State Farm Insurance said on Sunday that it has paid $5 billion to its customers for weather-related catastrophes so far this year. In the wake of a number of natural disasters–including numerous tornadoes, wildfires and hurricanes–damage to cars, homes and other properties has resulted in major payouts from the company.
In its announcement, State Farm revealed it had received over 970,000 claims as of Sept. 23. Whil
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Drivers in New York are banned from using hand-held cell phones while driving, and this week they will be getting an extra penalty if caught doing so. Since the statewide ban of using cell phones while driving in New York was enacted, the penalty has been a fine of up to $100. The Online Auto Insurance News article “Strengthening of NY Distracted Driving Law Has Car Insurance Implications” by John Pirro states that drivers will now receive two points on their drivers license in addition to the fine.
When drivers get a State Farm auto quote or price another car insurance company, having extra points on their license will likely make their premiums increase. Insurance companies price their policies based on the risk that drivers carry and they use driving records to determine an individual’s risk. Extra points, whether from talking on your cell phone, speeding, or a DUI, mean extra risk to your car insurance company.
You may think it is harsh that car insurance companies would increase premiums based on two points from a cell phone violation, but New York’s DMV found that 20% of car accidents were caused by drivers being distracted. While not all of them were on their cell phones, it is likely that some of them were. Since New York was the first state to implement this ban in 2001, more than 300,000 tickets have been issued yearly for talking or texting while driving. Since insurers look at dozens of factors when determining rates, whether a violation will up your premiums or not really depends on more than the added points.
State Farm will be raising auto insurance rates in Florida by as much as 9% soon. This is an interesting trend for State Farm in Florida as it was only last year that they announced they would no longer offer homeowners insurance in Florida. Their stated reason for raising auto insurance rates is that claims have been up. Of course it does cost money to payout on claims so it certainly makes sense that rates would go up.