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5 ways to send your car insurance
rates through the roof
By Kat Zeman, Insure.com
Last updated: April 12, 2011
In your quest for good car insurance rates, you may be your own worst
enemy. The insurance industry spends a lot of time evaluating risk, and the
surest way to drive up your premium is to make a big mistake that flags you as
“risky.”
1.
Cause a car accident
If you are at fault in an
accident, your car insurance premium is likely to increase. The exact increase,
often called a “surcharge,” will depend on your insurance company. Before you
buy car insurance, ask your agent for a “surcharge schedule” which will reveal
how much you’ll be charged in the event you cause an accident.
Some car insurance companies
forgive first-time accidents but require that you fit certain criteria in order
to escape a rate increase. If your insurance company holds your rate steady,
consider yourself lucky. For more, see how much your rates can go up after one accident.
In some cases, adding a driver
with a terrible driving record to your policy can more than double your premium
because your insurer will base the rate increase on the risk associated with
your spouse.
2.
Get convicted of a DUI
Driving under the influence of
alcohol or drugs is a serious risk – and insurance companies base their rates
on risk. Aside from your irresponsibility on the road, impaired driving
carries serious consequences from car insurance companies.
If your insurer discovers you’ve
received a DUI, your rates could increase or your policy may be cancelled or
nonrenewed. You will be classified as a "high-risk driver," and that
makes shopping around for insurance difficult. If your policy is
cancelled, you’ll have the double whammy of a DUI and a cancellation on your
record – a factor that a new insurer will use to increase your rates even more.
3.
Buy a vehicle with a high claims history
Certain cars shoot to the top of
the "most expensive to insure" list because their drivers have submitted
frequent and/or expensive car insurance claims. High-performance sports cars
often fall into this category. In most cases, liability premiums aren't
affected by car choice. But if you buy a sports car, you could be charged
higher liability rates because insurers expect that sports car drivers intend
to make liberal use of the gas pedal. You’ll also generally pay more for
collision and comprehensive insurance. Drivers of certain vehicles like the
Hummer also receive higher liability rates because their vehicles inflict more
damage and injuries during crashes.
4.
“Soup up” your car
If you have a passion for
“souped-up” cars, you can expect souped-up car insurance premiums too. Modified cars and
"bling machines" — as they are commonly called — are considered high
risk by many car insurers because their parts are often worth more than
the car itself, and their owners tend to drive them with caution thrown to the
wind. In any case, when you make modifications to your car, you should
inform your insurer. These modifications could include a 600-horsepower engine,
custom paint job, spoilers, ground effects, custom wheels, highly customized
interior or expensive stereo components. If you make modifications and fail to
inform your insurer, your insurance will cover you for what the car was worth before you made
modifications.
5.
Marry a reckless driver
If you get hitched to a reckless
driver and wish to add him or her to your car insurance policy, you can expect
your premium to skyrocket. The pain of the increase will depend on how much your
significant other has tarnished his or her driving record. For example, a DUI
conviction will be costly while a speeding ticket may not be as bad. It will
also depend on your insurance company and the state where you live. In some
cases, adding a driver with a terrible driving record to your policy can more
than double your premium because insurance companies will base the rate
increase on the risk associated with your spouse. In really bad cases, your
insurer may refuse to insure your spouse and you’ll have to shop around for a car insurance quote from
another insurer.
6
top car insurance myths
By Insure.com
Last
updated: June 6, 2012
Insurance can be complicated
enough. Don’t let a flood of misinformation drown out the facts. Since
misunderstandings can be costly, here are the most common car
insurance myths debunked.
Myth: Red cars are the most
expensive to insure
Fact: Red will not cost you more green.
Roughly 25 percent of drivers surveyed by Progressive Insurance believe that
the color of their car is a factor in determining their insurance rate —
especially if the car is red. But the belief that drivers of red cars pay
higher car insurance premiums is a myth. Insurance companies will likely not
even ask the color of your car when they’re calculating your car insurance rates.
The notion that car color
determines what you’ll pay for insurance is a longstanding myth. It may have
come from the idea that people who drive red sports cars are reckless. Car
insurance companies are interested in the year, make, model, body type, engine
size and age of your vehicle. The color may be important to you, but it really
doesn’t matter to your insurance company.
Myth: Thieves prefer to steal new
cars
Fact: It’s the other way around.
