Questions About Auto Insurance and Accidents

KCRam · May 2004

Ketan, did you cash the check immedoiately? That's a sign to the insurance company that you likely did not repair your car. When the car is going to be repaired, most people endorse the check over to the body shop, and it would almost always take some time (getting a repair appointment, ordering parts, etc.)

Three big bills sounds high for a door dent. Their estimate likely included additional repairs that you didn't think were necessary or didn't realize were in the deal. This is likely why they are concerned that you're driving an unrepaired car, and why they're considering a rate increase if the car remains in the damaged state. If you have a copy of their adjuster's report, check to see what damage they paid for.

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tornado25 · June 2004

but I work in the industry. The reason the company will require proof of repair is twofold.

1) IF you don't repair the vehicle and say in a month are hit in that same spot, the company will not (nor should they) want to pay to "repair" a door that was never repaired in the first place. This is "prior damage". Setting aside the total loss issue, your ins company will theoretically pay for the same damage over and over again, as long each individual loss is not a total AND you've repaired it each time. (You know what I'm saying here?) However, if it was never repaired in the first place, you can't "repair" it again. The deductible change is weird. What my company does is simply refuse to pay if the same unrepaired area is hit.

2) This is where the total loss thing comes into play. Let's say you don't repair it because you're going to get rid of it. But, before you do, you get hit again, but it's in a different area. Since the original area is unrepaired, the company can look at the total damage (the $3000 in original paid, unrepaired damage plus the new damage) and total the vehicle out.

This whole thing might be moot for you, however, if you're simply trading or selling the vehicle without repairing it. Then, when you get your replacement vehicle, the insurance company won't care one way or another, because the vehicle in question is no longer insured by them. Also, I would point out that your original post said "or my premium would be increased" but your excerpt from the letter states all they would do is increase the comp/collision deductibles, which would actually lower your premium.

This action though, is primarily to prevent fraud--it's not a action against YOU personally, but a way to keep it from happening. Most commonly, what I see a lot is a client will get 2 estimates from body shops in the area and ask for a cash settlement (i.e., we pay you instead of the shop once the work is done). Then, they'll get their cousin's friend's uncle to do the work on the side for parts and a couple cases of beer (or $15/hour labor instead of the body shop's $50/hour or whatever) and keep the rest of the money. That sort of thing (again, not that's what you're doing, obviously) is fraud and is illegal. If that person is paying less, the insurance company should get to pay less, too. (Not to mention the uncle probably isn't reporting that income, either).

wahes300 · June 2004

I had my 1st accident in my Lexus ES300 - and it was a strange accident. They have agreed to fix the damage to the fender and passanger side, but can't see the connection to the roof 'rippling' which occured when my sunroof was open and the impact (I'm guessing) caused the sunroof to slam shut and ripple/buckle the roof at all point points on the roof. My insurance company sees no relation and sent out an independent adjuster whom has agreed with ERIE's adjuster. The damage def. came from my collision. The difference between what they will cover and what needs to be fixed is ~ $1000. I'm afraid of the car having an unsafe roof as well as a long term bad 'look.' What are my options now?

ketan · June 2004

Excellent explanation by tornado25.
A few answers :
This was my 1st accident so I always thought the check would be on the name of the repair shop I would tell them. 1 fine day I got the check in mail on my name. I called the claims agent and asked her whats this check for - she said for your repairs. After which I deposied it.

The damage is a dent on the front left fender and door - so I guess they would replace the stuff - I got a rough estimate from a local BIG repair shop and they gave me an estimate close to 3000 $. Then I went to a few more shops they all ask 1st question - who is paying ? This made me belive that they could be possibly giving different rates if I tell them that I am going to pay for it ... I am going to try that this weekend going to a different repair shop.

Thanx
Ketan

tornado25 · June 2004

Sometimes, too, they ask who's paying because we have agreements with area shops that allow them to transmit digital photos and estimate to the co directly. This means the client doesn't need to wait for an adjustor (or come to our office) for a photo or get 2 estimates, etc. If their preferred shop is on the list, it works well.

