CAR INSURANCE:

Thieves, drunks and lawyers are why your rates are so high

Nevadans have more accidents, file more lawsuits and have the ninth highest premiums in the U.S.

By J. Patrick Coolican (contact), Alex Richards (contact)

Sunday, June 21, 2009 | 2 a.m.

Premium concern (8-20-2004)
Eliminating 'double-dipping' rule could reduce rates (8-20-2004)

Archive of Sun politics stories

Nevadans are burdened with some of the highest auto insurance premiums in the country, according to a Sun analysis.

The state’s residents spent a bit more than $1,000 per year, per vehicle, in 2006, the most recent year for which statistics are available. The figure is 23 percent higher than the national average and ranks the state ninth in the nation, behind high-cost states such as New York and New Jersey.

The above-average premiums amount to hidden taxes on residents.

Like other phenomena in Nevada, the cause comprises irresponsible decision-making by Nevadans and failed public policy, according to insurance industry experts and state officials.

The formula for setting premiums is fairly simple: The rate of incidents — meaning accidents and car theft — and the severity of the incidents, or dollar amount per claim.

“Higher the claim frequency and higher the settlement, the higher the cost” of insurance, said Rajat Jain, an actuary for the Nevada Division of Insurance.

Jain cautioned that state-by-state comparisons of premiums per car can be inexact and ultimately misleading because of different conditions in each state. For instance, premiums would be higher in states with more new and expensive cars whose owners buy more expensive coverage. Still, few people would dispute that car insurance is expensive for Nevadans, and experts say it’s because we have more incidents, and more expensive incidents, than other states.

Why is that?

Michael Geeser, president of the Nevada Insurance Council and spokesman for the driving club AAA, pointed to a number of factors.

We have lots of accidents because we are too often distracted. We live a 24-hour lifestyle that allows us to work and play at all hours, leading to tired driving. We have 24-hour access to alcohol and easy access to illicit drugs.

Our laws allow cell phone use and texting by drivers. We don’t have a law making the failure to wear a seat belt a primary offense. Police officers can ticket a driver for not wearing a seat belt only after they have made a stop on a separate violation such as speeding. And we don’t have enough police officers to be a visible presence at intersections where there are frequent accidents.

Couple those factors with the fact that our accidents are more expensive than crashes elsewhere.

We drive drunk, which leads to more severe accidents: Alcohol was a factor in 36 of percent of our traffic fatalities compared with 26 percent nationwide, Geeser said.

Health care here is more expensive. Our hospital inpatient cost per day is $1,875; the national average is $1,696. If a driver gets hurt, insurers must pay for costlier care.

Nevada exceeds the national average for uninsured drivers, even though the law mandates coverage — Geeser said one estimate put the rate of uninsured at 17 percent, compared with 14.6 percent nationally.

Uninsured drivers push costs onto the rest of us and drive up premiums.

Nevadans also love their personal injury lawyers. According to the Insurance Industry Institute, Nevadans file 39.7 injury claims for every 100 auto accidents. The national average is 24.5.

“Those guys are looking for work,” Geeser said of the lawyers. “They have their ads blasting, and as soon as you get in an accident, call one of these guys, and somebody is gonna pay.”

And, with more claims come more overhead and legal fees.

(Bill Bradley, a prominent Nevada trial lawyer, said poor claims handling by insurance companies is a significant cause of high premiums in Nevada. Rather than promptly and fairly compensating innocent accident victims, insurance companies delay payments or offer unfair settlements, which requires victims to hire lawyers, delays eventual settlements and drives up costs, Bradley said.)

Finally, Las Vegas is home to a lot of car thieves. Las Vegas criminals led the nation in 2006 with more than 22,000 car thefts, or 1,265 per 100,000 residents; that number dropped to 13,000 in 2008, or 732 per 100,000 residents.

That’s good news, but any attendant reduction in insurance premiums has been more than offset in other areas such as rising health care costs or a recession that has given drivers more incentive to file bogus medical claims.

To sum up, “all of those could be contributing factors in the cost of auto insurance here in this state,” said Scott Kipper, Nevada’s insurance commissioner.

Nationwide, 77 cents of every premium dollar go to pay claims; in Nevada, it is 95.5 cents, according to the Insurance Industry Institute. Factor in overhead, and auto insurance companies have a difficult time turning any kind of profit in Nevada, which explains the steep premiums.

So what can be done?

The answer is not complicated, though it may cost some money.

Essentially, Geeser said, Nevada needs to look at all the areas where it is falling down and do the opposite.

• Hire more police to patrol dangerous intersections and prevent drunken driving and car theft.

• Alert drivers to the most dangerous intersections.

• Adopt a cell phone and texting law, at least for teenage drivers.

• Add to drivers education classes in high schools and get young drivers more training hours on the road.