Statistics show that thieves actually prefer to steal older cars. According to
a 2011 National Insurance Crime Bureau (NICB) report, the top 10 most-stolen
vehicles reported in 2010 were the '94 Honda Accord, '95 Honda Civic, '91
Toyota Camry, '99 Chevrolet pickup (full size), '97 Ford F-150 pickup, '04
Dodge Ram pickup, '00 Dodge Caravan, '94 Acura Integra, '02 Ford Explorer and
'99 Ford Taurus.
The reason older vehicles
dominate the list is because they are easier targets for thieves. Because
people are keeping their cars longer in the tight economy, there is a strong
market for used parts that may come from stolen vehicles.
If you have an older vehicle and
have dropped comprehensive coverage to save money, you are not covered for
theft and do not qualify for rental car coverage. NICB’s report reveals that
thieves have different preferences from state to state. Crooks in California
and Florida prefer imports like Hondas and Toyotas. Texas crooks select pickup
trucks. Criminals in Indiana and Michigan have a thing for domestics (Dodges
and Fords).
Myth: My auto insurance will
cover me if my car is stolen, vandalized or damaged from hail or fire.
Fact: Unless you have comprehensive
coverage, you are not covered for any of these things. A bare-bones policy in
most states only requires you to buy liability coverage. This pays only for
damage you cause to others. You need to purchase both collision and comprehensive
coverage in order to fully protect your vehicle from all types of damage
situations.
Comprehensive coverage covers
pays for damages to your car that are not the result of a car accident. That
includes theft, vandalism, hail, fires and accidents involving animals.
Collision coverage pays for damage to your vehicle from a car accident.
Myth: If my car is totaled, my
car insurance will pay off what I owe on my loan or lease.
Fact: When your car is totaled, your
auto insurance policy does not promise to pay off what you owe. It will pay you
the actual cash value of your car, minus your deductible. Actual cash value is
the amount your car was worth before the accident, factoring in depreciation.
You are still responsible for any amount outstanding on the loan or car lease.
The only way to cover the
difference between the car's cash value and the amount you owe on a loan is to
purchase gap insurance. Available to cover both auto leases and loans, gap
insurance covers you if your car is totaled before you’ve paid off the loan, or
before the lease term expires. Insure.com's Save yourself some grief: buy gap coverage article
explores this issue.
Your insurer will decide if your
car is "totaled." Generally a total loss is declared when the repair
costs exceed a certain threshold of the car’s value. It varies by insurer.
Generally insurance companies will total your car if the repair costs exceed
between 51 to 80 percent of the car’s value. At that point, the insurance
company will tow the car to the salvage yard and offer you the actual cash
value of your car.
Myth: My auto insurance company
will pay for a rental car if my car is stolen or damaged in an accident.
Fact: Even if you have comprehensive
and collision coverage, it may not include a rental car. Rental car
reimbursement is not automatically included in most car insurance policies, but
you can add it at an affordable cost. According to the Insurance Information
Institute, rental reimbursement coverage is available for $1 to $2 a month with
most insurers.
Even if you have this coverage,
it won’t necessarily last until your stolen car is recovered or your damaged
car is fixed. There’s a limit on how much your insurance company will reimburse
you per day, plus a cap for a maximum amount per accident. For example, GEICO
charges $20 per year for a maximum $750 in rental reimbursement, with no
deductible to pay. In this case, GEICO would reimburse you up to $25 per day
but no more than $750 per accident.
Myth: Drivers of sports cars get
more tickets and thus pay higher car insurance rates.
Fact: That’s not necessarily the case.
According to a list released in 2010 by Quality Planning Corp., cars with the most violations are
coupes, sedans and SUVs. The Merdedes-Benz SL-Class convertible was the only
sporty car on the list. Drivers of two different Scion models (TC, XB) also made
the Top 10 list. Others on the list include drivers of the Toyota Camry-Solara,
Hummer H2 and H3, Mercedes-Benz CLS-63 AMG, Acura Integra, Pontiac Grand Prix,
Mercedez-Benz CLK 63 AMG and the Volkswagen GTI.
At the other end of the spectrum,
the study also includes a "well-behaved vehicle list." Topping that
list are drivers of the Buick Rainier, followed by the Mazda Tribute, Chevrolet
C/K-3500/2500, Kia Spectra, Buick Lacrosse, Saturn Aura-Hybrid, Oldsmobile
Silhouette, Chevrolet Uplander, Hyundai Tuscon and Pontiac Vibe.