A dent on the left fender and door, depending on the vehicle, doesn't surprise me with a $3000 estimate, since a lot of that cost is the paint time and blending, etc.

Did the estimates (less deductible) you got come close to the amount of the check? If so, I would just go to one you can trust and be done with it.

prophet2 · June 2004

You've claimed not to be an "expert," but the quality of your commentary says otherwise. The readers here would be wise to pay heed to you and your observations.

$3K for the dented fender and door is definitely in line. Often, the replacement of a part is less expensive than the labor cost to repair it, hence the big business in crash parts.

There was a report in our area about 10 years ago which indicated that totally re-building a $15K car with parts would cost $40K! Some cars are stolen for hard-to-get parts. An example of the "sum total of the parts being greater than the whole."

Companies like GEICO and AIG have "preferred" body shops. The checks are sometimes made out to the insured and the shop used. Usually, the check is made out to the claimant only as the law here gives people the option of choosing their own repair facility.

One of the shops I've had very satisfactory dealings with is on the "preferred" list, so I had no qualms about using their services three years ago. In that case, no draft was issued to me as the insurer paid the shop directly. The other party was at-fault, but we both had the same carrier.

janz · June 2004

and involved mostly the passenger door of a sedan. They had to buy a NEW door, because they could not find a used one, that and some hidden damage, cost just about $2500 for the repair.

tornado25 · June 2004

"You've claimed not to be an "expert," but the quality of your commentary says otherwise. The readers here would be wise to pay heed to you and your observations."

Thanks for the nice words. I work in the business but try so that I don't want people to think my word should be taken as gospel--there are a lot more experienced people out there than I. I can see you your advice and info is just as good.

As for the preferred shops, the client still needs to choose that shop. We provide the option and explain it is (and sincerely, it is) the fastest, most efficient way to get their car fixed. If they choose another shop, it usually means either a) having a co inspector come out or b) getting 2 estimates and coming to our office for a photo.

They always, always have the choice, but once they've decided where to go, we prefer to pay the shop directly (even if the shop isn't "preferred".) 2 reasons for that: 1) the insured/claimant can't take the money, not pay the shop and then the shop starts barking at us for payment (it happens)and 2) (this one for the benefit of the client) if something goes wrong, us having paid the shop makes it a little easier to fix things (another reason going with the preferred shop is the way to go--if they screw up, the company can lean on them). If a client takes a check and Joe Schmo does the work on the side and screws up, good luck getting our help, because in most cases, we really can't--it was a cash settlement.

"Often, the replacement of a part is less expensive than the labor cost to repair it, hence the big business in crash parts."

Yep, I can't tell you how many times people have brought in their estimate, all excited, shocked over the amount, especially older folks. They will get the front bumper cover scratched and because that normally requires replacing the entire bumper cover assembly, the parts are $500 with 1 hour labor (or whatever). The client is thinking less than deductible and it comes back $600. And the thing is, it's a fair and correct price, since those bumper covers can't be repaired. Nothing fazes me anymore.

leomort · June 2004

I'm sure most drivers have encounter other drivers who slam on their brakes to "teach" the other driver behind them a lesson. If an accident occurred who would be at fault? Was the following driver "tailgating" too close thus deserved to be taught a "lesson" or is the driver who slammed their brakes bear any fault?

janz · June 2004

by the "teacher", I really don't think you could prove it. Further, if this action did result in a rear end accident by the "student" it would likely be the result of their guilt, if you will, by FOLLOWING TOO CLOSE.

(I have to admit, I did consider this ONCE, however, at the risk of damage to my own car it seemed rather ridiculous.)

prophet2 · June 2004

In my way of thinking, I wouldn't want my car damaged in the process. Even if the repair would be under the other guy's policy (assuming he's insured), my car would never really be the same (diminished value due to accident).

