Molly's Musings | Questions Addressed About Insurance

Molly's Musings

Questions addressed that may be a bit amusing.

Why is my insurance premium so high?

The higher your premium the more commission I get. OK so that’s what you’re thinking. It’s OK, before I was an insurance agent I thought that as well. The great thing about Huggins Insurance is that we are an independent agency. We have several companies that we can shop with if you feel your insurance is too high. We like to keep you happy with lower rates because that will mean you stay around longer.

There are a gazillion different factors that determine rates for insurance policies. Each company uses their own rating factors imagined by little actuary elves that sit in enclosed offices without windows surrounded by typed reports with plenty of numbers but no pictures. Usually they wear wire rimmed glasses and own 10 of the same suit.

Some of the factors that influence a majority of the rates you will find in auto insurance are:

  1. Insurance Score: AKA Credit Score. I will extrapolate further on this later.
  2. Driving Record: If your driving record is 5 pages long take the bus.
  3. Age
  4. Gender
  5. Age, Make, Value, and loss experience of the car you drive

Those are just a couple of the big factors.

 

Why is my credit a rating factor?

The number one reason why insurance companies use your credit information is to submit the information they obtain to all of the government agencies. That’s right, you heard me… The FBI, the CIA, the ATF, and the IRS. Your credit score is also beamed up to a satellite strategically located on Mars so alien life form can steal your identity.

All joking aside I understand why people are wary about the use of credit in insurance. Especially if your credit is not so great. Having a low credit score does not make you a bad person nor is it necessarily your fault. Scores tend to plummet after a divorce especially if the partner responsible for paying the bills feels like he/she is no longer responsible for paying the bills. You may be loaded under huge medical bills that any reasonable person would have a hard time staying on top of. Or you could be like me and forget to take back books to the library and get sent to collections. Thanks Multnomah County! (True story)

Just because you have marginal credit doesn’t mean your insurance is going to be sky high. Credit is just one factor. If you have a clean driving record and at least six months prior insurance the impact won’t be as great as it would be if your driving record reads like a Tom Wolfe novel.

OK now I’ll get to the dreaded answer of WHY. Each key I type feels like a leaded weight at this point. Can we talk about bunnies or rainbows? Those actuary elves I’ve discussed before have numbers saying that the lower your credit score the more likely you are to turn in claims. That’s the gist of it.

Insurance companies cannot use your credit as a rating factor AFTER the initial policy is written unless you give your permission to have your credit re-run. They can’t decline new business coverage or existing coverage based solely on your credit score. That my friend is Big Brother looking out for YOU!

 

Why won’t Huggins Insurance reinstate or re-write my policy if I cancel within the first six months of starting coverage?

It really irritates me when someone comes in to get auto insurance coverage just to get their car out of impound only to cancel the policy 2 days later so they can drive uninsured yet again. The process would keep continuing if we kept re-writing these people. That’s a lot of time wasted on one person that could be spent alphabetizing my CD collection, or searching for my true love on craigslist. Basically this practice is akin to returning your prom dress at Nordstrom’s after wearing it one night. It’s just rude.

If you cancel within the first six months for non-payment I understand. It’s not easy for everyone to afford insurance however letting your policy cancel for non-pay so early in a policy is a pre-cursor to the future. It takes a lot of time and money to have a policy cancel only to have to re-write it every other month.

 

Explain my auto Insurance Coverage.

Glad you asked. It’s good to be informed on any product you are purchasing. Especially if said product is not a tangible item i.e. insurance. Here is a dictionary of terms you will find on your policy.

There are two types of ways the liability portion of your insurance can be written. You could have split coverage which delegates how much will be paid to any one person, then to a group of people, and finally to the damage to the property in question. We will start with this coverage.

Bodily Injury per person: This is how much money the insurance company will pay to one person in the event of an accident.

Bodily Injury per accident: This is the amount of coverage that will be paid out period regardless of how many people are involved.

Property Damage: This is the amount of coverage that will be paid out to the damage that’s incurred to the other party’s car, fence, house, garden gnome collection, whatever you happen to run into. You could also have a single limit coverage which is a flat coverage that would encompass all of the above items.

Uninsured Motorist Bodily Injury

This coverage will either be a split limit or a single limit as mentioned above. This is my favorite coverage. It slips off the tongue like a Shakespeare sonnet. Plus if a person without insurance decides it would be a good idea to bump into your car at 120 mph and you end up losing a couple of limbs you will have coverage for the prosthetics and your pain and suffering.

Uninsured Motorist Property Damage

While not as eloquently named as the coverage previous this coverage will cover the damage to your car. For example you park in a parking structure and take up two spaces because your car is very precious to you. Someone finds this extremely annoying and while you are shopping for matching oven mitts and kitchen towels they back into your car with their 1982 Ford F250 and leaves the scene of the crime. Your uninsured motorist property damage will cover the damage to your car. The secret little clause in this coverage is that it carries a deductible of between $200-$300 depending on the company and the circumstances surrounding the incident.

Comprehensive Coverage

This coverage isn’t named very well. If it was really comprehensive coverage it would cover anything that could happen to your car including alien abduction. Really this coverage covers physical damage incurred to your car that is not the result of a collision. This includes but is not limited to:

  • Glass Damage
  • Theft
  • Fire not the result of a collision
  • Tempests
  • Magnetic Pulses
  • Etc.

There is a deductible involved. The higher the deductible the lower the premium. This coverage is generally cheap so I recommend deductibles on the lower end. $100 would be optimal.

Collision Coverage

This coverage is pretty self explanatory. If you run into somebody this coverage would cover the physical damage to your vehicle. Again there is a deductible involved. If you are trying to save money to counteract your driving record or your age increasing this deductible may save you quite a bit depending on the type of car you drive.

Towing

Man could they make these terms any simpler? The insurance companies are making sure the layman can understand insurance terms. We’re here for you! This coverage, while not necessary, is cheap. Depending on the company it runs between $6-$12 for the policy term. Some companies have limits as to how much they will pay or how far they will let your car be towed so if you know a really cute tow truck driver and ask him to drive from Oregon to Hawaii for the view make sure you can swim and the tow truck can float. You’re insurance company will not be paying for your trip but will wish you luck in your romantic endeavors.

Loss of Use

Please purchase this coverage!!!!! It’s cheap and I know from personal experience the necessity of this coverage. If your vehicle is laid up as a result of an accident and you need a rental car this coverage will pay for one, subject to the limit your insurance company provides.

 

What is the cheapest car to insure for my young driver?

Buicks! Buicks are by far the cheapest to insure. You don’t see many Buick drivers driving 80 miles over the speed limit now do you? Do your teenager a favor and get him/her a white Buick with Baby on Board stickers. First of all your teenager will be so embarrassed to be riding in the car he/she won’t bring ten friends into the car for joy rides. Secondly your face will shine with happiness knowing how much you will be saving on insurance premiums.

 

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