• Put cameras on traffic lights to issue tickets to reckless drivers who run red lights, a frequent sight in Las Vegas.

• Adopt a primary seat belt law.

• Reduce health care costs, though this is driven by national trends to a large degree.

Reducing the number of lawsuits is a thornier problem because our litigious nature appears to be in large part cultural — we claim injuries and sue because we like suing, not because of any perverse incentives to do so.

Some of these solutions would require higher taxes. But they would lower insurance premiums.

Discussion: 26 comments so far…

By discosis

6/21/09 at 4:08 a.m.

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Right. So let's test the methodology of the Sun's self-proclaimed "analysis" that led to the concusion that insurance rates are higher due, in part, to lawyers. First, the Sun talked to an insurance industry lobbyist. What did he say? It's the lawyers' fault? Nooooo. For shame! Didn't see that one coming. Isn't this the same insurance lobby who a few years ago spent $10 million dollars in Nevada to pass the "Keep Our Doctors In Nevada" ballot measure? And guess what the insurance lobby said back then? That insurance rates are high in Nevada due to the lawyers. That conclusion sounds familiar. The problem is that the insurance lobby makes up the data to support its conclusions. The claim about doctors fleeing the state? A governor's task force looked into it and found that not a single physician had left the state of Nevada due to high insurance premiums. Put simply, the insurance lobby lies. And here they're at it again. Oh yeah, and that Keep Our Doctors In Nevada thing? Too bad, those who have had their lives ruined by Dr. Desai and company. The insurance lobby is laughing all the way to the bank on that one. Here's the business model of the insurance industry: (1) Collect premiums; (2) When a claim is made, deny it, whether it has merit or not; (3) Lawyer up and defend the claim; (4) Charge higher rates to everyone due to the dilatory tactics. What a racket. And they think we're that stupid. Sorry LV Sun, this is bush-league, RJ-level reporting you're pulling here. Next time, try not to print the insurance lobby's press release word for word.
By adviceischeap

6/21/09 at 6:10 a.m.

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As a concerned citizen I want to do my part. Beginning today I will no longer use my cell phone while speeding from casino to casino. Also, if I'm not too drunk I will try to remember to buckle up. I hope the rest of you can follow my example and just maybe we can get our insurance rates in line with other states.
By rejco100

6/21/09 at 6:22 a.m.

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Insurance - What a Racket!
By Mandy

6/21/09 at 6:29 a.m.

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Easy solutions:

1. More police on the roads (and yes, whiners, that means that, God forbid, our sales tax will go up another quarter percent!!) And with more police, maybe they can crack down on the incessant speeding on every single street out here.

2. MANDATORY laws regarding cell phone use - for EVERYONE. No yakking and driving especially with no hands because the driver either has a pen in the hand not using the cell phone writing something down OR smoking. Mandatory use of hands free devices; they are not expensive to buy so everyone should have one. NO TEXTING for anyone, too. (Let's throw in no applying makeup, reading the newspaper, etc.) And ENFORCE these laws. IN other States, the laws are enforced so why not here?

3. Absolutely NO LENIENCY on DUI's, regardless if it is a first offense. HIgher fines for ANY DUI AND JAIL TIME across the board, with the fines and jail time appropriate for the DUI, ie first offense, second, etc. I can hear the crying now from the jail cells of the young club hopping kids who got busted after a night of drinking on the Strip, or the "you can't touch me, I'm a (Fill in the blank of the high salaried professional)". Priceless!!

3. Intersection cameras. They work so let's use them for the speeders, the red light runners, and NO, it is not violating anyone's rights to use these cameras. So get over it you super sensitive liberals. Better to save lives then to kowtow to the likes of the ACLU.

4. Seat belt use - use them or get slapped with an enormous fine. Seats belts save lives and we all know it. So use them. While we're at it: no animals on your lap when driving!!! Or lose in the car. If you love your pets - strap them in!! And every pet owner who has been to PetSmart and Petco KNOWS they have devices now for your pets to use in the car. So no excuses.

Las Vegas is not alone as far as bad drivers, law breakers etc. Every city and state has them, but it seems Las Vegas and Nevada does nothing about it, probably from lack of resources. My sister lives back in Illinois and was hit by a hit and run driver Friday afternoon. In less than an hour of her accident, the police caught the little punk - no license, no insurance, driving someone else's car - the usual MO and we, too, have thousands of these types here, but I was amazed the cops caught this kid before my sister was even done talking to her insurance company. Maybe that does happen here but if we are so short of police on the streets as it is - I doubt it.
By mred

6/21/09 at 6:50 a.m.

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Why have they built more hospitals over the last couple of years, if it is such a hostile environment for doctors? What about the profits insurance company's make?