Some folks have told me that if it's during daylight hours, they flip on their lights for the "lesson." The tail-gaters can't tell the difference between the tail lamp lighting up vs. the brakes being applied, so they slam on their brakes in a panic. They may then be rear-ended by the guy who's following them too closely!

akangl · June 2004

That's why its nice to drive an old Chevy truck that's seen better days. Can't hurt that dang thing.

CarMan@Edmunds · June 2004

I don't know if this is actually officially the case or not, but I remember hearing somewhere that if there is an accident where one car is rear-ended the person who was driving the vehicle that hit the first one is always at fault. The logic behind this is that the accident would have never happened if the second driver would have left several car lengths between them and the first car while driving like they should have.

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qbrozen · June 2004

that's what I used to hear, too. But I did have an accident a few years back where I was driving through an intersection on a rainy evening and someone made an abrupt turn into oncoming traffic. The car in front of me hit the turning car, effectively bringing the car in front of me to an immediate stop. I could not bring my car to a halt quick enough and rear ended him. It took almost a year, but my insurance company eventually forced the insurance company of the woman who turned into traffic to pay for everything and even refunded my deductible. So its not as black and white as it seems.

grneyes · June 2004

I recently sold my car to a private party and received a fraudulent cashiers check in payment. Filed all appropriate police and DMV reports. Insurance agent said that this is not considered a theft loss as I willingly turned over the keys to this individual. Any insurance agents thoughts?
This is a horrible experience.
Thanks in advance.

KCRam · June 2004

Well, this won't sound very helpful, but I was in a similar boat some years back. Was way over mileage on a lease and called one of those "car buy" places. They fell a little short of the payoff, but the difference was manageable. Gave them the vehicle and the difference. Lease bank called me; they never were paid, and was I still in possession. I gave them the location and name of who I turned the vehicle to, and the bank sent an investigator... place was deserted and padlocked. Unfortunately, I had closed the insurance policy and turned in the license plates to DMV, so no chance at reporting theft. Lease bank understood I got jobbed, but I still had to pay the lease residual - worked out a payment plan and got it done. It had to go on my credit report as a charge-off until the payments were completed, now reads as a Paid-was Charge-off. Lesson learned the hard way.

The only legal recourse you have is filing charges for a bad check with the police. If the police consider it theft by deception, then you may be able to use that with your insurance company to get a claim.

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akangl · June 2004

We *almost* had that happen. Let a car buyers club consign our 92 F-250, they sold it, we paid the difference between what it was sold for and the pay off ($9000 sale price, $9300 payoff), thought it was a done deal. Got a call from the bank a month later asking where the payment was, we told them the truck was sold and by who. Lady from the bank got on the phone and I don't know what she did, but she had full payment for the truck in 2 hours.

Others weren't so lucky, the place went under 3 weeks later and some had repos and other things show up on thier credit. Some people bought cars from them, had loans, only to have to give the car back to the original owner because the original loan on the car was never paid. So they got stuck paying for a car they didn't own.

leomort · June 2004

I'm talking about during the morning rush hour drive to or the afternoon rush hour from work. You're usually closer to the other cars around you than in typical driving situations. Any body that leaves even one car length in front of them during rush hour is going to have another vehicle cut in front of them to take that space. Heck, anything even resembling space between cars often has someone "trying" to squeeze into that spot.

tornado25 · June 2004

Personally, I think the theft by deception is not a bad tack to take with the insurance company, but I wonder if it would fly, since as the agent indicated, you handed the keys over.

One thing you can consider is, as agents, we aren't claim reps, so the true final call isn't ours anyway. Most agents know generally what is and isn't covered and are the best first resouce, but it's always the unique/funny claims where coverage exists even though I thought it wouldn't or be denied when I thought there was coverage. Keeping in mind that simply filing a claim in today's market can be used negatively, you may want to consider forcing the agent to send in a claim for a definitive response from your company.

