial Commission showed once again that their sympathies lie with the employer over the injured employee. 

In early May, 2012, Governor Bev Perdue ordered a swift reform of our system.  She was made aware of a number of claims filed by injured employees against their uninsured employers that have gone unpaid for years.   In a show of strong action, the North Carolina Industrial Commission rounded up about 100 delinquent employers and threatened them with jail time should they not pay their injured employees what they are due.  It was beginning to look like the unpaid injured employees were finally going to be treated fairly by their government.

But let’s back up a bit.  If the employer’s part of the work comp bargain is to carry a workers compensation insurance policy, then how did we end up with so many uninsured employee injuries?  This can happen in several ways.  An employer could fail to make a payment and have its work comp insurance policy cancelled.  Or they could just decide to drop the coverage or never buy it in the first place since the NC Industrial Commission has never set up a system for finding the uninsured employers out there.  Or, they may simply not have to buy a policy due to a crazy rule in North Carolina.  This rule states that if you have less than 3 employees, you don’t have to purchase a policy if you don’t want to.  If you don’t buy a policy though, you still have to pay for all loses that occur to your employees just as if you were the insurance company.  This rule makes no sense to me.   Why should a small employer be more able to pay for on the job injuries of its employees than a larger employer?  I would think that a small employer is even less likely to have the assets needed to pay a claim.  NC is one of the few states with such a silly rule and to go along with this, NC also has one of the most lax enforcement of the workers compensation rules that you will find.  It is estimated that in NC there are as many as 10,000 employers with no insurance coverage at all.

With Governor Perdue’s new initiative to find the scofflaws and make them pay or go to jail, there was a glimmer of hope that someday we might not hear any more of these sad stories where an employee is maimed for life and the employer, not having purchased any workers compensation insurance, claims that he has no assets to pay the claim.  But now, as we saw this week, when push came to shove, the North Carolina Industrial Commission chose the welfare of the employers over the injured employees.  No employers were thrown in jail, those that couldn’t or wouldn’t pay what is owed to injured workers were granted extensions to make good on their settlements.  Businesses can now flaunt the law and not purchase work comp insurance and do so with impunity.  Will the Industrial Commission find ways to identify them and force them to obey the law like other states do?  Will they change the law to force all employers with any employees at all to purchase a policy to protect what they don’t have the assets to protect?  I doubt it.

Clinard Insurance Group, located in Winston Salem, NC insures thousands of small businesses all across the state.  We urge every business with any employees at all to buy a workers compensation insurance policy to protect their assets and their employees.   If you would like help with your workers compensation insurance, please call us toll free, at 877-687-7557.

Fatalities For Teen Drivers Are Spiraling Downward Thanks To Tougher Licensing Rules

For parents of teenagers nearing driving age, there should be great comfort in the report released last week by the Insurance Institute for Highway Safety and Highway Loss Data Institute.  The results of this study indicate a very positive step forward for nervous parents.  This report, which studied the time frame from 1996 through 2010 indicates a dramatic drop in automobile accident death rates for teen drivers of all ages.

The drop in fatality rates for teen drivers over the past 15 years can be directly attributed to tougher licensing restrictions by many of the states.  Teens are having to wait longer to become eligible for a license and are also being required to show that they have received more practice driving with a supervisor as well.   As you would imagine, this report proves that states with the toughest graduated licensing rules have experienced the greatest drop in teen driver fatalities.  Here in NC we have pretty stringent requirements both in terms of licensing age and in terms of hours of practice required for a teen to be eligible for a license.  By contrast, South Dakota allows a teen to obtain a license three months after his or her 14^th birthday.  If that state were to increase the driving age to 17, it is estimated that the state would see a 32% drop in fatal crashes among young drivers.

The graduated licensing rules typically aim at 5 specific areas of training or privilege.  They are the age at which a teenager can obtain a driving permit and start practicing with a parent or other driving supervisor, the number of hours of driving practice that must be completed before a teen is eligible, the age at which the teen can test for and receive a license, the restrictions on night driving, and the restrictions on passengers in their age group allowed in the car.  North Carolina, for instance, has steadily increased their restrictions in each of these categories over the past decade.

The numbers from this report are very encouraging.  The death rate fell for each age group studied.  16 year old drivers had a drop of 68% in fatalities.  17 year old drivers had a 59% decrease while 18 year olds had a 52% decrease.   Even 19 year old drivers show a positive change as well with the death rate for 19 year olds dropping by 47%.

