The SUV—whether you deem it was a stout vehicle or a gas guzzling monster, rules the road in America. “The debate over this immensely accepted vehicle rages on. To some, the high gasoline consumption of the vehicle is a symbol of decadent waste. To others, the enormous size of the vehicle is a symbol of station and safety” (Kic). What is certain, however, is that the SUV, the way it is, creates definite economic problems. Many things can be done to change this, but many automakers feel it is in their best interest to not fix those problems.
There is a large gap in the fuel economy between what the average passenger car receives (28 miles per gallon) and what popular SUVs receive (12-16 miles per gallon) (Economics of SUVs). An example of the real difference this makes would be to consider a driver of a passenger car that receives 28 miles per gallon—a 2005 Chevrolet Impala SS fits this category, and a driver of a SUV that receives 15 miles per gallon—a 2005 Chevrolet Tahoe fits this category, that both drive 12,000 miles per year (MSN Auto). The driver of the Impala will spend $1, 213 a year on gas at $2.83 a gallon. The driver of the SUV will spend $2,264 a year on gas at $2.83 a gallon. This is a difference of $1,050 a year! I am sure the average consumer can find a much better way to spend over a thousand dollars.
Improving fuel economy standards could be done with relatively low cost compared to the excess amount of money that would be spent on gas. “Duleep identifies feasible fuel economy improvements that can be made in the upcoming five to ten years and their respective costs. He estimates that average efficiency can be increased from 28.1 to 37.6 by model year 2001 at a cost of approximately $860 per vehicle” (Krupnick).
One glimpse pointed out the quandary of the ‘rebound effect’. “Since fuel economy improvements lower the cost per mile of driving, people may drive their more fuel efficient cars more than they would a less fuel efficient one. This behaviorally-based ‘rebound effect’ will result in accurate emissions reductions (and reductions in overall gasoline use) being smaller than would be expected with no driver response to lower vehicle operating costs” (Krupnick).
Not only do SUVS have significantly higher fuel costs, they also tend to cost more to maintain and repair. Sometimes bumpers alone can cost of $5,000. The Insurance Institute for Highway Safety conducted a study in June 1999 that concluded that many popular SUVs can sustain quite expensive damage in ‘crashes’ of five miles per hour. They tested types of accidents that would usually occur in parking lots. The results were extraordinary. “The Jeep Huge Cherokee cost $5,107 to repair after those tests. The Mitsubishi Montero Sport cost a whopping $6,282 to fix. The best SUV tested, the Mercedes ML 320, came in at just under $3,000 to repair (Economics of SUVs). While SUVs put forth a tough and rugged appearance, they reason they don’t hold up in crashes is because of the lack of federal standards. “Passenger car bumpers have to meet federal standards in low-speed crashes, and most of the bumpers on passenger cars include a reinforced bumper bar and foam to believe crash energy. But SUVs are not subject to any kind of bumper requirements, so they are allowed to crumble in low-speed accidents” (Economics of SUVs).
The effect of the improper crash standards of SUVs also affects insurance companies. “Several national insurance companies are raising liability rates on SUVs while providing other car owners with discounts in several states. The insurance rates on SUVs have been rising in part due to studies showing that insurers have been paying out at higher rates for liability insurance on SUVs. A study conducted by the Insurance Institute for Highway Safety concluded that liability insurance claims average $107 for large SUVs, $94 for smaller SUVs, but only $71 for other cars. In the Current York Times, Diane S. Taska, a spokeswoman for Farmers Insurance, states “The regular car drivers are subsidizing SUV and pickup drivers on liability insurance.” (Economics of SUVs).
Costs that affect our wallet in the form of higher repair costs and higher gasoline costs are obvious to the average consumer. What may not be so obvious, however, is the cost of driving SUVs in relation to the environment and pollution. The effect of greenhouse gases on the environment has become a great concern. California was one of the first states to do something about the great damage that greenhouses gases are doing to the environment. “California’s new law on curbing greenhouse gas emissions is serving as a powerful impetus behind bipartisan congressional legislation that would force car makers and other industries to act against global warming” (Epstein). Different states and Congress are beginning to follow California’s step to protecting the environment for the future. “The cap and trade bill proposed by Senator John McCain, R-Arizona, and Senator Joe Lieberman, D-Connecticut, would set an overall national limit on the release of carbon dioxide and five other greenhouse gases. It would also set up a mandatory trading system in which companies that fail to met their reduction goals could buy credits from those that do” (Epstein). These proposals point out the fact that something needs to be done about the amount of emissions that some vehicles (mostly SUVs) are producing. “California’s law started something big, said Anne Petsonk, a researcher with Environmental Defense. ‘California is a signal to the automotive industry is not going to be exempt from greenhouse gas regulations. Other states and many in Congress are looking at what California did in its legislation,’ she said” (Epstein). The reason why this new law in California is so indispensable is because of the amount of impact California has on the automotive industry. “The new California law that requires plot air regulators to start a program by 2009 that would cut emissions form automotive vehicles by a still-unspecified amount may be forcing a national come. California accounts for 13 percent of the nation’s auto market, so manufacturers of cars, SUVs and trucks are determined to comply with the state’s edict” (Epstein).