While insurers don’t base their
car insurance premiums on this study, the insurance loss history for the model
you drive and your own driving history factor into how much you will pay for
car insurance. Insure.com's How your car drives your insurance premium explains
this issue.
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Car insurance for risky drivers
By
Insure.com
Last
updated: June 6, 2012
You may consider yourself a
pretty good driver. You know how to handle a car on icy streets and maybe
you're even confident negotiating narrow mountain roads at high speeds.
But even the best drivers in the
world can receive a speeding ticket or become involved in an accident. If you
rack up enough accidents, speeding tickets or even one serious infraction --
such as driving under the influence of alcohol or drugs -- you may find
yourself classified as a "high-risk driver." That means you won’t be
able to buy car insurance in the standard market. Nonstandard or “assigned
risk” drivers can expect to pay up to three times more for car insurance than
drivers with a clean record.
What is a high-risk driver?
Before selling you car insurance,
insurers will check a number of things -- including your driving record and
claims and credit history.
According to the Insurance
Information Institute (III), drivers fall into one of the following categories:
·
Preferred: Drivers with outstanding driving records who get the lowest car
insurance rates
· Standard:
Average drivers with good driving records
·
Nonstandard: Young, inexperienced drivers and drivers with many tickets and
accidents or a reckless or drunken driving history. These are high-risk
drivers.
And then there is a fourth
category: Drivers who can't convince an insurance company to sell them a
policy.
This type of driver can still buy
insurance through their state’s "assigned risk" pool but they'll
typically have to prove they've been repeatedly rejected by car insurance
companies, and their premiums will be two to three times higher than the
national average.
How people fall into a high-risk category
In addition to having multiple
accidents, speeding tickets or a DUI, there are other factors that can push you
into the high-risk category. The following items will not necessarily place you
in the “assigned risk pool” but they can increase your car insurance rates.
· Bad credit score.
Although you can't be denied insurance altogether for a lousy credit score, it
can be a factor in what an insurance company will charge you.
· A lapsed insurance policy. If you
failed to pay your car insurance premium and had your policy cancelled by
another insurance company, other car insurance companies can find that out and
factor it into your premium. You'll also pay higher rates if you drove without
insurance for a period of time -- in some states it has to be at least 30 days
-- in the previous 12 months.
· A young driver with no record. The
state of Oregon Insurance Division notes that since one out of three young
drivers gets in an accident each year, drivers under the age of 25 are
typically classified as "high-risk" by car insurance companies.
· Your profession: People
who drive great distances for their job -- pizza deliverers and long-haul
truckers, for instance -- are considered high-risk drivers by many car
insurance companies. Recreational vehicles, even if they aren't driven much,
cost much more to repair than a regular car so they need to carry higher-priced
insurance.
· Your car: Certain types of high powered cars,
including some sports cars, can fuel higher auto insurance quotes. These cars
are expensive to repair. Insure.com's The most and least expensive vehicles to insure article explains why high-performance
cars can lead to higher insurance premiums.
What you can do if you're denied car insurance
If one company turns you down for
auto insurance, keep shopping. Even if one company turns you down, another may
be willing to sell you a policy. Although you may be classified as a high-risk
driver, you may not have to buy from your state’s assigned-risk pool.
How to get rid of the high-risk label
Most car insurance companies will
forgive your accidents and poor driving record if you maintain a clean driving
record for at least three years. But it varies by insurer; some will look back
as far as five years when assessing how risky a driver you are.
Many states use a point system
that assigns a score according to the severity of an incident, says the III.
And how long those points stay on your record varies by state. Points for such
things as illegal turns stay on your driving record for three years in
California, for instance, but points for a hit-and-run or DUI stay on your
record for 10 years.
Periodically ask your insurance
company to review your policy. Ask how long it will take to improve your
driving record.
In
the meantime, drive carefully, don't cause accidents, pay your insurance bill
on time and don't drink and drive.
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Car insurance rates by state: The
most and least expensive places to buy auto insurance in 2012
By
Barbara Marquand, Insure.com
Last updated: March 5, 2012
Louisiana has the most expensive
car insurance rates in the nation, followed by Oklahoma and Michigan, according
to data from Insure.com's car insurance comparison survey of premiums for 2012 models.
