Wednesday, January 9, 2008

SIGNING UP UNINSURED DRIVERS

States have tried many tactics to reduce the number of uninsured drivers-vehicle impoundment, jail terms, and laws limiting the rights of the uninsured to make claims against insured drivers. And while the rate of drivers with no car insurance has declined, there is still up to a one-in-three chance, depending on where you live, that a car that collides with yours will be driven by an uninsured motorist, according to a study last year by the Insurance Research Council. When that happens, of course, accidents can turn into nightmares. The full cost of your medical bills and property damage can be unrecoverable.

California, which is among states with the most expensive auto insurance and whose rate of uninsured motorists is among the highest, is trying to solve its problem in a new way. In Los Angeles and San Francisco counties, low-income residents with good driving records are now eligible for bare-bones auto insurance costing $450 per year in Los Angeles and $410 per year in San Francisco. (Unmarried men between 19 and 24 pay a 25 percent surcharge.) Up to now, these same drivers were reportedly charged double or triple those rates. The four-year pilot program began this summer.

"This landmark program was sparked by the dilemma faced by hundreds of thousands of uninsured low-income drivers who are required by law to carry auto insurance but who cannot afford to do so," says Norma P. Garcia, a senior attorney in Consumers Union's West Coast Regional Office, which strongly supported the state legislation that created the program. "This opens the door for safe low-income drivers to buy affordable auto insurance, allowing them to drive legally."

Fewer than 300 motorists had signed up as of early September, a number that officials are hoping to boost with a billboard campaign and streamlined registration. Consumers Union is also trying to promote the low-cost policies. With the help of a $20,000 grant from the nonprofit California Consumer Protection Foundation, Garcia and other advocates will be targeting community groups and other institutions in San Francisco County to get the word out to eligible consumers.

Ultimately, low-cost insurance could be a boon to all insured California motorists. With fewer uninsured drivers on the road and in accidents, the cost of uninsured-motorist coverage would likely decrease. That's one intent of the program. And success of the pilot could help more than California, where slightly more than one in four vehicles is )uninsured. States including Connecticut, Kentucky, Louisiana, and Washington are watching the initiative to gauge its effectiveness, says Richard Manning, regional director of the nonprofit California Automobile Assigned Risk Plan, a group supported by the insurance industry that administers the program.

Monday, December 31, 2007

STATES MILES APART ON AUTO INSURANCE

New Jersey drivers paid the highest average auto insurance premiums in 2001 for the seventh time in eight years, according to the latest report from the National Association of Insurance Commissioners.

On the low end is Iowa where drivers paid barely more than half the average premiums of New Jersey motorists.

Average premiums combine three separate coverages--liability, collision and comprehensive. Because liability coverage is tied to at-fault accidents, the most expensive premiums are in states with the most traffic. The states with the most traveled roads tend to have the most expensive liability coverage. The notable exception is Michigan ($294), with its unique no-fault system that bans most lawsuits in exchange for unlimited medical coverage for people hurt in accidents. The national liabilty average was $413.

Some of what Michigan drivers save in liability, however, they pay out in collision coverage. With unlimited medical coverage, Michigan paid the most ($416). The national average for collision was $271.

Comprehensive tends to be the cheapest coverage--costing less that $100 in Hawaii and Ohio. However, where auto thefts and hail damage are prevalent, premiums can go above $200. The District of Columbia ($230) tops that list. The national average was $133.

Even with the highest cost in the nation, New Jersey saw its average premium decline 6 percent from 1996 to 2001 while the national average grew by nearly 5 percent. Only two other states saw premium drops during this period--California (10 percent) and Hawaii (25 percent). Eight years ago, Hawaii was in New Jersey's shoes with the highest premiums in the country.

This year, New Jersey passed major reforms to make its highly regulated insurance market more competitive. Like Hawaii, it hopes to leave its national distinction behind soon.

