Help: Learning about Insurance ... and you'd rather be in the The Erogenous Zone - Tilted Forum Project Discussion Community

Randerolf · 06-27-2006, 08:35 PM

I need your help.

Insurance – it sounds as exciting as a debate on what to do with grass clippings, but, as a young college student there a lot is to be learned about this subject. If you are like me, you never think about it until you need it or, more honestly, just pay and get it out of the way until another rate adjustment occurs. Some themes to tackle:

* Have you ever shopped around for car insurance? Where? How accurate are the comparisons that companies are so generous in providing? Are there third party sites that you recommend in gauging price and quality of coverage?

My car is a 1995 Plymouth Neon that, according to Kelly Blue Book, is worth approximately $1,300. It’s the only car that I’ve ever had, but it’s getting high in mileage (~150,000 miles), so I think that it is appropriate to re-examine my insurance coverage.

Quote:

Here it is for 6 months.
Coverage & Limits Cost $
Liability Bodily Injury 25k/ 50k
Property Damage 50k 223.34
No Fault 99.78
Medical Payments 10k 64.57
250 Deductible Comprehensive 38.64
250 Deductible Collision 95.79
Emergency Road Service 1.60
Rental Car & Travel 80% /day $1000 max 17.40
Death Indemnity 2.40
Total 543.52

I want to adjust my deductibles (250, 500, 1000, no coverage), but I’m not sure to what amount; I’m having trouble wrapping my head around this stuff.

* Since that sassy, red Neon is worth $1,300, what would be the appropriate deductible? I have ~$2k allocated for a new car and other liquid funds that could be used for a new car. I wouldn’t want to have the car totaled and get handed a check for $1,300 when I could have adjusted my insurance and just have that in the bank.

What are you thoughts? Do you have towing coverage? What are you driving and who covers you?

I found a little information:

Quote:

The best set up from Clark Howard's website

• Buy uninsured motorist coverage to protect yourself against uninsured or underinsured drivers.
• If you have a car loan and don't carry insurance, the lender may buy insurance for you at five or six times what you would normally pay.
• Collision coverage takes care of damage to your car from an accident that is all or partially your fault. Normally you'll be responsible for a deductible of $250 or $500, and your insurer pays the rest.
• Comprehensive coverage takes care of noncollision calamites, such as damage from a break-in, theft or windshield cracking.
• Liability is the most important component of auto insurance and the one to which people pay the least amount of attention. It pays for damage to property and physical injury from an accident that is your fault.

Jun 13, 2006 -- Drop towing riders from your insurance
Clark talked recently about how getting tow service from your insurance company can boost your rates if you use the service. The report got people up in arms and he has some follow up news for you. The story first came out in Consumer Reports, a magazine Clark highly respects. It said that AllState, State Farm and Geico all either raise your rates or report you to other deciding bodies. Clark wanted to contact the biggest insurer - State Farm – to see what they had to say. And, it is true. If you’re a State Farm, All State, Geico or Nationwide customer, discontinue the towing rider from your coverage. If you need the towing coverage, get it from Costco or BJ’s instead.

Below is the response Clark received from State Farm Insurance when he inquired about the possibility of insurance rates going up if customers use the towing rider on their policies...

When attempting to determine the cost of making the promises we make to our customers, we use many rating variables.

Among them are the customer's age, the customer's driving record, where the customer lives, what type of car the customer drives, how the customer uses the car, the customer's credit information and the customer's previous claims experience. Using any one rating variable is not very helpful in our effort to precisely measure auto insurance risk, but using all of them together is very helpful. All of these variables, and others, in conjunction with one another, help us determine the cost of the promises we make.

In almost all cases, emergency road service claims have no impact on our measurement of the cost of a promise. But under the right circumstances, it is remotely possible that emergency road service claims, in connection with other rating variables, could impact that measurement.

The bottom line is that we are attempting to use all of the information available to us to measure auto insurance risk as precisely as we can. We want to charge each of our customers a premium that is commensurate with the risk.

-State Farm Insurance

I use State Farm. Have you ever have your rates go up because of a tow? Do you follow this format?

cookmo · 06-27-2006, 09:52 PM

If I went into the insurance industry, I would be fourth generation, I cut my teeth on my mom's desk. Not the most exciting thing, but a necessary one.

Insurance varys state to state. What state are you in? Is it a no fault or an at fault state? This is really important because in a no fault state everyone takes care of their own, no matter who caused the accident.

