Car Insurance… is it A Bad Mandatory Joke?

I find myself perplexed when it comes to car insurance. I’m no sovereign citizen looking to evade insurance requirements. But my frustrations stem from the way insurance has been marketed, priced, and exploited.

At its core, car insurance can be simplified as a savings account… 

You contribute small amounts routinely. Your insurance company acts as the bank. And your payments are your deposits… in exchange for coverage if should you ever need it. While coverage can be tailored to your budget, states often have their minimum requirements. And car financiers may additionally mandate increased coverage levels. It all makes sense & seems fair, right?

But the conundrum arises… 

When factors beyond your control (like location, inflation, & so forth) start influencing your personal insurance rates. It’s bewildering how much ‘location’ impacts insurance rates. A good friend of mine recently relocated from metro Atlanta, to a small town in Tennessee. And his car insurance premiums nearly halved. Same person, same vehicle/s, same driving history.

This raises a thought-provoking question about insurance: 

Is it justifiable for your insurance rates to increase because of other peoples’ reckless behavior in your area? A clean driving record should surely count for something, right? It signifies good judgement, and an ability to foresee & avoid risk. 

As a consumer, I’ve experienced the helpless frustration of unexpected rate increases… 

And when I take the time to inquire about these hikes, what I truly desire are specifics, not the same old general corporate jargon of…

“It’s due to patterns in your area.”

I’m looking for fairness and peace-of-mind – that’s all. This is something that many insurance companies promise to deliver on their clever, heavily-funded commercials. However, speaking from personal experience, those ‘promised savings’ often turn out to be nothing more than a bait-and-switch. I departed from a well-known internet-based insurer several years ago, prompted by a staggering 55% rate increase… which was conveniently blamed on factors entirely unrelated to my own circumstances.

To be perfectly fair & clear… 

There are certain rate increases & factors that make sense… when they are a direct result of your own actions. For instance, if you have a habit of collecting speeding tickets, or if you’ve been at fault for accidents… you can probably expect a rate increase. If you’ve received a DUI. Or even if you own a particularly rare, luxurious, or exotic (or electric) vehicle with higher repair costs. Rate increases due to these factors make sense. However, on the contrary, if you’ve exemplified safe, incident-free driving for an extended period of time, shouldn’t your rates decrease a bit?

What doesn’t quite add up… 

Are the all-too-common scenarios where rates increase NOT because of the consumer’s actions or risk profile. But because the insurer is more preoccupied with satisfying their investors, rather than doing right by their more responsible customers. There’s a clear need for a recalibration of the scales here. The core principles of car insurance have been exploited, and it’s becoming a bad mandatory joke.

*In Conclusion: Consider the case of one family grappling with the perplexity of car insurance…

They’d been insured by a lesser-known, smaller provider for over 15 years. But recently, their premiums surged because their provider mistakenly claimed their son on their insurance policy. A son who hasn’t resided with them or been on the paperwork for over a decade, and has maintained his own policies with a larger well-known provider for 10 years at this point.

The reason for the sudden rate increase? Their son was involved in an accident with a scammer. And regrettably, was ticketed by an officer who failed to perform a thorough investigation. Instead, the officer took the easy/lazy route of blaming someone & moving on. Despite the family’s lengthy history of maintaining their own policies, they find themselves entangled in the confusion… facing higher costs & unjust demands for proof… in order to restore their costs back down to normal. 

Proof of what you may ask? Well, their current insurer requested evidence that 1) their son not only has his own current policy, but 2) also sold the truck that used to be under the parent’s policy. Additionally, 3) they also want proof of the start-date of his very first independent insurance policy… the one he opened a decade ago. This situation serves as a glaring example of the inefficiencies & incongruities within the car insurance industry, especially amongst smaller providers.

The above story… is my family’s story. And it served as the catalyst for this article. I recently got a phone call from my bewildered father, struggling to make sense of what his insurer told him. The perplexing situation didn’t just confuse my family. It even stumped my own insurer as well… when I reached-out to acquire the necessary documentation to resolve what, by all accounts, shouldn’t never have been an issue.

•Get the free S3 MAGAZINE app•  (Apple)

•Get the free S3 MAGAZINE app•  (Android)