I mean, if we're talking about a vehicle valuable enough to carry comprehensive and to worry about like this, it's probably worth it to get a solid response. If they deny, I can't comment on your actions beyond that, as it would require specific knowledge of both your policy and proper legal advice, neither of which I have.

prophet2 · June 2004

A few weeks ago, a claims rep confirmed that damage to a vehicle hitting a pothole could be paid under collision coverage. Subject to the deductible, of course.

I suspect, however, that if it just threw your alignment off, that cost would fall well within the deductible.

leomort, what you say is so true. Some drivers think that just flicking on the turn signal gives them an automatic right to merge in. Leave just a little room and you'll have these dolts barging in WITHOUT the turn signal.

It isn't a case of NOT letting these guys in, but it would be nice if they'd "ask."

leomort · June 2004

prophet2,

   Yep, I seen the flicker turn signal too. Usually they have enough time to get into the space. That usually doesn't bother me, as I can usually tell before hand if someone is going to do that and general give the space if able.

   Then there are the drivers that speed-up to cut off the driver who had their turnal signal on when there was more than adequate space. To me that's rude. Or if the driver needs to be in my lane and I see their turn signal, I let them in--as long as I can see it before hand there's no problem. But I've had drivers decide they were changing lanes regardless who was there.

  Of course there's alway the one idiot who has their turnal signal on that wants to be in the other lane but wants at least three car lengths before making the change. In the meantime, said driver has slowed down in the fast lane, plus cause the other lane to also jam up.

janz · June 2004

Long story short, a while back we LOANED our motorcycle to a "friend" for 2 days and a week later, we hadn't heard from him. We tried to call it in as theft because he'd had it so/too long, we were told if you hand it over, it is not theft, plain and simple. I don't think this will fly with the police or insurance company.

Now imbezzlement or fraud on the part of the defaulting company who did not pay the loan off is more like it. A similar situation happened locally. The owners of a used lot who had not paid-off trade-in cars were prosecuted, landed, in jail and paid huge fines. It was a big mess for those involved, just as akangl describes.

qbrozen · June 2004

did you ever get the bike back?

prophet2 · June 2004

Might this "loan" have graduated to an "illegal conversion" by your so-called "friend?" This could then be "theft" by another name. Or, would the thief have to actually sell ("convert") it to be guilty of a crime?

I can see the insurance company balking, but not the police. Can any of you legal beagles out there offer some insight? People ought to have some recourse as far as at least getting their property back.

janz · June 2004

it was insured for liability only. So the insurance had nothing to do with it.

About 10 days later the police found it abandoned in the mall parking lot. It wouldn't start, but it was nothing big. Of course, we never heard from the friend again.(He WAS a very good old friend of my husband.)

By "illegal conversion" do you mean if he tried to sell it? I imagine it would become illegal at this point in that you cannot legally sell and transfer the title on property that you do not legally own. Of course, that doesn't mean that this doesn't happen.

The point of the police was that we gave him the keys and permission. The arrangement was to loan it for a couple of days. When I called the police 5 days later telling them that our permission for him to have the bike had expired, I was told that it didn't matter. Point being that you cannot change the terms at will or your convenience. They would do nothing because we "gave him the key and permission to take it", therefore there was no theft involved and they could do nothing and were not sympathetic.

prophet2 · June 2004

"Conversion" as to selling, trading, or exchanging for value ("fencing"). Items like cars, boats, motorcycles, etc. are often registered and have ownership papers. Others like jewelry, musical instruments, TVs, etc. do not.

I really don't see how you "changed" the terms after five days went by - was it not agreed that it was for a couple (two, three at the most) of days?

It was probably a way for the police to tell you that this was not a high priority "crime" in their estimation.

