Car insurance is just totally mad.

[Small White Car]

Car insurance is one of the biggest scams perpetrated in America...no one cares about safety, its all about how local and state governments require it, and then they co-operate with companies to scam people by over-charging for the least rationale possible through "official" channels.

Actually... (boring post coming)

...Most car insurance companies don't make very much money from car insurance (if anything, even).

They make their money by investing their 'float' and earning returns on that. Basically, they take in x every month and pay out x the next month. For that month they can invest x in the market and earn a profit.

THAT's where their earnings come from. So there's really no scam here. They CAN'T make themselves much cheaper. Many insurance companies actually lose money on the insurance part of the business in an attempt to gain more customers.

So why are prices so high? Well this might sound familiar, but the problem is health care costs. Paying for injured people is a lot more expensive than fixing cars, and the costs for THAT has been going up and up and up for everyone. Car insurance companies included. THAT's where your GEICO check is going...to pay for someone's surgery; not their bumper.

In fact...I hadn't thought of this until just now...but is it a coincidence that the OP has low car insurance rates AND lives in a country where the government supplies health care? Hmm...probably not.

Now, clearly there's something to your theory about regulations. That's why it varies from state to state. NJ clearly requires things that are more expensive than other states. So I agree with you about the government requirement part raising prices. But that's a state-to-state comparison thing. Not a company-to-company thing. So as for the "they charge too much" part, that's clearly not the case. These companies want market-share above all else. Trust me, they'd lower their rates if they could. It's one of the rare industries where you can actually believe them when they say "we want to get you the best price possible." They make a bigger profit by having more customers giving them a bigger float...they're gonna do everything they can to get more.

 

[Robert Maxwell]

NJ does indeed require a lot more than other states.

I came here from Indiana, which had a minimum insurance level of (I think) $25K/$50K, and that was only for liability. I don't believe you were required to carry anything else, either. It also cost me something like $60 a month for $100K/$300K coverage plus under/uninsured and a few other things.

NJ, on the other hand, has me paying for a bunch of stuff:

* Bodily injury liability (same as Indiana, but a higher minimum)
* Property damage liability
* Personal injury protection health coverage
* Uninsured/underinsured bodily injury coverage
* Uninsured/underinsured property damage coverage

Those things are all required, at least by Geico. I remember I could've declined any of those others when I was in Indiana, so I suspect this is an NJ regulation thing.

Anyway, NJ also makes you choose between "full tort" and "limited tort." Under full tort, you can sue someone who hits you for an unlimited amount of damages for pain and suffering. It also costs two to three times as much to go full tort. Under limited tort, you cannot sue someone who hits you for pain and suffering damages unless you suffer one of a specific list of injuries. Your damages for actual losses (vehicle, physical injury, lost wages) are still unlimited under limited tort, though.

I remember hearing something about how car insurance companies once pulled out of NJ completely because of the costs, and were forced through government intervention to come back. Wish I had a link for that, though, I'd love to read up on it.

 

[Mary Ann]

I just get paranoid about being honest ~ I can't believe I typed that when I usually blame everything on the cat

I know what you mean about being scared into honesty, and it angers me when other people aren't honest. Some months ago I came back to my car after work and discovered that some [insert insult of choice here] had scraped the side of my front bumper but hadn't left a note to say sorry, never mind leave insurance details. It was only cosmetic damage but my car is black and the scratches are very noticable. Darned if I'm losing my no-claims over this, but I also can't afford to get it painted. I am not impressed.

As for blaming the cat...I have 3 kids, so the cat is let off the hook.

 

[Holdfast]

I seriously don't understand how it works.

It's based on actuarial tables, as modified by that particular company's risk profile and past experience. Or so my rather dull contacts in the actuarial world tell me.

Basically, they work out the average risk for someone of your demographic profile and figure out the "fair" price they need to charge for someone of your risk in order to cover the premium. As someone else mentioned upthread, they make almost no money on your premium itself but on the arbitrage investment income they make on the total premium income they receive (they do also make money on all the optional "extras" you can bolt on - legal cover, breakdown, etc, etc.).

However, they do then adjust the "fair" premium to reflect the fact their company may not want your particular business. Different companies have different preferred client bases, to allow them to provide lower rates to that niche, so will artificially inflate premium quotes for anyone outside that demographic, to discourage that business. This allows them to bypass some of the anti-discrimination legislation in this country - they DO accept your business but will charge an arm & leg for it so you'll never use them.

Personally, I'm rather lazy when it comes to comparing quotes. I do a single online comparison search at confused.com, and then get a direct quote from Direct Line/Privilege (I used to use them in the past and was happy with the service so even though I'm not with Privilege now, I ask for a quote from them annually anyway), and then negotiate with my current provider (currently Elephant). The whole process takes well under an hour from start to finish.

I can't actually remember what my current premium is (I pay annually), but I do know that it's come down a lot over recent years. When I first got my current car it was about £1000 pa. Now it's something around £500-ish pa I think. Group 20 car, IIRC, and fully comp insurance so those rates are actually pretty good.

