Nov 17
adminArticles Act, Adverse Weather Conditions, Auto Insurance, Deductibles, Doing Business, Insurance, Insurance Commissioner, Insurer, Leading The Way, Perfect Market, Policyholders, Premium Rate, Reason, Single Family, State Farm, Variable Percentage
Most of the research shows up to 90% of all policyholders renew automatically. Only the remaining 10% actually consider the possibility of changing insurer and a variable percentage then makes the change. With such a low level of “churn”, insurers have little need to change their products to make them more attractive. There’s no real competition between them to force an improvement in the terms. As a result, insurers tend to act unilaterally, changing the terms with little or no warning given to their policyholders. Although some states have given their Insurance Commissioner the power to intervene, the majority of these changes are waved through. Everyone in “authority” assumes this is a perfect market where you are free to switch to a different supplier if you feel unhappy with the level of service.
So beware changes in the deductible. Up to two or three years ago, almost all insurers offered discounts if individuals opted between deductibles in bands up to $1,000. That’s no longer standard. State Farm is leading the way in forcing an increase in the minimum flat deductible. This is no longer a choice. It’s imposed as a condition of doing business with the company. So, in some states, a single family occupying a home will now be required to pay a minimum of $2,000 towards every claim made. If families bundle home and auto insurance, this is reduced to $1,000. When asked to explain the reason for this increase, the company was remarkably honest. It intends to deter claims. Most people decide not to claim, but pay for their own repairs when the deductible is high. This reflects the fact that most claims are for relatively small amounts and, if claims are made, insurers often retaliate by increasing the premium rate when the policy falls for renewal.
When other companies were asked to justify their increases of both rates and deductibles, the majority spoke about the increasing number of claims made because of adverse weather conditions. This last two years has seen more damage due to winter storms, and spring and fall have seen major tornado and hurricane damage. Indeed, last year saw record payouts by the insurers and this year will see last year’s record broken. If the companies are genuine about having enough cash in hand to repair or replace damaged homes, more money needs to be collected in and less paid out for the smaller claims.
These increases in the deductibles would not be so bad if the insurers were reducing their premium rates. If you deter small claims, there’s a cost-saving to pass on to the policyholders. Sadly, this is not happening in the majority of states. Even more depressing is the number of insurers imposing a change from flat-rate to percentage deductibles. So, if you own a $300,000 home, you could find the deductible ranging between $6,000 and $15,000 for some of the perils covered. Curiously, very few home insurance policyholders have lodged formal complaints with their local Insurance Commissioner. Either they feel powerless or they have yet to realize the change which is not always obvious when the home insurance quotes or renewal notices come in. If you are affected, shop around to find any local insurers who have yet to increase their deductibles.
Sep 16
adminArticles Bad Manners, Commercial Transaction, Conviction, Generous Person, Gift Horse, Gm, High Risk Group, Independent Expert, Insurance, Insurer, Models, New Car, New Model, Pig In A Poke, Premium Rate, Scam Artists, Showrooms, Sounds, Veterinary Science, Volume Sales
In some cases, the idea of looking inside the gift horse’s mouth to see how old it is and judge its health is bad manners. The generous person making the gift would be insulted if you were seen to question the value of the gift. But when you’re looking at a commercial transaction, it’s an idea to have the horse go through a full physical from an independent expert in veterinary science to ensure you’re not buying a pig in a poke. Remember there are a lot of scam artists out there who want your money and would give you nothing in return. Checking you are about to receive what’s being promised is always a good first step to protecting yourself. So have you seen the latest offer from GM? This once-great company is out to rebuild volume sales. To tempt people back into the showrooms, it’s packaging insurance with the car. Yes, friends, if you live in either Oregon or Washington, you can buy one of GM’s new models and get your first year’s insurance without paying another cent. All you have to do is sign up for a new model before September 2011, and you can drive the car off the dealer’s lot the moment the ink is dry on the sale contract. This sounds like a good deal. Is it?
The unknown is how much GM is paying for the insurance. Let’s say you go into a dealership and negotiate a discount in the list price of the vehicle you want to buy. Who’s to say that saving will not pay for your first year’s insurance? The problem with this offer is that you have to buy at the list price or walk away. You cannot refuse the insurance cover and buy the vehicle at a discount. So, if you have a low premium rate on your current car, it may well be worth buying a different new car and staying loyal to that insurer. But, if you are unlucky enough to be a member of a high-risk group, e.g. you have a conviction for driving while intoxicated, this promotion could be good value for you. Let’s assume you still hold a valid license. Instead of being forced to pay the top rates, you get insurance without question. GM guarantees you will be insured when you drive away no matter what your claims record or risk profile. This is not to say the insurer will continue covering you should there be an extravagant claim or claims. But, if you can afford to buy new, you will at least start off with cover.
