10 Things Your Auto Insurer Won't Tell You

Is a toad hiding in your engine? Here’s 10 little car insurance dirty secrets from SmartMoney:

10. “You’re paying too much.”
9. “Forget your driving record. We want your credit rating.”
8. “We’re pocketing your deductible.”
7. “We can dump you on a whim.”
6. “We’ll stiff you if your car is totaled…”
5. “…and even if it isn’t.”
4. “You need a lawyer.”
3. “Our body shops work for us, not you.”
2. “We make money by sitting on your claims.”
1. “We own your state insurance commission.”

Hit the link for the full explanation, but we thought the last one was notable. According to a WSJ article, which we can’t find, at the time this was written, 9 of the last 11 heads of the National Association of Insurance Commissioners left for private-sector insurance jobs afterwards.

10 Things Your Insurer Won’t Tell You [Steelelaw]
(Photo: the c-side)


The Consumerist insurance claims adjustor disagrees with some items on this list:

Most notably, #1.

Your state insurance department is most definitely not owned or influenced by any insurance company. Quite the contrary, if any consumer makes a legitimate complaint about any company, hellfire begins to rain down. Companies are always trying new things to see what they can pull off. Savvy consumers and insureds contact their state insurance department and file complaints, and the insurance company quickly has a change of heart.

#7- This isn’t true is most states. They can’t dump you on a whim. Rather, most states have specific regulations on when a company can drop you, and specifically why. Also it’s smart to be familiar with your policy. A common reason for being dropped: Material misrepresentation. Another word for that is lying. If the insurance company asks you if there’s anyone else living in your household, and you say no, but there are other people living there, that’s an additional risk the insurance company should know about. So say, if another person in the household drives the car, and hits someone and hurts them, the insurance company didn’t know they lived in the household, therefore weren’t aware of additional risk. Further, the insured lied to the company, which is material misrepresentation. In that case, the insurance company is no longer obligated to honor the policy, and likely WILL deny the claim.

#3- This is the primary reason to get an insurance company that doesn’t have their own body shops. It’s fine if the company has local shops that they work with, or ‘prefer’, but don’t require you to use. This basically means that if the body shop does a shoddy job fixing your car, you make enough complaints to your adjuster, and it puts the body shop in hot water, and could jeopardize their relationship with the insurance company by inadvertently giving them a bad name.

#2- Nope, they don’t make money sitting on your claims. Rather, adjusters who sit on claims usually get reamed by their supervisors for not promptly resolving claims and settling them out. Unfortunately, some things take time. Patience is required for things like this. They understand you are inconvenienced by not having your car….remember your adjuster is human too and has likely experienced the same thing. Be diligent and kind and usually things will move along at a good rate.


Edit Your Comment

  1. Instigator says:

    Regarding #1: No shit! This is why Florida will allow no-fault insurance to sunset on October 1.

  2. projoe1979 says:

    Car insurance = extortion

  3. doctor_cos wants you to remain calm says:

    @projoe1979: State-mandated extortion.

  4. doctor_cos wants you to remain calm says:

    And don’t even get me started on insurance companies and “drunk” driving.
    Yes, drunk driving is bad. But:
    1. “drunk” is NOT an arbitrary number.
    2. Roadblocks are unconstitutional, and are demonstrably selective enforcement.

    Here is the absolute best thing to know about insurance companies and “drunk” driving, and how they skew the numbers to raise your premiums based on where not how you drive…
    Which of the following is considered an “alcohol-related” accident according to the insurance companies:
    1. On my way home from work, I run into someone who has had two beers pulling out of the parking lot of a bar.
    2. On my way home from work, I run into a someone who has had six beers running across the street after visiting a bar.
    3. On my way home from work, I pick up a friend who has had several beers at a bar. While he is still in the car with me, another sober individual crashes his car into me.
    4. All of the above.

    That’s right, the answer is 4, all of the above. Look it up sometime.

  5. jtlight says:

    How can anyone on the planet think the state mandated health insurance when they see the mess that is state mandated car insurance. Giving insurance companies power is never a good idea.

  6. CoffeeAddict says:

    Insurance companies are scum. Some are a little higher on the food chain and you want to go with them. I find you just search for the least evil and stick with them. Other then that I believe insurance is a scam and is something invented to screw people out of money.

  7. doctor_cos wants you to remain calm says:

    @jtlight: Universal health care is a different animal entirely. And I don’t think that we as citizens are entitled to anything which is not available to our elected leaders (i.e., members of congress).

