Jay Fishbein:
>Our agency mission is to provide protection of our insured's assets, not to
>do whatever we can just to make a sale. For example, the insurance
>protection that you outline ($100,000 liability/$35,000 UM) would not be
>offered in our agency as it is inadequate protection for anyone. (One of
>our insureds was recently struck and killed while stopped at a stop sign. He
>leaves a wife and 3 small children. I would not want to have to face his
>family and discuss the "benefits" of $35,000 UM coverage.)
The use limits on classic car insurance are a real issue. You don't want to
give your insurance company an excuse to deny your claims because you were
using the car outside the limits of your policy....
But other than that, I disagree completely. In particular, far from being
"inadequate for anyone," I think that's far more coverage than you need.
First of all, keep in mind that the expected value of any policy is
guaranteed to be less than the premiums--otherwise the insurance company
wouldn't be making a profit. So there are only two reasons why any kind of
insurance is a good buy: first, to cover expenses beyond what you can
handle, and second, because in some cases the government forces you to buy
it whether you want to or not.
So with that in mind, why do you need even $100k in liability insurance?
The state (in California, at least) requires, I think, $35k. Buying
additional coverage benefits you only if you're found liable for more than
$35k in an accident. And the vast majority of claims are far below $35k.
There are a small number of claims that are above $35k but not too far
above. Imagine that you're likely to be found liable for $45k in damage,
and you have $35k in coverage. The claimant (or her insurance company or
attorney) will be happy to settle for $35k. If you instead had $100k in
coverage, the claimant would have pushed for $45k or even tried to inflate
the claim. And larger claims against you mean higher premiums in the future.
So what above the claims that are even higher? Generally those are serious
injuries that run to the hundreds of thousands of dollars. If you're found
liable for hundreds of thousands of dollars, the $100k insurance won't help
much. I'd have to declare bankruptcy or find some other way out of the
liability anyway, so the insurance doesn't help me there. If you have a few
hundred thousand in assets (other than your house and other things you can
protect) lying around that you need to worry about, let whoever helps with
your financial planning help choose insurance; otherwise you're in the same
boat as me.
As for UM coverage, if you're buying it as a substitute for life insurance
or health insurance, you're getting a bad deal.
I don't know anyone with enough UM coverage to compensate their family
adequately in case of death. Will your wife and children be that much
better off with $80k instead of $35k? It's still nowhere near enough.
As for injuries, some states require health insurance, HMO, or PPO plans to
pay for your treatment in case of accidents, and even if they don't require
it, many policies pay for this anyway. My PPO plan covers me in case of
accidents, although they require any car insurance coverage to pay first.
So if I pay for more UM coverage, I'm not getting anything extra in that area.
As for car damage, well, how much is your Spridget worth? Priceless, I
know, but what would a judge set the value at? I'll guarantee you it's less
than $35,000.
>If you reread my original message, the issues I raised regarding classic
>insurance had nothing to do with actuarial data, but with vehicle use and
>low limits of liability chosen by uninformed insureds or recommended by
>inexperienced personnel. Until you experience it, there is nothing
>quite so upsetting and painful as the uninsured or underinsured event.
Sure there is--the adequately insured event. About seven years ago, my
Celica was hit by a BMW, causing enough damage to bend the frame to the
point where the car would not drive in a straight line.
The other driver was clearly at fault--I was waiting at a red light, not
moving, at the time of the accident--and she accepted that. However, my
insurance company, coincidentally also her insurance company (and one of
the big ones), decided to offer on my behalf to accept 10% fault--which
means they could raise my rates. I found out about this and stopped it, but
they quoted my new rates as if I had been 10% or more at fault, and I had
to fight them on it. Meanwhile, they made me bring the car to their
inspection facility, and the estimate they gave me was about half what any
repair place I found thought it would cost. It took me over six months to
resolve all the issues, and I ended up with bad marks on my credit rating
which I had to get removed.
All in all, if I'd saved the money I'd paid on that policy over the past
five years and paid for the repair myself, I would have come out ahead. Of
course that would have been against the law--but even the money I would
have saved buying a minimal policy from a no-name company would have been
enough to make me come out ahead. Needless to say, I now have a minimal
policy from a small company.
>I am painfully aware of the "dim view" that most people take with regards to
>insurance agents
Personally, I have nothing against agents--especially independent agents.
It's the insurance companies who are running a scam on the public; most of
the agents I've dealt with are legitimately trying to help their customers,
but the job is pretty much impossible.
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