AUTO INSURANCE COVERAGE

♦ Liability (required in all but a few states) pays bodily injury and property damage expenses--including legal bills-caused to others in an at-fault accident.

♦ Collision pays vehicle repair of the person who causes an accident.

♦ Comprehensive pays for other damages, such as theft, fire, vandalism, natural disasters and even hitting a deer.

Sunday, December 30, 2007

HOW TO SAVE ON AUTO INSURANCE

You could be paying hundreds of dollars too much in premiums. It's time to shop for a new policy.

For the past 39 years, Thomas Healey has been loyal to his wife, Joan, to his six kids - and to State Farm insurance, the company that's written his auto-insurance policy since Dwight D. Eisenhower was president. A lot has changed in Toom's life over the intervenin decades: His children learned to drive, moved away from home, bought their own cars, and got their own auto policies. Tom has moved cross-country from San Francisco to Long Island, and he gave up commuting when he retired from his job at American Airlines. He's owned new and used cars; two were stolen, and one was totaled in an accident. Each time State Farm was there.

On autopilot. Despite big changes in his family life and driving patterns, Tom Healey has stuck with the same insurer for nearly four decades

Like Healey, you too may have let your auto policy coast on cruise control for a long time. The more than 145,000 Consumer Reports readers who responded to our Annual Questionnaire told us they had been insured by the same carrier for a median period of 11 years. More than one-fourth have stuck with their insurer for 21 years or longer, and three-fourths said they regularly renew their coverage without shopping around.

Loyalty and steadfastness pay big dividends in family life and careers, but they can cost you dearly in today's fast-changing auto-insurance marketplace. No one can say how much, or even whether, Healey could have saved over those four decades. But if it's been awhile since you last shopped for an auto policy, you may be surprised by how much the industry has changed - and by how much you may be overpaying for your policy. Insurers change their rates regularly, so last year's decent price may be uncompetitive this year. When we examined premiums charged in major markets across the U.S., we found that the median-priced policy can cost twice as much the one with the least expensive premium. Over the past two years, moreover, policy premiums have been declining for the first time since 1974. Robert Hunter, who directs the insurance program for the Consumer Federation of America in Washington, D.C., predicts that rates will fall another 4 to 5 percent this year.

What's powering the decline in premiums? The aging of baby boomers, for one thing; today's more mature drivers have fewer accidents. Consumers are also buying safer cars equipped with air bags, antilock brakes, and daytime running lights. Safety-belt use is up, and fewer people are driving while intoxicated. Better cars and better drivers translate into fewer claims, and insurers have passed some of those savings on to policyholders.

But you can save even more by learning how to shop smart. This report will tell you how. Working with InsurQuote, a rating-information provider in Provo, Utah, that monitors auto premiums charged by 2,200 insurance-company plans in 37 states, we analyzed more than 25,000 price quotes to find out which factors have the biggest influence on what you'd pay to insure your car. The amount insurance companies charge is determined by scores of details they gather about you, your driving record, the vehicles your own, and even your credit history. A change in any of these variables can create opportunities for you to save money or to overpay significantly. (For the factors that are likely to influence your rates, see the "Factors that drive up premiums.")

You'll also learn about the new ways of shopping for auto coverage that put the technology of the World Wiide Web and telephone service at your disposal to compare quotes quickly and accurately; see "In Search of Savings." For help in deciding what coverage you need - and where you can safely cut back - see "We've Got You Covered."

Finally, for information about which of the biggest insurers are likeliest to provide the best claims service. Our Annual Questionnaire gathered information from 32,000 readers who told us about any problems they've had settling claims with their carrier, and their overall satisfaction with the result.

Sunday, December 23, 2007

SAY YES TO RENTAL CAR INSURANCE?

Frequent business traveler James Smith says he's saved "tons of money" during the past 30 years declining car rental companies' optional insurance coverage. But, he acknowledges, it could have come in handy at times.