Emissions regulation is a very serious spot. “The transportation sector is a major contributor to two indispensable environmental problems—global warming and urban smog. It has been estimated that transportation sources account for 8% of global emissions of carbon dioxide (CO2), a major greenhouse gas, with U.S. sources alone accounting for 3.4%. At the same time, motor vehicles contribute from one-third to twp-thirds of all volatile organic compound (VOC) emissions—a precursor to ozone—in U.S. ‘ozone nonattainment’ areas (Krupnick).
Much has been said about if we are to improve fuel economy then the main way to do so would be to lessen the weight of the average automobile. So in turn, attempts to improve the Corporate Average Fuel Economy (CAFE) standards would reduce the safety of automobiles because some studies have shown that vehicle weight is sometimes related to crashworthiness. “Not all studies rep a positive relationship between weight and safety. The General Accounting Office acknowledged a theoretical link between automobile size and safety; however, they find no explain empirical link between the two. They find the highest fatality rates occur not in the lightest cars, but in the middle-weight cars. The reasoning is the larger, heavier cars increase the probability of a fatality for the lighter automobile passengers, as well as subjecting their own occupants to greater force (i.e. mass times acceleration) at impact. Lighter vehicles, though generally less stable and crashworthy, create less force” (Yun, John).
Even with all the costs of SUVs described above many Americans aloof choose to drive them. Why? “The answer lies in differing concepts of utility. It is utility that accounts for formidable growth of the United States economy. It is utility that accounts for fast-food restaurants and drive-thru banks. It is utility that brings about the construction of 16-lane highways, air disappear and high-tech communication devices. It is utility that money and credit creates, that is solely accountable for a negative savings rate. Utility means a 24/7/365 economy. Utility means there is no economic scarcity except wasted time. For Americans, the pursuit of utility equals freedom” (Kic). The notion of the SUV is very appealing to Americans. But all the costs that near with SUVs need to be reduced—and it is very possible for this to happen, if they automakers desire to. The only contrivance for this to happen in the foreseeable future, is to have government mandated fuel economy standards, crash standards, and emission limits.
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Works Cited
“Economics of SUVs” 14 April 2006
Epstein, Edward. “California emissions law now a model. It’s cited in a major new Senate bill.” San Francisco Chronicle 9 January 2003
Kic, Wojciech. “There are two sides to the SUV debate coin.” Houston Business Journal 27 December 2002
Krupnick, Alan J. et al. “Global warming and urban smog: cost-effectiveness of CAFE standards and alternative fuels.” The Energy Journal v14 October 1993: p75-98
Yun, John M. “Offsetting behavior effects of the Corporate Average Fuel Economy Standards.” Economic Inquiry v40 April 2002: p260-271
Filed under Farmers Insurance by on Mar 13th, 2011. Comment. 
Health insurance—we’re hearing a lot about it lately. If you have it—good, reliable insurance that covers everything you need—you don’t even think about insurance. Your employer has already done the legwork for you. But if you don’t have insurance, if you’re one of the 47 million Americans who have lost their insurance because of layoffs, or pre-existing conditions, or self-employment, the subject of insurance looms large.
The truth about American Health Insurance is that it is now a luxury item. Though arguments abound as to whether it’s a ‘right’ or a ‘responsibility,’ the truth is that insurance coverage in our country hangs by a thread. The cost of premiums and copayments have increased so much that only large corporations or government entities can ‘negotiate’ in order to derive the best prices. And their covered employees are so large a group that the risk is spread over a gigantic number of age groups and health situations.
We are often told that small business is the engine for job creation in our country, and has been for decades. Yet, small businesses are the most vulnerable to the prohibitive costs of health insurance. Often, a business is started with fair one person—or perhaps with one person, his or her spouse, or partner. That can qualify as a ‘group’ for insurance, but if one of those people has a serious, previously-diagnosed condition, it will bump their ‘group’ into a considerably higher premium level. Often the self-employed go without insurance, hoping to insert it into the business budget later, but higher health insurance premium costs can outstrip profit gains, so that it never does quite fit into the budget. And they continue to go without insurance.
On an industry forum I subscribe to, I recently read agonized comments and requests for advice about health insurance. If you think small business is doing radiant with the current system, you are terribly mistaken. Foremost in the minds of those with tiny, fledgling businesses is the health insurance coverage for the owner and his or her family. Often, this cost so taxes the profit margin that the only choice left to preserve the tiny business is to descend coverage for employees altogether, That invariably affects the quality of employees a business can attract. It then becomes a vicious circle—the business can’t gain the employees it needs, or can’t retain them for long—which then affects the productivity of the business—which then affects the bottom line of the business—which then makes it even more impossible to afford the health insurance coverage it needs to attract long-term employees.
