Car Insurance bitch

Brunswick_kate

Where I live has some of the hightest rates for car insurance in Canada. It's actually scandalous and to the point where the provincial government came within a hair's breadth of losing the last election over the issue. The insurance companies claim they're getting whacked by huge payouts on accident claims and that's why we're getting soaked. Personally, my insurance rates aren't that bad (compared to some others) but I'm up for renewal in November and am dreading the "sticker shock".

What peeves me is that I don't drive my car that much any more, particularly in the summer and fall months. Now that the kids are back to school and there's no babysitting runs, the car can sit in the driveway for days on end. Both hubby and I commute by bike, run errands on the bike etc. The only time the car goes on a trip is basically when the destination is out of town.

I called the insurance company about rates for people who cycle commute (or use public transportation). To my way of thinking, our lifestyle considerably reduces our insurance company's underwriting risk. It's hard for my car to be involved in an accident when it's sitting in the driveway.

My insurance company: no dice. Never heard of such a thing.

I called a competing company. Well, they do have a reduced rate for people who don't commute by car. It's a $9 reduction, semi-annually -- not exactly a big bonus on a bill that easily runs over $1000.

The agent had a couple of minutes to chat so I asked him the whys and the wherefores. He agreed that cycle commuting did vastly reduce the insurance company's risk of underwriting but "if they had such a rate scheme, then everyone would do it". I pointed out that in that case, their payouts on accident claims would drop like a stone and more or less solve their payout problem for them. He agreed.

"Besides", I continued "do you think it would be such a bad thing if we suddenly didn't have a couple of zillion tonnes of hydrocarbons dumped into the atmosphere every day?"

His first comment had been that there was no way to ensure that only the low-usage customers got the benefit of the reduction but I thought that was easy enough to fix. Every year at renewal, I provide the insurance company with the odometer reading on the car. If I make a claim and the adjuster finds the odometer reading is out by 50000 km, then they just disown the policy.

It seems to me that this should be a fairly easy route to go but apparently I'm the only one. If nothing else, the whole situation rather kicks dirt at the insurance companies' claims that they base their rates on calculated risk factors and that the people more likely to cause an accident (lots of speeding tickets, convictions for impaired driving etc) are paying their share through higher premiums. It's pretty obvious that there are a lot of insurance premiums being subsidized by the very low use people.

I've thought about giving up the car completely but it's just not a practical option at this time.

Anyway, that's my rant.

__________________
Insanity has its price -- Please have exact change.

Babbar

Ah, Kate, you are treading on very dangerous ground here. You are being quite rational and using common sense. How dare you?

Actually, many insurance companies try to keep their rates low. It is massive court decisions for silly things like spilling hot coffee on yourself, then suing the company that sold you the coffee.

In the U.S. auto insurance business, we have GEICO, which is about 15% cheaper than other national companies. There are also local ones that are cheaper still.

Be careful, however, of getting politicians into the mix. They will screw it up worse.

The home insurance market in my state is a perfect example. All the companies used credit rating as a gauge of number, frequency, and severity of claims as well as paying on time. They found that people with the better credit ratings had fewer claims, that those claims were generally less costly, and they never had to sue in court to get their premiums. The lower the credit rating, the more claims, the more costly, and the more they had to resort to suits.

So our wonderful politicians decided this wasn't "fair." They said that personal responsibility in paying your bills and taking care of your property which resulted in fewer claims weren't valid gauges of insurability. So they passed a law. Consequently, my home owners insurance yearly premium will jump 40% this year, taking money out of my pocket I was using to pay for my daughters college tuition, which jumped another 35% this year, but that's another rant!

A few years ago, they chased an insurance company out of the state because they issued policies only to a select group of people, those who belonged to churches. This was a privately held, non-profit company started and run by Quakers.

It didn't matter if they were Christian, Amish, Jewish, Muslim, or what. They found that people who attended church regularly were less likely to file claims.

