Posted by admin on April 19th, 2010
You probably know that all US states have different minimum coverage amounts that are required to be carried within the driver’s insurance policies. And depending on where your car is registered you will have to meet these requirements. What happens if your policy has coverage amounts lower than the required minimum? That depends on the state you drive in. But usually, in case of an accident if the authorities learn that you have coverage below the minimum amount you can face a penalty or even taken into custody. So, in order to avoid that, here are the minimum requirements of coverage state by state: Read the rest of this entry »
Posted by admin on March 21st, 2010
In the good old days, people were trapped in their employment. The lyrics of the classic song, “Sixteen Tons” say it all: “Another day older and deeper in debt… I owe my soul to the company store.” The company paid, but the only place to buy food and the other necessities of life was the company store. With the prices set unaffordably high, people had to go into debt to put food on their tables. In accounting terms, they never ever paid off that debt. It’s a strange reflection on those times – that employers felt their labor would never willingly stay loyal. Today, people are more free to sell their labor and, if the job is not good for some reason, they can move on to try somewhere else. To that extent, employers have to build up a relationship with their employees. Trust and loyalty must be encouraged on both sides. It’s the same with those who sell goods and services. There are vast numbers of potential customers “out there”. How do you convert “potential” into “actual” and then keep those customers loyal? Well, Toyota seemed to have the answer to the question and then, as it slowly forgot about the need to maintain their customers’ good opinions, lost their brand image for safety and reliability. What price loyalty from Toyota customers?
Moving to the insurance industry, we find the same “for profit” attitude that has just driven Toyota into a wall. Insurers should be looking after their customers, ensuring they always have a good experience, particularly when making a claim. Instead, the insurers have this remarkable reputation for trying to weasel out of paying the full value of every claim made. It seems the words, “small print”, were invented just to let them off the hook. Why, then, has the free market not operated to drive them out of business? Ah, the wonders of capitalism do not apply to the insurance industry. We get caught in so many different ways. First off, all but three US states make it mandatory for us to have auto insurance. That forces us to look for the product. Then we run into the insurers’ exemption from the antitrust laws. Sadly, in 1944, the federal government thought it would be a good idea if the insurers did not have to compete with each other and no administration has had the political will to repeal that law. So we get prosecuted if we drive uninsured, but have to pay whatever premiums the insurance companies feel like asking. Life is just not fair. Read the rest of this entry »
Posted by admin on March 6th, 2010
The market for insurance in the US is somewhat unusual. In most every other line of business, companies are allowed to compete with each other across state lines. This helps to keep pricing and the quality of the product to higher levels and protect the consumer. But, the insurance industry is licensed and regulated state-by-state. There’s no such thing as a federal insurance policy. You have to buy a policy written by a company licensed in the state where you live. This is frustrating because, if you live near the border, your friends and colleagues at work probably tell you how little they pay or complain you have the better deals. Either way, it’s not very fair. Worse, the companies often decide not to set up in all fifty states, but pick and choose where they will operate. The result is that many states only have a small number of licensed insurance companies. Because there is no real competition, their premium rates tend to be high. This produces a big political divide. In Republican states, this is the free market at work and no intervention is necessary. If you do not like this, move to another state which has lower rates. In Democratic states, there is more interest in protecting consumer interests. Some states have intervened in their local markets to introduce “managed competition”. Needless to say, this has outraged the insurance industry and the insurance agents who survive on the commission earned from the insurers. There have been heated debates between the lawmakers. Where the local Department or Office of Insurance has produced new rules, they have been referred to the local courts. Who would have thought helping millions of average people to save money on their premium rates would produce so much heat. Read the rest of this entry »