A long time ago, my 10-speed bike was stolen. My insurance paid me off, then the police caught a criminal with a long record of petty theft and burglary riding it. Since I had been paid off, it now belonged to the insurance company and I retrieved it for them from police impound and it was eventually sold by sealed bid. The thief? Although I was served with a subpoena to testify, he never went to trial. He didn't show up and a bench warrant was issued. I guess that with a plea bargain, a trial became unnecessary.

janz · June 2004

(13 years) and something about it might not be a priority for the police does sound familiar. I guess I get stuck on the concept that they said because we handed over the keys voluntarily, they could not do anything. We do not live in a high crime area. It was a disappointing and surprising answer, we honestly believed because more time had passed than we agreed to that we had a valid concern, they did not think so. In the end, we were just happy to get it back. Needless to say, it has made us more careful.

prophet2 · June 2004

One lesson is that we should be careful in choosing our "friends." Especially in lending cars and money.

bolivar · June 2004

You 'lend' someone something, the police will not get involved.

It's a civil matter, not a criminal matter.

Kirstie_H · June 2004

Have you ever heard of Web sites that evaluate photos of your damaged car and help you get repair quotes, such as dingit.com? Please contact jfallon@edmunds.com if you know anything and/or have an opinion about these services.

nitrocl · June 2004

Does anyone know when buying a new car in NJ if your name has to be on the insurance card or can you be part of someone elses policy? Do the dealers call the insurance company or do you just show your card? Will I have to get insurance in my own name (Which will cost me over $4800 a year!!!) What if i get financing outside the dealership? does how my car is insured matter to them still?

solaraman2003 · June 2004

I have a 2003 Toyota Solara for just over a yaar now.

When should I expect that the premiums charged for collision/comprehensive start to go down, since the value of the vehicle IS going down?

I use Allstate. The auto was purchased 5/2003. My policy is semi-annual and so now (July 2004) I am receiving the renewal and the premiums are the same as the 1/2004 policy, which is the same as the 7/2003 policy.

KCRam · June 2004

Hi nitrocl

Won't necessarily matter to the dealer, but it will definitely matter to the lender. Since the dealer acts on the lender's behalf, they will indeed call the insurance agent to verify that a valid polciy will cover the vehicle. If this is a situation where you are on your parents' policy, you should be ok as long as you are listed as a driver on that policy and the address matches your driver's license. I did that in NJ for years - my dad and I shared a policy for the multi-vehicle discount until I moved out.

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nitrocl · June 2004

Then in the case that I get outside financing it should not matter to the dealer correct?

KCRam · June 2004

correct, but do check with the bank/credit union for their insurance requirements - it's their money and the car is collateral, so it's their rules of insurance coverage that you must abide.

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tornado25 · June 2004

You should not expect the comp/collision rates to go down each year simply because the value of the car has decreased. I'll explain why.

1) The value of a vehicle only comes into play in one claim scenario and only one: a total or potential total. For that reason, a vehicle's cost when purchased is only one of many, many factors used to calculate the premium. To carry that point a step further, it would make sense that any change in that vehicle's value would be a small factor in determining it's renewal premium.

2) So, aside from total losses that might involve the value of the vehicle, the VAST majority of all claims are for damage that is less than a total. For that reason, things like body shop labor rates, parts costs, average damage amounts, etc have a much greater effect on the premium than anything else (aside from age). Those things do NOT go down just because the value of your car did. So, if your car is vandalized and not totalled or you're in an accident, but it's not totalled, the cost of the parts, the labor, the claim handling, etc all are the same (if not increasing each year).

My point is, finally: The premium you pay represents your share of the risk presented to the company for that particular car. Things like theft rates in your area PLUS more importantly, the theft rate for your vehicle, the historical loss history for accidents where you live, honestly HUNDREDS, if not thousands of variables go into determining that premium and the value of the car is just ONE.

prophet2 · June 2004

In addition to tornado's explanation, the age of the vehicle plays a small role in calculating the premium charged. In my jurisdiction, current year models are placed in the highest premium group (1) for collision/comp rates. Cars then drop in the age classification for the next two years (2,3), followed by another drop (4,5), then the final rate class (6+).

These changes occur on renewals dated on or after October each year. A 2003 vehicle would have been a "1" anytime prior to October 2003, then go the "2,3" class until October 2005.

