Category Archives: Articles

Articles

Insurance on the internet

December 28, 2011 – 12:44 pm

If you listen to the commentators, they all sing the same song. We’ve now entered the internet age. This is supposed to convince us something new and wonderful has happened. It’s such a complete break with the past it heralds the beginning of a new information age in which, somehow, we can all get ahead and do things never possible before. This is, of course, pure rubbish. The only difference between the digital age and the hard-copy age that went before it is the ease of access. Having a PC or some other online device gives you access to a vast library with a search engine to help you find the pages you need more easily. But, when you have the right page on the screen in front of you, it’s the same words you could have found in a book or some other written material. All that’s changed is the way the words are presented to you.

So, if you go back in time, printed words have always been used to manipulate people. They sell ideas to you. This means real power lies in the power to control access the means of publication. If a group can control what gets printed and distributed, the words can always tell the same story. But if the means of publication is open to other voices, this can give a completely different view of the world. This is why reputations can be made or unmade depending on who has the power to publish.

The problem for modern companies is anyone today can start up a blog or website. Many internet services are free to use. Similarly, the networking sites like Facebook allow people to write their opinions and describe their experiences. In the past, we would never get to hear Anne from Denver bought a steam cleaner that sprayed boiling water over her hands. Now she can write it and thousands of people can tweet it. It makes it very difficult for manufacturers and service providers to protect their reputations. This explains, in part, why insurance companies very rarely allow interaction on their sites. Since they cannot control what sometimes angry customers may say, they try to deny them a voice. Except there are now some very high profile sites on which people can complain about bad products and services. This movement is not yet sufficient to damage the vast insurance industry, but individual companies are finding it more difficult to prevent their reputations from slowly washing away.

This makes the recent announcement of a new online forum all the more encouraging. The intention is to allow people from both sides of the insurance relationship a chance to ask questions and have their say. Instead of a blank screen on which insurers give you the news they think you should hear, you can now ask about how to get more affordable car insurance rates, what to do if a claims adjuster low-balls the fair market value offer, and so on. This does not mean everyone on the forum will be an “innocent” consumer. There will inevitably be anonymous industry experts giving balancing views and opinions. But this is a hopeful sign of change. You may even get cheap car insurance quotes because of pressure through forums like this.

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Articles

The wind-water debate

November 5, 2011 – 11:49 am

Everyone accepts the basic principle of capitalism that, if a company is run on a for-profit basis, it’s entitled to run a business model that maximizes revenue and minimizes costs. After all, it’s only fair that whoever puts up the money to start a business should be entitled to a return on their investment. But there comes a point when we should ask how much profit is morally acceptable and whether there should be limits on the means a business can use to make that profit. In the movie Wall Street, Gordon Gekko answers the first by saying there’s no such thing as “enough”. All that happens in business is money gets transferred from the losers to the winner. Later he says greed is good. Looking around at the amount of bonuses paid to the bankers and senior officers of our largest corporations, it seems they’ve learned Gordon Gekko’s lessons well.

As an example, let’s take the insurance industry. For a few years, it offers cover against all the standard perils from wind and rain. That way, if a storm hits your home, you can claim regardless whether the wind huffs and puffs it down or floods wash it away. Except, the insurers noticed there were more floods coming along, so they stopped insuring. The result? The Federal government had to set up the National Flood Insurance Program to take on the risks the private corporations rejected. Then along came a series of hurricanes that did real damage through the combination of wind and water. People living near the coast discovered to their cost that insurers were excluding so-called storm surges. That’s where the wind whips up the water and drives it inland.

These days, insurers are very careful to define exactly what wind and water damage they cover. If there’s even the slightest doubt your damage falls within the scope of their definitions, your claim will be rejected and your only remedy will be to sue. As an example of the attitude shown by some insurers, let’s travel to Mississippi where the local Supreme Court is dealing with a case in which the same insurance company paid out for wind damage to the houses on both sides of the claimant, but refused a cent to the house in the middle. The problem follows from Hurricane Camille when this particular insurer lost a lot of money. So it inserted a new term in the policy which says that if water gets involved, all wind damage is excluded even if the wind contributed to the damage. The result is rather dramatic. Suppose your home is 95% destroyed by wind and then there’s a small flood that completes the destruction, the insurance company would deny all liability.