  8. alice_bunnie says:

    8. “We’re pocketing your deductible.”

    I hope since State Farm was slapped with a lawsuit about this that they’ve changed their ways. They owe me $500 from an accident in June and it’s in subrogation now. :(

  9. goodguy812 says:

    of course they aren’t going to tell you if your getting skrewed on a car purchased! its not their job to negotiate your deals for you. they just want the sale.

    why would anyone even think they would tell you if you could do better on a car purchase.

  10. Keter says:

    @doctor_cos: State-mandated UNsurance is still extortion, I don’t care what it doesn’t cover us for. Government needs to mind the business it is supposed to be doing for us (foreign policy, national security, etc.) and get their noses out of people’s private business…the things that each vote-eligible adult is supposed to be responsible for themselves, like managing their own health care, saving/investing for their own retirement, and dealing with the consequences of their own bone-headed driving moves.

    Used to be, Texas allowed individuals to post a fiscal responsibility bond in lieu of insurance. I posted the bond; it was much cheaper and far less infuriating. That was discontinued; now I have to pay out the wazzoo for something I’ll probably never benefit from, because my cars are too old and no one will ever pay me to have them FIXED, even for a ding…and I intend to keep the cars until they collapse in a dust heap. So now I have to pay insurance AND figure on suing whomever hits me for repairs…if I can find them.

    That’s not even covering the issue of illegal aliens and other persons who drive on forged documents, none of whom have insurance or a way to find them when it’s time for them to pay for their damages. The cops don’t have any way to verify identity, address, or valid insurance coverage, so they just take the anybody-with-a-laser-printer-can-fake-it printout as “proof” of insurance. Almost everyone I know has been hit by an uninsured illegal (most of whom ran); being hit by an “uninsured motorist” or involved in a hit-and-run seems to be equivalent to driving drunk, it seems, based on the subsequent rate hike…

  11. Heyubrando says:

    I love this site, rather, I love what they stand for. I don’t always think that those who comment are highly intelligent, however. Of the 10 items in the list, only one or two have much validity in my opinion. It sounds as if the person that wrote it was unfortunate (and stupid) enough to have chosen to select a company like Safe Auto for provide him/her auto insurance. Some of these points may be somewhat more valid when you talk about the low-end companies, but on average, most of the larger companies that actually have agents–agents that have buildings, and staff, and customer service–are good to their insureds and try to the best of their ability to indemnify them if they experience a loss.

    Most people that get ticked off are people that were too lazy to read their policy when they got it, or don’t understand how/why insurance works the way it works. 99.9% of the gripes people whine about would not be an issue if they had read and understood their policy when they got it. Many people that get upset with their insurance company are people that have put themselves in a bad situation (i.e. – those that are over-financed after their car is totaled, and do not have GAP insurance).

    Moral of the story… do your homework before you chose who you will have provide your insurance. Read the policy & ask questions. I’d like to see most of your who whine about the insurance industry recover after you are involved in an accident and total your $30,000 car, while still owing $20,000+. It doesn’t take a genius to do the math and figure out how screwed you’d be. Oh, and don’t forget the $100,000 medical bill you owe to the guy you hit…

  12. SOhp101 says:

    After reading the article, it’s extremely misleading. Like with anything involving cars, companies will take advantage of your ignorance.

    That being said, here are some counterpoints:
    1. If you’re lazy, you will always pay too much. It’s called the cost of convenience.
    2. Insurance companies looking at your credit report is already common knowledge.
    3. This really depends on how shady your insurance company is. I was refunded my deductible in less than a month after an accident that wasn’t my fault.
    4. If you read your contract, you would already know this would be true. Not paying your insurance in time? No wonder they canceled your policy! Who would have known!
    5 & 6. Keep in mind they are a company that’s trying to make a profit. You have to be clear on what you want and use appropriate negotiating skills to be truly satisfied. Documenting all conversations and correspondence is critical.
    7. Keep in mind you have the right to use legal means at all times and carefully use it as a bargaining chip if necessary. Legal action beyond small claims is tedious.
    8. In CA it is illegal for an insurance company to force you to use their body shop. You also should make sure that you specifically request new OEM parts.
    9. Yes, and this is how insurance companies make their money… making interest on your premiums. Keep that in mind and avoid debt.
    10. Just like how insurance/pharmaceutical companies own the US healthcare system, etc.

  13. MercuryPDX says:

    My auto policy just renewed, so out of curiosity I went to one of those “Submit here, get quotes from everywhere” websites I won’t mention by name.