Also there are a lot of hit and runs, and while some of those driver's have no insurance, some do. Alot of accidents go unreported because people don't want to get a ticket and see their insurance rates go up. That is a savings to the insurance companies.
By VegasSmitty

6/21/09 at 7:03 a.m.

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Get the police out of the stations and on the roads. Those "biker" cops spend way too much time trying to look cool, rather then doing any real police traffic work. They need to hire "parking attendents" to patrol parking areas to free up real police. Part of the problem is the example the police are setting, speeding with no lights/sirens, and never signaling, running red lights and stop signs.
I see way too many cars with one or no tags and I can bet 10 times that have no insurance.
By LasVegasLawyerGal

6/21/09 at 7:23 a.m.

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It's all too easy to "blame the lawyers" isn't it? While I'm not a PI lawyer, the reality is those folks who do that work usually--if not exclusively--work on contingency, which means they get zero unless they're able to secure a settlement for the client. But there's a deeper issue here--blaming lawyers after an accident caused by irresponsible people is kind of like blaming doctors when people contract lung cancer after smoking five packs a day for 20 years.
By markp

6/21/09 at 7:42 a.m.

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over the past 3 weeks I have seen 5 police cars jump red lights, rather than stop they sail right through.....
By hooloogoo

6/21/09 at 8:05 a.m.

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.
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...I'm single and got five cars, yeah yeah I should sell some, but I switched from AAA to State Farm and was shocked to get the same coverage at 250 a month down from 450. That's ridiculous. but then you have a hamburger at 3.95, a cheeseburger at 4.50 and a California burger with a slice of tomato and piece of lettuce at 8.95.. Damn you California auto club...
..
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By Babyboomer

6/21/09 at 8:07 a.m.

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Cell phone laws on the books in other states don't work,never enforced and pointless.Texting...? how the hell can you do that and drive? Beyond me.Anyone caught texting while involved in a accident or using a cell phone is traceable and can tracked to the moment of impact.A good tool for the lawyers suing a driver after he/she has just killed or seriously injured several people.They need to use these and pass laws to allow this in a court case. Seat belts will not stop you from walking away without some injury,but the simple point is you will be alive in most all cases.I for one,don't even put my car in drive until everyone is belted in,but thats me.I truly am floored when I see a 4 foot 10 inch woman sitting behind the wheel of a caddie suv,turning the corner with one hand and chatting with the other stretching her neck to see over the dash. GOOD GRIEF
By NNurse

6/21/09 at 8:27 a.m.

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What is the solution for out of state residents who never register their cars in Nevada? I have several neighbors on my street whose cars have sported out of state license plates for 2 or more years. My hairdresser used to brag that she has lived in Las Vegas for 15 years but never registered her car in this state. She may still be bragging, but I wouldn't know: I stopped paying her my Nevada-earned dollars so she could avoid paying her share of the burden.
By sphengolly

6/21/09 at 9:27 a.m.

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Here a novel idea, DO NOT PAY OUT CLAIMS TO THOSE WHO GET A DUI,AN ACCIDENT WITHOUT A SEAT BELT ON, TICKET FOR CELL PHONE USE, TEXTING WHILE DRIVING, All of those claims that can be attributed to bad driving or stupidity," Texting while driving" Have automatic denial on the claims & people will stop. More cops will not stop it, more laws will not stop it , only when people get hit in the wallet will it stop. If they hurt another driver or damage an innocent person's property, that part should be paid out, but not to the driver, then take away their driving privileges for a year, no exceptions.
By sphengolly

6/21/09 at 9:40 a.m.

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I agree some of the cops are worse then the people they are suppose to regulate.

The other day there were 2 motorcycle cops(On dirt Bikes) they drove between the left turn lane & the traffic going straight on Rancho, They were South Bound, Wanting to turn East onto Alta, they did this just so they could get ahead of the cars that were stopped at the light that were waiting to turn east onto Alta. This was on Wed or Thurs between 0730-0745.
By OpenRange

6/21/09 at 10:20 a.m.

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Welcome to Nevada. If you are a newcomer be aware of our economy which is highly based on retail and service sector jobs that pay very low wages. As a result, Nevada tends to attract poorly educated citizens and non-citizens that also lack basic grasps on life like driving (and buying homes). Compound this situation with the fact that Nevadans refuse to pay higher taxes for anything, including more police, traffic cameras (against Nevada Statutes, by the way), seat-belt/DUI enforcement, and all those other fuzzy, feel-good solutions.

Knowing this, be prepared for higher insurance costs and higher probability for vehicle damage while driving and parked. Solutions to our "phenomena" are to buy vehicles that have low insurance rates (the higher the safety rating, the better), buy used vehicles (less painful to witness the constant abuse on the vehicle's paint and body), and drive like you are in a Mad Max movie (never take an intersection for granted is one example).