As for getting quotes, you want to look in your local phone book and find an independant agent, if you want the best rates. Independant agents are more likely to give you more discounts inorder to get your business. The big companies are not going to want to give you these. The thing with car insurance is that it is not the money maker. The plan is to get your car insurance, then you bikes and boats, then your home, and then life insurance-which is were the real money is made.

The value of your car is not relevant to the deductible. They are what they are. Go ahead and raise your deductible so you pay less each month, and save the extra money. If your car gets totaled, your still only going to get what the ins. company thinks its worth. If you dont think it will be worth anything than just carry indemnity, which is liability only, and just pays for damage that you do, not your car.

Personally, If I were you I would raise my liability Bodily injury limits. If you ever cause a bad accident you will be glad that you did. Thats only 25k per person, up to 50k per accident, I dont think its enough....Property damage is fine, just dont run into any buildings. But, I would think about raising the medical payments also, again 10k is not that much.

Don't worry about towing raising your rates. The other stuff is what will get ya. But the other stuff in the article is pretty much correct.

hope I could help a little,
Misty

The_Jazz · 06-28-2006, 05:15 AM

I guess that this falls to me as the resident insurance nerd. And considering that I had to finish off the last of my continuing education for my license last night with the "Personal Auto" test, I actually do recall a little about this stuff, even if it's not something that I normally get involved with.

First of all, Cookmo is right about several things - go to an independent agent, raise your limits and consider raising your deductibles on the physical damage. First, independent agents have access to lots of companies that write personal auto coverage. They can help you figure out what the best deal for you is. They'll most likely recommend packaging it with your renters insurance (I'm making an assumption here), which is a fantastic idea since you definitely need that as well. My largest client base is independent agents, and if you need help, just let me know where you are and I can probably figure out some recommendations since I deal with agents across the country (Cookmo, there's an excellent chance that someone in my office deals with your family's agency if there's any size to it).

The average auto claim for bodily injury in 2000 paid out something like $40,000 (although that number includes commercial claims, which are traditionally much higher because of the size of vehicle involved). Think about how much medical treatment costs and you'll get a quick idea. Never, ever, ever buy the state minimums unless you are fully prepared to spend the rest of your life with garnished wages. You need at least $100,000 in BI coverage, and personally I think that $250,000 is a reasonable amount. You may not be able to afford that, but it's something to think about.

On the physical damage coverage, definitely think about raising the deductible or dropping the coverage altogether. Look at it this way, right now, you're paying the insurance carrier 20% of the value of the car every year ($134.43 x 2 = $268.86 on a car with a blue book value of $1,300). My rule of thumb for my cars throughout the years is that I don't bother to by physical damage coverage on anything less $5,000. However, that's my personal decision and not necessarily my recommendation as an insurance professional. You're already banking money for a new car, and my assumption is that you're planning on driving your Neon into the ground before replacing it. There's little difference between a wrecked car and one that doesn't run because of a mechanical breakdown in terms of drivability.

And before you ask, no, I can't help you with your personal auto coverage since you definitely don't want what I bring to the table. If you ever have a fleet of garbage trucks (or better yet, start manufacturing garbage trucks), I'm definitely your guy, though.

NoSoup · 06-28-2006, 10:28 PM

I would suggest a couple of things...

If your vehicle is only worth 1300, I would not recommend that you even carry full coverage insurance, just liability and uninsured motorist coverage.

Since you have the money saved up if you need it, I'd recommend getting your deductables set as high as you think is reasonable - liability covererage is relatively cheap, so you shouldn't have to go to extremes to keep it affordable.

Another something you may want to consider is getting other types of insurance to possibly reduce the amount you pay.

Although your results may vary, before I bought my house if I got renters insurance through the same company I had my car insurance through, it would drop my full covereage insurance approximately $450.00 per year. The rental insurance only cost about $120.00 per year, so obviously that was the way to go.

As far as getting quotes go, I personally use an independant insurance agent - but not just any agent. I'd get two recommendations from friends/family and play them against each other to see who gets you the better deal. Let each of them know that you are doing so - you'd be surprised as to how much more a motivated agent can save you.

For the towing insurance, I'd first take a look at the dependability of your vehicle. If it's likely to break down, perhaps it is something you should consider. If not, skip it. If you do decide to go ahead with it, I'd check with AAA (I am a member, not because I think my car is going to break down, but because it gave me a discount on my home/auto insurance - a much bigger discount than the $60 annual fee) or even your cell phone carrier to see if they offer it. I am with Sprint, and I believe for an extra four or five dollars a month I can get towing coverage for any vehicle I am in - not just my own - providing I have my phone with me.

