Category: Insurance Claims

Online auto insurance and credit scoring

Insurance is always supposed to be about who you are and how good a driver you are. That why insurers are so interested in your background, how many miles a year you drive and where you live. So why should they care if you have a good credit score? This has nothing obvious to do with how well you drive. Yet almost without exception, all insurance companies will look at your credit history before deciding whether to accept you as a policyholder. It starts with the more general question of whether you’re likely to be able to keep up the installment payments. There are administrative costs if you start a policy and then the insurer has to keep chasing you to make each payment when due. Indeed, the majority of insurers will cancel the policy if your payment record is too bad. So if you have a poor track record in meeting other regular payments, you may find your application refused or renewal declined.

Once we get past this legitimate use of your credit history, we’re then into murky waters. Suppose you’re short of money, do you spend as much on the maintenance and repair of your vehicle? If not, you may drive on bald tires or with worn brake pads, and have more accidents. Should you be really desperate for money, you might be more likely to report your vehicle stolen to get some cash. Most states have laws to control the way in which this information can or cannot be used.

For example, Wisconsin’s laws depend on the idea of unfair discrimination. If you suspect an insurer is guilty of discrimination, you’re entitled to ask for a copy of all the credit reports the insurer relied on when making the decision. These must be supplied to you without any charge. If you find the information is wrong, you can have it corrected and ask the insurer to review the decision. This is all part of the federal rights represented by the Fair Credit Reporting Act and the Fair and Accurate Transactions Act. These entitle you to one free copy of your credit history a year from each of the major reporting bureaus including Equifax, Experian and TransUnion. If you find any inaccuracies, you’re entitled to have corrections made. Remember, this is not your credit score. It’s the information used by lenders and others to create a score for their own purposes. The way insurers use this information does not create a standard score. Once you’re sure all the information is correct, you’re entitled to ask your insurer to review the premium rates. If the changes are significant, the insurer is likely to reduce the rates. The most honorable will reduce the rates from the time the error was made (assuming you’ve had the policy that long).

All auto insurance quotes are estimates of the risk you will have an accident and claim. The more you can do to convince the insurer you’re a safe driver, the lower your rates will be. If this means showing more financial responsibility by keeping all your payments up-to-date and avoiding defaults, then that self-discipline is going to benefit you in other parts of your life. It’s worth doing anyway. Let online auto insurance be the incentive to prove you’re trustworthy.

Auto insurance quotes when your vehicle is totaled

The insurance industry is run by honest and trustworthy people who only want to help the community get through its troubles with the least trouble. So, when you make a claim, the first question is whether it’s economic to repair your vehicle. The maximum amount you can claim under the policy is the fair market value of your vehicle. This is the price a buyer would be prepared to pay for your vehicle in the open market. Who is this buyer? This is a person who is interested in buying a vehicle, but he or she is not desperate. So the assumption is this buyer is shopping around and can afford to wait while negotiating the best price on a number of possible purchases. This means you are always looking to value your vehicle “as is”. This is not a hypothetical value. If it’s poorly maintained and the paintwork could do with touching up, you will get a low valuation. Equally, a beautifully maintained example of the make and model will command a high price. Note, loading up the car with customized features is not going to help the resale value. There’s more to breakdown and go out of fashion. Only have the most popular extras fitted. There are a number of reference guides like the Kelley Blue Book that offer prices and advice.

You’ll be pleased to know the average vehicle loses 65% of its value over the first five years of ownership. This means it’s nearly always uneconomic to repair older vehicles. The cost of labor is high and spares can be equally expensive. So unless you were very careful in choosing the vehicle and have maintained it well, even apparently minor damage can mean you lose the vehicle for a smaller cash sum than you were expecting. If you have doubts, do some research based on the reference guides and then talk it through with the claims adjuster.

What happens to the vehicle when it’s totaled? Well, the insurance company has bought it and can do whatever it likes with it. In most cases, the car will be sold on to a scrap yard where it’s broken for spares. Most insurers label the Vehicle Identification Number in the National Motor Vehicle Information System. That way, if you are tempted to buy a used car, you can check the VIN and make sure it’s never been totaled. Why take the trouble?

There are new reports out of the southern states where there’s been significant flooding over the last year. It seems a lot of vehicles that were totaled because of flood damage have been reappearing on the roads. After all, the main damage is going to be to the electronics, brakes and the airbags. Simple cleaning of the interior can suggest everything is in apple-pie order. So never buy secondhand without first checking the NMVIS whether the VIN has been tagged. Otherwise there’s a real risk your beautiful vehicle will rot from the inside out while the online auto insurance quotes assume it’s in good condition. This is one of those times when the auto insurance industry actually does something useful. The NMVIS is a fee-for-service organization with the range being $2 to $7 per report. It doesn’t cost much to be safe.