I'm working for a well-known insurance company now (YAY!!!) and I have a pet peeve about auto insurance in general that I'd like some feedback on...
I always thought it was unfair that insurance costs more for a man than a woman, etc. but now I've learned that the insurance industry for some bizarre reason automatically hikes up the premium if you have bad credit. Supposedly, if your credit sucks, your driving does too, statistically speaking.
Nevermind the fact that your credit might suck because you're going through a divorce or lost a job. Nevermind the fact that you have a spotless driving record. Your premiums go up because they run credit checks now and you become "high risk" just because you "don't pay your bills".
Just wanted to rant a bit, I'm pissed about this little form of discrimination.

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“It is only with the heart that one sees rightly; what is essential is invisible to the eye.” - The Little Prince by Antoine de Saint-Exupéry (1945)

Because high premiums just make it so much more likely that the impoverished will pay their bills on time. Sure.

If the premium is on an installment plan, then it is fair to take a person's credit into consideration. I'm sure there is also some actuarial table out there that correlates poor credit with a certain level of irresponsiblity, which the auto carriers will translate into, "for whatever reason, this person is more likely to get into trouble."

There is a cost involved in stamping a policy, and there are costs involved with sending out cancellation notices, rescinding cancellation, etc, and the risk that the insured is going to get into an accident while the policy is in force before the annual premium has been paid. If the insured stops paying his/her premium, then the costs and risks of that policy have gone up.

Yeah, it sucks, but it also sucks to get into an accident without insurance. I worked for a personal lines auto carrier and a multi-line commercial carrier. Now I'm on the other side as a director of risk management (the guy who buys or doesnt buy insurance) for a public entity.

By the way, if the insurance companies didn't take your premium and invest it in the stock market, your premiums would be much higher. I don't think there is a single carrier out there right now that makes a pure profit off the premiums it charges [premium - (claims +overhead)]. They all run a loss on claims and overhead and hedge their bet with investments in the hope of capturing more market share--every time they cancel a policy for non-pay, they are absorbing overhead without the ability to recapture it through investment.

That's the thing...(at least the company I work for) does this across the board, installment plan or not.
And the average consumer shopping for insurance rates doesn't even know to tell them they cannot look into their credit, it's done automatically.

If the insured stops paying his/her premium, their insurance gets cancelled. Period. If they have to re-write the policy because it lapsed and the rates have gone up in the meantime, oh well...

I can't justify a person having a spotless driving record getting screwed over because some actuarial ass decided that people with bad credit = people who are irresponsible and more likely to get into an accident.
(Sorry, I'm really pissed off about this whole thing)

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“It is only with the heart that one sees rightly; what is essential is invisible to the eye.” - The Little Prince by Antoine de Saint-Exupéry (1945)

quote:

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I can't justify a person having a spotless driving record getting screwed over because some actuarial ass decided that people with bad credit = people who are irresponsible and more likely to get into an accident.
(Sorry, I'm really pissed off about this whole thing)

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Age, gender, credit, vehicle make and model, school record, car age, location, and criminal records all fit into what you pay for insurance on a car.

Younger, male, no/poor credit, sporty car, bad grades, older car, highly populated area, and misdameanors. You're gonna be paying more than the patments on your car for the insurance.

Also, if you're making payments, you HAVE to get full insurance. If you don't own your car, you're gonna get screwed.

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Do you want ants? Because that's how you get ants.

I get a discount on my insurance because I have a carport for added protection from the elements.

If they ever saw what it actually looked like, I'm sure they'd hike the rates up. It's more a danger to my car than my neighbor's driving.

It's interesting how rates are calculated. When I first started with Geico, my credit was still okay so it's not a factor for my current rate unless I go to another company. I had a "good student" discount that no longer applies because I'm not longer a student (or a good one). Of course it helped that I moved from Minnesota to Wyoming where my rates dropped by $400 a year for the same coverage. They also won't raise rates unless I have two or more tickets in the past 6 months (I average about one every six months, though so far half of them have been reversed since my car can't go 97 mph uphill against the wind with 3 cylinders and cargo almost to the weight limit).