Smith, an economist in Asheville, N.C., has paid $1,100 for damages to three rental cars in the past five years. Last year, a valet damaged his rental car in Maui, and his parked rental car was scraped in Buford, Ga. In 2002, he backed a car into a rock in Ireland.

Smith was unaware that his personal auto insurance policy would have covered most of the damages in Ireland, so he didn't make a claim. In the other two incidents, he had to pay deductibles.

Like Smith, many travelers are unsure about their coverage when they approach a car rental counter. The National Association of Insurance Commissioners (NAIC) surveyed 632 consumers in September, and 42% were "either thoroughly confused or had only a rough idea about insurance."

The association of top state insurance officials says 34% of consumers surveyed by telephone bought a rental car company's insurance just to make sure they were covered.

"When renting a car, many consumers purchase unnecessary insurance and end up wasting money," says Walter Bell, Alabama insurance commissioner and NAIC president.

Renters should check whether their personal auto insurance policy and a credit card used for the rental provide sufficient coverage without buying additional insurance, NAIC says. Many credit cards include some collision and theft protection, but the benefits are usually secondary to personal auto insurance or the coverage sold by a car rental company.

But, as Smith learned, protection provided by credit card companies can be tricky.

He says he used a Visa card, which provides secondary insurance coverage, to pay for the rentals in Ireland and Georgia, but he wasn't reimbursed because he didn't notify the credit card company within 45 days of each incident.

And personal auto policies that provide coverage for renters often include conditions. For example, they may not cover rentals on business trips and may limit coverage for long-term rentals. Personal policies also may not cover rentals in foreign countries.

'Important profit center'

Sales of insurance or damage waivers that absolve renters involved in an accident are an "important profit center" for a car rental company, says auto rental consultant Neil Abrams.

Avis, for example, sells five kinds of coverage: a loss damage waiver, supplemental liability insurance, two types of personal accident insurance and personal effects protection.

About 30% of renters at Enterprise Rent-A-Car buy some type of insurance coverage, spokeswoman Christine Conrad says.

Travelers appear divided on the value of optional coverage.

Smith says buying insurance coverage from a car rental company would have covered his $1,100 in payments and spared him the hassles of dealing with the rental company, his insurance company and his credit card company. Nonetheless, he continues to decline rental coverage, which he believes is too expensive.

Frequent flier Richard Leck of Bedford, N.H., agrees, calling the insurance products offered by car rental companies "a rip-off." "I can't imagine anyone other than an inexperienced traveler, or someone without any other insurance, taking out coverage," says Leck, president of a management consulting firm.

Nashville antitrust lawyer Alan Marx says auto rental companies are charging too much for insurance coverage. "It reminds me of the old insurance policies that were sold in airports to cover you on a single trip," he says. "Pure gravy for the seller but a lousy deal for the buyer."

But some renters think it makes sense to buy coverage from the car rental companies.

"I learned my lesson the hard way, so when traveling overseas, I always get the insurance coverage," says Michelle Trombetta of Minnetonka, Minn.

Trombetta, a manager in the health care industry, says it's a hassle dealing with a rental car company and others involved in an incident abroad.

She says a hotel valet in Dublin scratched her rental car.

The rental company charged her the equivalent of $865 until the damage could be fully assessed. The car rental company then billed the hotel, but the hotel disputed the amount for months. Trombetta says it took four months for the hotel to reimburse her.

Van Potts, the owner of a company in the beverage industry, says he buys collision coverage mainly for peace of mind.

He pays only $24.95 per car rental for collision coverage, a special rate because he has an American Express Platinum card. A resident of East Greenwich, R.I., Potts returned three cars with damage in the past 10 years. "The car rental company pressures you to pay upfront (for damage), and it's a pain to file to recover the money from insurance companies. You have to pay an insurance policy deductible, and the price of your insurance goes up."

Fred Fleischner, spokesman for two rental companies, Dollar and Thrifty, says optional coverage can be a good idea even for travelers with coverage under their auto policies. "We recommend it to customers who have full coverage at home so they can keep their good standing with their insurance company" even after a wreck, he says.