Car insurance rates are cheapest
in Maine, followed by Iowa and Wisconsin.
|
State rankings of auto
premiums, 2012
|
||
|
Rank
|
State
|
Avg. annual premium
|
|
1
|
Louisiana
|
$2,536
|
|
2
|
Oklahoma
|
$2,047
|
|
3
|
Michigan
|
$2,013
|
|
4
|
West Virginia
|
$2,002
|
|
5
|
Washington, D.C.
|
$1,866
|
|
6
|
Montana
|
$1,856
|
|
7
|
Rhode Island
|
$1,830
|
|
8
|
Wyoming
|
$1,732
|
|
9
|
California
|
$1,709
|
|
10
|
Georgia
|
$1,694
|
|
11
|
Connecticut
|
$1,665
|
|
12
|
Texas
|
$1,661
|
|
13
|
Florida
|
$1,654
|
|
14
|
Delaware
|
$1,652
|
|
15
|
New Jersey
|
$1,608
|
|
16
|
Pennsylvania
|
$1,598
|
|
17
|
Hawaii
|
$1,594
|
|
18
|
Kentucky
|
$1,572
|
|
19
|
Mississippi
|
$1,502
|
|
20
|
Missouri
|
$1,455
|
|
|
National average
|
$1,438
|
|
21
|
Alaska
|
$1,431
|
|
22
|
North Dakota
|
$1,426
|
|
23
|
New York
|
$1,413
|
|
24
|
Kansas
|
$1,410
|
|
25
|
Massachusetts
|
$1,378
|
|
26
|
Maryland
|
$1,372
|
|
27
|
Alabama
|
$1,345
|
|
28
|
Arkansas
|
$1,334
|
|
29
|
Colorado
|
$1,322
|
|
30
|
Utah
|
$1,315
|
|
31
|
Washington
|
$1,305
|
|
32
|
South Dakota
|
$1,303
|
|
33
|
Indiana
|
$1,301
|
|
34
|
Virginia
|
$1,297
|
|
35
|
New Mexico
|
$1,274
|
|
36
|
Minnesota
|
$1,264
|
|
37
|
Nebraska
|
$1,244
|
|
38
|
Oregon
|
$1,241
|
|
39
|
Tennessee
|
$1,228
|
|
40
|
Nevada
|
$1,223
|
|
41
|
Illinois
|
$1,192
|
|
42
|
Arizona
|
$1,176
|
|
43
|
New Hampshire
|
$1,133
|
|
44
|
South Carolina
|
$1,108
|
|
45
|
Ohio
|
$1,099
|
|
46
|
Vermont
|
$1,063
|
|
47
|
North Carolina
|
$1,022
|
|
48
|
Idaho
|
$1,011
|
|
49
|
Wisconsin
|
$987
|
|
50
|
Iowa
|
$985
|
|
51
|
Maine
|
$889
|
|
Source: Insure.com
|
||
High rates usually cannot be
pinned on a single cause. Rather, a variety of unfortunate circumstances
combined to make insurance bills more painful in some states:
Costly storm seasons in 2011
impacted rates in many states.
Once again, uninsured drivers
caused high premiums for others because they didn't pay their share for
accidents they caused. In most cases, drivers hit by uninsured motorists have
to rely on their own coverage to fix their cars or pay for medical treatment.
For example, an estimated 24 percent of drivers are uninsured in both Oklahoma
and Florida, according to the Insurance Research Council. Maine and Massachusetts, on
the other hand, have the lowest shares of uninsured drivers -- just 4.5
percent.
Agents in Michigan and Louisiana
say a tough economy has made it hard for many drivers in their states to afford
insurance. "I have people in my office on a weekly basis who say they just
can't do it," says Jason Verlinde, vice president of Verlinde Insurance
Agency in Richmond, Mich., and a board member of the Michigan Association of
Professional Insurance Agents.
No.
1: Louisiana
Brad Bourg, past president of the
Independent Insurance Agents & Brokers of Louisiana and president of Bourg
Insurance Agency in Baton Rouge, La., says for some people it comes down to
"whether to keep insurance or put food on the table."
In addition, some drivers buy
only the minimum level of liability insurance required by the state, which
often isn't enough to cover injuries and damages they cause in an accident.
Insured drivers then have to tap into their own coverage to pay for damages.
Bourg was disappointed that
Louisiana came out on top this year. "I thought we were doing
better."
Agents and insurance companies
contend the judicial system contributes to Louisiana's high car insurance
rates. Louisiana is the only state that requires claims to reach $50,000 before
they go to a jury trial. Lawsuits involving claims under that threshold go
before elected judges, who are perceived to side more with their constituents
over insurance companies.