While a particular vehicle may "drop" in the age classification, the rates may have been raised for that age class, or the vehicle itself may have been re-classified higher (e.g. 12 to 14) due to the risk factors tornado has pointed out.

xiaozuzu · June 2004

State Farm Fire and Casualty Co. mailed me a letter last week and told me they decide not to renew my Auto insurance plan which end in this August (08/27/2004)
My insurance plan background :
Driver : me ( 27 y/o ) my girlfriend ( 26 y/o) both of us are students
Car: Chevy Lumina 1995
Illinois
State Farm fire and casualty Co
Liability (car body, medical .towing , A, C, H U1 W)
Starting from 01/2002 to 08/27/2004

I had 2 accident:
05/2002 accident (left turn collision , my fault, went to traffic school) 2 ticket were given at that time and later dropped because I took the class the Illinois Supervision ( non of the tickets were covicted and as long as you have no accident in the next 1 year, you have a clean record)

04/ 2004 accident (hit a coming deer, damaged the very cheap iron wire -fence which separate the highway from the farm)

Because my 10 years old chevy sometimes broke down ( Chicago cold weather) , I towed my car 3 times from 2002 to 2004 in additions to the 2 accident towing bill, which state farm reimbursed me. So State farm wrote to me and said that I had 5 claims.(@#$@#$!!!)

Before my girlfriend and I decide to just use my car, her car were hit by an uninsured vehicle in 2002 and it is totally the other drivers fault who got a ticket , because this driver is uninsured and can not pay back to my girlfriend, her license were revoked. Her cars were insured by state farm too, but state farm did not pay a penny to us because we only had liability.

So state farm is dropping me because I had 2 accident ( the 2002 one and 2004 accident with a deer) and 5 claims( 3 towing and 2 accident I just mentioned)
I am not sure about follwing questions:
What will this dropping affect my driving history?
Can other company see I am being dropped by statefarm and had 5 Claims.??
Can I still get insurance from other good companies with a reasonable price??
What is the difference between State farm mutual automobile Ins Co and state farm fire and casualty co ( the one I had policy with )??
As statefarm said in the letter I can appeal this decision to Illinois State, Is it worth for me to hire a lawyer and appeal this??

I was a bad driver and getting better and better each day, but I can not imagine that the recent unfortunate Deer accident can cause so much trouble, is this Deer accident considered unavoidable nature disaster?
Thank you very much

prophet2 · June 2004

State Farm MUTUAL is for their standard and preferred risks. State Farm FIRE is their second-tier carrier with premiums 70-100% higher than standard, depending on the state you're in, even if you have a "clean" record (no tickets or at-fault claims). They also have State Farm GENERAL for DUI and "assigned risk" drivers. The rates are even higher.

What was your driving record before you insured with State Farm? Was it the FIRE company rather than the MUTUAL company you were placed in?

Being dropped is a function more dependent on the frequency and number of claims rather than the dollar amount of the claims. In other words, five at-fault claims totalling $6000 will get you booted, a single $10,000 claim will probably not.

I'm a little surprised that the towing claims have been factored in. It may have been better to have joined AAA for their towing benefit rather than the insurance company.

xiaozuzu · June 2004

i just get my learner's permit when i get my insurance from statefarm fire and casualty ( not the mutual), i did not recall and did not know there is such difference, it must been that it is risky to give my insurance so they only give me the fire and casualty company.

just talk to my agent, she told me the fire and casualty is already the statefarm General ( highese risk level), so i can not get insurance from statefarm after all!

Anyways, do you guys know whether other insurance campany will see my towing claims at all. or will they only see my accident record in DMV?

thanks a lot

manamal · June 2004

There is something called a 'CLUE report'. If yu do a google search on 'CLUE insurance' you will learn more about it.

Bottom line is it lists all of the insurance claims that you have made.

