In 2011, the Internet Crime Complaint Center received 300,000 complaints about online sales, many of which involved vehicles where the VIN had been changed, the title documents had been forged and dealers were claiming to sell as private citizens. In other words, this is clear fraud. To offer some protection for consumers, lawmakers have begun to consider changes to the law. This March has seen new laws pass on to the statute books in Florida and Utah. These laws place a specific duty on licensed salvage dealers to certify whether the vehicle can be safely repaired. In Utah, the law now defines a total loss vehicle and, once a vehicle meets this classification, it can only be dealt with by an approved dismantler and recycler. There are also specific reporting duties to ensure central database records are updated. As in all double entry systems, the idea is to ensure that the records of the insurance companies and the salvage dealers should tally. Perhaps, surprisingly, the Florida lawmakers were unanimous in producing HB 885. This not only creates new offenses relating to the process of certifying total loss and subsequent destruction, but also makes it more difficult for anyone other than a licensed dealer to sell scrap.

Because lives are at stake, it’s a little disheartening that only two states have specifically addressed the problem. Given the auto insurance companies and the recycling industry were unanimous in approving new laws in Florida, this should be a no-brainer for the rest of the country. All lawmakers should be introducing proper accounting systems to ensure structurally damaged vehicles cannot get back on our roads. Remember none of money that’s paid to buy these death traps can be recovered. Auto insurance does not cover losses through fraud. It’s ridiculous that, as consumers, we’re supposed to protect ourselves. No one can easily detect a cloned vehicle with a different VIN and forged title documents to match.

We can all wish the secondhand dealers who wait for us on their lots are as honest as the day is long. Many of them are, but it’s their job to sell the stock. To keep their jobs, they must be good at passing on what they have. So our survival depends on where the stock comes from. Some cut corners. Either they look the other way when a vehicle is driven in for sale, or they actually adjust the vehicle so it will command a higher price than it deserves. On a good day, the only changes in addition to the mandatory wax job to make the vehicle shine are a little heavy oil to make the engine run more smoothly and a few miles subtracted from the odometer. But on a bad day, we buy something that slowly tells a story of past disasters. People in the trade can pick up damaged vehicles for a few dollars. When the insurers pay out fair value on a totaled vehicle, the vehicle should be scrapped but, sometimes, a few more dollars divert it into a repairshop. For this purpose, the most popular are those vehicles that have been underwater in a flood. The bodywork is usually sound. It does not take so much effort to clean up inside. This produces a vehicle that looks good. The fact the electronics may only stay active for a few miles is not something these sellers worry about.

Fortunately, every vehicle has a unique VIN, an identification number. If you cannot see one, do not buy the vehicle. It’s missing because there’s something to hide. If there’s a number, run it through the free test on the National Insurance Crime Bureau site. This will tell you immediately whether the vehicle has been through a claim and has been declared as salvage. For once, the auto insurance industry is on your side by keeping perfect records of totaled vehicles. So never get an auto insurance quote before checking out the VIN.

Theft is included as part of the cover sold in a comprehensive policy. It applies both to the vehicle as a whole and to parts. For example, in 2010, slightly more than 75,000 airbags were stolen. This part of the insurance portfolio is not mandatory. It’s up to the individual vehicle owner to look at the local crime statistics and decide whether it’s a good investment to include theft. To help you decide, let’s look at how Minnesota approaches the problem. Even though the state has one of the lower theft rates, there’s a major crime initiative between the law enforcement agencies and the commerce department which offers specific funding of $4 million per year. As a result, the number of thefts has fallen faster than the national average over the last seven years of reported figures. The initiative falls into two parts. The first is research-based, interviewing convicted thieves and collecting evidence to prove which are the most effective strategies to recover stolen vehicles. Second, there’s a move to introduce both static and mobile license plate readers across the major population centers. It’s considered far more cost-effective than hiring extra officers to police the roads. When you put the funding against the total of $21 million in stolen value, it’s a good investment if it enables a higher rate of recovery or acts as a deterrent to the thefts by increasing the risk of detection.