Enterprise's Conrad says consumers should take the time to understand what their insurance company and credit card issuer will cover. "Being underinsured or uninsured when involved in an accident can have devastating consequences," says Conrad.

---

Tips for car renters

The National Association of Insurance Commissioners gives the following insurance coverage tips for auto renters.

*Before renting, ask your insurance agent whether your personal auto policy covers a rental car.

*Ask your credit card company what coverage it provides.

*If your personal auto policy doesn't provide rental car coverage, ask the cost of adding a rental insurance rider.

*If you don't own a car, consider buying a non-owner auto insurance policy that provides benefits in addition to rental car coverage.

*If you are unclear about car rental insurance options or are concerned that a rental company is giving bad information, check with your state insurance department.

TEXT OF INFO BOX BEGINS HERE

Daily rates for car rental insurance products

Two popular products sold by car rental companies are the loss (or collision) damage waiver and supplemental liability insurance. The following are the companies' daily rates, which can vary by type of car and rental location.

Company Loss damage waiver Supplemental liability insurance

Alamo$10.50-$22.99$11.95-$12.95

Avis$9-$35.99 $10.95 or $12.95

Budget$9-$35.99 $10.95 or $12.95

Dollar$8.95-$34.99$8.95-$12.99

Enterprise$10-$15$10-$16

Hertz$9-$35.99$10.95-$12.95

National$10.50-$22.99$11.95-$12.95

Thrifty$8.95-$34.99$8.95-$12.99

(c) USA TODAY, 2007

Tuesday, November 27, 2007

HOW TO BUY A SUPERCAR

Learning how to finance, insure, and properly drive your new supercar are the best ways to ensure a sound investment

You've had a good year. Whether because of a big bonus or because a cash-rich private-equity firm bought your company, now it's time to stop daydreaming about that beautiful high-performance supercar you've been lusting after and actually buy it. But before you sign that check and cruise off into the horizon, make sure to put in the due diligence that will save you from getting taken for a financial ride.

It's easy to fantasize about choosing between million-dollar cars like the Pagani Zonda and Bugatti Veyron, but actually paying for one is something else. Creating a sound financial plan for your lease or purchase is the most important detour you should take between your door and the car dealership.

Financing companies like Woodbury [Conn.]-based Premier Financial Services and Hallandale [Fla.]-based LeaseTrader.com specialize in the leasing of collectible, vintage, exotic, and luxury cars, and act as liaisons between dealers, banks, and leaseholders.

Leasing: Approach With Care

Premier CEO Mitchell Katz says that potential leaseholders should be cautious about the lack of flexibility in traditional lease arrangements. "People are so anxious to get the car, they don't always take a look at termination clauses," he says, which could lock you into a big investment for longer than you think.

His company offers a program called Simple Lease, which gives clients the options of terminating the lease at any time, switching cars mid-lease, and buying or selling the car for its residual value upon the termination of the lease.

The company deals only with cars valued $25,000 or higher, though the typical client springs for wheels in the $200,000 range. The company's list of 10 hottest cars to lease in 2007, based on consistent consumer demand and strong resale, include the Ferrari 599 GTB, Lamborghini Murcielago LP640, Aston Martin DB9, and Porsche 911 Turbo.

Special Insurance

Don't forget that your supercar will also need super insurance. If you go with an average insurance agent and underwriter, you will most likely enter into an Actual Cash Value policy, where an adjuster decides what amount you will receive for damages when they happen.

A handful of standard insurance companies, and a growing number of underwriters that specialize in luxury cars, offer Agreed Value policies, where repair values are negotiated from the beginning. An estimated 95% of all standard insurance companies do not provide Agreed Value policies, because collector cars present too many risks and variables like mileage that create too much fluctuation in their market value.

