Molly's Musings | Questions Addressed About Insurance
Questions addressed that may be a bit amusing.
Why won’t Huggins Insurance let me purchase the minimum liability limits that the state requires?
Let’s use some common sense here. The minimum limit the State of Oregon requires you to carry for property damage for the car you slam into is $10,000. Maybe it will help if I make that a little bolder. $10,000. New cars cost thrice that amount. You could meander into a car 7 years old and still owe a ton of dough after your insurance company pays out their measly $10,000.
I haven’t even started on bodily injury. Admit it. You’ve watched one of those hidden camera reality shows that run at 3:00 in the morning that show people faking falls in grocery stores so they can sue the store. Imagine rear-ending one of those people, and ta-da, they are injured. Really injured. Documented by a law-abiding doctor with awards for saving kittens out of trees in his exam room. Do you think that person will be satisfied with $25,000 which is what the State of Oregon requires? Let me write it a little bolder so you understand the gravity of the situation. $25,000.
Huggins Insurance recommends that you carry liability limits of at least $100,000 per person for bodily injury, $300,000 per accident for bodily injury, and $100,000 for property damage. We don’t care that it will cover the cost of your accident. We want the $5 extra in commission it will grant us with your higher liability limits. That’s right. Increasing your liability limits is generally a pidly little amount of extra premium. Oh and we also get added benefit of not getting sued by you when your policy limits don’t cover the cost of your accident.
What do I do if I’m involved in an accident?
Make sure everyone is alive and breathing. OK so those are mutually exclusive terms but don’t just sit in your car spewing epitaphs of rage until you know everyone is OK. Even then you should probably keep your rage contained. If someone is injured or if your accident is blocking traffic and causing other motorists to wield unfriendly hand gestures at you call the police. Once you have assessed the situation at hand garner the following information from the other party:
The names of everyone in the car, the name and policy number of said person, their drivers license number, the plate number of the car as well as it’s year make and model, addresses and phone numbers of at least the driver if not all of the occupants, and names and phone numbers of any witnesses that may have stopped.
Make sure to actually look at the driver’s license of the driver and the actual insurance card if you’re lucky enough to hit or be hit by someone that has insurance. If they spout of their policy number out of their heads you are either in the presence of the Rain Man or someone is trying to scam you. My bets are on the latter.
The number one item I personally ascribe to is to BE NICE even if the accident isn’t your fault. Chances are you have been in an accident that is your fault or you will be at some point in the future.
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:
- Insurance Score: AKA Credit Score. I will extrapolate further on this later.
- Driving Record: If your driving record is 5 pages long take the bus.
- 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.