Good luck, and let us know what you decide

The_Jazz · 06-29-2006, 04:45 AM

NoSoup made some excellent suggestions, but I think that I need to elaborate/qualify a few of them.

Quote:

Originally Posted by NoSoup

Since you have the money saved up if you need it, I'd recommend getting your deductables set as high as you think is reasonable - liability covererage is relatively cheap, so you shouldn't have to go to extremes to keep it affordable.

Back in the bad old days, I did quite a bit of commercial auto coverage (before my underwriter saw the writing on the wall, realized that his underwriting treaty/contract wasn't going to be renewed and decided to trash it, but that's a story for another day). The program that I did the vast majority of my business with wanted to put a liability deductible on every account to help with claims. That proved to be difficult since it wasn't approved/legal in several states. Insurance companies have to get approval for every endorsement that they use for auto coverage (personal and commercial) as well as tell the state what rates they will be charging. A liability deductible may not be available in your state or from the company that otherwise has the most competitive quote.

Quote:

Originally Posted by NoSoup

Although your results may vary, before I bought my house if I got renters insurance through the same company I had my car insurance through, it would drop my full covereage insurance approximately $450.00 per year. The rental insurance only cost about $120.00 per year, so obviously that was the way to go.

This is an excellent idea. Although you'll end up with a larger bottom line at the end of the day, your home and your car will both be covered and, at least theoretically, at rates lower than if you bought the policies separately.

Quote:

Originally Posted by NoSoup

As far as getting quotes go, I personally use an independant insurance agent - but not just any agent. I'd get two recommendations from friends/family and play them against each other to see who gets you the better deal. Let each of them know that you are doing so - you'd be surprised as to how much more a motivated agent can save you.

I'm all for this, but I'll caution you to do it without wasting anyone's time. Let both agents know that the other is involved and which companies the other will be going to. Once one agent has submitted something to a company, that will preclude another one from accessing the same company. You don't want the people you've got working for you getting frustrated and abandoning your cause.

NoSoup · 06-30-2006, 09:11 AM

Quote:

Originally Posted by The_Jazz

This is an excellent idea. Although you'll end up with a larger bottom line at the end of the day, your home and your car will both be covered and, at least theoretically, at rates lower than if you bought the policies separately.

Actually, this was not the case, at least in my personal experience. It was cheaper for me overall to actually have both insurances than to have just vehicle coverage. The discount on my vehicle was more than the price of the renters insurance...

Just thought I'd toss that out there. It may not be the case in all instances, but in mine it was.

Some possible contributing factors, though -

I had full covereage insurance
My insurance was really expensive - I think I was either 18 or 19 at the time I bought my vehicle. Although I only had one ticket (from when I was 16) my insurance was really expensive because I was so young, a male, and had just bought a brand new sports car...

Rodney · 07-07-2006, 05:35 PM

Everybody else knows more than I do, but I'll second going directly to an independent agent, or two. If you're going to two, tell the second one who the first one is submitting you to.

It's worth making multiple calls, because not all independent agents are as independent as they ought to be, thanks to various incentives that some insurance companies offer. If you're young, you may find that there's just one or two companies who write in your area that offer good rates. In California, for example, independent agents routinely offer Mercury Casualty to young drivers with good records, because it offers low prices to that group and is a pretty sound company (they pay).

As always, ask your friends how much they're paying and how they like their insurance companies.

And finally, I will reiterate what others say: go far above the minimum for bodily injury and property damage. Drop the collision, though; it's $100 bucks a year for a $1300 Neon that's probably going to be worth $1100 next year and $900 the year after. On top of the $250 deductible. I'd apply the money to increased bodily injury/property damage coverage.

The_Jazz · 07-08-2006, 06:45 AM

Quote:

Originally Posted by Rodney

Everybody else knows more than I do, but I'll second going directly to an independent agent, or two. If you're going to two, tell the second one who the first one is submitting you to.

It's worth making multiple calls, because not all independent agents are as independent as they ought to be, thanks to various incentives that some insurance companies offer. If you're young, you may find that there's just one or two companies who write in your area that offer good rates. In California, for example, independent agents routinely offer Mercury Casualty to young drivers with good records, because it offers low prices to that group and is a pretty sound company (they pay).

As always, ask your friends how much they're paying and how they like their insurance companies.

And finally, I will reiterate what others say: go far above the minimum for bodily injury and property damage. Drop the collision, though; it's $100 bucks a year for a $1300 Neon that's probably going to be worth $1100 next year and $900 the year after. On top of the $250 deductible. I'd apply the money to increased bodily injury/property damage coverage.