It’s curious to see how the priorities of a state can be shaped by its geography. When the source of the problem is limited to one or two major population centers, it’s very cost-effective to invest in technology to reduce the theft rate. The success of a relatively small investment should be an encouragement to other states or the larger cities. Yet, despite this success, many drivers are hostile to the use of any form of camera technology that reads the plates or identifies the drivers at specific locations and times. They are offended by an infringement of their privacy even though it may have a major beneficial effect for all who live in the area. As it is, comprehensive auto insurance remains relatively expensive because the value of vehicles stolen is high even though the number of vehicles lost is falling. If there was more effective policing across America, it would certain keep comprehensive insurance more affordable even if not actually produce cheap auto insurance.

The British have invested heavily in camera technology to monitor speed on highways, encourage people to obey the stop lights, and so on. Because there was a major problem of people driving away from gas stations without paying for their gas, thousands of cameras were installed to collect evidence of the vehicles involved and, wherever possible, clear images of the drivers at fault. This has significantly reduced the problem, although some dishonest drivers simply fit different plates and still drive away. The British government is now proposing to extend the use of these gas station cameras. The software already exists to cross-reference the camera images to the central database showing whether the vehicle is taxed and insured. It’s already in use on the equivalents to our interstate highways with police stationed at regular intervals to stop offending vehicles. About 1,500 vehicles are pulled from the roads every week and almost half of them are never reclaimed. The new proposal is to prevent uninsured drivers from buying gas. This will literally leave them unable to use the vehicles unless they pay to license and insure them.

To give you an idea of the scale of the problem, the British government estimates about 4% of their vehicles are uninsured. About 14% of all vehicles on the road in America are uninsured, yet there’s no consistent use of license plate recognition software. If we adopted the British approach, we could pull tens of thousand uninsured vehicles from our roads every week and, if we wanted to be really aggressive, stop the uninsured from buying gas — assuming the staff at gas stations were prepared to face angry customers denied their gas, of course. The result of this enforcement would mean more people paying for their auto insurance. As their numbers increase, responsible drivers need not pay for uninsured driver cover. With more people paying, the insurers could hold the current premium rates if not actually reduce them, saving significant amounts for all the drivers who have been paying more than they should. This is a political issue worthy of debate at a national level. Although we all rely on our vehicles to get around, the responsible drivers should not be forced to subsidize the uninsured or to self-insure against the risk of being hit by an uninsured or underinsured driver. We should all be equal when it comes to auto insurance.

This is treated as asking the insurance company for credit. It is, after all, entering into a contract with you for six or twelve months of coverage. Instead of you paying for this in full, you are spreading out the payments. For this privilege, you pay a fee. If it was expressed as a loan, the additional sum would be called interest. In one sense, this is a penalty for those who literally cannot afford a lump sum. If it was always a trivial amount, we could smile weakly and accept it. The reality is that, over six months on a standard policy, the difference can be more than $100. Put this the other way round and ask about about discounts. You will usually discover how much you can save if you have enough to pay the premium in full. Indeed, if you have savings, it’s always better to pay as a lump sum. It also avoids any problems in you forgetting to make any of the monthly payments.

You should also look out for the hidden fees. The majority of insurers list the premium rate as a monthly sum. This means they neglect to tell you about the fees they charge depending on how you make the payments. There can be big differences depending on whether you pay by electronic wire transfers or online or by the traditional check (which many businesses are now trying to discourage). Some add an administrative fee for handling all monthly payments. There have been problems with this practice in some states and their Insurance Commissioners have issued regulations capping the fees the car insurance companies can charge.

The moral of this is clear. If you are fortunate enough to have savings, always get the car insurance quotes including the discount and pay the full amount. For the majority who are struggling financially, do the calculation. Find out how much you will save if you pay in full and then see whether you can borrow this amount. Obviously, a payday loan will cost you a fortune — if that’s your only option, pay monthly. But if you can borrow more cheaply, do the math. Otherwise, try to save a little each month so that, when he renewal comes around next year, you can pay in full.

You will know this cost is divided among all insured drivers as a part of the premium. Just imagine how large the reduction in the rates would be if the fraud could be eliminated. The latest proposal is to require all the victims of traffic accidents to go to an ER. As it is, a team of “professional” drivers can be seen involved in an accident at a street corner. Innocent witnesses will confirm the reality of the accident and “pain clinics” will offer medical evidence of the injuries. When payment is received, the cash is divided among the participants and they move on to the next fraud. If it was a condition of a claim for personal injuries that a team of ER specialists had to certify the reality and extent of injuries, the politicians believe the number of dishonest claims would fall. This assumes no doctors who work in ERs could ever be dishonest and, for a fee, certify non-existent injuries. But, more seriously, the problem is numbers.