 

[Mr. Laser Beam]

I just get paranoid about being honest ~ I can't believe I typed that when I usually blame everything on the cat

Hey, you never know, blaming it on the cat might actually work. Especially if your cat is named Toonces.

 

[Aragorn]

What's really great about car insurance is when someone without insurance hits you. Result? Too bad for you.

 

[Amaris]

What's really great about car insurance is when someone without insurance hits you. Result? Too bad for you.

Unless you have comprehensive coverage.

 

[Mallory]

On topic, we pay around $900/year for three cars/two drivers. All three have complete comprehensive, collision and liability.

That seems a very fair rate ~ but then again you are Mallory and therefore above reproach or high insurance!

While I'd like to think so, I suspect it has more to do with being over 50, not working and no driving offenses in over 30 years. My wife is also over 50 and a full-time student so we're getting a break there to. And we'd pay even less if I could convince her that speed limits are not just for other people.

What's really great about car insurance is when someone without insurance hits you. Result? Too bad for you.

Shouldn't be that way if you have comprehensive or uninsured motorist coverage.

 

[Robert Maxwell]

I always, always, always have uninsured/underinsured motorist coverage. It's stupid to go without it. It's shocking how many people out there drive around with no insurance whatsoever. These are also people who have dick for assets, so you're just plain SOL if they hit you and you've got no coverage to protect yourself.

 

[Small White Car]

I remember hearing something about how car insurance companies once pulled out of NJ completely because of the costs, and were forced through government intervention to come back. Wish I had a link for that, though, I'd love to read up on it.

Many insurance companies left both New Jersey and Massachusetts in the 70's because they decided they couldn't make any money based on what the government required. (Governments which both required certain things AND set maximum allowable rates, mind you.)

No one forced anyone to come back. What happened is that over the last 5 years both states got tired of having very few options for car insurance and started talking to the big companies about what it would take to bring them back. They've made a lot of compromises and gave up on some of the laws they used to have, just to attract more companies to return to the states.

It's obviously not a total change, they're still more expensive than other states. But it was enough of a change to draw back some companies, at least. I can't speak for other companies, but I know that GEICO spent several years working on the concept of returning to Mass. and NJ. It was not an overnight thing and took a lot of work from both the companies and the governments.

Insurance is one of the weird industries that's regulated by each state. If someone has GEICO in Florida and someone else has it in New York it's almost like 2 different companies because the laws are so different. Your state government has more control over how your car insurance works than anyone else does. There's a state commissioner that regulates everything and can even set limits on what rates can be. It's why many, many insurance companies are just local companies and why only the biggest ones exist in all the states. That takes a lot of work so it's not like a fast-food place where they can just easily spread everywhere once they're popular.

There's obviously not a lot of detail here, but here's an article about GEICO returning to NJ in 2004.

 

[Robert Maxwell]

I remember hearing something about how car insurance companies once pulled out of NJ completely because of the costs, and were forced through government intervention to come back. Wish I had a link for that, though, I'd love to read up on it.

Many insurance companies left both New Jersey and Massachusetts in the 70's because they decided they couldn't make any money based on what the government required. (Governments which both required certain things AND set maximum allowable rates, mind you.)

No one forced anyone to come back. What happened is that over the last 5 years both states got tired of having very few options for car insurance and started talking to the big companies about what it would take to bring them back. They've made a lot of compromises and gave up on some of the laws they used to have, just to attract more companies to return to the states.

It's obviously not a total change, they're still more expensive than other states. But it was enough of a change to draw back some companies, at least. I can't speak for other companies, but I know that GEICO spent several years working on the concept of returning to Mass. and NJ. It was not an overnight thing and took a lot of work from both the companies and the governments.

Insurance is one of the weird industries that's regulated by each state. If someone has GEICO in Florida and someone else has it in New York it's almost like 2 different companies because the laws are so different. Your state government has more control over how your car insurance works than anyone else does. There's a state commissioner that regulates everything and can even set limits on what rates can be. It's why many, many insurance companies are just local companies and why only the biggest ones exist in all the states. That takes a lot of work so it's not like a fast-food place where they can just easily spread everywhere once they're popular.

Great explanation, thank you. NJ insurance is definitely very complicated. And given the number of accidents I see around here, it's no wonder it costs so much. Lots of expensive cars, fast-moving, dense traffic, and people drive like fucking maniacs.

 

[Small White Car]

Great explanation, thank you. NJ insurance is definitely very complicated. And given the number of accidents I see around here, it's no wonder it costs so much. Lots of expensive cars, fast-moving, dense traffic, and people drive like fucking maniacs.

The New York area is also a high area of fraud for all car insurance companies. (People faking accidents and pretending to need lots of medical treatment that they never get. The crooked doctor keeps half and the fakers keep the other half.)

That also contributes to the higher rates in all the areas surrounding NYC.

 

[Mr. Laser Beam]

The New York area is also a high area of fraud for all car insurance companies. (People faking accidents and pretending to need lots of medical treatment that they never get. The crooked doctor keeps half and the fakers keep the other half.)

