I wouldn't be that cynical insurance companies loose money on almost every person who makes a large claim. the idea behind insurance is that the majority of people who pay for it won't ever use it, and that's how they make their money. Don't get me wrong though, if they do payout a claim they will put steps in place to try and recoup their lose, normally through higher premiums on top of the fact that you will often now have less coverage or additional surcharges. They're not charities, they're in the business of making money, and they do it well. Use it to you're advantage, insurance companies are some of the best blue chip stock's you can hold, and generally have long standing history of dividends. it does, and will. Even in terms of liability. Statistically poor people are less responsible then the middle class and wealthy buy a great margin, increased risk, increased rates. Even with exceptional credit you may get declined for a lone if you live in the ghetto. Statistically speaking you’re a higher risk to the bank, why take on additional risk when its not necessary?
like I said, regardless or not if YOU are the one causing the auto accidents or what not, if you do several claims, then yes, it's a FACT that you are costing your auto insurance company money. My low credit is not a FACT and is not costing my auto insurance company a single penny extra. Do you get what I'm saying? Bottom line, people that file claims with the insurance company are costing the insurance company money (regardless on what the problem is or who's fault it is, the insurance company still has to spend money). People like me with low credit are not costing the insurance company any more money. Sure, statistically, people with low credit are worse drivers but it's not a die hard fact. It's an assumption.\ By the way, I'm not trying to come off as an ass here so forgive me if I sound like it. I love you all
lol agreed with that. HOWEVER, if they are looking for excuses to charge more money, why don't they charge more money when people file lots of claims, get into accidents, have tickets? I mean, they will eventually but I'm automatically charged more for my credit even though Bob with lots of claims has, in FACT, cost his insurance company money.
Probably has something to do with the way their systems were made. Hard to change over once it's in place and it's just easier to make everyone pay. IE. you're probably paying for Bob's claims.
its an assumption based on statistic, just like your assumption that someone who's been in an accident previous will continue to do so. What about the people who learn from their mistakes? its not a perfect system, but their is some logic behind it. Lets say Mr poor credit is driving around not paying attention and cashes into someone and kills them or runs over a group of school kids, You're insurance company is getting sued since they're the big wealthy corporation with coin. They would then intern try and re-coup the looses from you but opps, poor credit means you have little to no money and assets so you're insurance company fully takes it in the ass and cannot pass anything off on you. Do to this you ARE a larger risk to the insurance company in comparison to someone who has been responsible with their money and has assets.
i don't have any assumption that people who get into a previous accident will continue to do so. But facts are facts. They got into one, which cost the insurance company money. Having bad credit alone does not cost the insurance company a dime. Your point about if someone with bad credit gets into an accident and the insurance money has to take the brunt of the cost because the person has no money is wrong. The insurance company could care less. They will get the money from the person anyways. They just won't say "oh well, he's poor so we will pay it". no they will sue and get the money eventually anyways. That's the thing, people with bad credit are getting punished in advance for something that hasn't even happened yet or might not happen. People with good credit get punished AFTER they get into several accidents/tickets. Hell, if the insurance companies wouldn't charge me so much more, I would be out of debt in half the time. You can be damn sure that my auto insurance charges me more because of my bad credit AND would sue me if I got into an big accident to recover the costs of it.
For better or worse it's a barometer of responsibility. What other metric are they supposed to use? When I was a ding-dong I had bad credit, and I also drove like shit. Now I have good credit and drive responsibly. In my case at least it was pretty damn predictive.
I'm glad I don't have to worry about that kind of crap here. Good ol' government-owned insurance companies FTW.
My bad debt wasn't my responsibility though (unless you count marrying the bitch lol). I drive just as responsible now as I did with good credit. I know I'm not the norm and I just happen to fall into a crappy gray area. I have said what metric they are supposed to use. auto insurance should charge people based on the FACTS of the past on their driving record. Jim has had 2 tickets and 3 accidents. Whether they are his fault or not, it's a FACT that he is causing his auto insurance money. He should be charged more. Now if the accidents and tickets slow down and don't happen anymore, lower the rates as the financial risk for Jim is not as high any more. Bob, who has bad credit but a perfect driving record has proved that he is a good driver so far. That is a FACT. He should have cheaper rates as he has not caused his insurance company to have to spend money to pay for claims. If any tickets/accidents occur, raise the rates as he is now more of a risk. Sure, statistically, people with bad credit are worse drivers. But it isn't a FACT. You see the difference? One is based on fact, one is based on assumption. And the person that is based on assumption gets fucked in the ass. Who has proven to cost more to the insurance company? The person who files claims. I'm sorry but I don't see how you can defend that assumption is better than fact. If an insurance company only cares about money, than the person with claims is costing them more money, not the person with no claims and has bad credit. It's just like the assumption that males are worse drivers than females. And people under 25 are worse drivers than people over 25. It's an assumption and not a fact.