In a for-profit business model, there’s no general requirement for the home insurance company to be fair to the customer. If the clause is clearly set out in the policy and the customer accepts the policy, this is the customer’s choice and the insurer will deny liability. So, the next time you get those home insurance quotes, make a point of reading through the policies to see what exceptions and exclusions the insurers have written into the policies. If you live in an area where wind and water may combine, you could find your claims denied.

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Articles

Factors that influence the cost of insurance

November 4, 2011 – 1:59 pm

When it comes to insuring a car people often speculate about various things that may have an impact over the rates they are charged with by the insurance companies. Some state that even the color of the car has an importance and will advocate their point of view as being a correct one. Still, knowing what exactly may influence your insurance rates is quite important because it will be easier for you find a deal that would be adequate to your current situation. So what really influences insurance rates when insuring a car and why?

There are two sets of factors that insurance companies use to determine the risk associated with insuring a particular driver. One set of factors concerns all the important variables regarding the car in question such as car make and model, engine volume, top speed, safety features, repair costs, theft rates and other less important variables. These factors allow the company to determine how it is likely for this very car to cause a claim to be filed, and make up a good part of the final premium you will have to pay.

The second set of factors concerns the car owner and is used to determine the respective risk of this person to use the policy’s coverage. That’s why when quoting for auto insurance you are asked to indicate your marital status, place of residence, driving record, credit rating, education and other things. Although some of these factors may look quite strange from the perspective of auto insurance there’s nothing surprising for the insurance companies. They simply want to know how it is likely for a person to file an insurance claim and it turns out that these variables really help them determine the respective risk.

However, it is very important to understand that every company uses these factors in different ways. It’s not that all insurance providers have the same formula to calculate their rates – each provider has their own method of rate calculation and you will always get different results when getting quotes from different providers using the same data. That’s why auto insurance quotes are always different when you compare them. One provider may rely more on the car factors, while another may have a larger weight of credit rating in their formula. And seeing how many factors are involved you will certainly understand that the premiums you are charged with may fluctuate significantly depending on the provider you will choose to buy insurance from.

How knowing the factors influencing your rates may help you when buying insurance for your car? Although, all providers have different formulas for calculating rates they all share the same classification of the factors involved. For example, if you have a bad credit rating or driving record this will certainly reflect in higher rates no matter what company you choose to go with. And by knowing what factors are important you can take the steps in order to improve them and get cheaper auto insurance or look for companies that aren’t as concerned about a particular factor that you feel as unfavorable to your final rates.

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Articles

How much insurance to buy

October 25, 2011 – 11:26 am

No matter what you think of scientists, there seem to be changes in the weather. There’ve been more violent hurricanes and storms, some devastating tornados, and more flooding than anyone might have expected. Looking around the world, there’s massive flooding across large parts of Asia and don’t forget the earthquakes. First New Zealand and then Japan got hit, followed by a tsunami. When you put it all together, it’s enough to make you think no amount of insurance is ever enough. Guess what? Because you think that, the insurance industry has been bringing out an all-singing-all-dancing package of different policies. If you can think of a way of losing money, the insurance industry has a policy to sell you. The only question is how much insurance should you buy?

This is about paranoia. When you add in the recession, there’s a perfect storm with everything going wrong in the world. The marketers trade on this so, when you see a company offering to sell cover against the value of your home falling, you’re tempted. You see the homes being repossessed around you. Perhaps your own mortgage is underwater. What’s not to like about policy that pays out if your home loses yet more value? Then there’s the company selling insurance against you losing your job. In theory, it pays out your take-home pay if you suddenly pick up a pink ticket. This looks good because, even though you can’t pay off the mortgage, you can at least make the monthly payments. At least, you think you can until you read all the small print and find out just how difficult it is to make a successful claim. Yes, it’s natural to want to protect your family and keep a roof over their heads, but this is not the right time to panic.