At present, ERs are drowning in too many patients. People without health insurance wait until their problems are an emergency and then turn up for treatment. If politicians make it a condition that thousands of additional drivers and their passengers also attend the ERs so that any injuries can be documented, imagine what would happen. This is not to say people with serious injuries should not be seen at an ER. That’s what happens now. It’s only right people should get the best possible treatment in hospitals. But the idea of suddenly sending in all the other people with relatively minor injuries will break the system. The only way the hospitals could cope would be by dramatically expanding their facilities and staff. Who would pay this additional cost? Auto insurance quotes might fall but health insurance costs would rise. So when you are thinking about cheap car insurance, do not hope for mandatory visits to the ER.

As an example of the problem, let’s look at the solar power market. If you live in a slightly better than average home, you are probably paying about $6,000 per year in electricity charges. A home solar-power system costs about $90,000 except the federal government is so keen to promote the use of solar power there’s a 30% subsidy. So the cost of the installation is about $63,000. The system has a life expectancy of about twenty years so, if you pay off the cost over ten years, you get free electricity for not less than 10 years. That seems like a good deal. Except very few people want to pay now to save money later. In fact, the majority will be looking for a no-money-down deal and reduced payment even though, long-term, this is a worse deal.

This unwillingness to invest in the future is what causes your insurance rates to keep on rising. Let’s take just one issue as an example. The insurance industry loses billions a year through fraud. Instead of spending money to put people and systems in place to reduce the fraud, the bill is simply passed on to us as higher premiums. But suppose your state used some of the taxpayer dollars to create a special task force to investigate insurance fraud. This force liaises with all the insurance companies, i.e. the computer systems are partially integrated so that the claims adjusters can refer suspected cases for investigation. Why use taxpayers’ dollars? Because fraud is a serious crime and, if there are going to be successful prosecutions, a dedicated and specially trained force is the best approach. You are worried this may cause tax increases but ask yourself which is better: that you should pay a little more in tax now if this reduces the level of fraud in your state and means your next auto insurance quotes come in at significantly reduced levels?

Just think how much of a deterrent more effective investigations would be. The first people tried and convicted are given media coverage as they go to jail. It only takes a reduction in fraud by a few hundred million, and we are moving towards a better country with less dishonesty and really cheap car insurance. Unfortunately, the politicians have no stomach for this type of policy because it does not deliver benefits to fit into the two-year electoral cycle. To keep their voters happy, they need results today so they will be re-elected tomorrow. If all the voters see is higher spending and only slightly reduced premium rates in two years, they may vote against the big-spending governments and demand the termination of all the special task forces.

In a way, we have all been conditioned to think of this damage as being mainly a property problem. We see all the pictures of the winds picking up buildings and leaving nothing but wreckage behind. When the twisters move through a town, entire neighborhoods are flattened. So we routinely reach for the homeowners insurance policy and start reading the small print to see whether we are covered. As an aside, the insurers have been getting more restrictive with their coverage as the number of wind-related events have been increasing. Premium rates have been rising fast when the homes involved are more prone to damage. This can be the obvious problems of mobile homes and trailers through to older properties where roof construction may not be as robust. You may benefit from asking a builder for quotes to reinforce your roof — discussing the plans with your insurer can bring the premium rates down so rebuilding can be a good investment.

Although buildings are static targets, not everyone can drive their vehicles out of harm’s way. There are three major source of danger for vehicles. The wind can literally blow a high-sided vehicle over. If you are overtaking a semi-trailer truck or a bus, you can suddenly find yourself caught in a trap as something falls on to or in front of your vehicle. Equally, once a tornado or windstorm picks up branches or debris, it has to come down somewhere. If you are driving when it hits, it can cause an accident. If you are parked, it can simply damage the vehicle in your garage or parked on the yard. Secondly, wind can move water. It can be rain, sleet or snow, or in a lake or the sea. This combination can produce flooding which can seriously damage modern vehicles with their electronic systems. Thirdly, windstorms like Santa Ana routinely cause wild fires.

