One important point you fail to mention is attorneys. An insured can bump someone in the rear and barely crack the tail light and you will get a letter demanding $50,000. I have experienced this many times over the last few years. Here is an example of the worst claim. My insured was carrying $300,000 combined single limit. His teenage son was backing out of a parking space. The other vehicle driver, who was driving a jacked up 4 wheel drive pickup, wanted the parking space so he pulled up too close and my insured bumped the truck. My insureds son called the police. The police arrived and said there was no damage to either vehicle so there wasn't a need for a report but since they were there they would write up a report. A year and a half later my insured was served with suit papers. The statue of limitations in Georgia is two years and the attorneys like to wait just before the statue of limitations expire. The suit wasn't asking for a dollar amount but whatever a jury would give. Six months later I received a copy of the claim check which was for $90,000. I called the attorney for the insurance company and asked him why he recommended settling for $90,000 when there wasn't any damage to either vehicle and no one was hurt. The attorney said that three days after the accident the claimant had neck surgery and he couldn't risk going to court and the claimant getting more. He also said he thoroughly checked the claimant and if he could have found where the claimant had ever been treated for a neck problem he would have not settled and that there were thousands of people driving that have a health problem but don't have insurance or the money to pay for treatment and wait for an accident to happen so they can get their treatment paid. I could go on and on with cases like this that happen all the time. This is a problem for insurance companies. I read recently where many insurance companies had to go back to last year and add millions of dollars to their reserves for claims that had cost more than anticipated.
Auto policy from scratch
- Thread starter northwoods2
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- #12
northwoods2
Expert
- 27
Adjuster Jack:
Several companies already sell insurance by the mile so you aren't reinventing the wheel.
A fair number do this-or say they do. They are all doing the same thing with
acceleration events - triggering a minus on your "safe driver" discount for the slightest
acceleration event. For me, it was coasting up to a stop sign. No squealing tires. No sudden stop. Just light brake application. The advertising is such that "save up to hundreds of $" - like 500-700/yr If you qualify. Thing is, few can qualify! So they do offer by the mile rates, but your actual savings are miniscule or nonexistent.
The con does not stop there. Many who did qualify for a discount found that their zip code experienced a "risk increase" - and end up paying as much or more than they did before their usage discount. Progressive has renamed it - pay how you drive.
you'd better have an electronic device to record the exact miles driven and collect the additional premium every month or you'll be out of business in a year.
check amazon for "telematic device". Easy and cheap to get. plugs into OBD-2 port.
Countng miles driven will never tell you the speed driven over the limit for anyone.
speed is a simple thing to record and all telematic devices can do this and much more. The bottom line are costs to the insurance company. Next topic will be teenagers.
Usage is a significant factor in risk calculation. Copied from my business plan (using a database of 2.8 million car years.):
Driver class and territory are the current insurance risk model's main factors and have 57% predictability using these two factors alone.
When miles driven are added to this factor, this statistic changes to 72%.
Several companies already sell insurance by the mile so you aren't reinventing the wheel.
A fair number do this-or say they do. They are all doing the same thing with
acceleration events - triggering a minus on your "safe driver" discount for the slightest
acceleration event. For me, it was coasting up to a stop sign. No squealing tires. No sudden stop. Just light brake application. The advertising is such that "save up to hundreds of $" - like 500-700/yr If you qualify. Thing is, few can qualify! So they do offer by the mile rates, but your actual savings are miniscule or nonexistent.
The con does not stop there. Many who did qualify for a discount found that their zip code experienced a "risk increase" - and end up paying as much or more than they did before their usage discount. Progressive has renamed it - pay how you drive.
you'd better have an electronic device to record the exact miles driven and collect the additional premium every month or you'll be out of business in a year.
check amazon for "telematic device". Easy and cheap to get. plugs into OBD-2 port.
Countng miles driven will never tell you the speed driven over the limit for anyone.
speed is a simple thing to record and all telematic devices can do this and much more. The bottom line are costs to the insurance company. Next topic will be teenagers.