Let’s start with the standard policy for the home. You’re insuring the cost of repairing or, if the damage is too extensive, completely rebuilding. To that, add the value of the contents. Depending on the policy, this is the amount necessary to replace like-with-like rather than new-for-old. All this should be reviewed when renewing because the cost of labor and materials keeps on rising even though the resale value of the home may be dropping like a stone. Remember you’re not insuring the land. You’re just replacing what was lost, assuming that’s possible. If your home was to drop into a sinkhole or the plot disappeared in a landslide, rebuilding might be impossible. In that case, you pick up an agreed cash sum.

So, when you’re planning how much insurance to buy, focus on the standard policies and make sure you have everything set up properly so that, if the worst happens, you can make a claim and have it paid. Home insurance cover is not rocket science. Whether it’s good value depends on what the insurer has excluded. Read the policy and do your “homework”. If your research says this is a good deal, go for it. Although it may make you feel more comfortable if you spend your money on some of these more exotic policies, nothing is likely to offer the same value as a traditional home insurance policy.

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Articles

Cheaper Car Insurance: Data-Tracking Devices

October 19, 2011 – 4:34 pm

Allstate alone reported over 500 claims within 24 hours of Hurricane Irene assaulting the east coast, and the total damage is estimated at nearly $12 billion. The irregular flooding and numbers of natural disaster claims will have an effect on rates, and has left many living in areas not prone to floods struggling to find out if they’re covered.

Once an area is hit with a natural disaster, rates will naturally rise since that occurrence means a higher likelihood of future occurrences; therefore, more people are going to make claims from that area. Live in a Northeastern state? From Delaware to Vermont, your premiums are likely to rise because of this unprecedented flooding and potential for damage to your vehicle. Worse, scientists agree that Irene is probably a phenomenon related to climate change, which means we can expect a repeat of Irene’s push into the Northeast.

Since there is nothing you can do to avoid these raised rates other than leaving the area, you can try to mitigate this increase by lowering your monthly premium in other ways, such as making yourself look better to the agency by improving your credit, remaining a loyal customer, and maintaining a good driving record. You can also consider raising your deductible.

What To Do In A Natural Disaster

Catastrophes of nature are becoming more and more common as years go by, so you had better be prepared. Use these tips to protect yourself.

Take Photos And Protect The Scene

If your car is damaged by a natural occurrence like a hurricane, the first thing to do is to treat the area like a crime scene and avoid moving anything so the insurance agency can inspect the damage. Take photos of the scene so that you have an undeniable record in case you have a dispute with the auto insurance company.

Contact Your Insurer

In a natural disaster many people will be contacting the agency simultaneously, which will make the process take significantly longer, but it’s important that you report damage as soon as possible, and the earlier you make the claim, the higher on the list you’ll be for processing.

Protect Against Secondary Damage

Secondary damage occurs as a result of the initial damage. For example, if your car window is broken from the hurricane, your car insurance company will cover that damage. However if you don’t cover the window with plastic and subsequent rains ruin the vehicle’s interior, that will not be covered.

Know What Your Policy Covers

Comprehensive coverage protects your vehicle against damage from more than just other vehicles and likely includes flooding and other natural disasters, so make sure you check with your agency to get your money’s worth. If you live in an area with high risk of hurricanes, you are likely already covered in either your auto or home insurance policy. However, if you only have liability coverage and your homeowner’s insurance won’t cover it, you’re not going to get any help.

Ultimately, all of these tips can be put under knowledge (of your claim) and discipline (to act quickly). If you know what your policy covers, how natural disasters affect insurance premiums, and how to deal with the damage, you’re in the best position possible.

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