I also have a discount for the auto locks on the doors, though if I ever drove into a body of water, I'd rather not have to remember the locks. Of course, this IS Wyoming...

Every once in a while someone tries to convince me to up my coverage until I point out that any accident I get into out here will either be in town and not worth the raised coverage or at high speeds on the interstate/Hwy 287 and I'll be smashed flat by a semi truck and therefore dead so there would be no point in raised coverage.

So far, I've managed to horrify every agent I've talked to about that. It gives me a happy tingly feeling.

But yeah, I hate the credit thing. Seems like everyone does that these days. What bugs me most is jobs where a credit score seems immaterial to the actual job. It's kind of hard to find a job that pays well enough to erase bad debts and improve credit when you can't get it because of bad credit. Like the banks charging higher fees for people with smaller accounts because they think somehow making it more difficult to pay bills will make it all better.

/bitterness

I'm kinda stuck with State Farm right now for the same reason.

Here's the funny part: The insurance company that hired me (after a long and fruitless search for a decent job) didn't even look at my credit in the hiring process...thankfully :D

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“It is only with the heart that one sees rightly; what is essential is invisible to the eye.” - The Little Prince by Antoine de Saint-Exupéry (1945)

A sizeable proportion of accidents are committed by people with no insurance - this affects premiums for those of us who bother to obey the law.

Also, if you ever think of saving a few quid by going for "voluntary excess" on your car insurance, forget it. i made that mistake and ended up getting shafted by both the insurance company and the garage who repaired my car when I actually had an accident.

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Please replace the handset, and try again.

The problem with taking the credit into account when doling out car insurance premiums is that I cannot see any justification for it whatsoever.

I understand what you are saying, choad, but again, I fail to see how credit card companies and what not taking someone who THEY deem is "irresponsible" and raising interest rates and premiums will ensure they will be more responsible. In fact, if this "irresponsible" party does renege on their contract or fails to pay, they will be in even MORE debt than someone with great credit who also fails to pay.

Profiting off those who are already downtrodden is not something I am really happy about. I had to sue two collection agencies (and I won both suits) because of their violations of the Fair Debt Collection Practices Act in trying to get money that I owe. The simple fact that credit cards exist is enough to bother me. It means you can buy whatever the hell you want now and pay a lot more for it later. It totally feeds into the "gotta have it" mentality that marketing absolutely preys upon.

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The giant three-phallused phallus of Uzbekistan will one day squirt the cosmic jizz of revenge all over Canada.

My sentiments exactly. I can't tell you how good it feels to shred credit cards. My new philosophy is if I can't pay for it now I don't need it badly enough. Will you marry me? :)

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“It is only with the heart that one sees rightly; what is essential is invisible to the eye.” - The Little Prince by Antoine de Saint-Exupéry (1945)

Okay guru of all things insureable, Nate just got 6 months of insurance on his new truck. He was quoted somewhere around $700, but ended up paying less than that. Well, a few days ago they called and sent a letter saying he would owe about $200 more because "something came up" that they were previously unaware of that they had to charge him more for. Furthermore, the letter they sent wasn't just $200 more, it was significantly more than that. 1. Is this legal? and 2. Why didn't they quote the price correctly the first time around?

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Mediocrity at its most average.

Considering that if I'd put all the money in my IRA in a smalll metal tube inserted in my rectum, rather than in the stock market, not only would I have more money, but it would be less painful, I invite the insurance companies to stick their premiums up my ass. Granted, that wouldn't do them well in the long run, since I'd remove the tube once they were out of earshot and spend the loot on my own, but hey, if their actuaries didn't count on that, that's their problem!

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ken.kaufman@gmail.com

It's not really legal, but then again, it's hard to prove it's ILLEGAL. Companies do shit like this all the time. I'd consult a lawyer. While you're online, look up "free lawyer" or "free law advice" and your area.

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The giant three-phallused phallus of Uzbekistan will one day squirt the cosmic jizz of revenge all over Canada.

Hey everyone, check out stripcreator! You can make your own comic strips, and talk with other people who are making comic strips, and yell at eachother in a political thread!

