What insurance companies don t want you to know

When I say this is a good policy, it may be for me, but not for you!

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Reading: What insurance companies don t want you to know

When shopping for an auto insurance policy, it’s helpful to know who’s watching your results. Independent agents and brokers often receive not only a sales commission, but also an additional commission, known as a contingent commission, given to them for selling a specific insurer’s policy.

According to a 2005 study, the most recent, insurers specializing in sales of personal lines of home and auto insurance had relatively high contingent commissions, averaging more than 1% of the premium. found that 14 of the top 20 auto and home insurers used contingent commissions.

These commissions are divided into two categories: one is to sign clients with a particular underwriter and therefore do more business with that insurer, and contingent commissions based on profitability, to obtain clients with a loss ratio low, which means that individual premiums are higher. than your claims. these incentives may lead some agents or brokers to recommend unnecessary or useless coverage to consumers. most insurers offer these commissions, so the commission is unlikely to have an impact on your agent’s recommendation.

To protect yourself, ask about commissions and have potential agents explain their recommendations to you. we’ve seen steady, moderate single-digit car rate increases since mid-2008, they’re down marginally this year, and premiums are down, but they haven’t gone down as fast as insurance companies raised them in the first place! ! Compared to other types of insurance in this sector, insurers are generally able to implement price increases more quickly due to the short-tail nature of a policy, but often don’t reduce them as quickly when the market improves.

While rate increases vary, based on a number of factors, the cost of car insurance rose about 2.5% nationally in 2008, after falling in 2005, 2006 and 2007, according to statistics from the government regulator cited by the insurance information institute. In part, the rate increases follow declines in premium growth since 2003, which the report attributes to price competition between insurers and consumers buying less coverage due to tight budgets.

increases in auto and homeowners premiums from 2000 to 2003, which were precipitated by major insurers’ investment losses. this could be happening again in the wake of the subprime crisis and other worrying economic news. The rest of the UK has to tighten their belts when investment opportunities dwindle, but insurers simply tie the noose around policyholders’ necks to keep their incomes high.

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Not very good credit rating? that will cost you.

Consumers with poor credit histories could end up paying more for their car insurance even if they are existing policyholders who have always been on time with their payments but end up on a financial losing streak . Most insurers have for many years used credit information, along with other factors, to determine risk and the premium paid. It’s estimated that at least 90% of insurers use credit history in their underwriting, according to the Insurance Information Institute.

While consumer advocates argue it unfairly penalizes the poor, it can also hurt the middle class. The problem is further aggravated by the recent financial market crisis and recession, which have affected the credit scores of middle-class consumers. Since many insurers take credit history into account, consumers should obtain their credit report and check for errors before purchasing insurance.

How do we set premiums? that is for us to know and for you to discover.

Many factors affect premium disparities and one of them is the location of the policyholder. what has really muddied the waters are the formulas used to set premiums for individuals. In general, most insurers classify customers into price tiers (often two to four) based on where they live, their age, and their driving record. But more variables have been added to the mix, including credit history, home ownership, and previous policy limits. And since each insurer interprets these variables differently, it is even more difficult for consumers to control the system.

total loss of your car? it will be difficult to collect its full value. . .

Policyholders may be surprised that insurance companies often don’t get their valuations from a standard source. When a car is completely lost, insurance companies often get their valuations from claims service companies that consult proprietary databases to assess the valuation. The eyeglass guide, on the other hand, uses transaction data, which is often higher and is considered by some to be a better way to get more value out of a totaled vehicle. If your car is totaled, you don’t have to accept your insurer’s first offer. go to autotrader.co.uk to find better comparisons, to check your price.. . . .

and we are more likely to declare your car a total loss.

given the haircut you’re likely to get when replacing your total loss car; many policyholders would prefer that repairs were covered in all but the most serious accidents. but that is getting harder and harder. according to trade magazine collision repair industry insight, the percentage of damaged cars declared a total loss by insurers jumped to between 20% and 22% in 2009, up from 16% in 2003 and 7% in 1995. and as cars for the market In the masses to get more high-tech, that number continues to rise because the increasing number of electronic components and passive restraint systems, like airbags, can make repairs difficult and expensive.

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What constitutes a total loss? A general rule of thumb for insurers is to consider a car a total loss when repairs would exceed 70% of the vehicle’s value, the threshold that could easily be exceeded with a dented spoiler and bumper with a few deployed airbags. And if your car’s chassis is damaged, it can still be a safety hazard even after it’s repaired. if the damage is limited to a few minor but expensive components, the policyholder can contest the settlement amount under the terms of the cost of appraisal.

Choose carefully as your repair center may work for us.

The auto insurance industry has long relied on approved repair programs with insurers that maintain lists of recommended repair facilities. some insurers have taken the relationship a step further. The repair network includes repair facilities across the country that have agreed to provide repairs to insurance customers and claimants.

Whether it’s a preferred provider network or wholly owned, such intimacy between insurers and auto body shops makes consumer advocates nervous. it allows insurers to take too much control over the repair process. And when you’re under pressure to keep costs down, you may start to see shortcuts to repairs. insurers say their program allows them to provide recommendations to customers and claimants after an accident and helps speed up the claim process by giving the customer a one-stop shop for estimates and repairs they guarantee.

Most of the time, you have the option of whether or not to use the shop recommended by the insurer. if some insurers, customers have the choice. why should i? it’s convenient and, in some cases, policyholders who don’t take their cars there can increase their deductible or charge a percentage.

remaining loyal may not mean much. . . Some insurance companies offer discounts to long-term customers, but beyond that, it’s getting harder to see the benefit of sticking with one insurance company. to the company as your circumstances change, it may not be profitable to stay.

People looking for the lowest price on a policy generally benefit from shopping around, the recommendation is that customers let their insurer know they are starting to shop around and also let the insurers they call know to get quotes. start by getting quotes online. Before you make a move, consider that another benefit of staying is the relationship you may have developed with an agent. that’s where loyalty pays off. if you work for an extended period of time with insurance agents, [he or she] should and more often than not values ​​you as a customer and has a vested interest in taking care of [you].. . . .

But be careful when changing insurers could cost you.

Many consumers think that when they change insurers, leaving the previous insurer is as simple as stopping paying. not so If you don’t pay a bill for the next period, your insurer may not just cancel the policy, but also report your nonpayment to the credit reporting agencies. (Most insurers must give you a certain number of days notice before cancellation.) Also, your new insurer will see a cancellation on your record, which could mean you’ll pay higher rates or be denied. To avoid the problem, obtain the proper documentation. make sure it’s the right time so that the end date of your old policy coincides with the start date of the new one.

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