Some good, some not so good
This article - "10 things your auto insurer won't tell you" - takes a look at some of the mysteries of auto insurance. This happens to be a specialty of mine - having worked for an insurer for many years. Here's my take on it:
1. "When I say this is a good policy, I mean it's good for me."
This is true - but not to the extent that you might think. Auto insurance companies pay 10%-15% commissions. Usually 13% - 15%. The agents getting the special spiffs are usually making no more than 2%-4% extra. That means on your policy costing $1000 per year, the agent will only see an additional $20 - $40. While it is worth possible risk of losing you as a customer if the rate and coverage with the higher-paying company are comparable, it is certainly not worth it if he loses your business altogether.
2. "Young drivers can't catch a break."
True. And deservedly so. There is a strong, direct correlation between inexperience and likelihood of a claim. This has been known for years.
3. "Spotty credit? That'll cost you."
True. I am not completely convinced that credit has a lot to do with the likelihood of a claim, but it is what all the companies are doing now - so we have to live with it. Reason # 87 to keep a good credit history.
4. "How do we set premiums? That's for us to know and you to find out."
Not entirely true. In TN, companies must file rating structures with the Department of Insurance. Problem is, many are based on complicated mathematical formulas - so good luck figuring those out.
5. "Your repaired car might look and run like new, but it's worth a lot less."
This has nothing to do with insurance. And, we have known this for years. Not sure why this was in there, unless the author needed "filler" to get to 10 things.
6. "Totaled your car? Good luck collecting its full value."
Unfortunately true. Insurance is a business. To make a profit, companies can maximize revenues, or minimize costs. Claims are costs. Most companies will offer below value as settlements. This is your chance to negotiate.
7. "And we're more likely than ever to declare your car totaled."
Also true. Repair work is costly. Very costly. Companies will total a car if repair work is 40%-70% of the car's value (depending on company, and the car in question).
8. "Your mechanic works for us."
Poor choice of wording. They should say that the repair shop works for them. It's almost true.
9. "Brand loyalty is for suckers."
True to an extent.
10. "But be careful switching carriers -- it could cost you."
Again, true to an extent. Shop. Read your fine print carefully.
1. "When I say this is a good policy, I mean it's good for me."
This is true - but not to the extent that you might think. Auto insurance companies pay 10%-15% commissions. Usually 13% - 15%. The agents getting the special spiffs are usually making no more than 2%-4% extra. That means on your policy costing $1000 per year, the agent will only see an additional $20 - $40. While it is worth possible risk of losing you as a customer if the rate and coverage with the higher-paying company are comparable, it is certainly not worth it if he loses your business altogether.
2. "Young drivers can't catch a break."
True. And deservedly so. There is a strong, direct correlation between inexperience and likelihood of a claim. This has been known for years.
3. "Spotty credit? That'll cost you."
True. I am not completely convinced that credit has a lot to do with the likelihood of a claim, but it is what all the companies are doing now - so we have to live with it. Reason # 87 to keep a good credit history.
4. "How do we set premiums? That's for us to know and you to find out."
Not entirely true. In TN, companies must file rating structures with the Department of Insurance. Problem is, many are based on complicated mathematical formulas - so good luck figuring those out.
5. "Your repaired car might look and run like new, but it's worth a lot less."
This has nothing to do with insurance. And, we have known this for years. Not sure why this was in there, unless the author needed "filler" to get to 10 things.
6. "Totaled your car? Good luck collecting its full value."
Unfortunately true. Insurance is a business. To make a profit, companies can maximize revenues, or minimize costs. Claims are costs. Most companies will offer below value as settlements. This is your chance to negotiate.
7. "And we're more likely than ever to declare your car totaled."
Also true. Repair work is costly. Very costly. Companies will total a car if repair work is 40%-70% of the car's value (depending on company, and the car in question).
8. "Your mechanic works for us."
Poor choice of wording. They should say that the repair shop works for them. It's almost true.
9. "Brand loyalty is for suckers."
True to an extent.
10. "But be careful switching carriers -- it could cost you."
Again, true to an extent. Shop. Read your fine print carefully.
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