GM also claims this will reduce the number of uninsured drivers on our roads. This is not real. If people can afford to buy new, they can afford the insurance. The majority of the uninsured are from low-income families who usually buy secondhand. Putting all this together, this could be a good offer for everyone currently paying high car insurance rates. Check out the list prices and see whether you can get discounts that would cover the premiums. If not, buying a new car through this program will save money on your cover. At the end of the year, hopefully with no claims, get multiple car insurance quotes. Hopefully, they will be more affordable.
Mar 13
adminArticles Accident Victims, Accidents, Actuaries, City Streets, Female Drivers, Ford Contour, Gender Equality, Insurance Industry, Last Detail, Local Newspapers, Many Men, New Moon, Pack Rats, Police Report, Premium Rate, Premiums, Red Ford, Safety Record, Sincerity, Statistical Evidence
Whenever you ask a talking head paid by the insurance industry, “How do you calculate the premium rate?” the answer is always the same. There’s a big smile of sincerity and that reassuring voice says, “We look at the driver. It’s all about who you are and what you drive.” And that, of course, is how it should be. Actuaries are paid to estimate the risk of accidents and, as they keep telling us, the statistics never lie. These actuaries are like pack rats. They collect every last detail of every accident that gets reported. It doesn’t matter whether it’s a police report, a claim to the insurers from a hospital for treating accident victims, or reports in local newspapers. They have information about accidents going back to the time we were switching over from real horses to horse-powered engines. So ask how many men aged 33 have had an accident at 2 a.m. while driving a red Ford Contour in the rain with a new moon and, with the click of a mouse, you will have the answer by return. It’s the detail that’s so impressive. More importantly it shows exactly how many claims are made by male as opposed to female drivers, and what the average value of the claims is.
All around the world, the statistical evidence shows women making fewer claims and, when they are involved in accidents, the amount claimed tends to be lower.
The reason for this is that, in general, women drive within the law. They do not try to beat the lights or drive too fast on city streets so, if there is an accident, they are traveling more slowly and the impact is less damaging both to the vehicles and the people inside. Not surprisingly, this excellent safety record has been rewarded by lower premiums. Where the risk is lower, drivers pay less. Except, in Europe, this will change next year.
The European Court for Human Rights has just ruled that men and women must pay the same premiums. At the end of 2012, there must be a new system in place to calculate premiums without relying on gender as a key factor. So what’s going on? Well, ask yourself, is it fair to charge someone more to insure their vehicle just because they are male. No one asks to be born male or female so why penalize all those who have the bad luck to be born male? Keeping this real, men don’t crash because their sexual apparatus gets caught in the steering wheel. People get into accidents because they drive badly. There’s no point in forcing people to pay more because of something they are powerless to control. There’s every reason to base auto insurance quotes on actual driving records because, if the record is bad and the premium rate is high, it gives those drivers an incentive to improve their driving. Calculating premiums should be very personal, looking at how well each individual drives. Grouping everyone together on the basis of their gender for issuing auto insurance quotes is arbitrary and unfair (at least, in Europe).
Jun 10
adminArticles Arrest Warrant, Car Insurance Quotes, Department Of Motor Vehicles, Fighting Traffic, Insurance Companies, Insurance Institute For Highway Safety, Insurance Market, Linkage, Maximum Penalty, Police Issue, Premium Rate, Prosecutor, Rate Hikes, Risk Assessments, S Hospital, Several Thousand Dollars, Speeding Ticket, Speeding Tickets, Statistical Fact, Traffic Citation
According to the Insurance Institute for Highway Safety, if you collect one speeding ticket, there’s a significant rise in the probability you will be involved in an accident in the next three years. This is not opinion. It’s a statistical fact that the chances of an accident rise by 50%. If you have two speeding tickets, the chances of an accident double. Since insurance companies set their premium rates according to these risk assessments, there’s an automatic linkage between a traffic citation and your premium rate. Depending on who you are, the rate can rise just a little or triple. For example, a wife rushing to her husband’s hospital bedside will be penalized less than a young man out street racing. The reality of the insurance market is that, according to the statistics, you get the premium rate you deserve. Since this is going to make the difference between potential discounts for being a safe driver with no claims and no tickets, and rate hikes worth several thousand dollars over the next three or four years for picking up a ticket, it can be worth fighting traffic tickets.