Since 1991, Fresno [Calif.]-based Leland West has offered the Select Auto Insurance Program, a selection of Agreed Value policies specifically tailored to coverage of expensive and hard-to-replace autos. Their plans place restrictions on ownership, such as annual mileage, business or commuting use, parking, and alterations to the car. But being insured by a company that knows how delicate your investment is means that you will be able to do things like take the car to special-treatment repair shops or get towed from an accident on a flatbed truck.

Super Driver's Ed

Once you've balanced the books, one question separates you from the open road: Do you know how to properly drive a car that could be worth more than your house? If you're planning on driving your supercar -- which will likely accelerate from zero to 60 mph in under four seconds and max at over 200 mph -- to anywhere near its high-performance capacity, a few professional driving lessons are a wise investment in both your personal safety and your car's. It will also help bring down those insurance premiums.

One option is Skip Barber Racing School, which is held at more than 20 racetracks in North America. Would-be Jeff Gordons can enroll in the High Performance Driving School, a $1,595 one-day or a $2,895 two-day course. Pro instructors in the school teach students how to handle challenging real-life driving scenarios, such as what to do when approaching wet surfaces at high speeds.

"While the car industry focuses a lot on high-performance hardware, driving school is about the software -- what's in your head. How are you setting yourself up to drive this vehicle?" says Dan Hubbard, marketing director for Skip Barber Racing School.

Carmakers' Schools and Car Clubs

The High Performance Driving School, a new program for 2006, also gives potential buyers the opportunity to test a variety of high-end European cars, such as the BMW M3, Porsche 911 Turbo, and Audi S4, before they commit to a lease or purchase on the basis of a dealer test drive alone.

Also, most of the bigger high-end performance carmakers also offer their own driving schools, including Ferrari, Porsche, and Lamborghini, which may be arranged as part of an ownership package. Those lucky enough to buy from British boutique builder Ascari can get schooled at the Race Resort Ascari, near Ronda, Spain -- supposedly the world's most exclusive track and the world's only racing-dedicated resort.

