Automobile Insurance Policy Danger In The Details

automobile insurance policy
Good auto insurance is hard to beat!

Automobile Insurance Policy Details Are Fraught With Danger

I enjoyed a great conversation with a nice gentleman the other day. He’d been referred to me for an automobile insurance policy. He readily admitted his last automobile insurance company dropped him back on July 1, 2020, for having two (2) “incidences” during the past three (3) years.

He tried, without success,  to acquire new coverage for two (2) months prior to his prior company’s non-renewal date. After many tries, he simply couldn’t understand why no one would take him up as his one accident was not-at-fault and the other incident, a moving violation, resulted only in a ticket, no points.

I ran him through one of my preferred companies and discovered why no one wanted to take him.

How Automobile Insurance Policy Owners Put Themselves In Danger

 

Auto and home insurance are analogous to term life insurance. Basically your coverage, unlike whole or permanent life insurance, runs out after a certain number of years. If your policy allows the coverage to continue, the premium skyrockets to an amount that becomes untenable to maintain. So you wind up losing your “cheap” insurance, usually at the same time it is most important for your family’s financial well being.

In New York State, auto and home insurance companies write you policies with a term of three (3) years. So, if you maintain a good auto driving record, for example, renewal is a no-brainer. Too many “incidences” though, and renewal may come at a hefty price, or not at all.

So. several years ago you called one of those over-the-phone, direct-to-a licensed advisor automobile insurance companies and got a terrific rate.

You just weren’t aware it could have even been better.

You didn’t know your new policy contained a ticking time bomb.

So you contacted your independent agent or broker who’d been through hell, high water, and even a couple of claims with you, canceled your current policies, and moved to your new company.

Which Rating Factors Matter Most To Automobile Insurance Companies When You Want To Move Your Policy?

How long you’ve been licensed.

Your gender and age.

Your insurance credit score.

How many current moving violations (with some companies, during a period of as many as five (5) years) are on your record when you apply.

Policy lapses for non-payment of premium.

License suspension or revocation.

The length of time you were without auto insurance. Nowadays, the lack of a personally owned auto insurance policy for more than 30 days even if you didn’t actually own a vehicle, will disqualify you from getting insurance from many companies. 1

And Finally, The One Factor Most Consumers Know Nothing About

Few, if any, of the major preferred companies take new business coming from indemnity or non-standard insurance companies.  

And that is where your company placed your coverage. Its indemnity or non-standard insurance company. The nice person on the phone never suggested you could request quotes for their Preferred or Standard companies. Or, even if you didn’t qualify for those companies now, you weren’t advised to try again in six (6) or twelve (12) months.

For this reason, you’re basically stuck with your automobile insurance company.

Your Policy Is Emblazoned With An Automobile Insurance Scarlet Letter

 

For this reason, and this reason alone, I couldn’t offer this gentleman a quote from any of my preferred companies. So, I took the only choice open to me. I gave him a quote from the New York Automobile Insurance Plan (NYAIP).  In many cases, the NYAIP is the last resort for those needing automobile insurance. 

The NYAIP quote? Close to $6,295 for one year, about $4,500 more than the quote I would have been able to get him from one of my preferred companies.

I called him back.

Told him the quote.

He said, “Forget it,” and hung up.

Why Do Some Automobile Insurance Companies Engage In These Practices?

Short answer? Got me. 

For many companies, the name of the game is increasing market share, no matter the immediate cost. So, if your profile permits, you will be placed into their Indemnity or Non-Standard company, offering you a competitive, lower premium just to get your business. Then as claims from other drivers in your Indemnity company roll in, your premium begins to increase. This increase will be imperceptible at first. Then one day, you will open your renewal envelope and receive the shock of your life. 

Even if your record is perfectly clean, when you begin calling other insurance companies to secure a lower-cost automobile insurance policy, your current indemnity policy status will prevent you from doing so.

What You Should Do Today

Find your automobile insurance policy and call the insurance company or agent. Ask whether you are in an Indemnity or Non-Standard automobile insurance company. If you are, request they requote your policy for either their preferred or standard company.

Now, when you want to switch companies, it won’t be the type of company preventing you from moving your coverage.


Notes:

1. In my previous post “8 Tips To Save Money On Your Automobile Insurance, (https://brooklyncovered.com/8-tips-to-save-money-on-your-automobile-insurance/)”,  I wrote about the good old days when most auto insurance companies allowed you to go from one to up to three years owning a personal auto insurance policy without extra premiums or flat-out rejection. Some companies didn’t even factor in the lack of automobile insurance, as long as you didn’t own a car in your own name. In either case,  I suggested the purchase of a monthly zip car membership where your membership automatically provided you with liability insurance coverage. This removed the necessity of maintaining a non-owned auto insurance policy. Thus, when you decided to purchase your own vehicle, the money you’d spent on the zip car membership:

Wound up saving you money on your new auto insurance policy as you’d been continuously insured, and,

Enabled you to qualify for a better or preferred company in an insurance company’s member companies. 


