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Understanding Insurability

Written by W. Lane Startin. Posted in Definitions, Research Last Updated: 08/04/2011

What insurability is, how it’s determined for both the vehicle and the driver, and the differences in insurability from company to company.

Insurability for a Sports Car

Check with your agent to make sure this baby is insurable.

As part of the larger property and casualty line of insurance products, auto insurance shares some basic characteristics with other forms of insurance. One of these characteristics is insurability.

What is insurability, and how does it impact you the auto insurance consumer?

At a basic level, if an insurance company deems a certain risk to be acceptable to its business, it is considered insurable. Otherwise, the risk is considered uninsurable and therefore ineligible for coverage.

This is true regardless of whether you’re talking about auto insurance, homeowner’s insurance, life insurance or any other line of insurance you care to name.

When it comes to auto insurance, insurability is dependent on two factors: the auto and the driver. Both must be deemed insurable before an auto insurance policy can be written. This is accomplished in the underwriting process.

Insuring the Auto Itself

With most auto insurance companies, the auto meets insurability requirements if it is built by a recognized manufacturer and has a vehicle identification number, or VIN. This includes the vast majority of cars on the road today. Autos that do not meet insurability requirements with most standard companies typically include kit cars, exotic sport cars and models with particularly poor safety ratings. Your insurance agent will be able to tell you if your vehicle meets insurability requirements, but barring unusual circumstances you’re probably in good shape.

Model year does not have much of an effect on insurability itself, but it does have an impact on overall premium. For the most part, newer vehicles cost more to insure than older vehicles all other things equal.

Trailers and RVs are subject to similar insurability requirements, but remember that it is not possible to insure a trailer for full coverage. You can only get comprehensive and collision with them.

Insurability on the Driver

From an insurance carrier’s standpoint determining insurability on the vehicle itself is pretty easy. It’s either insurable or it’s not. Determining insurability on the driver, however, takes many variables into consideration. These include age, sex, marital status, driving history and past insurance history.

Further, if a vehicle is driven by multiple drivers then all drivers must be considered for insurability. Generally speaking, auto insurance on a vehicle is rated for the highest risk driver in any given group of drivers. This is why teenage drivers can cause their parents’ insurance premiums to dramatically increase.

Driver insurability is periodically reviewed by the company, and a driver may be dropped by the company if he or she no longer meets the company’s insurability requirements. Remember an insurance company can only drop a driver at renewal, so you may have time to shop around for a new policy if you find yourself uninsurable with your current company.

Driver insurability on commercial auto insurance policies takes into consideration a slightly different set of criteria. For example, drivers under 25 or over 74 are often deemed uninsurable on commercial policies regardless of other circumstances.

Insurability is Not Uniform

If your vehicle and/or you do not meet insurability requirements with one company, don’t fret. One company’s definition of insurability is always at least slightly different than another’s. Chances are there is a company out there that will take you. While many standard auto insurance companies shy away from kit cars and sports cars, there are other auto insurance carriers that specialize in them. Your agent may have access to one of these companies through a brokerage.

If a standard insurance company says you’re uninsurable, a non-standard or high risk company will probably take you instead. You might have to get an SR-22 or join an assigned risk pool to get insured, but auto insurance is available for just about anyone driving just about anything.

The Best (and Worst) Insurance Companies in U.S.

Written by Michele Wilmonen. Posted in Research Last Updated: 12/29/2014

Every year insurance companies are ranked by outside sources to provide you with information to make an informed choice in which are the best insurance companies to do business with.

Ratings for the Best Insurance Companies

Using research and consumer opinion brings the best insurance companies to you in an easy list.

Which are the best insurance companies to purchase car insurance from?

This is a question that is wondered by all drivers. Everyone wants the lowest priced premium that has the best customer service and claims process. But, you can’t trust the advertising from the insurance companies so how do you know which are the best insurance companies?