Before the salesman hands you the keys, one more piece of advice: Car clubs are a great opportunity to educate yourself, access all the resources a supercar owner might need, and find a group of people with a common love for driving fast and showing off.

~~~~~~~~

By Douglas MacMillan

Wednesday, November 21, 2007

COOLER ELITES. WILL THE RULING CLASSES SAVE THE WORLD?

When the rich and powerful gathered for their annual meeting at Davos in January, at the World Economic Forum, climate change was on their collective minds. Signs reading MAKE GREEN PAY served as a backdrop for the usual panels, featuring CEOs and highend pundits holding forth on global finance and the terrorist threat. And, participants say, global warming was the number one topic amid the shmoozing, where the real business of the retreat is conducted.

There’s some good news here. Given the risk that a climate catastrophe could hit soon and suddenly, we’ve got to make some dramatic changes very quickly. What CEOs and portfolio managers think and do is an urgent question; we may not have time for mass movements to develop and force elites to do the right thing. They’ve got to get started now, or all could be doomed.

But you’ve got to wonder how serious they are about doing something. Chris Giles, economics editor of the Financial Times , said at Davos that there’s no evidence that CEOs and Cabinet ministers were about to make “tough decisions” to avert catastrophe.

Had I been invited to Davos, I could have earned an I AM OFFSET pin by paying a mere $93 to “offset” a New York to Zurich round trip flight a journey that produces more than six tons of carbon emissions. About 60 percent of attendees performed this act of penance, though as A.C. Thompson and Duane Moles show in this issue, carbon offsets are a pretty dubious business. The more serious question is Davos style jet setting sustainable? wasn’t likely to come up when consciences were assuaged by the offsets.

But maybe this is too negative. Let’s savor the spreading climate consciousness among the corporate elite. Amazingly, the CEOs of the Big Three US auto companies and Toyota appeared before a Congressional committee in mid March to endorse limits on carbon emissions and they failed to rise to the bait when a Republican panel member, Joe Barton, characterized the human contribution to greenhouse gas emissions as “trivial.” Even ExxonMobil, the most recalcitrant of the oil companies, has a statement of concern on its website. When the auto and oil industries feel they have to talk the climate change talk, then something is happening.

A milestone in the evolution of elite opinion was last October’s publication by the British government of the Stern Review , an overview of the economics of climate change, named after former World Bank chief economist Nicholas Stern. While many have (rightly) criticized the review for its excessive caution, its political contribution shouldn’t be underestimated: It promoted the idea in elite discourse that there would be substantial economic costs to doing nothing about climate change. As Stern showed, it’s not good for the GDP when crops fail, storms intensify, pandemics spread and coastal cities flood.

Another milestone was the creation in January of the US Climate Action Partnership (USCAP). Among the players are such noted friends of the earth as GE, DuPont, PG&E, Caterpillar and BP (which tries to be the greenest of the oil companies but is still an oil company, and one with a terrible worker safety record at that). Joining those firms are some of the most business friendly environmental organizations, like Environmental Defense (ED) and the Natural Resources Defense Council (NRDC). While USCAP’s manifesto calls for relatively modest reductions in greenhouse gas emissions, and seems in no hurry to get there, it is remarkable to see such bluechip corporate names signing on to any kind of green program, even if it is a rather pale shade of green.

And then in late March yet another group formed, Investors and Business for US Climate Action, a coalition of institutional investors (including not only union and public sector pension funds but also big private sector names like Merrill Lynch), foundations and businesses. Among their founding documents was a letter to George W., urging him to take serious action on the climate and asking for a meeting.

All that’s not to say the denialists have gone into hiding, and it’s no surprise that the dead enders at the Wall Street Journal editorial page are leading the resistance. The creation of USCAP was greeted by the Journal ’s Kimberley Strassel with a real screamer of a piece, denouncing the “jolly green giants” for secretly wanting to make money on carbon reduction while appearing high minded in public. True enough, but Strassel won’t cut them an inch of slack: “At least when Big Pharma self interestedly asks for fewer regulations, the economy benefits.”Reducing greenhouse gas emissions, in WSJland, has no upside at all.

Aside from overt denialists, there are some important players who are MIA, such as the insurance industry. Back in the early 1990s, I attended a conference co-sponsored by that industry and Greenpeace. Greenpeace wanted to prod insurers into countering the weight of the denialist auto and oil industries. After all, the insurance companies will have to pay out larger claims as hurricanes and floods get more severe. At the time, their European counterparts, especially the reinsurance industry (which insures the insurance companies), worried aloud.

But the US insurance industry would hear none of it; it was interested only in tighter building codes, better computer modeling and inventing new financial instruments. Though they were too discreet to say it openly, their plan for climate change was either to jack up premiums or to stop writing new policies—thus Allstate has largely pulled out of Long Island.