Good Luck!

tornado25 · June 2004

Prophet, I can't really get into it too much here, so if you'd like to email me, that's cool; what I can tell you is unless there is a or a couple exception states out there, SF General does not do auto insurance. It's primarily a property insurance affiliate. Mutual takes preferred risks only--those with perfectly clean records or exceptional scores. All other eligible business is written in Fire. (All auto in NJ is written by SF Indemnity).

As for the question at hand, my main thought, as was previously brought up is what caused you to be placed in Fire initially? If you had a violation or at fault loss when you started the policy and at the time of cancellation, if that incident was less than 5 years old, that may also be taken into consideration. It's not just the accident/ticket NOW.

Re: the towing claims. The typical action there is simply removal of the coverage. The company would not cancel the policy for that alone, but it does give them a claim picture. My best guess is what really hurt you is your tenure with the company. In the 2 1/2 years with the company, you had 5 claims.

As far as the deer hit. In terms of repairing your vehicle, if you had carried comprehensive, that would have paid for the damage to the vehicle and it's not chargeable. However, if the company had to pay to repair the fence, that's property damage liability and although I've never encountered this situation, I believe because of that payment, it would be considered chargeable. (Try not to think of it as "at fault" versus "not at fault" but rather how the company considers the payment in it's rating).

The accident with your girlfriend's car has no affect or bearing on this situation.

As far as appealing, what that means (likely--not 100% sure since I don't live in IL) is you can obtain coverage IL's pool plan. I highly doubt a true appeal of the cancellation is possible and if it is, it's likely to be unsuccessful. You definitely have one chargeable loss on your record and depending on the fence claim, maybe 2. It may take calls to few companies to find coverage.

prophet2 · June 2004

At least through fairly recent times (late '90s), Hawaii may have been one of the few jurisdictions in which State Farm wrote auto coverage through three different carriers. I met a GI who had applied for coverage through State Farm and the application had the three carriers listed. He had a clean traffic abstract and had been based here for three years.

The car was being financed, but the State Farm agent did NOT write him up for full coverage and placed him in the FIRE company at $676 for six months for basic liability and no-fault medical. The MUTUAL company rate would have been $375. The lienholder would have slapped on a very costly physical damage policy (comp-coll) to protect their interest.

We wrote him full coverge through Transamerica at $578 (basic at $405 was higher than State Farm Mutual's comparable rate).

Back then, the GENERAL carrier was used strictly for DUI, assigned risk pool, and non-owned auto (driver-only) policies. There were drivers who sold their vehicles after their policies were cancelled, but were shocked to learn that unless they could prove financial responsibility by either posting a bond or getting insurance, they would have to surrender their drivers' licenses.

As far as the GI went, shoving him into the FIRE company was probably State Farm's way of saying he was an "undesirable" risk. They were not the only ones as other carriers would prefer to not accept military non-coms, young drivers, etc. State Farm was one of the companies here cited and fined for using "illegal" criteria in their rate structure and risk assessment (occupation, age, gender, marital status). I myself got a call from the agency head that my book had too many military clients.

All other companies have a second carrier in which to place sub-standard risks, but none went to the lengths State Farm did in this case. But, all of them required "clean" abstracts and claims histories to get into the prime carrier - all others were automatically placed into the second tier.

Others whose policies I examined were found to have had a gap in coverage, which in these parts in almost as bad as a DUI. Non-continuous coverage is regarded as evidence of not being a responsible driver and the surcharge is enormous.

I suspect that our friend may have been placed in the Fire company due to his youth (20's) as most states allow age as a rating criteria.

tornado25 · July 2004

I will defer on this point since:

A) I don't live in HI, nor have I ever been there

I don't know company guidelines for HI

As for HI, I can be sure I will NEVER live there, since disallowing perfectly normal undewriting criteria from rating calculations means some people pay a higher rate than they should be. Just because the legislature thinks it sounds good to the voters.