Here at Car Insurance Guidebook we have collected the rankings of the best insurance companies (and the worst car insurance companies) for you to view and make a decision for yourself. These are nationwide lists of the best insurance companies so keep in mind you may not have heard of the ones that don’t write insurance in your area.



Fortune 500 – 2011 Best Insurance Companies

Let’s start with the best insurance companies that are making the most money.  The rankings of these top 10 best insurance companies on the Fortune 500 list are more based off information that a business person or an investor would be interested in. They are not based off anything that we as insurance consumers look for in our best insurance companies such as premium, customer service or claims services.

However, as an insurance consumer, going with an insurance company that is a solid company all around does protect us. It protects us from paying a large amount of premium to a company that may not be around to pay our claims if that time ever comes.

The following listing is the rankings of the best insurance companies in the “Insurance: Property and Casualty” category.  The numbers listed after is their ranking on the complete Fortune 500 list with all of the business categories combined.

  1. Berkshire Hathaway (7)
  2. AIG (17)
  3. State Farm (37)
  4. Liberty Mutual (82)
  5. Allstate (89)
  6. Travelers Cos (106)
  7. Hartford Financial (117)
  8. Nationwide (127)
  9. United Services Automobile Association (145)
  10. Progressive (164)

Top 3 Insurance Company Mascots

Company identification is very important in the insurance industry.  The better known an insurance company is the more likely people are going to seek them out for an insurance quote.  More insurance quotes lead to more business.

Insurance mascots can help an insurance company achieve this recognition. The mascot helps by making the insurance company that they represent stick in a potential client’s mind. So every time a consumer sees the mascot, they think of the insurance company. To test part of this advertising gimmick, a TV study was done to see the effectiveness of insurance advertising on consumers.

When study participants were provided with insurance TV ads these were the top three most recognized insurance company mascots:

  1. The GEICO Gecko (Geico is a subsidiary of Berkshire Hathaway)
  2. Flo from Progressive
  3. Allstate’s Mayhem

If you will notice the companies of all three of the most recognized insurance company mascots are listed above in the Fortune 500 best insurance companies list.

Best Insurance Companies for Customer Service

Customer service is essential in the insurance industry. If you treat your customers rudely and do not try to be flexible to their needs, there is very little keeping them from leaving for another company.

Each year JDPower.com awards the best insurance companies that exceed customer service expectations for their clients.  The following is a list of the 2011 Customer Service Champions for the best insurance companies in the industry:

(A full listing of all the best insurance companies that earned the Customer Service Champions award can be found at www. JDPower.com)

Best Insurance Companies for Claims Service

The whole essence of insurance is the claims department. Insurance is a promise that is made by the best insurance companies to you that they will pay your claims for the coverage that you buy. If an insurance company does not hold up their end of the promise, they are not an insurance company that is worth paying premium to.

Below is the list of the best insurance companies for claims service from JD Power’s 2010 Auto Claims Satisfaction Survey:

  1. Auto-Owners Insurance
  2. American Family*
  3. Amica Mutual*
  4. California State Automobile Association (CSAA)*
  5. Erie Insurance*
  6. The Hartford*

*Numbers 2 – 6 all tied for 2nd best “Overall Satisfaction” rating for Claims Satisfaction.  These companies all earned a 4 out of 5 ranking on the study.

Worst Insurance Companies Based on Claims Service

An insurance company that is rated poorly on claims service is a lot of times a combination of bad customer service and also a claims department that clients just don’t think is keeping their claims promise to them. In JD Power’s 2010 Auto Claims Satisfaction study there was no one company that stood out as the worst in the rankings.

These insurance companies on the Auto Claims Satisfaction study were rated on: First Notice of Loss, Service Interaction, Appraisal, Repair Process, Rental Experience and Settlement.

In “Overall Satisfaction” these companies tied at the bottom of the list only earning a 2 out of a possible 5.  In alphabetical order, the following three companies graced the bottom of the list:

  • 21st Century
  • Commerce
  • Mercury

So there you have it, the best insurance companies and the worst in the insurance industry as ranked by businesses and consumers like you.

