Drivers whose insurers came to the rescue after Hurricane Sandy destroyed their car might be spared some sticker shock when they go to renew their policies: The claims they make for a flooded-out or tree-flattened car won't affect their rates down the road, some insurance companies are vowing.Other insurers, however, have not ruled out counting a comprehensive claim against drivers whose vehicles were damaged during the storm.
Meanwhile, drivers in general can anticipate that New Jersey's already pricey auto insurance premiums may edge up as insurers take into account Sandy's tremendous costs -- and the growing belief that the Northeast will face more devastating storms, experts say.
All drivers are required to carry liability insurance to pay for damage and injuries they cause. But those who want to protect their own vehicles can buy additional insurance: collision coverage that pays for damage from auto accidents, and comprehensive coverage, which pays for damages such as floods, falling trees and other so-called acts of God.
Just over 4.1 million vehicles in New Jersey are covered by comprehensive insurance, according to 2009 data from the state Department of Banking and Insurance, the most recent available. That represents 78 percent of all vehicles with liability insurance.
Auto insurers create categories, or tiers, of rates that they place drivers in based on their risk characteristics, such as age, driving record and the type of vehicle they drive, according to the insurance department, which regulates these rates.
For those who bought comprehensive coverage, not factoring a Sandy-related claim will keep them from seeing a potentially significant jump in their insurance rates, according to Plymouth Rock Management of New Jersey, which has begun marketing its "Sandy Forgiveness" program.
"We think it's fundamentally unfair to treat victims of a storm like this as if they did something wrong," said Gerry Wilson, president and chief executive of Plymouth Rock, the state's fifth-largest auto insurer by measure of premium dollars it brought in last year.
Under ordinary circumstances, claims made under comprehensive policies are factored into Plymouth Rock's rating algorithm, and they can affect the price of a premium by a factor of 10 percent to 20 percent, Wilson said in an interview.
Robert Hunter, director of insurance for the Consumer Federation of America and a former insurance commissioner for Texas, said insurers typically don't count comprehensive claims against drivers, particularly when the claim is caused by a natural disaster such as Sandy.
"I don't think it's fair to surcharge people for a hurricane. It's certainly no indicator of negligence on their part," he said.
If they do, that deserves special attention, Hunter added. "If I were a commissioner again, I would twist arms to make sure that doesn't happen."
Even if Sandy-related claims are not counted against individual drivers, the impact of the storm likely will be reflected in rates down the road, experts said.
"Big losses typically mean prices go up," said Paul Newsome, managing director and insurance analyst for Sandler O'Neill & Partners. He added that he would not expect a dramatic change in pricing given, among other things, the regulation of auto insurance rates.
Estimates are still flowing in about the damage from the storm, but auto insurers may end up paying out about $250 million in claims in New Jersey alone, according to Property Claim Services, a data supplier to the insurance industry. The group expects about 60,000 auto claims to be filed in the state, with an average payout of about $4,167, according to a bulletin it issued to clients that was reviewed by The Star-Ledger.
Plymouth Rock to date has received about 4,300 comprehensive auto insurance claims, on which it expects to pay about $29 million, Wilson, its CEO, said.
The insurer, which last year took in about $600 million in auto premiums according to state data, also is using its Sandy forgiveness program to make a play for new policyholders. It says it won't consider prospective customers' Sandy-related comprehensive claims when quoting them a price for a policy.
New Jersey Manufacturers Insurance, which last year received about $859 million in auto premiums, has received about 9,400 auto claims tied to Sandy, most of which are comprehensive claims. Spokesman Patrick Breslin said the insurer, as a rule, does not factor comprehensive claims experience when setting individual rates.
Progressive, which took in $418 million in auto premiums in the state last year, also won't consider Sandy-related claims when pricing future policies for existing customers, said spokesman Jeff Sibel.
"In terms of a policy, it will be forgotten," he said. He added that it is still being discussed as to whether to extend that benefit to new customers.
Progressive doesn't disclose its numbers of claims, but 45 percent of its Sandy-related auto claims came from New Jersey. The insurer, which primarily writes auto insurance, last week estimated its overall losses from Sandy at $90 million.
Allstate, which last year took in $958 million in auto premiums in New Jersey, has not ruled out considering a storm-related claim in future rates.
"The effect of a superstorm Sandy comprehensive claim on an Allstate New Jersey customer will vary depending on several factors including previous claim history," spokeswoman Sheila Breeding said in an e-mail. "Some customers will see no impact upon renewal. Others may see increases."
The insurer, which has estimated its overall Sandy-related losses in New Jersey at about $250 million, has received more than 6,500 auto claims, Breeding said.
Nearly two-thirds of these were total losses, she said. Allstate subsidiary Encompass has taken in about 500 auto claims in the state, she said.
State Farm, which received about $607 million in auto premiums last year, also may factor in Sandy-related claims.
"We haven't really made a determination," said spokeswoman Arlene Lester.
The insurer received about 4,400 auto-related claims in New Jersey as of last Monday, she said.
GEICO, which last year took in $977 million in auto premiums in New Jersey, the highest amount of all insurers, is still calculating its losses from the storm and won't comment before then, spokeswoman Christine Tasher said.