Car Insurance, are the ads just spam?

[WhitewaterWoman]

I have become totally mystified by car insurance. I have been trying to reduce the cost of my basic living expenses and it turns out that car insurance is one of the biggest routine expenses, exceeded ony by the cost of my medications, which is considerable.

I have been flooded for more than a year with advertisements that blare out car insurance for as little as $39/month. Special rates for Seniors. Special rates for people in Florida. Etc. I have responded to some of these ads, from time to time. And none have been less than my current rate of about $210/month. And these include the most well known ones that promise to save you $800/year by switching to them, etc., etc.

Are these rates just made up? A whole lot of spam promising things that don't even exist?

It's driving me nuts because I want to reduce my cost, but making these phone calls or responding to web ads seems to just be giving away my private information. Because getting car insurance, they need to know where you live, how old you are, etc.

 

[Mary Terry]

I think a lot of insurance is questionable. One way to save on car insurance is to raise your deductible as high as possible. We have high deductibles on all our cars ($1000) and house ($5000) because we do have funds to cover the amount of the deductible in the event of a claim. State Farm a/k/a Snake Farm has among the lowest insurance rates in Mississippi.

 

[WhitewaterWoman]

I think a lot of insurance is questionable. One way to save on car insurance is to raise your deductible as high as possible. We have high deductibles on all our cars ($1000) and house ($5000) because we do have funds to cover the amount of the deductible in the event of a claim. State Farm a/k/a Snake Farm has among the lowest insurance rates in Mississippi.

I have had State Farm my whole life (although they no longer do home insurance in Florida). I am going to call them today and try to work out what is lowest for car insurance. I don't drive as much as I did when I was working. As far as homeowners insurance goes, I think I am going to drop it. It is way too expensive.

 

[Mary Terry]

I don't know if you qualify but Florida has some kind of state-issued barebones homeowners' insurance. It's worth investigating.

 

[Xinyta]

I have become totally mystified by car insurance. I have been trying to reduce the cost of my basic living expenses and it turns out that car insurance is one of the biggest routine expenses, exceeded ony by the cost of my medications, which is considerable.

I have been flooded for more than a year with advertisements that blare out car insurance for as little as $39/month. Special rates for Seniors. Special rates for people in Florida. Etc. I have responded to some of these ads, from time to time. And none have been less than my current rate of about $210/month. And these include the most well known ones that promise to save you $800/year by switching to them, etc., etc.

Are these rates just made up? A whole lot of spam promising things that don't even exist?

It's driving me nuts because I want to reduce my cost, but making these phone calls or responding to web ads seems to just be giving away my private information. Because getting car insurance, they need to know where you live, how old you are, etc.

From what I've seen and understand. Car insurance is advertised alot, to the same degree as the Medicare ads. Most are just looking to make a quick buck, at the expense of the people they lure in. So yeah. Scams.

I'd do some research, if I were you, on what is reputable and is reasonable.

 

[Judge]

When such advertisements talk about savings in specific figures, forget the notion that their rate disparity reflects generic drivers. It likely doesn't. Which is how they can legally advertise such nebulous claims.

With the rest of the formula weighted heavily against complacent policyholders who keep the same insurance carrier for years, rather than to carefully shop around. And that's a lot of people in the market who could move their insurance, but don't. Even when they should. So the only way to really determine a better deal with auto insurance is to utilize a carrier's online website that allows you to get a quote from them, contingent with the accuracy of the data you input to arrive at such a premium quoted.

Keeping in mind that direct-writer insurers are more likely to be competitive given they cut out the expense of using third-party agents to market insurance and manage policyholders. Which can potentially be good in terms of lower premiums, but potentially bad in terms of whatever person you contact will truly only represent the company's interest and not your own.

"Good capitalists exploit demand. Great capitalists invent it where it doesn't actually exist".

Unless perhaps you are a policyholder paying way too high a premium and have been for several years with the same carrier. Which in the case of the Florida insurance market might well come down to the concept of "bait n switch" and little else. An insurance market that has become far too strained to offer any real bargains.

 

[TBRS1]

Insurance, all insurance, is based on a simple idea:

Get enough people with a low probability of requiring a big payout (small payouts don't matter much) to MUCH MORE than make up for a low number of big payouts.

It's a very simple formula that make a lot of money for people pretty much constantly.

If it seems that a company is violating that formula, look for the cost cutting tricks:

1. Selecting safe people to insure (the best people to insure are people between the ages of 25- 50, without any preexisting conditions - in auto insurance, preexisting conditions are things like history of speeding, dui, accidents).

2. Writing "terms and conditions" that will prevent most payouts (A person is driving behind a truck. Wheel comes off truck, crushes passenger side of following car. Insurance company claimed this was "an act of God," and acts of God are specifically exempted in the signed agreement. This is a true story. I know people involved).