This is all sound advice. A word, though, about independent agents - they are not all created equally. Some just don't have access to the same markets as others. For instance, the Smith Agency may not have a contract with Progressive or Mercury Casualty but the Jones Agency right down the street may have both. It's worth asking who they have contracts with so that you know who they will be talking to on your behalf. Also, if both Smith and Jones do have contracts with, say, Progressive, even if they are both able to get quotes, they should be equal unless one is playing games with your information (that's called insurance fraud and the agent can go to jail for it).

As another quick aside, a sound company and a company that pays are two very different things. For instance, the largest insurance company in the world, AIG, is a notoriously slow payer.

Rodney · 07-08-2006, 01:10 PM

Quote:

Originally Posted by The_Jazz

As another quick aside, a sound company and a company that pays are two very different things. For instance, the largest insurance company in the world, AIG, is a notoriously slow payer.

I have a friend whose family runs an agency that offers property and casualty insurances to churches only. He's phasing out AIG for his clients because, he says, they routinely deny most claims he sends in. When he gets a lawyer involved, they pay up promptly. With that approach, I have no doubt that they're financially sound! But -- who needs it?

Randerolf · 07-21-2006, 10:41 AM

Thanks guys. Your replies among other threads have really helped me.

According to iii.org, Florida is a no-fault state. The lackey at my State Farm office said that he thought "that it depends on the situation."

I help take care of my Grandmother and live with her, so I don't carry renter's insurance. Plus, I don't have expensive furniture or nothing I couldn't live without.

I'm going to find an independent agent and PM The_Jazz for a recomendation.

I appriciate all of your help. I have not debt, but want to be responsible with my finances though I've done well, so far. I just canceled my life insurance policy since I have no wife or kids and hopefully a burrial will cost less than 30k. I have an online savings account with ING that does much better than CD in local credit unions. I put $90 every month into my 401k at work. It's not much, but I'm paying my way though school. I even just got a secured credit card (Thanks No Soup!) with a $1000 limit to start buidling credit instead of paying cash like I've always done.

06-27-2006, 09:52 PM	#2 (permalink)
cookmo Insane Location: Ohio	If I went into the insurance industry, I would be fourth generation, I cut my teeth on my mom's desk. Not the most exciting thing, but a necessary one. Insurance varys state to state. What state are you in? Is it a no fault or an at fault state? This is really important because in a no fault state everyone takes care of their own, no matter who caused the accident. As for getting quotes, you want to look in your local phone book and find an independant agent, if you want the best rates. Independant agents are more likely to give you more discounts inorder to get your business. The big companies are not going to want to give you these. The thing with car insurance is that it is not the money maker. The plan is to get your car insurance, then you bikes and boats, then your home, and then life insurance-which is were the real money is made. The value of your car is not relevant to the deductible. They are what they are. Go ahead and raise your deductible so you pay less each month, and save the extra money. If your car gets totaled, your still only going to get what the ins. company thinks its worth. If you dont think it will be worth anything than just carry indemnity, which is liability only, and just pays for damage that you do, not your car. Personally, If I were you I would raise my liability Bodily injury limits. If you ever cause a bad accident you will be glad that you did. Thats only 25k per person, up to 50k per accident, I dont think its enough....Property damage is fine, just dont run into any buildings. But, I would think about raising the medical payments also, again 10k is not that much. Don't worry about towing raising your rates. The other stuff is what will get ya. But the other stuff in the article is pretty much correct. hope I could help a little, Misty Last edited by cookmo; 06-27-2006 at 09:54 PM..

06-28-2006, 05:15 AM	#3 (permalink)
The_Jazz Asshole Administrator Location: Chicago	I guess that this falls to me as the resident insurance nerd. And considering that I had to finish off the last of my continuing education for my license last night with the "Personal Auto" test, I actually do recall a little about this stuff, even if it's not something that I normally get involved with. First of all, Cookmo is right about several things - go to an independent agent, raise your limits and consider raising your deductibles on the physical damage. First, independent agents have access to lots of companies that write personal auto coverage. They can help you figure out what the best deal for you is. They'll most likely recommend packaging it with your renters insurance (I'm making an assumption here), which is a fantastic idea since you definitely need that as well. My largest client base is independent agents, and if you need help, just let me know where you are and I can probably figure out some recommendations since I deal with agents across the country (Cookmo, there's an excellent chance that someone in my office deals with your family's agency if there's any size to it). The average auto claim for bodily injury in 2000 paid out something like $40,000 (although that number includes commercial claims, which are traditionally much higher because of the size of vehicle involved). Think about how much medical treatment costs and you'll get a quick idea. Never, ever, ever buy the state minimums unless you are fully prepared to spend the rest of your life with garnished wages. You need at least $100,000 in BI coverage, and personally I think that $250,000 is a reasonable amount. You may not be able to afford that, but it's something to think about. On the physical damage coverage, definitely think about raising the deductible or dropping the coverage altogether. Look at it this way, right now, you're paying the insurance carrier 20% of the value of the car every year ($134.43 x 2 = $268.86 on a car with a blue book value of $1,300). My rule of thumb for my cars throughout the years is that I don't bother to by physical damage coverage on anything less $5,000. However, that's my personal decision and not necessarily my recommendation as an insurance professional. You're already banking money for a new car, and my assumption is that you're planning on driving your Neon into the ground before replacing it. There's little difference between a wrecked car and one that doesn't run because of a mechanical breakdown in terms of drivability. And before you ask, no, I can't help you with your personal auto coverage since you definitely don't want what I bring to the table. If you ever have a fleet of garbage trucks (or better yet, start manufacturing garbage trucks), I'm definitely your guy, though. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