LSVI Accidents: An Automatic Fraud Flag

Written by Michele Wilmonen. Posted in Research Last Updated: 07/24/2011

An accident is categorized as an LSVI when the injuries are more serious than the damages to the vehicles, leading the insurance company to think fraud.

A Lady wih a Potential LSVI Fraudulant Claim

The history of exaggerated and fake injuries with an LSVI is why the fraud department is automatically notified when these types of claims are reported.

There are just some insurance claims that make an insurance employee immediately think of one word – fraud. Claims where the person’s vehicle was found at the bottom of a lake, but there was no police report that it was stolen and the insured claims not to know how it got there, brings the fraud word to mind. Injuries for multiple people in a small car all treated by the same doctor for an accident that has no police report or other party involved also begs for the fraud word. Out of all the possible fraudulent claims though, the one that is the most frequently reported is the LSVI accident.

What is an LSVI?

A LSVI is just the insurance industries internal word for Low Speed Vehicle Incidents.  These are accidents that happen at a low rate of speed and there is hardly or any damage to the vehicles that were involved in the accident. What automatically flags these types of accidents for the fraud department is not what happened in the accident itself, but the result.

With these accidents, people claim to have serious injuries that should not be seen with this type of accident. Injuries such as: sprains, pulls, strains and soft tissue injuries. Whiplash being the most common of these injuries that are claimed. Conveniently, these types of injuries cannot be recorded with a machine by any doctor, like a broken bone or other serious injury can. Meaning that there is no evidence other than what the person is complaining about to the doctor and the doctor’s diagnosis from an exam and taking the patients word for it.

Are All LSVIs Fraud?

No, not all LSVI accidents are fraud. There are some very legitimate injuries that can happen as a result of an LSVI accident. The limited damages to the vehicles may be a result of a well-made car or the way that the vehicles hit each other. Injuries can also happen very easily to people that are fragile, already have injuries that were just exacerbated by the accident or to minor children and the elderly.

Are LSVI Fraud Criminals Stopped?

Yes, some LSVI fraud claims are caught by fraud investigators before any money is paid out to the people trying to collect on the claim. Then the wheels are set in motion to charge them with insurance fraud. Catching people in a fraudulent claim early is the result of vigilant claim CSRs and claim adjusters that have worked on the case.

However, there are times when the claim is paid out before catching the fraud. In cases like these the insurance company then goes after the criminal through legal recourse to get their money back and to file charges. Other times, the fraud is not caught or the insurance company is not able to find enough evidence to accuse the person of fraud. In cases, like these, the criminals get away with committing fraud through a LSVI.

Is Car Insurance the Next Car Sales Gimmick?

Written by Michele Wilmonen. Posted in Research Last Updated: 07/24/2011

Car dealers and manufacturers try everything to get you to buy a new car, including throwing in free car insurance now.

Free Sign of Insurnace for Buying a New VehicleAt the beginning of July this year, General Motors announced a new incentive for new car buyers in the states of Oregon and Washington. For one full year they will pay your car insurance for you. Of course, as with all deals that sound too good to be true, there are terms and conditions.

It begs to ask the question though, is this offering from General Motors the start of a new kind of car buying incentive?

The Car Insurance Offer

General Motors has partnered with Met Life Home and Auto Insurance to provide this incentive to their new car buyers. The offer is available to anyone that buys a new vehicle from them between July 6, 2011 and September 6, 2011. The new vehicle has to be a 2010, 2011 or 2010 year model and has to be a Buick, Chevy, Cadillac or GMC vehicle.