3. Providing cut-rate "options" that won't provide the benefits the buyer thinks they will (house flooded? A "budget" policy most likely is cheap because it excludes flood damage from coverage), or are insurance policies that work in name only (in the U.S., auto owners are required to have insurance. That insurance can be pretty useless, though. Also, an employer who wants to offer insurance as a "perk" doesn't need to offer very much).

Insurance is a business, not a charity. People will never get a good deal. The house always wins.

But some deals are better than others. You have to look under the hood very carefully to find them, though. Much of life involves seeing through deception.

 

[Neonatal RRT]

I have become totally mystified by car insurance. I have been trying to reduce the cost of my basic living expenses and it turns out that car insurance is one of the biggest routine expenses, exceeded ony by the cost of my medications, which is considerable.

I have been flooded for more than a year with advertisements that blare out car insurance for as little as $39/month. Special rates for Seniors. Special rates for people in Florida. Etc. I have responded to some of these ads, from time to time. And none have been less than my current rate of about $210/month. And these include the most well known ones that promise to save you $800/year by switching to them, etc., etc.

Are these rates just made up? A whole lot of spam promising things that don't even exist?

It's driving me nuts because I want to reduce my cost, but making these phone calls or responding to web ads seems to just be giving away my private information. Because getting car insurance, they need to know where you live, how old you are, etc.

My father was an owner of a Ford dealership in Michigan. Obviously, they work with insurance companies. Some are better to work with than others. The insurance company must approve the repair, ultimately dictate how the repair is done, and with what parts (OEM new, aftermarket new, or used). The auto body repair shop is at the mercy of whatever the insurance company is willing to accept in terms of a repair estimate. It's a racket and the auto owner is the unwitting schmuck pinched in the middle.

As an auto owner, we have our priorities. Is the money the priority? Is the auto coverage and repair quality the priority? My father had his opinions on the topic, but paraphrasing, "If your insurance company advertises on television, then they will be the most expensive and want to cut corners whenever they can." He recommended using a local, independent insurance agent.

Rates are subject to a lot of variables, but ultimately, it's profit margin. The bigger the corporation, the higher the risk of inefficiencies, the more bureaucracy, the less your money goes to actual insurance coverage, and the more difficult they can be to deal with in terms of obtaining a fair insurance claim check. The first bid is often a "low ball" offering, then you reject it, state your case, with documentation, and then you can often receive a better claim check. If you don't fight your case, you're likely getting shorted.

 

[velociraptor]

I have responded to some of these ads, from time to time. And none have been less than my current rate of about $210/month.

The majority of insurance companies will have exactly the same expenses and outlays unless they are able to avoid specific high-risk categories like young males or seniors past a certain age. That's why the ads pull you in with too good to be true offers, but the end price is a letdown because there is an industry average you can't go below without losing your shirt. (Speaking as a licensed broker in Canada.)

 

[Outdated]

What level of insurance you're buying makes a huge difference to costs. We've got entirely different rules in Australia but the way it works here might give you a different perspective.

The compulsory insurance component here is Third Party Person insurance. If you injure someone your insurance covers their health costs. That insurance component for us we have no choice in, the government pays for that insurance in bulk and gets money from us in our yearly car registration. That's why car registration looks expensive here but it turns out to be a lot cheaper for us than most other countries.

That insurance of course only covers injuries suffered by other people, it will not cover damage to other cars or property. If we want that sort of cover then we have to take out an appropriate insurance policy with an insurer.

Many of us, myself included, don't have any other form of insurance and if we damage someone else's vehicle then we have to pay for repairs out of our own pockets. For people like me that have never in our lives had an accident insurance represents poor value, where as there's a few people who are so hopeless on the roads that they should never leave home without it, in fact many of them should lose their licenses but the insurance industry always lobbies against that because it would take their highest paying customers off the roads.

P.S. Insurance companies, drug companies and legal companies aren't allowed to advertise in Australia.

 

[WhitewaterWoman]

I don't know if you qualify but Florida has some kind of state-issued barebones homeowners' insurance. It's worth investigating.

Yes. I already have it. Each year I have to reduce coverage just to keep the bill the same, but the bill goes up anyway. My bare bones insurance is over $3000/year. But thank you for the good thought.

 

[Shamar]

I have become totally mystified by car insurance. I have been trying to reduce the cost of my basic living expenses and it turns out that car insurance is one of the biggest routine expenses, exceeded ony by the cost of my medications, which is considerable.

I have been flooded for more than a year with advertisements that blare out car insurance for as little as $39/month. Special rates for Seniors. Special rates for people in Florida. Etc. I have responded to some of these ads, from time to time. And none have been less than my current rate of about $210/month. And these include the most well known ones that promise to save you $800/year by switching to them, etc., etc.

Are these rates just made up? A whole lot of spam promising things that don't even exist?

It's driving me nuts because I want to reduce my cost, but making these phone calls or responding to web ads seems to just be giving away my private information. Because getting car insurance, they need to know where you live, how old you are, etc.

Allow me to translate. "If you have a pristine driving record, you can save $800 over someone with a record of frequent accidents and traffic violations." They are not lying, merely omitting some facts (which is how they get away with it). For the same car and driving record, the rates are remarkably similar.