Nearly fifteen years later, little has changed. The US insurance industry is mainly concerned with technicalities, while the Europeans sound alarms. A 2006 paper from the Insurance Information Institute emphasizes scientific uncertainty about the relation between climate change and storm frequency and severity, notes that there’s no simple relation between storms and industry profitability, comforts readers with praise of the industry’s “resilience” and reminds them that they can always jack up premiums in dangerous areas (“where places, things, and people are expensive to insure, insurance will be expensive”).

By contrast, Swiss Re, the reinsurance giant, opened a 2002 paper on the topic by noting the necessity “to prevent global warming from accelerating to such [a] degree that humans are no longer able to adjust themselves in time,” which they identified as “a task for governments and the community of states.” A former consultant to the US insurance industry, who quit in disgust, told me that European insurers are “run by smart people who care about science” whose governments have been prodding them into action, while their American counterparts are “bottom line hacks” whose government has been just fine with their indifference.

The Wall Street Journal editorialists have a point when they say that the corporate members of USCAP are betterpositioned than their peers to make money from greenhouse gas reduction. GE, for example, which is busily touting its “Ecomagination” program, is poised to sell “clean coal”

products, solar panels and even nuclear power plants. But short of a revolution, there’s no imaginable way to reduce greenhouse gas emissions unless someone can make money off it.

It’s painful for someone like me, who instinctively gravitates to the more radical position on most issues, to admit that the “better deal for business” is still a lot better than nothing. But it’s worth examining the problems with their proposals, with the hope of agitating for something better. There’s the simple point that Stern’s and USCAP’s emissions targets aren’t ambitious enough. But there are also problems with their favorite strategy: cap and trade schemes.

These work by setting maximum emissions for polluting entities, be they individual factories or power plants or entire countries, based on historical baselines; these limits decline over time. Entities that come in under the limits are free to sell their remaining emissions rights to entities that can’t make the limits.

An early version of cap and trade was the 1990 domestic US agreement to limit acid-rain-causing sulfur dioxide emissions by coal burning electric utilities. Cap-and-trade was at the core of the Kyoto Protocol: Individual countries were capped and then free to sell their credits, and countries themselves were expected to develop cap-and-trade systems for their own polluters. Despite US rejection of Kyoto, the European Union established a cap-and-trade system to meet its obligations under the protocol.

The record of these models is mixed: The acid rain reduction agreement is seen as fairly successful; sulfur dioxide emissions are more than a third below what they would have been without the program. But SO2 emissions are mostly limited to power plants; by contrast, greenhouse gases come from millions of sources, from factories to lawn mowers, a more daunting administrative task.

The EU carbon scheme has had a less auspicious history Launched at the beginning of 2005, some 12,000 installations were covered, responsible for about 45 percent of the Union’s carbon dioxide emissions. Other greenhouse gases, and more installations, would be incorporated into the system in later phases. For the first sixteen months of the system, carbon permit prices more than tripled, only to collapse in April 2006 on the revelation that a number of countries had given their industries such generous caps that the industries were already in compliance and had no need to reduce emissions. This is just one of the problems with cap-and-trade schemes. Consider the burden of monitoring many thousands of sources just what should their baseline emissions levels be, anyway? The temptation to cheat, to game the system, would be enormous. Already an entire industry has grown up around the trading system analysts and brokers and traders who hope to make money from the scheme but contribute not much of anything to saving the planet. Also, cap-and-trade permit prices are tremendously volatile, more so even than the stock market. Volatility makes long term planning very difficult.

A far better approach would be to tax carbon. A carbon tax would be simple gasoline, coal and other fuels would be taxed based on their carbon content and nearly impossible to evade. It could be introduced quickly, unlike the multiyear phase in of the complicated EU cap-and-trade system. The tax rate could start low and then increase, to allow energy users to adjust. Unlike the market volatility of CO2 and SO2 permit prices, a carbon tax would be predictable, making it much easier for businesses and consumers to plan ahead. And as Charles Komanoff of the Carbon Tax Center argues, at least part of the proceeds of the tax could be rebated to poor and middle income households through the income tax system, neutralizing any inequities. The unrebated balance could be used to subsidize alternative energy research and production. Given the historical successes of government funding of basic research in computing and medicine, there’s every reason to believe the products of this work would be very promising.