Really crappy gray area. Insurance rates are based on past, present, and future risk. This is why very very boring people called "actuaries" exist (i emphasize this, because I'm an accounting major, and actuaries are the only profession i know of that accountants generally find boring as a whole). Saying that merely having claims necessitates higher rates tends to encompass not only the past, and the present, but the statement that those who have been in accidents, will be in more accidents. Bob is a good driver is an ASSUMPTION. Bob has not been caught, nor has he had the shitty luck of being the victim in an accident otherwise not preventable. only this last part, which is what i keep trying to say, is a fact. Insurance is, in essence, a company out there taking the financial risk of something off your hands. In the case of car insurance, it's what varying degrees of driving related financial risks they're taking off your hands. Risk is not an exclusive measure of the past, but a prediction in the future. They have to make reasonable and justifiable assumptions about the future, not simply the past, and present, to adequately cover their risk. If they only base their rates on past and present, they will eternally be playing "catch up" in the financial side of things, because they'll constantly be trying to get individual drivers to repay for their prior damages, and not actively try to prepare for the future payments required. this would be bad for all drivers with them because to make up for this lack of assumption everyone would have to pay more to meet it up. the various actuarial (credit rating, gender, age, type of car, year of car, value of car, employed vs unemployed, etc...) assumptions build a risk profile for a given client, and allow an insurance company to fit the rate [their income] to the profile risk [projected expenses]. Again. you're looking at it without an eye for the future. If you ignore future risk, everyone pays more. Statistically, new drivers tend to be more likely to get into accidents, they're also more likely to be screwed over in court thereby likely a higher risk. Men are more likely to do dumb things then women [though personally i think this is changing as texting/etc grows more rampant, evidently the industry doesn't think so yet]. Certain car types are more likely to roll-over, or explode, or have serious failures. Certain features (airbags, seatbelts, etc) or crash ratings on cars are likely to reduce the chance of injury to the riders vis-a-vis reduce the probable future outflow of an accident. Low credit rating has a specific impact on your risk profile, so you pay more. How much you drive daily/weekly, how far you drive yearly, what coverage options you've taken... all that fun stuff gets mashed together. There's a chance your paying a higher rate simply because you have comprehensive on a 94 ford explorer and the crash-prone dumbo with better credit rating has a car that's statistically safer. No offense, but might i ask why you have comprehensive on a 13 year old car? (loosely kelly bluebook'd around 2-4k in value) This is evidently nearly doubling your coverage costs on the explorer, for what (if totalled) is likely only gonna recoup for ya about years worth of insurance payments. And comprehensive doesn't cover routine maintenance last i knew, which is likely where your big cost risk is these days. Anyways... All of these assumptions have to be backed up by reasonably sound statistical evidence (or the industry would have their ass hanging in the wind for a lawsuit for discriminatory pricing) and have to be applied in a reasonably even way (or the industry would have their ass hanging in the wind for a lawsuit for discriminatory pricing) and have to have a reasonably pertinent aspect (such as responsibility guage, or the industry would have their ass hanging in the wind for a lawsuit for discriminatory pricing). What you can do is talk to your agent about it, there's a chance that there's some program out there that'll save you a bit of money on the deal. Or you could be lucky enough to convince them that the credit rating you have is atypical because of the ex-wife situation. When i first picked up my license i did some dumb drivers test program with them and it saves me 10~20 a month [i'm 21, student]... i don't know what special stuff e-surance has, i just know i hate their commercials. it may be worth looking into though. That sort of program shiz tends to have positive affects on your risk profile, thereby reducing rates. EDIT: i didn't mean to write a book... nor am i taking it personally, i just don't think you're getting the point i've been trying to make.
i only just put comprehensive on it because of the the nasty weather. I just took it off. And it's only because my g/f made me lol. I agree with you, it's a waste. That's why I took it back off. Even so, a 1994 Ford Explorer and a 1992 Honda Accord on liability cost $160 a month. i understand the whole future thing that they have to predict. And that's fine but I still don't see how someone with bad credit and no claims has a worse future than someone with a proven bad driving record but good credit. I see your points but most of it, I still disagree. Which is fine, it's my opinion on it. I have no speeding tickets not because I haven't been caught but because I don't speed. The most I've ever sped was 4 over. Now accidents is another story as even the best drivers can get into accidents that aren't their fault. I have just been lucky not to be in one. I have avoided a couple with good driving though. I guess my problem is that it's way lopsided. If it was more even, there isn't too much to complain about. But basically what the insurance companies are saying that it is worse to have bad credit than to have tickets/accidents. I find that hysterical. Oh well.
Haha, they care about if you live in the hood because of uninsured drivers everywhere, but more-so the fact that your car has a higher chance of getting stolen. And damn, you're 23 and you have $20k in debt? How the fuck?
remember? ex-wife. to be more specific. she had a spending problem so got lots of credit cards and and always maxed them out. Hell, $20k is after I've already payed off some stuff. $1900 of it is because i had to replace the transmission in my truck and I couldn't afford it (because of all the debt), so I had to get a loan from my parents. now most of the $20k is paid off by my parents and I am just paying my parents back slowly but surely.
