Do We Have Socialized Auto Insurance in Arizona?

Did you know that about 25% of the drivers in Arizona do not have auto insurance? Yes, for every four cars on the road, one of them is not insured! For those of us that play by the rules and are responsible for our actions, we pay an additional fee for uninsured motorists in our insurance premium payments! Essentially, we are paying for them….kind of like auto insurance socialism! Now that should send a chill up your spine!

On my 13 year old pickup truck, my insurance company charges me $77.00 a year for uninsured motorist coverage and an additional $76.00 a year for underinsured motorist coverage. So that’s over $150.00 a year that I am paying for this socialized system! And that’s just for one of my vehicles!

Remember years ago when you could not get license plate renewal tags for your vehicle if you did not have proof that you had insurance coverage? If you changed insurance carriers, you would likely get a letter in the mail from the Department of Motor Vehicles asking you for proof of insurance! Why is it that they were able to monitor insurance coverage back then but can’t do that today after computer technology has evolved by leaps and bounds?

Finally, just a few days ago on October 1^st, a brand new law has taken affect that will put some teeth in to our laws about driving without insurance. For those caught driving without insurance, they will be fined $500 on their first offense and up to $1,000 for their second offense. They might even lose their license if the judge is feeling rather ornery that day.

The minimum coverage that is mandated by this new law is $15,000 for bodily injury coverage and $10,000 for property damage coverage. So, with those low coverage amounts, it will barely cover six hours in a hospital emergency room and you better hope that you hit a 5 year old Chevy Impala instead of a new $90,000  Mercedes Benz.

Well, they say that it will reduce the premiums of those that have auto insurance but I’m not holding my breath! Once the accident claim goes well beyond their limits of coverage, the person with minimum coverage will probably skip out on any judgment against them. Heck, if they couldn’t afford to cover their vehicle in the first place, why should we think that they would make good on a judgment?

Did our legislators just pass a feel good law with no teeth in it after everything is said and done? If you can’t afford to be a responsible driver, stay off the roads and take public transportation or ride with a friend. I’m tired of paying for those people who can not be responsible for their actions!

There has also been talk about adding a gasoline fee which would provide all drivers with insurance. I am also opposed to this because it takes away our ability to choose our insurance providers and would be government run. I’d like to hear your thoughts on this!

Are we weapons of mass destruction?

All kidding aside, these two ton transportation traveling machines are killers on the highways and byways. Just ask the guy that plowed down 7 elk and walked away without a scratch! It’s too bad that he just sent these beautiful creatures to elk heaven! It certainly was an ugly mess.

However, most folks believe that the government is there to protect us and keep us free from harm so when we harm others or ourselves when getting in to accidents, our government wants to further regulate us. That being the case, we now have seat belt laws and certainly the city of Chandler AZ thought long and hard about this before sending out their posse to ticket those in their city who drove without being buckled up. The posse also took the time to check on your youngsters in the back seat to make sure that they were properly restrained in their car seat.

Now, another issue is looming and legislation is forthcoming. To text or not to text while driving. A recent survey shows that 80 to 90% of American drivers want texting while driving banned. The other 10 to 20% that does not want texting banned was too high on drugs or alcohol to respond in understandable terms, or were they? Maybe that group understands that it is a further encroachment on our rights so that we are free to travel without the eye of Big Brother constantly monitoring us.

I recently posed this question on the internet and received mixed feedback, but I already had taken a position in this looming legislation. When have we become so mindless regarding our own safety that we would stand to be distracted while driving? Some people are so oblivious to the safety of others that they would not consider the act of texting as a distraction that could kill or injure others? Are we so hooked on the necessity of constant communication that we forget how our actions can and do harm others?

There should be no need for legislation to ban texting or cell phone use while driving! We just need to be responsible for our actions and act accordingly! Believe it or not, we once got along without these electronic devices and actually paid attention to our duties of being a safe and responsible driver. When we become oblivious to our responsibilities, the government will deal with it by passing more legislation that will take away more of our freedom. Think about it!

Will You Get Stuck With a Warranty Issue When Your G.M. Dealership Closes?

As you may know, GM is closing 1,300 franchised dealerships across the country and they offered these dealers $100,000. to $1 million to wind-down the dealerships. In order to get this wind-down money, the dealers had to sign an agreement that they would not be able to order any new vehicles. Well… the Cash For Clunkers program has essentially eliminated most of their inventory, leaving many of them with a 30 to 60 day supply of vehicles on hand. Once that inventory is gone, GM has “allowed” them discontinue their franchise rather than waiting until January 1, 2010 (as originally agreed).