Usage is a significant factor in risk calculation. Copied from my business plan (using a database of 2.8 million car years.):
Driver class and territory are the current insurance risk model's main factors and have 57% predictability using these two factors alone.
When miles driven are added to this factor, this statistic changes to 72%.
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- #13
northwoods2
Expert
- 27
Ehall2:
No doubt insurance fraud is s real problem. estimates are that industry wide it costs all of us about $200 each year. Yet insurance companies are making good money. Your example strikes me as one that the defending insurance company decided not to pursue litigation for reasons only they know. It may be legalized extortion where the defending company figured that the cost of the case would end up being greater than 90K, so they folded. The suing company had it figured out as well.
No doubt insurance fraud is s real problem. estimates are that industry wide it costs all of us about $200 each year. Yet insurance companies are making good money. Your example strikes me as one that the defending insurance company decided not to pursue litigation for reasons only they know. It may be legalized extortion where the defending company figured that the cost of the case would end up being greater than 90K, so they folded. The suing company had it figured out as well.
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- #14
northwoods2
Expert
- 27
I have a website: smartcarinsurance.today
I had to remove all the contact info as my site has been bombarded by bots doing"their" best to shut it down by sending 100's of thousands of emails and other garbage. My web host's site was attacked as well and was shut down for a while.
I had to remove all the contact info as my site has been bombarded by bots doing"their" best to shut it down by sending 100's of thousands of emails and other garbage. My web host's site was attacked as well and was shut down for a while.
- 4,990
Parked cars do get hit by other vehicles or hit & run. Comprehensive coverage doesn't cover a collision, so you will need to define parked differently than in storage comp only, etc
- 1,062
I have always been puzzled as to why someone would choose to carry one type of insurance but not the other, except perhaps during long-term vehicle storage. Usually, the cost difference to carry both is minimal, and it is impossible to predict which coverage will be needed in any given situation.
Let me share a story about a friend of mine whose agent advised him to carry only comprehensive coverage to save money, as his main concern was hitting a deer. Unfortunately, he did hit a deer, and the damages were covered by his comprehensive policy. However, he also ended up flipping and rolling his truck in the accident, which would have required collision coverage.
But hey.. at least he saved a couple bucks on his premiums
- 4,990
I have seen cars & motorhomes stored for the winter in garages, barns, storage facilities that get hit by other vehicles being moved around ---no collision coverage, so no coverage.
Also saw a person with a $70,000 collectors vehicle stored in their garage, comp only coverage Fall to late spring. stolen vehicle couldnt make the turn on a curve in front of their house & stolen vehicle hit the garage & destroyed the car. Garage got fixed by the home insurance, no coverage for the collectors car. Guy should have just carried year round collectors car coverage instead of covering it like an every day car on a standard auto policy, etc.
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- #18
northwoods2
Expert
- 27
Could be I have the wrong idea regarding when a car is parked and what insurance covers it. Thought it was comp. In any event the policy I have in mind is no different than what is available now with the exception that miles driven is a significant risk factor that is calculated into the premium. Due to a better business model and more efficient operations, the premiums can be on average 30% lower. Nothing new here as these numbers were generated by an actuarial firm, not by me. The insurance industry likes the business just as it is and would like nothing more than guys like me to go away. It may be one of their bots that is giving my web site fits.
- 1,062
Oh, wow! Your better business model and more efficient operations will miraculously reduce premiums by 30%. How astonishing! I mean, it's not like the insurance industry has been striving for efficiency and cost savings for decades. Your mere presence must be shaking their entire foundation!
And of course, it's the insurance industry's biggest nightmare to have someone like you around. They are just trembling at the thought of your competition. It's not like they appreciate healthy competition or constantly work towards improving their own services. No, they secretly pray for your disappearance every night, I'm sure.
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Insurance companies can get a report that will tell them how many miles you drive per year. A company is getting this info from where you get your vehicle serviced and selling it to the insurance companies. But jump in with your company so you can start losing money like the other insurtechs are doing. I don't know of any insurtech that has made a profit since starting.