Eustace L. Greaves, Jr., LUTCF is an NYS-licensed Independent Insurance Agent and Broker with over 38 years of experience. Eustace is ready to assist you with your life, disability, home, flood, renters, auto, cooperative and condominium, and wedding insurance needs, and can be reached at 718-783-2722, or by email at eustace@insuremeeg.com. You can also contact him by going to his website and completing any of the available “Contact Us” forms.

If you’d like to subscribe to his monthly newsletter, “Health, Safety, and Good News You Can Use,” go to his website, https://greavesinsurance.com, and click on any of the “Subscribe” buttons.

Have insurance, income tax, real estate, mortgage, or home inspection questions for Eustace? He’ll be happy to provide the insurance and income tax answers and will continue to call on his expert contacts for help in the other areas. Just send him an email to eustace@insuremeeg.com with the subject line, “Ask Eustace.”

Automobile Insurance Quote

Be honest and tell the tell the quoting broker or clerk if there are other drivers in your household, whether or not they will driving your car, or own their own cars. There are few things worse than being caught in a lie when looking for auto insurance.

Put The Car Behind The Automobile Insurance Quote.

Thinking about calling some insurance agencies for an automobile insurance quote? Looking for better coverage for your dollar, a less-expensive policy, or some combination of both?

Then do yourself and every broker or clerk you speak to a tremendous favor and prepare certain information before you make your first call for an automobile insurance quote.

Basic Information You’ll Need For Your Quote

  1. Your driver license because the broker will need the license number to order your motor vehicle record.  Yes, people do call for an automobile insurance quote and can’t find their driver license. What would they do if the police pulled them over and said “License, insurance card and registration”?
  2. Your date of birth.
  3. Your social security number.
  4. The age you were first licensed. 1
  5. The year you were first licensed. 1
  6. Has you driver license even been suspended or revoked for cause?
  7. Have you ever completed a Defensive Driving course? If so, what was the date you completed the course. 2
  8. The Vehicle Identification Number (s) of any vehicle you want to insure.
  9. Your vehicle’s year, make, and model.
  10. The cost of your vehicle when it was new.
  11. How the car or truck will be driven. In other words, will it be pleasure only, used for a short or a long commute to work, or will it be used in the course of your business?
  12. Your current address. If you haven’t lived at your current address for at least three (3) years, what was you last address, and how long did you live there?
  13. The name, policy number, and length of time you’ve been insured by your current auto insurer, and any other automobile insurance company you’ve been insured by in the last five (5) years.
  14. How many, if any, no-fault losses have you had in the past five (5) years? If any, when did they occur, and how much was paid for each claim? 1
  15. How many moving violations?
  16. How many accidents in the last five (5) years? How many were definitely your fault? 1
  17. When did they occur? 1
  18. How many points on your license? 1

Honesty Counts

Above all else, be honest. Tell the quoting broker or clerk if there are other drivers in your household, whether or not they will driving your car, or own their own cars and carry their own insurance. There are few things worse than being caught in a lie when looking for auto insurance.

For example, I recently tried to work with a young lady who, when our conversation began, confirmed she lived alone. There were no other people in her household.

This young lady then told me she had two (2) vehicles to insure. To insurance agents and brokers this is a sure danger sign, especially for someone who’d never had an automobile insurance policy before. So, I asked her whether she would be driving both vehicles, or would someone else drive the second vehicle. She said her husband would be driving the second vehicle. So, when I asked her if she and her husband lived together, she seemed slightly put off, telling me that of course she, her husband and their children lived together.

I asked why she didn’t provide this information when I first requested it and she admitted that a family member told her not to as this should get her a lower rate.

He must have some driving record. Little wonder why automobile insurance premiums are so high, especially here in Brooklyn and Queens.

Best of luck with your search.

References:

1   All of this information can be found on your driving record, or driving abstract. To avoid a trip to their local DMV office, New York State licensees can go to the New York State Department of Motor Vehicles website, http://dmv.ny.gov.

  1. Click on “Top Online Services” under the heading, “Driver Licenses.”
  2. Click on “Get My Driving Record.”

You can order your abstract either through the mail using the MV-15 form for $10.00, or get it online for the fee of $7.00. You will have to create a “MyDMV” account to this.

Of course,  you can always get a copy of your driver license by simply going to your  local DMV office.

2 Defensive Driving courses provide automobile insurance premium discounts and driver license point reduction which last for three (3) years from the course date.

For 33 years, and since October 20, 1995 when he opened his own financial services agency, Eustace L. Greaves, Jr., LUTCF has enjoyed providing his clients with the personal lines insurance coverages, income tax services, and defensive driving workshops they need to better their financial lives. 

Call him at 718-783-2722, or email him Eustace@insuremeeg.com for a competitive quote for your life, home, flood, disability, renters, coop, condo, long-term care, and automobile insurance, personal income tax preparation services, or the date of his next defensive driving class.