If you remember, GM had sent out notices to the 1.300 dealers telling them that their franchise had been cancelled and it was up to the individual dealer to release the information that they would be closing. However, they said that these dealers would not be closing until late 2010. So, here we are… one year ahead of schedule and the public does not know if their dealer is one that will be terminated. These dealers represent 21% of the total of GM dealers in the nation. Also, GM has stated that it plans to close a total of 3,500 to 3,800 of its 6,100 dealerships by the end of 2010 or 57% to 62% of their total dealerships. GM states that this will save them $1,100,000 per dealer per year

 Here are some of the problems that we see:

1. Many dealerships offer a “Dealer Backed Extended Warranties”. If you purchased  a dealer backed warranty, you should ask for a prorated refund if you believe that your dealership has been terminated.

2. You need to get a printout (service records) from the dealer for warranty purposes. This report will need to list the service that was performed on the vehicle (as well as when it was performed and the mileage when it was performed). Having these records are necessary if you have a manufacturers warranty claim and it is also very beneficial to a new auto care facility that will be performing your service work in the future.

3. You should be hesitant to take your vehicle to a GM dealership for any minor or major repair if you suspect that this dealer may be closing their doors. If they do go out of business, other local GM dealers should be able to handle a part(s) claim in a warranty situation but they probably won’t cover the labor side of a warranty claim.

4. If you believe that the dealership that you use is going out of business, you need to get acquainted with a new shop right away. It would be a good idea to have this new shop perform some minor services to insure that you are comfortable with them. It is never a good idea to have a break-down situation where you are forced to take it to a shop that you are unfamiliar with.

  GM hopes that by eliminating up to 62% of their dealerships that the remaining dealerships can be more competitive and charge more for their vehicles.

 You may want to consider selecting an independent auto care facility. Well equipped and professional shops have the same tools and skills as the dealership and are able to charge significantly less for service and repairs. This is primarily due to the fact that independent shops can use O.E.M. parts which are as good if not better than the manufacturers parts. Recently, Consumer Reports stated that when using an independent shop you can expect to see savings of over 30% when compared to the dealerships.

 When selecting a new auto care facility for your vehicle, it may be tempting to use one closest to your home or place of employment or perhaps one that a friend or neighbor recommends. Before trusting anyone with your vehicle, spend a few minutes on line checking them out.

1. Check the shop out with the Better Business Bureau at www.bbb.org The BBB typically has a letter grading system. Only use shops that have an A rating! Some shops may have an A rating but have numerous resolved complaints against them so consider crossing them off your list if you are not comfortable with the volume of complaints.
2. Many times the BBB report will indicate how many years they have been in business. You will want to select a shop that has been in operation for many years and have the expertise and knowledge of operating a shop so that they will be there for many more years to come.
3. Make sure that the shop is clean and well kept as this may be an indication of how they will treat your vehicle.
4. Getting a written quote for major services or repairs is a good idea. You may also want to get a second opinion from another good shop but be sure that they quote you for the same quality parts and services.
5. Always pay for your service with a major charge card so that you will have the ability to file a dispute with the charge card company if a problem arises.
6. If you live in the Phoenix area, we invite you to use www.yourautonetwork.com We have researched all of the local auto care shops in the area and have listed the top rated shops for your consideration. Those living outside the Phoenix metropolitan area can find more tips on selecting an auto care facility by going to this website and clicking on “Our Rules”.

Cash For Clunkers-The Winners and Losers!

Recently, Automotive News published an article detailing the cost of a new “Auto Bailout program,” and the $95 billion dollar price tag was very unsettling to me.

This figure represents money already spent on the program by the U.S. government but also includes funds authorized but not yet distributed. So I guess I shouldn’t be upset about another measly $1 billion dollars in taxpayer money being spent on the automotive sector for the “Cash For Clunkers” program, but I am.  And here’s why.

In preparation for Your Auto Network’s  Calling All Cars radio show, I spent several hours pouring through whatever nugget of valid information I could find on the subject, including reading the law which takes effect July 24, 2009. Then I got to the section of the bill stating the reasons for its implementation which includes 1) efforts to save the environment, 2) reduce greenhouse gases, 3) reduce our dependence on fossil fuels and 4) lessen our carbon footprint.

I’m sure that every little bit helps when it comes to protecting the environment, but it left me scratching my head wondering if we will have to pay a billion dollars each time we want to make a minuscule environmental improvement. Well, this bill does very little to help our environment, so let’s continue to investigate here and figure out who this really does help!