    10. Out of the 10 or so quotes I received, one was $10 lower, one was $3 higher, the remainder were well over $100 over. If you think you’re paying too much, you might not be.

    9. Yes, but the driving record counts for a “Safe Driver Discount”. It’s a soft pull to your credit history, and most of the agents calling said it wasn’t mandatory that I give it to them.

    Skip to 7. My current agent is very straight forward. She told me they won’t drop you for your first claim (House or Auto), but cautioned against filing more than one.

    The rest I really can’t comment on.

  14. MercuryPDX says:

    @Heyubrando: Some of these points may be somewhat more valid when you talk about the low-end companies, but on average, most of the larger companies that actually have agents–agents that have buildings, and staff, and customer service–are good to their insureds and try to the best of their ability to indemnify them if they experience a loss.

    QFT! Out of the 10 or so in my post above, over half of them did NOT have an office in my city, let alone the entire state. I made it a point to ask where their closest agent was, because IMHO saving $10-15 dollars every 6 months was not worth sacrificing having someone 10 minutes away to take care of me in the even something happened.

  15. Sephira says:

    I used to work for a big-name insurance company. Another thing your insurance agent won’t tell you is that they cannot necessarily see all of your tickets when pulling your motor vehicle report. That’s why they ask you if you’ve any violations instead of just outright pulling your report (in addition to the cost, but anyway).

    I’ve spoken to several people who’ve confessed that they’ve had a DUI or reckless driving or what have you after asking about priors, and guess what? Didn’t see it on the MVR. But you better believe they still count that ticket against you as if it were.

    Some of those points are untrue, some are half truths, and others are completely true. It just depends on the company you use.

  16. swalve says:

    Please note that this was written by a lawyer. Of course he says the world is out to get you, he’s drumming up business.

    I like having insurance. It’s small price to pay to know that:

    1) If someone steals my car, I get something rather than nothing.

    2) If I crash my car, I’m not necessarily on the hook for the whole thing.

    3) And this one is most important: if I hit one of you fools, I don’t have to pay for your hospital bills.

    @doctor_cos: I agree with most of what you say. Check out the real drunk driving statistics sometime, not the lies MADD tells. Most victims of drunk drivers are themselves and their adult passengers. Strangers and children are way down on the list.

  17. 6. diminished value is bunk. Try to make a claim for diminished value when your car has been repaired with new parts. Unless the shop totally jacked up your car (pun intended)… then that would be an issue to duke it out with the repair shop. New parts increase value, not decrease. A vehicle is a ticking depreciation timebomb.

  18. Crazytree says:

    @doctor_cos: when did you get your DUI?

  19. @doctor_cos: My husband has litigated several “drunk walker” cases for car insurance companies. They’re expensive!

    My favorite was drunk walker vs. drunk driver, though.

  20. ViperBorg says:

    “2. Roadblocks are unconstitutional, and are demonstrably selective enforcement.”
    Actually, the supreme court allows it. I forget the exact case, but it was in my Criminal Procedural Law class. As long as the police department gives advanced notice, say in a newspaper, or news story, it’s legal. Now, that being said, if they get bored and decide to do that, without advanced notice (I think it needs to be at least a week in advance), THEN you have a right to complain. Play it safe, don’t drink and drive, and you wont have a problem.

    • Tonguetied says:

      @ViperBorg: The Supreme Court may have ruled that it is constitutional but as in so many other areas they are just wrong.

      We have to abide by these decisions but that doesn’t mean that we have to agree with them.

  21. doctor_cos wants you to remain calm says:

    @Crazytree: Not me, I’ve just known folks who have gotten bogus DUIs (one got a lawyer and had it tossed).
    I do my drinking at home. Not too many police between my kitchen and my living room.
    I just wanted to point out the stupidity of statistics as used by the insurance companies and MADD (a tool of the insurance companies).
    @ViperBorg: I was unaware that the supreme court had ruled on it. I know that several state supreme courts did (obviously siding with the state). I fail to see how it can be seen as constitutional, you are stopping people without cause. If you run a light, drive erratically, etc. fine, stop ’em. But a roadblock is used selectively: Say we have an older gentleman who has had a few in a nice Lexus, and at the same time, a younger rowdier looking soul in a POS Ford playing his tunes loudly. Which one gets more scrutiny 9 times out of 10??

