Expert: webfoot - 7/4/2006

Question
I never owned a car but for the future, can you give some basic tips/things to know  
when I go get insurance/choose an insurance/how to deal with them



thank you

Answer
Well Alex, I'll tell you what I can, but I've never sold insurance.  Claims is the complete opposite side of the business, but this is what I know.  

Generally speaking, the insurance companies that will insure "anyone" and have the "lowest down payment" are the ones that end up charging the most money for the lowest level of service.  Basically, they take care of the folks with poor driving records, no prior insurance, cancelled insurance etc.  

The larger insurers such as Statefarm, Allstate, Geico, Nationwide etc. are more particular about who they insure, generally require a larger down payment, but offer more competitive rates and usually offer a higher level of service.

I assume you are young and still living at home.  If so and your parents are willing to add you to their policy for a year or two, that is the best way to go as in most cases, you can then spin off onto your own policy with the same insurer for less than if you just walked in off the street.  

Though the jury is still out on this issue in some states, most insurers to base your premium on your credit score so having a good credit rating won't hurt.  I have mixed feelings on the validity of this system.  There is a clear correlation between credit score and loss risk.  However, there are also many exceptions which the insurers don't take into account.  One example is my own parents.  They filed bankruptcy in their 50's because of medical bills.  Though they had no at fault accidents or claims, their insurance was cancelled.  That is just flat wrong.

Lastly, be honest with whoever you're doing business with.  If you misrepresent material facts (facts that make a difference in the rate you pay) such as the address where the car is garaged, driving history, who is living with you, who you’re living with, who drives the car, etc. the insurance company can cancel your policy, even after a claim, if the facts come to light.  People do this all the time and I catch them doing it all the time.  When do I catch them?  When they file a claim and my investigation reveals the deception. It's not something that I'm actually looking for, but something that usually just jumps out at me.  We then deny the claim, cancel the policy and the lying party ends up paying for their car, the other party's car and everyone's medical bills out of their own pocket.  Telling lies to save a couple of hundred bucks a year on insurance can ruin a person's life.

Good luck to you and I'd appreciate your feedback.