But it won't save you money on car insurance.

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Do you want ants? Because that's how you get ants.

Hey everyone, check out stripcreator! You can make your own comic strips, and talk with other people who are making comic strips, and yell at eachother in a political thread!

But it won't save you money on car insurance.

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Do you want ants? Because that's how you get ants.

Yes it will.

Chicka, it doesn't sound right. Even better than consulting a lawyer might be your state's department of insurance. They have consumer hotlines (usually set up for unfair claims practices, but they may answer stuff like this too).

From a basic business law standpoint, you have offer and acceptance, and if Nate paid them, then there is consideration. All this is in writing, so it should be easy to prove, but ultimately time-consuming and not worth hiring an attorney for.

If the MO Dept. of Ins. doesn't help, then go with the second-lowest quote and make sure the insurance company knows why you are switching carriers.

Thanks love.

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Mediocrity at its most average.

As someone who once sold cars, I can say that people with little to no money and/or bad credit are absolutely shat upon by car dealers and insurance companies.

The dealers will advertise crappy used cars with LOW payments to entice the "bogue" (salesman slang for bogus) customers. Bogues are those people without money and with bad credit. People without money and without credit are called college students! Anyway, the interest rates on these LOW payments range from 18-24%, and the terms are almost always extended to 60 or 72 months.

So, the bogue ends up paying $5-6000 or so for a $2500 vehicle (assuming they even finish paying for the vehicle and further assuming the vehicle runs that long). Plus, the bogue has to come up with cash for the insurance deposit because they're already high risk (financially), and they're obtaining insurance from a second-rate establishment. The premiums certainly seem low to the bogue customer but are quite high considering the actual worth of the vehicle (if the dealership is selling it for $2500, then it's probably only worth $1500--or less).

Since the insurance companies get their cash deposits upfront, they don't have to worry about the bogue not paying for the car or the insurance. They can drop the customer for non-payment and keep the deposit for "services rendered."

Also, the dealership will try to get as much cash as possible through the downpayment and by selling the bogue a mostly useless warranty. Again, if the bogue doesn't keep up the payments, then it's the lending institution that's out that money instead of the dealership.

One time, we sold a car that ended up being repossessed maybe three months later. One of the wholesale buyers down the street with whom we did a lot of business bought the repo from the bank. We bought it back from the wholesaler and sold it again!

Learning crap like this made me get out of selling and back into school.

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Chicken Feather Bed Bugs Bunny Hop Sing Out Side Street Walker Texas Ranger Cookie Dough Boy Wonder Years

I was going to write a long story about how I used to repossess cars in inner-city Los Angeles, when I worked for what is now known as GMAC Insurance, but I'll just get to the point...

If you have a car loan, make sure you buy your own insurance. If you don't provide proof of insurance to your lender, they force the cost of a policy on your loan, but that policy is just there to protect their collateral and offers you no rights or liability protection. You can lose your car and still owe money on your loan under the wrong circumstances.

I took a lot of cars from people, even professionals (I remember one was an architect) who thought the collateral protection policy they were paying for was a "real" insurance policy. They aren't. Protect yourself.

Sounds like it could have been any number of things...if the company quoted $700. they more than likely said up front that it was not a firm quote and could change. (We've been instructed to do that.)

They then get an MRV report, and if Nate forgot about a ticket or accident (even not-at-fault accidents) there may have been points added on internally that raise the rates.

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“It is only with the heart that one sees rightly; what is essential is invisible to the eye.” - The Little Prince by Antoine de Saint-Exupéry (1945)

Or maybe they're just assholes.

Hey umfum, that repo after three months sounds like me. I wound up having to surrender (voluntary repossession) the 2001 Toyota Corolla I had leased (in 2001) after three months because the insurance rates were so high I couldn't afford the insurance AND the lease payments. The worse your credit, the more you pay, and the heavier the effect on your credit.

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The giant three-phallused phallus of Uzbekistan will one day squirt the cosmic jizz of revenge all over Canada.

Insurance is a racket. They'd be prosecuted under RICO if they weren't somehow legal entities.

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