Is Statefarm Ripping Me Off?

[freaknbigpanda]

Hey Guys,

I recently changed my statefarm insurance coverage to include comprehensive on my car, previously it was just liability.

My monthly premium went up from ~70 to around ~200 dollars.

This is what I expected and not anything unusual given the car and my age/driving history.

Anyways I changed my coverage on April 21st and I got a bill in the mail that included the full $200 new premium plus a "Rating change" charge of $287.55.

Apparently this rating change is "The difference in premium from the effective date of the change to the current date"

I don't understand this rating change charge. I am already paying the full $200 premium, why would I have to pay more on top of that?

Can anybody shed some light on this? I have included a picture of the bill for reference.

Thanks!

see this link for the bill:

imgur.com/a/UqvEy

 

[TeleCommuter]

On a monthly billed plan (Not withdrawn directly from a financial institution) you are actually paying for a month in advance. If the change was submitted, processed, and charges sent to State Farm Billing after your previous bill was already generated and mailed, you may have a catch up amount due on the next bill for "The difference in premium from the effective date of the change to the current date"

Call your State Farm Agent - They can explain that to you.

 

[freaknbigpanda]

If it is billed one month in advance does that mean that I don't pay the last month?

 

[freaknbigpanda]

So here is what my agent said:

$17.53 premium needed from 4-17 to 4-21 at the new rate of $207.48 per month
+
$136.07 premium needed to bring the month in advance from $71.41 to $207.48
+
$133.95 premium needed to bring April premium from $73.53 as billed for April to $207.48

________
=$287.55 total additional premium needed due to changing coverage effective 4-17 that was not billed in April​

Does this make sense to people? I can't wrap my head around it at all.

It says unambiguously that I am being charged an extra 133.95 "to bring April premium from $73.53 as billed for April to $207.48" but I am already being charged the full April premium of 207.48 as shown in the bill I posted in the original post!

So how am I not being double billed for my coverage?? What am I missing here?

 

[freaknbigpanda]

Bump, does this make sense to anybody? I really don't want to pay the bill before I am 100% sure it is correct

 

[TeePee]

Call your agent. They can explain the billing to you.

 

[freaknbigpanda]

He wasn't able to explain it to me... Or I wasn't able to understand or both. He wont talk to me about it anymore.

 

[togatown]

He wasn't able to explain it to me... Or I wasn't able to understand or both. He wont talk to me about it anymore.

Sounds like you are on a monthly billed account. If so, then there will always be one full month of billing in reserve in your account. So,since your bill went up $ 130 per month, you'll also need to pay another $ 130 to get the reserve up. It will stay that way as long as you remain on a billed account. They will use that money to continue coverage if you fail to pay your bill the following month.
Confusing yes, ripping you off, no. Can you do anything about it, no but....

Do yourself a favor, go on an auto draft with them instead, and you won't need to put up the reserve. Just make sure you let it go through automatically each month, or they'll convert you back to a billed account, and you'll end up having to put up two payments again.

 

[pjp88029]

This is how most types of policies charges/rates are calculated:
"By the Day" based on Number of Days in the Year of your Policy Start and Ends Dates,
so that they can accommodate for the years with 366 days.
[Annual Salaries, Budgets, etc, are also calculated this way; "By The Day";" per diem" in Latin]

YOURS:
Previously: $73.53/month = $882.36/year = $2.4174/Day for 2017-2018 and 2018-2016;
365 Days in each of these calendar years.

April 1-16 = $2.4174 x 16 = $38.69 of your payment in late March was used for your April coverage at your old rate of $73.53.
Leaving you a CREDIT of = $35.84 to be used towards the new, increased April 17th-30th Amount due with your new policy.

New Rate effective April 17: $207.48/month = $2,489.76/year = $6.8212/Day.
April 17-30 = 14 days inclusive.
14 x 6.8212 = $95.50 Due for April new car policy for 14 days.

$95.50 - $35.84/April CREDIT unused from previous policy =
$59.66 PAST & IMMEDIATELY DUE for your Apr. 17-30 coverage.
This coverage has already been provided by State Farm to you.

$59.66 PAST-DUE + $207.48 New Rate Amt. Due for MAY Coverage =
$267.14 Due end of April.

PLUS; You still owe $133.95 towards your Reserve; the Difference between your Old and New policy rates of $73.53 and $207.48.

It looks like They have "been nice" by spacing the increased Reserve amount required,
for you over 6 months, instead of demanding the full $133.95 Reserve Month (which is actually Due to them immediately) when you changed to more costly coverage effective April 17th.