The insurance will start as soon as you purchase the vehicle and will last for a full year. This is two insurance terms that you will get for free from GM. The policy through Met Life will include the following coverages and limits:

  • Bodily Injury/Property Damage Liability – 100,000/300,000/100,000
  • Personal Injury Protection – 15,000 per person (Oregon) / 10,000 per person (Washington)
  • Uninsured/Underinsured Motorist – 100,000/300,000/100,000 (Oregon Only)
  • Uninsured Motorist – 100,000/300,000/100,000 (Washington Only)
  • Comprehensive Coverage – 500 Deductible
  • Collision Coverage – 500 Deductible

(GM/Met Life Conditions)

As you can see by the insurance coverage offered, the policy is a very good one. In fact, it is better than the car insurance that most of us regularly carry on our vehicles.

Does Driving History Matter?

General Motors says that the insurance will be provided for the new vehicle that you purchase regardless of your driving or credit history. They still need this information from you so that Met Life can calculate your premium rates. That way Met Life can send General Motors the bill for them to pay your insurance.

The Free Car Insurance Conditions

You have to be a resident in the states of Oregon and Washington State to qualify for this offer.  General Motors is only offering this in these states because this is where their sales are the lowest right now. You also have to register the vehicle in and have a valid driver’s license for these states.

You do not have the option to decline the insurance offer to get a discount on the vehicle instead, this is a take it or leave it offer. If you sell or trade the new vehicle within the year of insurance coverage, you are not due a refund and you cannot transfer the coverage to a different vehicle. After one year of insurance, Met Life will automatically terminate the policy. You will have the opportunity to purchase a new policy with them or take your car insurance somewhere else.

A New Car Insurance Trend?

Is this free car insurance offering something that we are going to start seeing more in the future? You can bet that other car manufacturers are going to be watching General Motors’ earnings report for these two states with a good deal of interest. At the same time other insurance companies are going to be watching Met Life’s earnings to see if this partnership was a lucrative one for them also.

If this works well for both of the companies involved right now, this may be something we see available more often.

Jerry’s State of Regret – State Farm® Video

Written by Michele Wilmonen. Posted in Advertising, Research Last Updated: 07/21/2011

An interesting accident makes former State Farm client, Jerry, regret that he switched to a company that has no agents to help him – Video

 

Summary

Commercial opens with State Farm agent Jessica DeClercq answering the phone in her agency from a former client of hers, Jerry Newman. On the screen are the words “State of Regret”. We see Jerry through the windshield of a vehicle and he tells Jessica that he has a policy question. The screen shot is fast, but we see that the steering wheel of the vehicle is at an angle that just doesn’t look right.

Jessica greets Jerry and asks, “How are you doing?”

Screen changes back to Jerry and we see why that steering wheel looked a little funny in the last shot with Jerry. Jerry tells Jessica that he is “Fine” and that he has just had a little “Fender Bender”. We see that Jerry’s vehicle is nose down and the back of the car is in the air, leaning on a pole.

Jessica tells Jerry, “I’m so sorry, I would love to help, but you dropped us last month.”

Jerry responds with regret in his voice that it only took 15 minutes to switch to that “other” insurance company, but that it is now taking longer for them to respond to him.

Jessica asks Jerry, “Is your car up a pole again.”

Jerry breaks down in tears that he misses his agent Jessica, but won’t admit to crying.

Commercial ends with the words “Jerry. Jerry. Jerry. Should’ve Stayed With State Farm” on the screen and then “get to a better State”.

Announcer: “Get to a better state. State Farm”

Point of the Commercial

The whole 15 minutes comment gives away that the other insurance company is GEICO. State Farm is trying to make the point that you may save money in 15 minutes by switching to GEICO, but you aren’t going to have a local agent to help you. When it comes to when you really need help, you are going to regret leaving your agent.

What They Want you to Do

If you are still with State Farm, they don’t want you to leave for the possibly cheaper rates at GEICO. If you have already left State Farm, they are trying to get you to come back by showing you how much you are going to miss your agent when you really need them.

My Opinion

Okay, in all the years that I worked in insurance claims, I have never heard of a person doing this. Whoever came up with the idea for this claim has a great imagination.

I also like the creativity and playing the “no agent to help you when you buy insurance directly from the company” card angle that State Farm took. Thumbs Up.

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