"Unfair," "intolerant," "unethical," "separation of church and state" the politicians shouted, and the state took away their liscense to sell insurance. They never did say how the issue of the separation of church and state applied.

Brunswick_kate

I shouldn't laugh, really, but what you've said is so typical of what's going on here...when the government nearly lost their mandate in the last election, they decided that maybe people really pissed off about the insurance situation. Since the opposition had campaigned on a really good solution, the government couldn't possibly use the good solution, so they bastardized one of their own. I'd call it a MacGyverism but that would imply that it works...

Without boring you with the details, they pretty much mandated a 20% reduction in premiums, to counteract the average 57% increase over the last 2 years. I'm not up for renewal until November but I dread the envelope all ready. A co-worker of mine got hers last week. Her 20% reduction in premiums worked out to be a $400 a year increase.

Confused as to why the 20% reduction costs $400 more? So was she and so she called her insurance company. No, they hadn't forgotten to deduct her rebate. "You should have seen what your premiums would have been without it."

Let's face it, with interlocked jurisdictions and financial markets, we're all paying for 9/11 and the stock market swindles, just like we're all going to pay for the blackout on the Eastern seaboard a couple of weeks ago.

I think the insurance companies could save themselves a bundle by firing all their actuaries because calculation of potential risk has absolutely nothing to do with insurance pricing anymore.

__________________
Insanity has its price -- Please have exact change.

vlad

If there is a bright side, it is this.

People who ride bikes use a lot less fuel. Money they would have spent on fuel pays for their car insurance.

Insurance rates depend on where you live. I pay 100% more for insurance in East Texas than in western Montana. sigh.

How much would you pay if you lived in Alberta?

Brunswick_kate

I'm not sure what insurance rates are in other jurisdictions. I know they're pretty high across the board for the most part. What had everyone up in arms I think was the rate of the increases which are just nuts and there doesn't seem to be any reasonable explanation for them. Insurance companies just aren't admitting they've taken a bath in the stock market and now we get to pay for it.

What was particularly galling about my conversation was the disclosure that owners of antique autos pay very reduced premiums. Why? Oh, that's because they don't put many miles on them and therefore are a reduced risk to the insurance company. At that point in the conversation, it was obvious I just needed to go find a brick wall to pound my head against.

But, like you say, my gasoline bill is neglible. Tire wear isn't big either. My maintenance and upkeep costs are small. And what the hell, in another 15 years, my Civic will qualify for the antique auto rates.

__________________
Insanity has its price -- Please have exact change.

Babbar

Exactly so. When the insurance company loses money in one location, they use tried and true socialism methods of spreading the misery across the entire country.

We are already paying for the blackout. Our gas prices jumped from about $1.35 a gallon to $1.65 a gallon because of the interruption in supplies. Amazing what one tree in Ohio can do to the economy!



Actuaries are normally quite accurate. It is the "bean counters" that haven't a clue. Sometimes an insurance company will diversify, buying other types of companies for which they have no clue how to run. Sears almost went broke when they bought an insurance company, among other things about a decade ago. They didn't know anything about the insurance business, and they ran the company into the ground.

In the last two years, I had several claims that resulted from my own stupidity. I tried to plow through a snowed in street in a passenger car, slid into the curb, and twisted the front end. My wife miscaluclated and tried to park her car in a space already occupied by a tree! The insurance company paid immediately, but, when it came time for renewal, they said I had had too many at fault claims and my rates went up, but only about $15 every six months.

All in all, if you can get GEICO in Canada, do it. I have been with them for over 10 years and there is no way I would change companies. I had one company offer to give me a 10% discount off of GEICO's rates for 12 months. When I asked about renewal prices, they hemmed and hawed and finally admitted the rates would go up to their "normal" levels, which are 10-15% above GEICO.

vlad

gotta look into antiuque auto insurance rates.

I still drive the GMC 3/4 ton 4x4 pickup I bought new in 1976.

thanks for the idea.