So now your increased "1 month in Reserve fee" (as the previous poster indicated)
to get your Reserve in State Farm's "Reserve Bank" up to $207.48
is going to be a $20.41 "extra" monthly charge for 5 months, which are the April - Aug. Billings that
Will put $102.05 towards your Reserve Need of another $133.95;
AND; a Final amount of $31.90 to complete your Reserve responsibility in the 6th Billing month of Sept. for Oct. coverage.

Thus, After this April billing of $287.55 for your May Coverage;
the next months of #2-3-4-5, (your May- Aug Billing Dates), you will probably be paying the $207.48 + $20.41-ish; or around $228/month.
The final Sept./#6 month billing for Oct. coverage will be around $240.00

Only AFTER this, will your "1 month in Reserve" financial requirement of $207.48 be met.

Your New Rate of $207.48, will Not be billed/Auto-Deducted, until your Oct. Bill/Nov. Coverage.

Plus factor in the $2 month monthly billing "fee" (it's actually a penalty on people who can't cough up 3 months in advance total coverage charges) to all the above calculations.

Meaning, you need to now calculate $240/month in YOUR Monthly BUDGET Bills Due from your anticipated Monthly Income for auto insurance to cost you about $240 for May-June-July-Aug-Sept.

You will have to cut down on your other discretionary expenses by about $165/month for these months;
NOT just the $134/month increase in car insurance cost that you were "guess-estimating".

Starting in Oct, you will then have to re-Do your monthly Budget showing an increase of $30/month.

{I highly suggest that put this extra $30 it in your 401k, IRA, or savings.
Why? Because you have "proven" to yourself that you don't Really NEED that $30 to live on NOW. But believe me, when you retire, that extra $30 bucks available can make a Big Difference in the last week of each month before your next SS Retirement check comes in!}

Remember, if you are ever late with a payment, the laws require that the Insurer continues coverage for 15 days before they can cancel you for non-payment. That is what your Reserve amount is for.

When you first purchased your insurance, became a SF Monthly Payment client, let's pretend on Aug. 26, 2015; your RESERVE amount of $73.53 was already in State Farm's "bank"; So you didn't notice. If it wasn't, they would have billed you whatever you owed to your Reserve Month at the start of the switch from quarterly to monthly.

INSURANCE COMPANIES REASONS: There are (Far) too many irresponsible drivers and those in "Hardship Financial Times"; who go on monthly plans just to get or keep a vehicle registered, who have NO intention of renewing their coverage the following month.

That is why the Reserve Month is required from Insurers, and Why, after 15 days of non-payment, Insurers are legally allowed to cancel policies.

When that happens, the Insurer draws what is owed them for the 15 days of non-payment from the Reserve Month Amount charged at the start of the monthly policy, then they send a check out to the Non-Paying client, ASAP, to end the contract and relationship with someone who has now become a high-risk, financially irresponsible client, and send a notification to Motor Vehicles that they are no longer the vehicle's insurer.

The person who has been cancelled drives uninsured, until they get caught, or have to renew their registration. Then they do the whole dance again, with a different insurer, starting up a policy, and paying one time Uninsured Motorist Fines to the state that they are registering in.
These mind of people "figure" that all of the one time start-up insurance, registration and any fines, are cheaper than just paying for minimum liability insurance monthly, as a commitment.
The ironic part is, each time that they repeat this behavior; Register Vehicle with new Start-Up Insurance Policy, Pay Fines, Pay Reserve, Go into Non-Payment mode; They are increasing their own Annual/Monthly Premium Amount because of their trying to "Beat the System" by not paying for continuous coverage. What may cost you $200 a month policy (because you have established an ongoing relationship with an Insurer, will cost them $600-$1200/month for at least the first 6 months.

They don't see that they have created their own "Insurance Monster" by their Non-Paying history. Especially if they haven't been involved with any accidents or traffic violations while driving uninsured.

Meanwhile, the Insurance Companies all Pray to Their Liability G*Ds, that their new monthly clients that they allow this payment option, Don't file any claims before the 15th of the next coverage time period.

Most if not all, of the well-known, big auto insurance companies, do not even allow brand new customers to enroll in their monthly payments option at the start of their business relationship.

They require a minimum of 3 months (plus the initial Reserve Month) Up-Front, billed every 3 months, for 6 months or longer, while they evaluate your financial responsibility patterns.

Finally, For yourself, NEVER EVER EVER Be Late with an insurance payment in the first year of a new policy/rate; or, when the time comes for your ANNUAL Policy Renewal, you will see a rate increase for being a higher-risk client. Starve if you have to, but don't be even a day late with an insurance bill, or it will take another 3 years of Perfect On-Time Payments for your rates to start to come down.