06-28-2006, 10:28 PM	#4 (permalink)
NoSoup Non-Rookie Location: Green Bay, WI	I would suggest a couple of things... If your vehicle is only worth 1300, I would not recommend that you even carry full coverage insurance, just liability and uninsured motorist coverage. Since you have the money saved up if you need it, I'd recommend getting your deductables set as high as you think is reasonable - liability covererage is relatively cheap, so you shouldn't have to go to extremes to keep it affordable. Another something you may want to consider is getting other types of insurance to possibly reduce the amount you pay. Although your results may vary, before I bought my house if I got renters insurance through the same company I had my car insurance through, it would drop my full covereage insurance approximately $450.00 per year. The rental insurance only cost about $120.00 per year, so obviously that was the way to go. As far as getting quotes go, I personally use an independant insurance agent - but not just any agent. I'd get two recommendations from friends/family and play them against each other to see who gets you the better deal. Let each of them know that you are doing so - you'd be surprised as to how much more a motivated agent can save you. For the towing insurance, I'd first take a look at the dependability of your vehicle. If it's likely to break down, perhaps it is something you should consider. If not, skip it. If you do decide to go ahead with it, I'd check with AAA (I am a member, not because I think my car is going to break down, but because it gave me a discount on my home/auto insurance - a much bigger discount than the $60 annual fee) or even your cell phone carrier to see if they offer it. I am with Sprint, and I believe for an extra four or five dollars a month I can get towing coverage for any vehicle I am in - not just my own - providing I have my phone with me. Good luck, and let us know what you decide __________________ I have an aura of reliability and good judgement. Just in case you were wondering...

07-07-2006, 05:35 PM	#7 (permalink)
Rodney Observant Ruminant Location: Rich Wannabe Hippie Town	Everybody else knows more than I do, but I'll second going directly to an independent agent, or two. If you're going to two, tell the second one who the first one is submitting you to. It's worth making multiple calls, because not all independent agents are as independent as they ought to be, thanks to various incentives that some insurance companies offer. If you're young, you may find that there's just one or two companies who write in your area that offer good rates. In California, for example, independent agents routinely offer Mercury Casualty to young drivers with good records, because it offers low prices to that group and is a pretty sound company (they pay). As always, ask your friends how much they're paying and how they like their insurance companies. And finally, I will reiterate what others say: go far above the minimum for bodily injury and property damage. Drop the collision, though; it's $100 bucks a year for a $1300 Neon that's probably going to be worth $1100 next year and $900 the year after. On top of the $250 deductible. I'd apply the money to increased bodily injury/property damage coverage.

07-21-2006, 10:41 AM	#10 (permalink)
Randerolf Fireball Location: ~	Thanks guys. Your replies among other threads have really helped me. According to iii.org, Florida is a no-fault state. The lackey at my State Farm office said that he thought "that it depends on the situation." I help take care of my Grandmother and live with her, so I don't carry renter's insurance. Plus, I don't have expensive furniture or nothing I couldn't live without. I'm going to find an independent agent and PM The_Jazz for a recomendation. I appriciate all of your help. I have not debt, but want to be responsible with my finances though I've done well, so far. I just canceled my life insurance policy since I have no wife or kids and hopefully a burrial will cost less than 30k. I have an online savings account with ING that does much better than CD in local credit unions. I put $90 every month into my 401k at work. It's not much, but I'm paying my way though school. I even just got a secured credit card (Thanks No Soup!) with a $1000 limit to start buidling credit instead of paying cash like I've always done.