The ‘pre-existing condition’ is also a predicament that is still with us, and may even be so narrowly defined as ‘previous surgery’ or past mental health condition. If you try to shop around for health insurance, hoping to get a better price, you may find your condition under an ‘exclusion’ for a number of years. So in effect, you won’t be covered for that which you most need coverage to begin with!
Other problems afflict our health care coverage, such as increasing deductibles and copayments, that drive ordinary, hard-working and insurance-covered individuals into bankruptcy court—and ‘non-covered procedures’ that have the families of desperately-ill individuals on the phone with insurance companies and recount resolution boards when they should be attending to the patient himself.
We are often told that we have ‘the best health care system in the world,’ and it is—for those who are included fully in it. For others, the struggle to break into that ‘best system in the world’—or to compose that system work for them—is a daily, monthly, or quarterly battle. And the number of those who are not included in that system grows daily. There are those who also insist us that it would be too expensive to cover all Americans in a national healthcare thought. Yet other countries find a ways to do it. And our government spends hundreds of billions on other projects of dubious necessity.
We should all be aware that our current system of healthcare is failing too many Americans, and will continue to fail even more in the future. It is affecting our productivity as a nation, and our savings rate as a population. It is affecting our future—slowly, inexorably—and there may advance a time when we are ‘forced’ to something drastic. It would surely be better if we made the change to a modern system thoughtfully and systematically, instead of under the threat of health insurance collapse. These are the choices we have. Let us hope we have the courage and creativity to tackle the problem. Those qualities are, after all, our strengths as Americans.
Filed under Farmers Insurance by on Feb 22nd, 2011. Comment.
When you get an auto insurance quote, do you know exactly what you need to ask? Do you know what the terms are and what they mean? Here are a few tips that will help you think and talk like an insurance agent when you call for an auto insurance quote. First of all remember that an agent is in the business to sale his product. However, you being the customer you always have the final say. Here are some terms and their meanings.
Liability is the coverage that will protect you and your property and possessions in the event you are at fault in a multi-vehicle accident. This coverage will pay the other person or persons involved for hospital bills, their vehicle repairs or pay off, and protect you in the event of a law suit. The limits of liability vary from state to residence. Here in Tennessee the minimum limits are $25,000 per person up to $50,000 per accident. This means the insurance will pay up to $25,000 to the other person(s) involved but will not exceed a total of $50,000 for one accident. Limits range also from $50,000/100,000 up to $250,000/500,000.
Uninsured motorist is the coverage that will protect you in the event someone collides with you, and they are not carrying any insurance at all. This coverage will support pay for your vehicle repairs or replacement minus a $250 deductible. If this happens, the other person who is not carrying insurance is given the chance to produce restitution to your insurance company and provide proof they have gotten insurance before they have their license taken. This is providing they have a license and do not end up in jail for some reason.
Medical payments will pay for your hospital and ambulance services up to a certain amount which is specified on the policy. Standard medical pay is $5000. You can carry higher or lower medical payments if you desire. Just ask the agent what their choices are.
Full coverage insurance is when a person carries liability, uninsured motorist, medical payments, comprehensive, and collision coverage. In other words, they have it all.
Comprehensive covers the fire, theft, vandalism, glass breakage, and animal collision on your vehicle. This coverage comes with several choices of deductibles. Deductibles are what you pay out of pocket before the insurance takes over. The standard deductible on this is either zero or $50. Most people carry such a obscene deductible since if a windshield or glass is broken, they usually only cost $300 to $400. Thus, there would be no need to have a $500 deductible on comprehensive since broken windshields are the most favorite claims turned in under this coverage.
Collision is what will pay for repairs or pay off of your vehicle in the event of an at fault accident or a single vehicle accident. Most people will opt for a $500 deductible on this coverage in order to keep their premium lower. Collision is the most expensive coverage on the entire policy.
Some companies offer Emergency Road Service and Rental Reimbursement. First Rental Reimbursement will not pay for you a rental vehicle if you automobile is in the shop just for mechanical repairs. This only covers a rental car if your car must be repaired due to an accident. Emergency Road Service will cover a tow in the event of a mechanical shatter down but will not cover objective having a vehicle pulled from a ditch. If a tow is done due to sliding in a ditch or getting stuck, this is actually considered a collision and would fall under that coverage. Both of these coverages are optional.
Always do your homework on a company also. Check on their ratings and rankings, check to scrutinize if there are any complaints filed against them, and definitely check on their cancellation policies and statistics. Just doing this could save you a bundle on your auto insurance.
I sure hope this will help you if you are looking to get auto insurance. If you talk and consider like an agent, you could probably save yourself some money on your auto insurance.
Source:
Personally working in insurance for seven years
Filed under Farmers Insurance by on Jan 23rd, 2011. 1 Comment.
