Industry tactics and how to put yourself in a better position in the long term

Industry tactics and how to put yourself in a better position in the long term

There is are a few things you can do to improve your position over the long term, and there is a reason why for each one.

  1. First and foremost, don’t drive drunk, or worse, distracted, or even worse, without insurance. Major violations or getting caught without insurance exponentially increasing rates. Insurance companies KNOW people are creatures of habit. While there may be that one time when a person gets caught speeding because they really are just having a bad start to the day and are trying to get to work on time, most people who speed are habitual speeders and this one time, when you got caught is almost certainly indicative of dozens, or even hundreds of time when you got away with it.
  2. Second, know what you’re getting into, not just with the car you research to buy at the lowest price and finance with the lowest interest rate, know what will cost to insure and see what happens if you buy a slightly different make, model or year. You’d be shocked to find how two similarly priced cars can have very different insurance dynamics. A muscle car is more expensive to insure, but a minivan, which could sell for the same when new, or even more, is relatively cheap to insure. The difference is who generally drives and for what purpose. Most people don’t research the cost of insurance of the car in the purchase, and that is a HUGE.
  3. Don’t shop for insurance more than once per year, even if the state you live in has frequent semi-annual car insurance renewals. You may think an insurance company can’t punish you for shopping around! However, they can disincentivize behavior frequently associated with insurance fraud. What can and will hurt you is if you change every six months to save a few bucks here or there. When changes of company occur frequently for a long period of time, a person begins to fit the archetype of a fraudster. Most companies will reward long term loyalty if you stick it out. Understand EVERYTHING you may be losing, when you gain a lower premium and ask yourself “was $x premium savings worth it?
  4. Pay the rent or mortgage and your car payment on time. Insurance companies do have access to your credit report, and when they look at it, not the same as when a bank does to evaluate you for how much more you may want to borrow. Nor is like when an employer does it to is if you’re telling the truth on a job application. The insurance company is looking for ANY pattern of irresponsible behavior. So, one late payment here or there here and there because you forgot to go online and pay, is no big deal, they are looking for your habits because they KNOW people are creatures of habit.

Which is insured first, the car or the driver?

This is a very basic question, and states have laws that are very specific in what the insurance company is allowed to do, what is required to do when a claim is filed. There is at least one goal in all of these questions, in this one, the primary goal is to educate yourself about the state laws where you live. From state to state, laws vary wildly. In some states, the driver is insured for pretty much any vehicle they are licensed to drive, but the car is not when driven by somebody else, even when its a member of the same household. In other states, the car is insured first, and even if the owner of the car is not the one driving, rather someone who has tacit permission, access to the keys, or even unlicensed, under-age drivers in the household are required to be covered.

Now when shopping it is important to ask this question of the agent who represents just one insurance company, let’s say Good to go insurance or Young America insurance, they will give you that company’s underwriting philosophy for that state, not state law. They don’t train their people in the nuances of state law because they are not training lawyers, they are training insurance agents, and they want insurance agents who will tow the company line.

If the company line is all they know, they can tow nothing else

 A broker that is somebody who represents multiple insurance companies, (a rarity in car insurance) will be more acquainted with the law and know the difference between what is state law, and what is a company’s underwriting philosophy. Brokers work for the clients first and then the insurance companies they represent. Most agents are captive agents, who are only allowed to dance with one partner.

The person answering the question should be able to answer this question with confidence, a lack of confidence will indicate raw inexperience, and is a sign to move on the next company and call this one back in 20 minutes to see if a more experienced person picks up. Also, note the answers. Take bullet point notes on what the person is saying. This will allow you to compare each company you’re quoting to see who has the most knowledgeable representatives.

The representative should be clear and articulate

They don’t need to be likable or friendly, that is not what you need from them. You need them to know their stuff and respectfully answer your questions with patience and good humor.  If you don’t get the warm fuzzies, pay it no mind, this person is not there to give them to you. Con men give people the warm fuzzies, and then rob them blind. Warm fuzzies are ‘nice to have,’ not ‘need to have’.

They need to give clearly understandable answers that don’t sound like another language, or what some people like to call “insurance-ese,” my name for industry jargon and acronyms that allow insurance professionals to communicate with each other without it taking all day. They need insurance-ese, you don’t. If they can translate insurance-ese into English and give the feeling that they would be a cool person to sit and have a beer with, then great, but the warm fuzzies are NOT needed, trustworthy truth is!

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