And Jack McCoy prosecutes the bastards.

 

[Small White Car]

And Jack McCoy prosecutes the bastards.

But what about next year?

 

[Mr. Laser Beam]

There was an episode about that very thing. One of my favorites, in fact.

 

[Robert Maxwell]

People who engage in auto insurance fraud should be punched in the genitals, repeatedly. Fuck those assholes for making my rates so high.

 

[Captain Ice]

I know what you mean K.

I have a seven year old Golf, no points, 13 year no claims, live in an ok area and it costs me mid three hundreds a year. (Last year though Direct Line decided they wanted to double what they charged me so a quick change in insurer was the way to go).

Oh but you said the danger word "Golf" (I miss my Golf GTI, I loved my Golf ~ now I have a rover metro - I hang my head in shame) ~ therefore you are obviously a dangerous boyracer
I'm with you with Direct Line ~ why do insurers not want to keep customers?
I've no points, hundreds of years no claims and yet still they quibble.
AND if you don't put a truly honest form in they won't pay out diddly squatt!
In fact they'll still quibble anyway AAARRRGGGHHHHH!

Where do you live, John Clark? I'm a 38 year old single male, insuring a 13 year old Pontiac, 12 years with no claims, and pay a little more than $950 per year. $300 a year would be a substantial improvement, not something to complain about.

 

[John Clark]

Where do you live, John Clark? I'm a 38 year old single male, insuring a 13 year old Pontiac, 12 years with no claims, and pay a little more than $950 per year. $300 a year would be a substantial improvement, not something to complain about.

The UK - so call it about USD500 odd depending on exchange rates.

It's still a vast improvement over yours, but I guess it is quite a bit cheaper in general in the UK. When the insurance company I was with before my current one wanted to up it, then it would have been around the USD850 - 900 mark.

On the other hand, one of my mates who I mentioned had a car that he paid about USD140 for is being charged about USD1000 for (1.4 litre, about 12 years old) but his history is rather more colourful than yours from the sounds of your no claims

 

[Mary Ann]

People who engage in auto insurance fraud should be punched in the genitals, repeatedly. Fuck those assholes for making my rates so high.

I'll hold your coat while you punch.

My kids like to watch shows like Road Wars (my 12-year-old calls it "Dorks Behind the Wheel") and these shows often quote the statistic that there may be 1 million uninsured/underinsured cars on Britain's roads. This scares the hell out of me, because these are also cars driving around with no MOTs and may therefore not be roadworthy.

 

[K'Ehleyr]

I just get paranoid about being honest ~ I can't believe I typed that when I usually blame everything on the cat

I know what you mean about being scared into honesty, and it angers me when other people aren't honest. Some months ago I came back to my car after work and discovered that some [insert insult of choice here] had scraped the side of my front bumper but hadn't left a note to say sorry, never mind leave insurance details. It was only cosmetic damage but my car is black and the scratches are very noticable. Darned if I'm losing my no-claims over this, but I also can't afford to get it painted. I am not impressed.

As for blaming the cat...I have 3 kids, so the cat is let off the hook.

It's seriously just a case of 'covering my arse'. If I wrote off another car or, godforbid, injured someone in an accident, I would want to know I was legally covered for it.
As for the PetaQ that damaged your car ~ that's rude! Pray that Karma will return on them
At least you have something to do this weekend ~ and try and find a friend to help!
Unfortunately son is 17 and able to wriggle out of things ~ the cat however... (see 'my cat is totally stoned' thread)

I seriously don't understand how it works.

It's based on actuarial tables, as modified by that particular company's risk profile and past experience. Or so my rather dull contacts in the actuarial world tell me...

...However, they do then adjust the "fair" premium to reflect the fact their company may not want your particular business. Different companies have different preferred client bases...

I think that's probably right in my case ~ I pay very little so they obviously do not want my business ~ well they can 'go fish'

I just get paranoid about being honest ~ I can't believe I typed that when I usually blame everything on the cat

Hey, you never know, blaming it on the cat might actually work. Especially if your cat is named Toonces.

I am never letting my cat near the car again ~ especially now he seems to have a drug problem

On topic, we pay around $900/year for three cars/two drivers. All three have complete comprehensive, collision and liability.

That seems a very fair rate ~ but then again you are Mallory and therefore above reproach or high insurance!

While I'd like to think so, I suspect it has more to do with being over 50, not working and no driving offenses in over 30 years. My wife is also over 50 and a full-time student so we're getting a break there to. And we'd pay even less if I could convince her that speed limits are not just for other people. .

. But I paid more when not working because they imagined I'd be driving around all day? Or with my income, pushing the car around all day

What's really great about car insurance is when someone without insurance hits you. Result? Too bad for you.

Shouldn't be that way if you have comprehensive or uninsured motorist coverage.[/QUOTE]

Is there not somewhere you can go to claim when getting hit my someone uninsured? I have it in the back of my memory that there is somewhere you can claim.