Insurance trade groups and
business organizations have called for legislation to lower the threshold for
jury trials.
According to Insure.com’s data,
New Orleans ZIP code 70117, which includes the Lower Ninth Ward and the Bywater
and Holy Cross neighborhoods, has the highest rates in the state.
No.
2: Oklahoma
A state task force is working
with the Oklahoma Insurance Department to tackle the problem of uninsured
drivers. The goal is to reduce the share of uninsured drivers from an estimated
24 percent to 14 percent by 2017, says Denise Johnson, a task force member and
immediate past chairperson of the Independent Insurance Agents of Oklahoma.
The task force is recommending a
variety of measures to make people more accountable, including tougher fines
for driving without insurance, says Johnson.
Wicked storm seasons have pounded
the state for the last couple of years, leading to big losses, which also
contribute to high rates.
Last year, Oklahoma was hit with
two major blizzards and a series of tornadoes. The year before, softball-sized
hail pounded Oklahoma City.
"We've had so many
losses," Johnson says.
No.
3: Michigan
Under Michigan's unusual no-fault
auto insurance system, car accident victims are guaranteed unlimited, lifetime
medical benefits for treatment of their injuries. Their insurance companies pay
the first $500,000, and then are reimbursed for any amount above that threshold
by the Michigan Catastrophic Claims Association, a nonprofit created by state
law.
Car owners have to buy personal
injury protection (PIP) coverage as part of their policy, and they must pay an
annual assessment to the association. Michigan’s PIP coverage pays for medical
bills for the policyholder, any family members living in the same house (even
when they’re injured as passengers in someone else’s car) and any passengers
who are injured but do not have no-fault PIP coverage.. This year's assessment
from the association is $145 per vehicle. Michigan drivers have paid $7.3
billion to support the association in the last decade, according to research by
Sharon Tennyson, a professor at Cornell University in Ithaca, N.Y.
"It's good coverage, but
it's starting to be unaffordable, and for insurance companies, it's starting to
be unsustainable," Verlinde says.
Another wrinkle in the system:
motorcyclists don't have to buy PIP coverage, but if they purchase the minimum required
liability coverage and are injured in an accident with a car, they still get
unlimited medical benefits. The car driver's insurance pays out, and then the
Michigan Catastrophic Claims Association kicks in.
Legislation is pending in the
Michigan House of Representatives that would eliminate unlimited medical
benefits and give consumers the ability to choose PIP limits of $500,000, $1
million or $5 million. The legislation would also establish a medical fee
schedule for no-fault car accident injuries. This would set levels for how much
insurers would reimburse hospitals and other health care providers for
procedures, treatments and tests, such as MRIs and X-rays. Such fee schedules
are in place for treatment through workers' compensation insurance. However,
hospitals oppose the change.
"That’s where we'll see the
biggest fight," Verlinde says.
Pretty low: Wisconsin
Wisconsin's rural environment and
competitive market help keep rates down there, says Michael Froh,
president-elect of the Independent Insurance Agents of Wisconsin and an agent
with Burkart-Heisdorf Insurance in Sheboygan, Wis.
"We have a lot of strong
regional companies in the area, besides the large national companies," he
says.
He also points to a favorable
regulatory climate. Last year, for instance, the state repealed a two-year-old
law that allowed policyholders to “stack” uninsured motorist coverage. Stacking
lets a policyholder combine the coverage limits on multiple cars to receive a
larger payment for damages caused by an uninsured driver. The insurance
industry generally opposes stacking, saying it leads to higher premiums.
Another factor pushing down
rates: Wisconsin is less litigious than some other states.
"People are not as quick to
sue," Froh observes.
Even
lower: Iowa
Many regional auto insurance
companies, as well as national insurers, compete for business in Iowa, helping
keep rates low there, says Brian Petersburg, president of the Independent
Insurance Agents of Iowa Inc. and owner of the A&J Petersburg Agency in Decorah,
Iowa.
Another factor: a low rate of
uninsured drivers.
“We’ve got great values in Iowa,”
he says. “People pay for their car insurance before they go out to dinner.”
A low crime rate helps, too.
Petersburg says he doesn’t think
his agency in Decorah, a city of 8,000, has processed a car theft claim in the
last 10 years.
Lowest:
Maine
David Millar, president of the
Maine Insurance Agents Association and principal of Riley Insurance Agency in
Brunswick, Maine, says he's not surprised his state has the least expensive car
insurance rates.
