Earlier this week, both SmarterSafer.org and The Heartland Institute separately submitted comments to the National Conference of Insurance Legislators on catastrophe policy. The link summarizes our comments. Although the collective comments are pages long, I think they can be summed up decently in one sentence: “risk-based insurance rates are the best way to encourage disaster resilience.” That doesn’t mean that we could simply go to risk-based rates for everyone tomorrow but, certainly, we can and should move in that direction.
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A friend e-mailed me asking how it was possible that Florida passed a bill that could potentially throw it out of the National Flood Insurance Program. The answer is pretty simple: Florida’s legislature is both part-time and term-limited. (I like the first, dislike the second.) This means that most people in the legislature are quite inexperienced and just don’t know what’s going on. But it isn’t limited to the Senate: I know that I worked on at least one Senate bill that, I later found out, duplicated an existing law and policy.
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As I get quoted more and more in the media, more friends and (once in awhile) strangers call me for advice on buying auto insurance in particular. I’m happy to give it although I don’t recommend specific companies. Anyway, here’s what I typically say:
- It’s hard to make generalizations about service for companies that rely heavily on local agents (independent or captive). Companies that don’t use them have, for better or worse, a consistent customer service experience. Other companies that sell mostly or entirely through local agents are going to have experiences much more dependent on what one’s agent is like.
- There are a number of quirky discounts around. Check with your company or your agent. My insurer gives one for having daytime running lights, for example. (There’s a hidden switch on most cars to turn them on because Canada requires them.)
- How much you pay has almost nothing to do with the service you receive. A lot of “discount” companies have superior service and some that advertise heavily and are well-known have poor service.
- If you have few assets and are just looking to “stay legal” then shopping for liability coverage only on the basis of price alone can make sense. If you’re satisfied with your current company company and have an older car, you will save more save more money by dropping collision, comprehensive and other coverage’ you probably don’t need than you would by switching companies.
- Uninsured motorist and (if you don’t have it from AAA or elsewhere) roadside assistance are very well-priced almost everywhere. Unless you have it for something else you’re buying anyway or it’s included with your new car–most luxury brands throw it in—then roadside assistance coverage through your insurer is a very good deal and will save your butt more than once. Uninsured motorist coverage is surprisingly cheap too. Most people who thought they were covered but weren’t neglected to buy uninsured motorist.
- So long as your driving record is within normal bounds (between perfectly clean and an average of one minor violation every few years) your credit score is probably going to be the largest single influence on your auto insurance rate that is within your easy control. (Location matters a lot, too, but that’s harder to control and, obviously, you can’t control your age and gender.) Credit scores accurately predict future claims better than most normal driving records probably because they correlate with how careful a person is and are continually monitored, unlike your driving record which is based on a very small number of data points. A few states, California most prominently, do limit or bar the use of credit scores. They tend to have even higher rates as a result because credit scores make price discrimination between those people who are likely to cost money, and those who are not, too important.