While this is great news there is some bad news on the horizon.   The preliminary data from the first 6 months of 2011 shows an increase in fatalities for 16 and 17 year old drivers of 11%.  Teen driver fatality data is subject to some temporary swings so this may be a blip on the radar or it may be a trend indicating that fatalities are once again on the rise.  The widespread use of smart phones and texting by teen drivers may be playing a role in this disturbing new upward trend in deaths.

Clinard Insurance Group, located in Winston Salem NC has made it a part of our mission for many years to help parents of teen drivers with training tools, information, and exceptionally low teen driver insurance rates for the new drivers in their household.  Please take a moment to check out our teen driver information web page.  There are some free tools there that might help you save your child’s life.   If you have questions about the NC graduated licensing program or about teen driver insurance, please feel free to call us, toll free, at 877-687-7557.

Is The Consent To Rate Letter Stealing Power From The NC Rate Bureau?

I remember a day, not so long ago when if we ever needed to have a client sign a consent to rate form, then we had to spend some time finding one to use.  This usually happened when someone had such a bad driving record or was considered such a poor risk that the insurance company needed to charge much more than the maximum rates allowed by law on their auto insurance policy in order to be comfortable writing the policy.  Today, with the market for NC homeowners insurance in such disarray, the consent to rate form has become much more common place than any claims forms ever would be.  This new trend has me thinking about how this overuse of a once rare loophole must leave the NC Rate Bureau feeling like they are losing their grip on the insurance rate rules in this beautiful state. 

Let me start with a warning to anyone who may have received a consent to rate form from their insurance company.  Don’t just sign and return this form without taking some time to check out your options.  This doesn’t mean that you should ignore this form completely, because doing that could leave you with no insurance at all.  But I want you to know that in most cases you have other options and that blindly signing this form will almost certainly mean that you will end up paying much more for your homeowners insurance policy than you need to.  To learn more about the consent to rate form and what it means for you and your insurance rates, please read my blog about that by clicking here.

Let’s begin with a bit of background about how insurance rates are created in NC, so that you can understand how this previously benign little form is starting to usurp the power of the NC rate bureau.  In the state of North Carolina, insurance rates are controlled by the NC rate bureau and approved or not approved by the NC Insurance Commissioner’s office.  The rate bureau establishes a maximum rate that can be charged for the different kinds of insurance policies sold in NC.  What usually happens with most insurance products is that the individual insurance companies then file rate credits to offer rates somewhere below this maximum rate.  In NC, insurance companies have been losing money on homeowners insurance policies for so long that the entire marketplace is under enormous pressure to stop the bleeding.  This has meant rate increases for home insurance in NC but many insurance companies are also using the consent to rate form to charge a much, much higher rate to a selected group of their customers while still offering the much lower rates to their more preferred clients.   The consent to rate form, once signed by a homeowner, simply gives the insurance company the power to charge more than the maximum rate allowed by the rate bureau for just that customer who signed the form.

When these forms were only occasionally used for a very small fraction of policy holders each year then it was being utilized in the manner in which the rate bureau intended.  The beauty of this form is that it allowed an insurance company the flexibility to adjust the rates enough to allow it to place insurance for special situations.   But now we are seeing insurance companies mailing consent to rate forms to large blocks of their homeowner customers.  Some may be sending the letter to as many as 25% of their home insurance customers in NC.  When that happens, and when a significant number of them sign the form and return it and then pay the increased rate, then in effect, we have created a new, more unregulated insurance rate making program that effectively makes an end run around the NC rate bureau.  I am openly wondering what the powers that be in the NC rate bureau feel about this technique and what it does to erode their power to make and enforce insurance rates in North Carolina. Are the ok with homeowners rates for some portion of our population turning into an unregulated wild west where the ignorant and the less informed pay as much as 300% more than they would have to with a clearer understanding of their options?

At Clinard Insurance Group, we insure thousands of families all across North Carolina.  We have options for those who are being nonrenewed or who have received consent to rate letters from their insurance companies.  If you receive a consent to rate letter from your insurance company, please don’t simply sign and return it.  Call us, we will help you explore your options in great detail, taking as much time as you need to fully understand your choices.  You don’t have to pay 2 or 3 times the maximum state allowed rate for your home insurance.  We want to help, just give us a call, toll free at 877-687-7557.