This damage will not be covered by a liability policy. You need both collision and comprehensive cover to give yourself some protection from losses. But this is where the small print becomes important. The number of natural disasters this year is forcing insurers to reprice the risks of losses. This means next year’s auto insurance quotes will be higher and there will be more exclusions and limitations. So if you live in California or in the northern states where the winter winds may cause damage, now is the time to think carefully about precisely how much insurance you carry. Cheap auto insurance is not a good idea if you are at risk. This will only pay out in very limited situations. Aim for the best cover you can afford.

In a capitalist society like ours, we put a price on everything. If you want to drive a heavy car with a thirsty engine, are you prepared to pay more than $100 for a tankful of gas? For the record, the average price of gas and diesel has been at or around $4 for most of 2011 although the price of regular can be as low as $3.30 in some states. Similarly, if you want to drive a high-powered car with ferocious acceleration, are you prepared to pay the higher premium rates to insure it? So here comes the next big question. Are you prepared to fit new technology to your vehicle to tell your insurer when and how far you drive? As an aside, some insurers have bigger better black boxes also containing a GPS transmitter and equipment to monitor how the vehicle is being driven. All this information is transmitted to the insurer in real time so, if anyone wanted to know where you were, some insurers could give a precise location. This also provides actual evidence of law-breaking. At a trivial level, it records every time you go over the speed limit. Should you be involved in an accident where someone dies, the bigger systems record whether you braked sharply, swerved violently or did anything else unusual. Like the black boxes in an airplane, it would allow investigators to create a very precise model of how the vehicle was being driven when the death occurred. It could be the difference between your statement to the police being believed and a conviction.

One of the pioneers of this type of technology is Progressive Insurance and it has just released the latest analysis of driving habits compiled from the data it collects. As you will probably be aware, most insurers offer discounts if you prove you drive less than 12,000 miles per year. This discount was given to half the drivers. Similarly, the majority of drivers claim they never drive between midnight and 4 am — the most dangerous time on the roads. This is also confirmed by the technology. In other words, if you agree to fit technology supplied by Progressive or any of the other insurers, you will potentially gain almost immediate access to all the discounts based on low mileage, the time you drive and the safety of your driving. So, when you are working through the next batch of car insurance quotes, look for the pay-as-you-drive options. If you are prepared to sacrifice some of your privacy, the savings can be significant. As a good capitalist, does a price incentive change your behavior when you see the savings in your auto insurance quotes?

So let’s say you decide to make the long drive, here are a few basic precautions before you set off. First, the farther you are proposing to drive at a busy time of the year, the higher the risk of an accident. Sadly, the holidays bring out a lot of weekend drivers who suddenly switch from short runs to a long journey. They tend to lose concentration. Some even fall asleep at the wheel. So now is the time to think carefully about collision and comprehensive cover (assuming you don’t already have them), and check your health insurance to ensure there will be enough money to cover any visits to the ER out-of-state should you have an accident. That way, you can avoid unpleasant surprises if your journey is interrupted.

Now spend a little money on some routine maintenance. You trust your vehicle when it’s just running around locally. A long run is a whole different ballgame so check the tires and have the engine serviced. The last thing you want is a breakdown in the middle of nowhere when no local garages want to come out and rescue you. Remember to pack emergency supplies should you be stuck by the road in bad weather.

Now suppose you decide to rent a big comfortable people mover for the journey or you fly and rent at the airport. You need to think carefully about insuring the rental. The rental company must give you the basic minimum liability insurance for the state(s) in which you will be driving. Remember, most of these policies do not cover you if you drive into Canada or Mexico. Now the big decision. Even if you have a collision and comprehensive policy on your own vehicle that covers you when you drive a rental, you can find your premium rates climb if you make a claim. It therefore makes sense to buy the Loss Damage Waiver. This pays all the bills if the rental is damaged or stolen. Finally, check your homeowners insurance to see whether all your possessions will be covered in a rental vehicle. It’s probably better to deal with this before you confirm the rental agreement. Get auto insurance quotes for the different possible types of cover. If you are paying for the rental by credit card, there may be some auto insurance thrown in but check the terms and conditions carefully.