But the corporate elite and their favorite enviros hate the thought of carbon taxes. (One exception: FPL, née Florida Power and Light, recently endorsed a carbon tax.) In a weird piece for the website Grist, ED’s chief scientist, Bill Chameides, said that carbon tax advocates would give Congress a big pot of money to play with, which they’d use to subsidize their favorite technologies in pork-barrel fashion. Sounding like he was reading from GOP talking points, Chameides declared, “History has shown that the marketplace does a better job of developing new technologies, and a tax takes money out of the marketplace.”

In fact, that sort of ideology ignores history, which is replete with examples of market failure and cases of state support in crucial economic and technological development. The point of a carbon tax is to raise the cost of energy, seriously, and encourage people to use less of it while developing new, carbon free sources. And the idea that Congress wouldn’t be tempted to play favorites with a massive carbon permit scheme is surreal.

That brings us to the crux of the problem: Raising the cost of energy means big changes in the way we live. Corporate friendly enviros don’t like to hear that. In an interview, NRDC’s global warming czar, David Hawkins, denied that sacrifice would be necessary because Associate Profesor yet unrevealed technological breakthroughs will allow us to gorge on energy and everything else. The investor and business coalition speaks confidently of “win-win” changes.

But the sailing might not be so smooth. Though advocates of cap-and-trade, like Hawkins, deny this, they seem seduced by a set and forget appeal to the technique. If, by some currently near unimaginable miracle, serious restrictions on greenhouse gas emissions were enacted, it might not look like win-win. Few things annoy Americans more than higher energy prices, or being forced to take the train instead of the Escalade.

For people on the left, it’s hard to parse the politics of the climate issue. We’re used to a world in which business interests and their favorite politicians will do the right thing only if they’re forced to by popular mobilization. That’s not true of the climate issue: Though there are activists seriously devoted to the cause, it’s a long way from being the foremost concern of millions. So it’s tempting to look at the latest elite mobilization as something that could get a head start on avoiding catastrophe while we hope for more action from below. But you really have to wonder how serious these freshly mobilized business interests are. Can we trust them? Do we have any choice? ■

By: Henwood, Doug

INSURER TATTLES ON KIDS WHO SPEED

Safeco Insurance unveils a teen driving package today that notifies parents when their young driver speeds, breaks curfew or drives outside of an agreed-upon area.

Parents can also use the Internet and global-positioning satellites to find their car at any moment.

"Teensurance," available in all 44 states where Safeco provides auto insurance, is the first time that a major national insurance company has combined multiple safety programs in a single package designed to prevent teen deaths. The Seattle-based company has 4.3 million customers, according to its website.

About 19 teens die from crashes every day, according to federal data. Dave Snyder, vice president of the American Insurance Association, a trade group, called the Safeco program a major step toward reducing those numbers. "This has potential to get at one of our greatest public-health issues: death and injury among young people from vehicle crashes," he says.

Jim Havens, Safeco's vice president of consumer solutions, says parents and teens who used the $25-a-month package in a trial run found that it helped new drivers earn trust fast.

"It flips the conversation completely around, from the parent saying 'no' to the parent being in the know," Havens says.

Teensurance includes an online survey that helps parents identify a teen driver's weak spots and provides a contract to help parents set limits on driving time and range.

None of the driving information collected by an independent firm in California will be seen by Safeco, the company says, even if an accident leads to a claim. But the insurer will measure aggregate program data to determine if Teensurance drivers have fewer crashes than young drivers who are not in the program. Such a benefit might lower rates for Teensurance drivers, Safeco says.

Teensurance includes roadside assistance and allows parents to unlock a car remotely if keys get locked inside, a common mistake made by inexperienced drivers.

Carolyn Gorman, vice president of the Insurance Information Institute, says, "You can say, 'I hope you are driving under the speed limit,' and your child will say, 'I am, I am,' and you just have to shake your head and cross your fingers and go along with the game. If you have this kind of specificity, you are actually being an effective parent, rather than an enabler."

Safety researchers say the most dangerous time for teens is the first few months that they drive alone.

"The longer you can have that protecting influence of the parents, the better," says Anne McCartt, senior vice president for research at the Insurance Institute for Highway Safety. "It's hard to think of other ways that can be as effective as things inside the vehicle."

Mary Hanke, a single mother from Sammamish, Wash., enrolled in Teensurance when her daughter, Christina, 17, was ready to drive. "If my daughter speeds, I get a phone call," she says. "I can check at any time on the Internet where she is. She is a good kid, and I want to keep her that way."

(c) USA TODAY, 2007