    That said, I am NOT advocating what most people with more than two brain cells to rub together think of as drunk driving, the asshole who runs a sign and hits a family on their way home from church, etc., etc. The problem is that the ‘letter of the law’ does not take into account that impairment is not a given, it varies from person to person how much alcohol they could have in their system before they are “impaired.” And you can’t even refuse a breath test now thanks to ‘implied consent.’ (thanks, insurance companies)
    Let me close by saying if you have no problem with roadblocks for drunk driving, you should have no problem when Fatherland security starts having roadblocks to check your travel papers after the next ‘terrorist’ attack.

  22. majortom1981 says:

    Body shops always charge the insurance company more to do work. My father hit my bumber on my car.

    I went to the body shop. I was given a 400 dollar quote to fix it if I paid them cash. They told me right out they charge $500 if I would have went through my insurance agency.

  23. FightOnTrojans says:

    I always wondered why I would read those annoucements in the paper. I thought it was stupid to do that, thinking that people would know what city to avoid after a night of drinking.

    As far as the selective enforcement, I think they get around that by checking every 5th car or selecting some other arbitrary number and testing the sobriety of that car’s driver, regardless of the profile that person meets (21 year old movie actress, 72 year old granny, 27 year old ambulance driver, in an ambulance). I work for an ambulance company and can tell you that my guys get stopped at these checkpoints along with everyone else, and I really doubt that they meet any drunk driving “profile.”

    From MADD’s website: Specifically, the U.S. Supreme Court on June 14, 1990 upheld the use of sobriety checkpoints to detect and deter impaired drivers. Previous appeals to the Supreme Court to review the constitutionality of such checkpoints had been declined, which allowed high state court rulings to stand. The June 14, 1990 ruling clearly upheld the constitutionality of such enforcement measures.

  24. vanilla-fro says:

    @alice_bunnie: sometimes it does take some time to subrogate depending on the aother carrier.

  25. vanilla-fro says:

    @vanilla-fro: I’m also not buying doc cos’ friend thing. Way too angry about the DUI thing.
    I have a few friends that have gotten a DUI or two and I don’t think they should be able to drive at all. I also think that if they are allowed to drive they should have every chance to be stopped and also charged more for insurance. Think about all the people in this situation, they knew it was srong the first time they did it. you think they are going to stop because they got caught? I’ve been through tons of check points and I got checked everytime, so did the people behind and in front of me.

    I’ve also seen a drunk asshat hit a police motorcycle, with its lights on. Luckily the officer wasn’t on the bike the guy didn’t even hit the breaks it would have ended a lot better if they could have got him in a checkpoint. DON’T defend drunk drivers, they’re idiots.

  26. mconfoy says:

    @ViperBorg: @FightOnTrojans: They have to set it up so that you have the opportunity to turn around before you reach it. People complain that they do that, but they can not force you to go through it.

  27. calvinneal says:

    Not all states allow drunk driving check lanes. Michigan does not. Check Lanes are a violation of the State Constitution. Besides, its far easier for the local cops to set up a thousand feet down the road from a bar at 0200 when the bars close. It gets cold here. Cops sit in their warm toasty cars on there cell phones and nail anyone driving to slow, too fast or who just looks guilty. Seat belt enforcement is similar. Since check lanes are legally out, police just sit on the side of the road with a camera and a cop up the street pulls you over.

  28. Nately says:

    @doctor_cos: And the person doing the drinking is the best person to determine “impairment”? Gimme a frickin’ break.

    Defending drunk driving …. that’s a new one.

  29. mac-phisto says:

    @doctor_cos: here’s a gas – happened up here in CT this spring: “Volunteer for anti-drunken driving group charged with DUI” [www.boston.com]

    @Nately: i’ll defend it – & you’ll wish you stood up too when you get tossed in the clink someday for driving home 4 hours after a party where you had 1 coors light. there’s a big difference between ZERO tolerance (which is what MADD is pushing for these days) & real DUI enforcement. “impairment begins with the first drink” is just a tag line. it actually takes a wee bit more.

    i’m all for makin the roads safer, but zero tolerance isn’t about that. it’s about a group that needs something to fight for so they don’t lose their government funding.

  30. waxigloo says:

    “Government needs to mind the business it is supposed to be doing for us (foreign policy, national security, etc.)”

    I am of the opinion that the most crucial aspect of national security is providing national healthcare. Think of how many American lives could be saved for the price of the Iraq war. For that matter…think of how much free education we could have provided for everyone in the country. Which would have benefited us here in the US more? Free education and healthcare, or bombing a country that was never a threat to us?

    It seems to me that using my tax money to bomb Iraq is a much larder example of extortion.