Instead of immediately calling for police-state approaches like some have suggested, understand the customs and cultures that dictate your surroundings.
By davidwayneosedach

6/21/09 at 11:01 a.m.

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I can understand the high rate of drunk drivers. But where does the high theft come from? More crooks?
By UNLVStud

6/21/09 at 11:14 a.m.

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Wow. That list of "solutions" reads like a government regulator's wet dream. More government control over your life is what they want.

Uninsured are the biggest problem. There are already laws on the books, they just need to be enforced. How are these people even registering their cars without showing proof of insurance? That should be check annually just like your smog check.

Also, how come there is not a thoughtful discussion or inclusion of all those California drivers that are on the roads and are causing these accidents? How many of the accidents were between two Nevadans? Accidents are just part of life in a tourist-based economy.
By geenab65

6/21/09 at 12:11 p.m.

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Unfortunately, drivers with suspended licenses or uninsured still drive. There is no way to tell who can drive and who can't!!
By FastTracker

6/21/09 at 12:12 p.m.

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Three and one-half years ago, I became somewhat of a professional pedestrian, to get the benefits of walking.

From that experience, I can say that those drivers failing to yield when I'm legally crossing a street are likely to be jabbering on a cell phone.

I'm the last one to want more government regulation, but these people are endangering others.
By casinokid

6/21/09 at 12:20 p.m.

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The above-average premiums amount to hidden taxes on residents.

How and where ? are these hidden taxes involved with a premium, A premium is assessed by the insurance company a private entity!
Taxes are assessed by the governing body.
By bdover

6/21/09 at 5:37 p.m.

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I just want to thank Glen Lerner, and his cadre of associated lawyers for driving us crazy with his personal injury ads. He's from Massachusetts, talks like Ted Kennedy, and is totally obnoxious. His old man, Pops, was a mob wanna-be in West Roxbury, Mass. When Shakespeare wrote his comment about lawyers, "First we need to....", which we all know, he was right. May they all rot in hell....
By hellraiser

6/21/09 at 6:47 p.m.

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I have to comment on this topic. I drive through Las Vegas a couple of times a year and am amazed at the crazy drivers in this town. Speed limits are for someone else I presume because if you dare to drive the speed limit you have someone on your tail and give you the finger when they pass. Darting in and out of traffic. No wonder there are so many accidents!
Yes, laws that are enforced for talking on cell phones and texting while driving help cut down on accidents. Don't tell me it is infringing on your rights, you are infringing on my rights by being irresponsible while you drive.
I am no lover of attorneys but they wouldn't be there if there weren't so many idiot drivers causing accidents. Put some teeth into existing laws and put some teeth into the seat belt laws. Your a moron if you don't wear your seat belt.
I was considering moving to your area until I did some checking on cost of vehicle licensing, insurance and yes the crazy drivers and decided that I would spend my money in another state. Yeah I know, you are glad and so am I!
By Esquire

6/21/09 at 8:58 p.m.

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you were considering moving to Vegas, but decided not to because of the vehicle licensing, insurance, and crazy drivers? Likely story.
By sunnysideup

6/22/09 at 11:21 a.m.

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Thieves, drunks, and lawyers are all one in the same.
By odeman

6/22/09 at 1:44 p.m.

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As usual it's the "poorly" educated working stiffs that are the bad drivers. The worst drivers I have encountered were from Ill and California, two states chock full of "educated" drivers. Truck drivers claim the worst drivers are from the northeast, specifically around the big cities and bedroom communities chock full of "educated" drivers. I live 100 miles out of Chicago in Wisconsin and most times there are more Ill cars than WI as a huge amount of rich "educated" people have summer and weekend homes here. We have a standing joke around here that we should stop every car coming in from Ill and give them a variety of citations because the odds are they are going to break as many traffic laws as possible while here.

How many of those uninsured are immigrants, legal or not. Have an accident and how are going to force them to pay? Take away their license? Just forge another one. Sue? These guys have no assets so why sue, even if you could find them. If they kill or injure someone and are cited, they head south of the border. Another cost we all pay that immigration backers fail to mention.
By TransAm1986

6/22/09 at 4:22 p.m.

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Las Vegas is just a smaller version of LA. Many bad drivers come from out of state. I blame the fibsters and the prunepickers.
By wdevine

6/22/09 at 6:36 p.m.

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Dang - we still can't get past using a truncated and out-of-context version of the Shakespeare quote... Come on 'bdover' - it was a compliment to lawyers when Shakespeare said the first thing we should do is kill all the lawyers, because he was talking about how to take away people's rights, and before being able to trample on people's rights, there cannot be lawyers to defend those rights.

As to the Vegas drivers, I moved to Vegas from Houston and I think everyone drive's great here :-) It's a matter of perspective.

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