"The population is spread
out, and there is not as much traffic as other areas," he says. "It's
a competitive market. We're very fortunate to have a good number of
carriers."
Sheila Sawyer, treasurer of the
Carl M P Larrabee Agency Inc. in Wiscasset, Maine, and president-elect of the
Maine Insurance Agents Association, says the state has lucked out with the
weather, too. There have been no major natural disasters, which helps keep
claims low.
"We also have a relatively low
crime rate, so we don't see a lot of car thefts or vandalism," she says.
According to Insure.com’s ZIP
code data, Falmouth, Maine (04105), which sits just north of Portland, has the
lowest rates in the state.
Survey
methodology
Insure.com commissioned Quadrant
Information Services to provide auto insurance rates for more than 900 car
models from six large carriers (Allstate, Farmers, GEICO, Nationwide,
Progressive and State Farm) in 10 ZIP codes per state. Rates were not available
for all models, particularly exotic cars.
We then averaged rates for all
vehicles in each state to create the rankings of affordable car insurance.
Rates are based on insurance for
a single, 40-year-old male who commutes 12 miles to work each day, with policy
limits of 100/300/50 ($100,000 for injury liability for one person, $300,000
for all injuries and $50,000 for property damage in an accident) and a $500
deductible on collision and comprehensive coverage. The hypothetical driver has
a clean record and good credit. The rate includes uninsured motorist
coverage. Average rates are for comparative purposes. Actual rates will
depend on individual driver factors.
More from Barbara Marquand here
Your insurance agent won't tell you
your policy is being canceled
By
Matt Brownell, Insure.com
Last updated: Aug. 27, 2012
If you've fallen behind on the
premium payments for your car insurance policy, you're going to start getting
nonpayment alerts and notices of
impending cancellation from your insurance company. But there's
one person you probably won't hear from on the matter: your insurance agent.
That's because agents aren't
required to notify a policyholder in the event of an impending cancellation.
"The parties to the
insurance [policy] are the carrier and the policyholder," explains
insurance agent David Hulcher, an assistant vice president of Agency E&O
Risk Management at Big I Advantage in Alexandria, Va. "State regulations
require carriers [to have] specific time frames and methods to notify
policyholders of cancellation. The agents are not a necessary party to this
direct communication."
In other words, letting you know
that you forgot to pay the bill is the responsibility of the insurance company,
not the agent. Your agent will probably receive a copy of the notice, and
there's nothing to preclude him or her from also giving you a heads-up. Yet
many will deliberately stay out of it, preferring to let the insurer handle the
task of informing you of your delinquency.
Hulcher, who is in the business
of protecting the practices of insurance agents, says that this decision is
partly a matter of limiting the agent's professional liability.
"The concern is really about
taking on an additional duty that is going to potentially raise the standard of
care for customers, which in turn increases exposure," he says. If agents
get in the habit of calling up their less-conscientious clients every time they
forget to send in their monthly payment, they run the risk of establishing that
as the norm. And that means that if the month comes when the agent forgets to
call with their usual reminder and the client loses his or her coverage, that
agent could be sued if the client later gets into an accident and isn't
covered.
Too busy
But it's not just litigation that
makes agents wary of calling up delinquent clients. It's also the fact that
they don't have time to deal with it.
"They have customers who are
late paying the bill all the time," Hulcher notes. "What if [the
agent] didn't spend [their] time constantly calling the 5 percent that's always
late paying, and spent that time prospecting for new customers?"
An insurance agent's job is to
sell insurance, and if the agent gets in the habit of handling the
administrative duties of the insurer, that's not good for business. Of course,
losing clients isn't good for business either, which is why some agents reach
out to policyholders who are on the verge of losing coverage.
Randy Hoffman, an agent with LA
Independent Insurance in Louisiana, takes the risk. "Normally we contact
the insured as well -- we'll send them one of our letters, or a copy of the
cancellation notice," he says. "It hurts us, too." He adds that
his agency has no problem sending repeated notices to clients who are regularly
late on payments.
Still, if you're routinely
dropping the ball on your premium payments, your agent may not be too sad to
see you go. In a recent message board discussion between agents on the
website of trade magazine Insurance Journal, some agents noted that
it simply isn't worth chasing the delinquent customers.
"You get them to pay one
late premium notice and then they're immediately behind on the next
payment," notes one participant in the conversation. "Often they
generate very little in premium and thus very little in revenue."
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