Obviously, it’s better to drive safely and within the law. It’s just as important to protect your reputation. Every few years, spend a few bucks at your state’s Department of Motor Vehicles (DMV) to ensure your driving record is accurate. If there’s a mistake, have it corrected. This could save you big dollars on the premium rates overnight. Now, let’s face the worst. You get pulled over. Remember never to admit guilt to the officer. Just be polite. Upsetting the officer could result in the addition of “ND” to the citation. That’s a note to the prosecutor not to do a deal, but to push for the maximum penalty. OK, so now you are in the system. What should you do? Don’t ignore the ticket. In many states, the police issue an arrest warrant. The first step is talking to your local DMV. Many states have programs in place to help drivers. For example, some will defer judgment and, if there are no violations in the next six months, the ticket is dismissed. Other states have driver safety courses. For minor offenses, attending a course on driving wipes the conviction from your record. You still have to pay the fine and the tuition fees, but this is less than the premium rate increases.
If you cannot prevent this from coming to court, go to court. Often challenging a ticket persuades the court to reduce the ticket to a moving violation which is not penalized by the insurers. If you show but the officer does not, this can persuade some courts to dismiss the ticket – check your local state’s rules. In the end, politely raising any kind of reasonable objection to the ticket is usually rewarded by the court – getting angry in a courtroom is not recommended. Of course, all this takes time and effort. Should this be too expensive, remember you can be saving several thousand dollars on premium instalments, so paying an attorney up to one thousand can be good value. All of this should encourage you to drive safely. It’s better not to get caught. Your car insurance quotes will come in lower and lower the longer you keep your record clean. If defensive driving fails to keep you safe, fight to avoid the conviction. It’s going to show up in the car insurance quotes over the years to come unless you get the ticket dismissed or reduced to a moving violation.
Jun 01
adminArticles Bad Weather, Cheap Home Insurance, Cheapest Auto Insurance, Climate Change, Heart Attack, Home Policies, Insurance Industry, Insurance Information Institute, Internet Search Engines, Major Storms, Melting Snow, Member Companies, Premium Rate, Property Insurance, Rate Increases, Replacement Materials, Sewers, Southern States, Torrential Rains, Weather Risks
As with every group of businesses, there’s an association for the insurance industry. It’s called the Insurance Information Institute. When individual insurers fear adverse publicity, the III usually gets the job of making general announcements. That way, the news comes out with less damage to the member companies. So, for example, when there was flooding because of the melting snow and then the torrential rains, it was left to the III to warn people that the majority of policies do not cover damage caused when sewers back up. That’s not the most reassuring of news. Making equally bad reading was a report that premium rates for property insurance were likely to rise by an average of 3% this year. This reflects both the aforementioned bad weather and the rise in the costs of repairs. You might not have noticed it yet, but builders have been steadily increasing their charges. The price of gas has been rising, labor costs are up, replacement materials are more expensive – it’s all bad news even though there’s supposed to be a recession.
So why might you have a heart attack when your renewal notice hits the mailbox? Although the politicians may not have accepted the reality of climate change, the insurance industry is watching the statistics and reassessing weather risks state-by-state. There’s been tornadoes and major storms across the southern states. Their premiums will be rising faster. The other common reason flows from the insistence that you all shop around for your next policy. In the days of habit, you picked an insurer and bundled your auto and home policies. This earned you a discount and everyone was happy. As more people use internet search engines to find the cheapest auto insurance, they are breaking the bundle and the rate for the remaining home policy goes up sharply. You should always look at all your policies together and not deal with separate policies.
How to keep premium rate increases to a minimum? First remember CLUE. The Comprehensive Loss Underwriting Exchange is another insurance industry body that stores information about every claim you make. If you propose changing insurers, the first thing new companies check before giving you a quote is whether you have recently made a claim. If so, you will be quoted a higher premium. The moral of this story is not to claim unless you are looking at a really big loss. Then there’s the recession and its effect on your credit score. Most insurers include the score in their formula to decide whether you are a responsible person. The assumption is that people with good credit records will also take care of their homes. Before you start shopping around, do whatever you can to improve your score. For useful advice, try www.myfico.com and www.whatsmyscore.org.
In other words, no matter how great the temptation to track down cheap home insurance using the internet, think carefully about bundles, the claims you have made, and your credit score. These are factors under your control and, unlike blindly increasing your deductible which is you deciding to insure yourself, will produce long-term savings on your homeowners insurance quotes. Remember, it’s better to get quality home insurance at an affordable price than cut-price insurance that fails to cover you when your sewers dump their contents in your kitchen.
Older Entries
RSS