Here are the fundamentals of the program and how the consumer can take advantage of it:

1. $1 billion program for the sale or lease of new, fuel efficient cars, SUV’s, vans and trucks.
2. Tax credit for cars at $3,500 if the improvement in fuel economy over the trade-in is at least 4 mpg or $4,500 if the improvement is over 10 mpg.
3. Tax credit for trucks at $3,500 if the improvement in fuel economy over the trade-in is at least 2 mpg or $4,500 if the improvement is over 5 mpg.
4. Consumers may combine this offer with other State and Federal incentives for purchasing hybrid vehicle.
5. Only one trade-in per new vehicle purchased is eligible under this program.
6. Trade-ins must be in drivable condition, continuously insured and registered to the current owner for the past year.
7. Vehicles must have been manufactured within 25 years prior to the trade-in but not later than model year 2001.
8. When a passenger vehicle is traded-in, it must have a combined highway/city fuel economy rating of 18 mpg or less to qualify.
9. The program is valid through November 1, 2009, or when funds are depleted whichever comes first.
10.  The program may be extended if Congress allocates more funds.
11. The program officially starts on July 24, 2009, however it applies only to vehicles sold after July 1, 2009.
12. New car dealerships must register for this program. Many dealerships are already selling vehicles under this program even though the final bill is not in place. If a dealer sells a vehicle under this program before the final bill is posted, the dealer is responsible for any ill effects caused by the early sale.
13. The dealer may not use this credit to offset rebates and discounts.
14. The trade-in vehicle must be crushed or shredded (by dealer designee) to ensure the vehicle will never be used again. Parts may be stripped from the car before crushing with the exception of the engine and transmission.
15. Consumers will not have to claim this credit on their income taxes.
16. The new vehicle’s suggested retail price can not exceed $45,000.
17. In purchasing a new passenger vehicle under this program, it must have a combined highway/city fuel economy rating of at least 22 mpg.

So, let’s analyze these figures to see what the real story is!

Let’s say the average credit the new car purchaser receives is $4,000. Divide by the $1 billion dollars that have been approved for this program. That equates to 250,000 new cars that could be purchased under this program. Now, let’s divide that by 50 states and that is 5,000 cars per state.

Using Arizona as an example, there are approximately 5 million vehicles registered in the state (including government vehicles). Therefore, this program would get 1/10^th of 1% of these “Clunkers” off the road and provide this incentive to only a small segment of potential participating car owners.

We contacted the Arizona Automobile Dealers Association and were unable to get a definitive answer as to how many new car dealerships are located in Arizona, but let’s guesstimate that there are 250 statewide and 175 will have registered for this program.

This means that each registered dealer could potentially sell 29 vehicles under this program. Frankly, new car dealers make very little money when selling new cars, the majority of their profit is derived from the sale of used cars and their service departments. So, here again, the dealerships are not the big winner in this program. In fact, it does not even provide them with cheap used cars to resell on the lot… I guess that they’ll have to continue to purchase more used cars at auction.

JD Power forecasts that 10 million vehicles will be sold in the United States in 2009.  Therefore this program will apply to only 2.5% of vehicles potentially sold this year. That’s not too bad for the struggling automakers, so let’s call the automakers a major winner in the Cash For Clunkers program.

For the consumer, it could be quite beneficial if they can meet all of the program qualifications. They could purchase a $15,000 economy car and make as much as $4,500 on their trade in under the Clunkers program. After sales tax, registration, destination charges and other fees, they could finance the balance with payments of $250.00 per month on a 60 month loan with a 6% interest rate (for good-credit worthy borrowers) or $3,000 per year. Purchasers are cautioned that they will need to check with their insurance agent to determine any increases that will result in their insurance premiums before making the purchase as well determining whatever increases they will see in the annual State registration fees.

The major winner in this program seems to be the car manufacturers benefiting by a 2.5% increase in sales.  And the consumer wins because under the Cash For Clunkers program, they will realize a savings in their fuel cost over the life of the car as well the savings derived by getting rid of their older, high mileage vehicle.

This analysis indicates that this bill’s original intention of achieving a meaningful positive impact on the environment is the Clunker!

After all of this research, I wish that I could say that I’m happy knowing where the billion dollars is going, but I keep remembering what some wise statesman once said … “a billion here, a billion there and sooner or later it’s a lot of money.”

If you’d like to find out if your trade-in vehicle qualifies for this program visit www.fueleconomy.gov/feg/findacar.htm and for program details visit www.fueleconomy.gov

Article by: Cary Lockwood, automotive consumer advocate and radio talk show host in Phoenix AZ. Founder of www.YourAutoNetwork.com automotive service referral network.