Ask an actuary once what happens when you can't use gender to rate a policy and you have a 20 year old guy and a 20 year girl to insure. It means the girl pays more than she would and the guy pays less. Gee, sounds fair to me. Guys are riskier but don't pay more. Whoo Hoo! Except not. (And for the record, I'm a guy. Single. Under 30. I'd benefit from moving to HI. I still think the law is dumb).

prophet2 · July 2004

They feel that applicants, regardless of age, gender, or marital status, should be rated the same if they both have the same driving and claims record and that increases should be based traffic violations and at-fault claims history. What is unfair is that drivers are penalized for PENDING tickets not yet adjudicated in court as if they have been convicted. I have never heard of an insurance company refunding surcharges on pending tickets after the driver was acquitted or the case thrown out.

You mean you'd let a small thing like our auto insurance criteria deter you from living in our ALOHA state? Surely, you jest! You must really love the snow. For us, cool is 70 degrees, when the locals desert Waikiki Beach because it's getting too chilly! :>) :>)

steine13 · July 2004

.... I understand where the insurance industry is coming from, but we're all individuals, and you can slice the pie many different ways. Gender just happens to be easy, and legal in some places.
I'm pushing 40 (hard) and I've never had a claim against my insurance. In Germany, I'd pay just about *nothing* on car insurance...

Here's how it works there, or at least used to.
You get your license at age 18 (another topic). If you want to insure a car, you'll pay the nominal rate for that car, multiplied by 2.25. Drive claim-free for 6 months, and it drops to rate*1.75. Another year of no claims, 1.25. Another year, you pay the "normal rate". Every year after that, it keeps going lower.

If you've had your license a couple of years before you get your car, it's 1.75 for starters.

If you have a claim, things get REALLY expensive in a hurry.

My old man pays std rate * 0.35, if memory serves. That is essentially free insurance, and a factor of six or seven less than a new driver. IOW, a discount of 85% or so. And even if he has an at-fault claim, he will be bumped up a few year's worth, and his insurance factor will still be low, like .45 or something.

Notice I said "claims". Accidents you pay out of pocket do not influence your rates. Speeding tickets do not influence your rates. Points do not influence your rates. The only thing they care about is chargeable accidents. Great system.

The downside is, the base rate for any car is determined by horsepower, even though it is widely acknowledged that there isn't much of a correlation. At least it keeps the young drivers out of the Camaros...

I'm telling you all this just to throw out a different perspective.

Long-windedly yours,
-Mathias

xiaozuzu · July 2004

thank you all very much.
I am getting a lot of quotes and probably make a bunch of appointment with the Insurance agent.
From now on, I will never never be bad driver!!!
it really save your money in the isurance and prabobly save your life!!!

tornado25 · July 2004

"You mean you'd let a small thing like our auto insurance criteria deter you from living in our ALOHA state? Surely, you jest! You must really love the snow."

Of course, I'm partially joking. I do love WI, though. We've got our own screwed up laws I'm sure people would hate--oh wait, we already hate 'em. The thing is, in my experience, when you see one law like that, it probably means there's a lot more like it out there.

Plus, my daily meal at McDonald's is always subject to that "prices higher in HI and AK" or "not available in HI or AK". Finally, I think I'd lose the concept of vacation if I lived there--how can you "get away from it all" when you're already where you would have "getting to"? ;-)

janz · July 2004

My agent recently told me that part of the discounts we are eligible for include one for a good credit rating.

prophet2 · July 2004

We've got a lot of screwed-up laws here. Don't believe the "experts" who say that our reputation as a "tax hell" is exaggerated - it isn't. The equivalent to a sales tax, the general excise tax, is pegged at 4% of all gross receipts for most activities (that includes 4% on the 4%, so car dealers charge up to 4.2%), which is lower than other states. But, we tax food and medical services, too.

The latest proposal is to require licenses for recreational open-ocean fishermen. All beaches are public: beach-front property owners must provide public right-of-way access at selected locations. But, the city government charges an entrance fee at one particular beach.

We already have a $25 permit fee to purchase 5000 fire-crackers for New Year's and Fourth of July celebrations. If the dealers run out of fireworks, the permit fee is non-refundable.

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