Archive for January, 2013
It would be good to believe the world always works the way you expect, i.e. in a way that’s basically fair. Except, if you choose to believe such a thing, you will nearly always be disappointed. More importantly, by not protecting yourself, you are opening yourself up to potential losses. Take auto insurance as an example. Perhaps in a perfect world, all the focus would be on you as a driver. The insurer would look at how well you have been driving, whether you have made any claims and, if so, how much the insurer has had to pay out. You might believe the insurer uses each person as an individual profit center. So if you pay $1,000 for ten years and there’s only one payout of $1,000, the insurer has made a gross profit of $9,000 on you so that should earn a loyalty discount and premium rate reductions to celebrate. Except that’s not how insurance works. Everyone pays into a central fund. No one is counted as an individual profit center. The profit is calculated by looking at whether there’s enough money collected in the fund to pay all the claims plus the administration costs.
Put another way, the insurers do look at you as a person but the focus is not just on you as a driver. The idea is to make an overall assessment of you as a “responsible” adult. Based on the statistical evidence, insurers take the view that people who are not responsible in the management of their money are less responsible when driving on the road. The cold reality of this view is to penalize people who are already struggling with their finances. Indeed, it specifically targets the poor and marginalized members of the community who may, through no fault of their own, miss a payment on a debt or make one or more payments late. This does not make them dishonest nor does it bear directly on their ability to drive. But making such people pay higher than average premium rates is distinctly unfair. These people probably live in parts of a town or city not well served by public transport. Without access to a car, they cannot find and keep a job. This locks them into poverty unless they take the risk of driving uninsured. If they are caught, they are criminalized.
No matter what your financial situation, you must ensure your credit score is at least accurate. You have a legal right to a free copy of your credit history. If you find mistakes, you have the right to correct the record. If your score improves, the next car insurance quote will be lower. To ensure you get the best rates, use this site to get comparative car insurance quotes. Only if you are proactive on this issue can you protect yourself, particularly in more expensive no-fault states. Remember this site delivers Florida car insurance quotes free of charge. You can quickly see whether you are paying too much.
The first and most important rule is never to lose your temper. If you take the behavior of the insurance company or the claims adjuster personally, you will just make difficulties for yourself. Try rational argument first. If this fails, ensure you do not prejudice any appeal you may make against the insurer’s decision. To get into the right mindset, understand the role of the adjuster. This is an employee of the car insurance company. He or she does not represent your interests against the insurer. Indeed, the terms of employment probably give the adjuster a direct financial incentive to force the lowest possible settlement figure. Remember the insurance company is not trying to cheat you. If you look at the insurance industry’s PR mission statement, it aims to keep all the policyholders happy. If too many get upset and begin to complain or move their business to other companies, individual insurers lose out. So they actually want you to be as happy as possible while still accepting low settlement figures. In the larger frame of reference, adjusters are allocated a given number of open claims at the beginning of each quarter. They are expected to have a higher clearance rate and to bring the total settlements in under a target. This allows then some discretion on individual cases but they do not have the time to investigate every case. So you need to get your adjuster on your side by presenting a very professional information pack with everything properly described and explained.
Suppose, for example, you think the adjuster may total your vehicle rather than authorize repairs. Look up the blue book value of your vehicle and check round the local garages for the same make and model on sale. You need clear evidence of the current market value. Now look at the repair quotations. The majority of insurers aim to total a vehicle if the cost of repair is more than 70% of the market value. One of the key factors in the decision will be the value of your vehicle when broken for spares. If you have new tires and everything is in an excellent condition, the insurer will get a good price on salvage. Now look at the projected costs of replacement parts and labor. If you think any of these prices are too high, get evidence – list prices for spares and alternate quotes from reputable garages who will do the work for less. Do not allow yourself to be rushed into a settlement. If you find yourself under pressure, step away and arrange for the negotiations to continue on an another day.
The car insurance claims process is designed to push you into accepting low-ball settlements. Although the theory says this will keep car insurance rates low, the actual motive is to maximize profits. If you think the negotiations will fail and a dispute will follow, get car insurance quotes from the other insurers to see whether you can move at an economical rate.
In the early days when gun-toting bandits were likely to rob the stagecoach or attack a bank, it was every man and woman for him or herself. Although insurance as we know it today had developed in London early in the seventeenth century, the idea was not widely accepted in most of America until much later. Individual companies were established in the mid-eighteenth century, but it’s not until the 1850s that states began to regulate the industry and appointed Insurance Commissioners. From then on, progress has been rapid. The idea is essentially simple. The insurer estimates the total amount of claims it’s likely to have to pay in a given year and divides that sum among all those wanting insurance. Everyone pays into the fund. That money is invested and slowly grows over the year. As claims come in, money is paid out. If there’s more than enough money to pay the actual claims, the insurer makes a profit. Should the insurer make a loss, all the insured pay more the next year. Because the losses are shared between a large number of people, each person pays a small amount to buy peace of mind.
Whatever the car insurance companies agree with the policyholders has to be consistent with the local laws. Until fairly recently, all the laws focused on financial responsibility. All the companies had to have a minimum amount of capital as a buffer against claims. That way, if they were hit by an unexpected run of claims, they would not fall into bankruptcy. For the policyholders, the relevant laws were self-preservation and tort. As a matter of practicality, if you own property and it’s destroyed in a fire or some other natural disaster, you want to replace it. With insurance, this is usually practical. The law of tort make you liable to pay compensation if you damage goods belonging to someone else, or injure them. If we were cynical, we could say you can ignore this liability if you injure someone poor. But injure a rich man who can afford an attorney to sue you and you realize the advantage of having liability insurance.
Because the majority of states thought all drivers should be responsible, they imposed a mandate. Now apart from drivers in New Hampshire, everyone who sits behind the wheel of a vehicle on a public road must carry a minimum amount of liability insurance. Because of the mandate, this is relatively affordable online car insurance. To check out exactly how much you will have to pay, get free car insurance quotes from as many insurers as possible. In most states, this is the cheapest form of insurance. It would be even lower if the law enforcement effort was greater. As it is, as many as 20% of drivers are uninsured in each state. Because the number of policyholders sharing the loss is smaller than it should be, every car insurance quote is higher. This is an unfortunate situation.