The Financial Crisis and Your Auto Insurer
April 10th, 2010 | 
Author: 
Will They Be Able To Pay Your Claim?
In what many experts have called the worst financial crisis since the Great Depression, millions of people have begun questioning whether their auto insurance companies are stable. They’re wondering if their insurers will have the financial resources available to pay claims. The economy continues to roil; headlines are splashed with news of high-profile bailouts. Drivers’ concerns are understandable. However, most of that concern is unwarranted.
There is a support structure in place that all but guarantees claims will be paid. Below, we’ll provide you with a quick overview of the auto insurance regulatory structure. We’ll also explain how your insurer’s financial stability affects you and when to make the decision to switch carriers.
Separating Fact From Fear
A lot of drivers are worried that the current financial crisis places their car insurance policies at risk. They’re afraid that carriers won’t be able to pay a claim in the event of a traffic accident. Some of this fear comes from the memory of property insurance companies being decimated in the wake of Florida hurricanes years ago. But, that situation was completely different. The equivalent for the auto insurance industry would require that every driver be involved in a catastrophic collision on the same day. In effect, an impossible scenario.
Auto Insurance Regulatory Structure
The underpinnings of the auto insurance industry are founded upon a strict regulatory structure. State regulators work closely with the industry in general as well as with each individual carrier. They do so to ensure that resources are always available to pay policyholders’ claims, even in the case of an economic and financial crisis.
Every auto insurance company is required by the state to set aside a given level of loss reserves. The purpose of these reserves is to pay claims. Insurers are also required to annually report their financial viability to the state insurance department. That way, state regulators can review the potential risk assumed by policyholders in light of each carrier’s financial status.
In the event that your carrier becomes insolvent or files for bankruptcy, the loss reserves remain available to pay immediate claims.
The Next Level Of Consumer Protection
Because an insolvent auto insurance company represents a potentially severe economic impact to a state, regulators have created another level of protection for consumers: state insurance guaranty funds. Car insurers are required to contribute funds to the pool. If a carrier becomes insolvent and its loss reserves are insufficient for paying its policyholders’ claims, the guaranty funds are used.
Should You Switch Auto Insurers?
Even though there is a regulatory structure in place to protect policyholders, it’s still worthwhile to review your auto insurer’s financial stability. If your carrier shows signs of impending insolvency, consider switching to a new insurance company. It’s also important to review your policy once or twice each year. Consider the rates you’re paying, the coverage you’re enjoying, the service you’ve received, and your current needs.
If your auto insurer is habitually late in paying claims or worse, refuses to pay many of them, it may be time to switch. You can often find lower rates with better coverage at insurers who are willing to compete for your business. If you decide to change car insurance companies, remember to keep your current policy in effect until you have signed a new policy. Then, cancel your old policy in writing.
The current financial crisis is unlikely to expose you to the risk of not having your claims paid. But, there may still be reasons to consider making a change.
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Help answer the question about auto insurance
How much is motorcycle insurance compared to auto insurance?Just wondering because one of my friends says she only pays half of her auto insurance a month and she is paying $300 and that seems pretty steep.
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Tags: Auto, auto insurance, Auto Insurance Quotes, Car Insurance, car-insurance-quotes, Houston, insurance, insurance quotes on line, Quiz, Texas, Trevco
Depends on where you live. I really like Farm Bureau, but I don't know if it is in all the states. I know it's in Indiana and Colorado.
You can try:
Freeway Insurance
Esurance
Progressive
The General
Dashers
These are all cheaper insurance brokers. In the end it will mostly depend on the coverage you need, where you live, you're driving record, etc.
Some of the better but more expensive companies are:
AllState
AAA
Farmers
State Farm
I agree with Ben. If you are financing the vehicle, then you are required to have full coverage which includes collision. Take a look at your declarations page. Is there a premium amount next to the optional coverage Collision? Call your insurer and ask to speak to a supervisor. This could simply be an oversight by somebody in underwriting.
I had many problems with them as I used to work for them.
You need to call them(1-800-Auto-Pro). They have record of all transactions whether via internet or phone. They have your whole conversation on tape and they should have said, "your policy incepted effective "this time" on "this date".
I wouldn't freak out as they may have the address wrong…but do give a call asap.
You get insurance from the place where you live. Period.
Your medical insurance provider will collect from the insurance company of the driver who caused your injuries. This process is called subrogation. It is standard practice throughout the US.
You are not entitled to dual benefit from your injuries. Go ahead and consult an attorney — he or she will almost certainly tell you the same thing.
If you have a pain and suffering claim, that would be paid by the insurance company of the at-fault driver, assuming that there is any room left on his liability coverage. If he had minimum liability that's probably been exhausted already. An attorney can help with that part of your claim if need be.
If you want to find a good auto insurance company in florida, Try this site to find the best auto insurance
http://saveautoinsurances.blogspot.com/
Here you can get quotes from different auto insurance companies in your area, its the best way to find an affordable auto insurance with a reliable company.
Most of the time, yes they will find those prior claims.
Many insurance companies participate in a national database that tracks claims. They will also check you MVR records of any tickets or accidents. It is very difficult to slip one past an insurance company.
Fraudulently stating fewer claims than you actually have is not a good idea. If you filed another claim and the prior ones were discovered, they could deny the new claim, back charge you a higher rate, and/or cancel the policy on the spot.
Because your rate went up due to the claims, it's not a bad idea to shop around, just make sure they are rating you with knowledge of those prior claims.
Depends on the company and the state that you live in. Auto insurance is regulated by each state so it can differ from state to state.
Some companies might offer:
-Good student discount (if you have a B or better average, so 3.0 or higher)
-Driver Training discount (if you got your drivers license through an 'on the road' driver training course and got a certificate stating you completed the course
-Some companies offer a book to be completed to make you designate driving goals to make you aware of your driving skills.
If there are 3 cars in the house and 3 drivers in the house, you will probably have to be put as a primary operator of a car, BUT if threre are 2 cars in the house and 3 drivers in the house you could probably be rated as an occational operator of the vehicle.
Just offering some suggestions for you!
Hope this helps. Good luck.