 

[WhitewaterWoman]

Allow me to translate. "If you have a pristine driving record, you can save $800 over someone with a record of frequent accidents and traffic violations." They are not lying, merely omitting some facts (which is how they get away with it). For the same car and driving record, the rates are remarkably similar.

Perfect! Now I get it.

 

[velociraptor]

For the same car and driving record, the rates are remarkably similar.

People should have to pay more if they have a lousy driving record. Honestly, people with a lousy driving record should be barred from driving entirely. I have seen studies showing what a huge difference that would make, but driving is a "right" don't you know.

We are also not charging high risks groups what they should be paying for the menace they pose (younger drivers, especially younger male drivers).

 

[Mary Terry]

My father was an owner of a Ford dealership in Michigan. Obviously, they work with insurance companies. Some are better to work with than others. The insurance company must approve the repair, ultimately dictate how the repair is done, and with what parts (OEM new, aftermarket new, or used). The auto body repair shop is at the mercy of whatever the insurance company is willing to accept in terms of a repair estimate. It's a racket and the auto owner is the unwitting schmuck pinched in the middle.

As an auto owner, we have our priorities. Is the money the priority? Is the auto coverage and repair quality the priority? My father had his opinions on the topic, but paraphrasing, "If your insurance company advertises on television, then they will be the most expensive and want to cut corners whenever they can." He recommended using a local, independent insurance agent.

Rates are subject to a lot of variables, but ultimately, it's profit margin. The bigger the corporation, the higher the risk of inefficiencies, the more bureaucracy, the less your money goes to actual insurance coverage, and the more difficult they can be to deal with in terms of obtaining a fair insurance claim check. The first bid is often a "low ball" offering, then you reject it, state your case, with documentation, and then you can often receive a better claim check. If you don't fight your case, you're likely getting shorted.

Local independent agents can investigate the cost of premiums and scope of coverage for you but then they will recommend one of the name brand companies anyway.

 

[Mary Terry]

People should have to pay more if they have a lousy driving record. Honestly, people with a lousy driving record should be barred from driving entirely. I have seen studies showing what a huge difference that would make, but driving is a "right" don't you know.

We are also not charging high risks groups what they should be paying for the menace they pose (younger drivers, especially younger male drivers).

Technically, driving is a privilege, not a right, in the USA.

Young males and females cause accidents at about the same rate. In my state, the premiums are very high for all young people without regard to gender.

 

[WhitewaterWoman]

All of my calls and forms have ended up with quotes within a few dollars of the one I already have. I have a decent driving record. Not perfect, but all very minor things, and nothing in the past three years. State Farm claims I am not being penalized for any long ago stuff. I have the "good driver" discount.

 

[Judge]

We are also not charging high risks groups what they should be paying for the menace they pose (younger drivers, especially younger male drivers).

I haven't been in insurance since 1996. Though up to that point in time, our private passenger auto underwriting always carried a 20% surcharge against the base rates for inexperienced operators in the household, regardless of gender. If you were licensed for less than three years, and living in a family household, the surcharge did not go on the vehicle the operator in question was driving, but rather the highest rated vehicle in the household.

And of course a moving violation or at-fault accident on the part of an inexperienced operator would mean another 20% surcharge in addition. Plus to consider certain types of high performance or sports cars with yet another 20% surcharge alone. So if you are a bad driver, it all adds up fast and can spoil things for the rest of the household.

In the event of accident frequency or anyone incurring a major violation, as an underwriter I had the duty to give policyholders 60 days notice under state law to non-renew the policy. And shopping around for insurance that was cancelled or non-renewed could be daunting in even standard markets back then. Leaving some people to shop the substandard market, which meant astronomically higher insurance premiums.

So things could get quite dicey for policyholders.I know state government regulation of insurance over the years has mitigated some of such underwriting actions, but not all of them.

Effectively making mass-advertising schemes on tv skirt along the edges of civil law relative to false advertising. Unless of course you drive a benignly performing vehicle with no accidents or violations.

 

[velociraptor]

regardless of gender

It used to be that males were surcharged more than females (for obvious reasons) and they complained to the government that it was discrimination. The insurance companies responded by raising the rates for the females without lowering the rates for the males, thereby earning better profits.

 

[Judge]

It used to be that males were surcharged more than females (for obvious reasons) and they complained to the government that it was discrimination. The insurance companies responded by raising the rates for the females without lowering the rates for the males, thereby earning better profits.

One dynamic I came to understand implicitly was how an insurer ALWAYS manages to get "their pound of flesh".

As long as they refrain from allowing a liability suit to go to trial. When they didn't, it was often quite costly for them. With one too many civil jurors more than willing for an insurer to pay indemnity to a plaintiff, even if they weren't guilty or negligent of much of anything.

Funny to think how much I enjoyed personal lines insurance. But commercial was my eventual demise. Too competitive and too diverse, where no one can "learn it all". Not fun.