The Truth About Insurance.com

What is an Auto Insurance ID Card?

Hopefully you’re not asking this question because you were pulled over while driving uninsured!

Put simply, an “auto insurance ID card” is a document that demonstrates evidence of your current insurance coverage.

You will receive an auto insurance ID card for every covered vehicle on your policy. It is important to make sure you get the correct ID card in the correct glove box to ensure there are no problems when you need to show your evidence of insurance.

For example, if you have two similar vehicles, or even the same make, be sure to get them in the right vehicles to avoid any fines if and when you’re pulled over. The VIN number should help you identify which is which.

What Information is on an Insurance ID Card?

While not every card is the same from every insurance company, you can expect AT LEAST the following information to be listed on an auto ID card:

1. The name of your car insurance company
2. The name of the insurance agency from which you purchased coverage
3. The effective date and the expiration date of your coverage
4. Your policy number
5. The named insured on the policy (sometimes other drivers on the policy are listed as well)
6. The VIN number of the vehicle that’s covered
7. The year, make and model of the covered vehicle

As discussed in item number “5” above, you may not always see every driver on your policy listed on an ID card. This is because car insurance coverage “follows” the vehicle rather than the person driving.

For example, you can allow a friend to operate your car (legally) without them having to be listed on the policy or the ID card.

When Do I Get My Auto ID Card?

You should receive a temporary card directly from your insurer or agent when you purchase coverage, followed by a permanent card, which arrives with your policy in the mail.

Unfortunately, not every insurer is able to provide you with instant proof of insurance when you purchase your policy. This may lead to your not being able to provide proof of coverage until your policy and ID cards arrive in the mail.

Some states have switched to an electronic database in order to keep up-to-the-minute coverage detail, which may make auto ID cards obsolete in the future. Read more about one example in Georgia.

Tip: What if I get pulled over without proof of insurance?

The 10 Best Times to Shop Your Insurance Rate

It breaks our heart to know that most people consider insurance a necessary evil and only want to “deal” with it when they absolutely have to. But is this approach a good idea? Probably not. Insurance is likely one of the biggest items in a household budget and should receive equal attention as such.

The more active you are with your insurance, the better off you’ll be. Not only will you realize the direct benefit of lower overall insurance premiums, but you may very well get a better understanding of your coverage, which could certainly help you out at claim time (why do insurance companies deny claims?).

So, if your answer to “when you shop your insurance” is NEVER, you may want to read our list of the top 10 times you should shop your insurance rate.

When It’s Best to Shop That Rate

1. Every Two Years – Insurers adjust their premiums regularly. Sometimes more than once per year. What you thought was the best deal around two years ago may not be so great today. At least get a few online quotes to see if you are still in the ballpark.

2. During Car or Home Purchase – You’re going to have to contact your insurance agent anyways. May as well ask if they can review your coverage to see if there are any new discounts you qualify for (discount double check). Also grab a few quotes to see if you should switch to another insurer. Of course, if you have a captive agent, you will be severely limited in with your options…go independent to snag the best deal.

3. Teen Driver Added – You knew it was coming and you knew it was going to be expensive (cost of teen car insurance). Your current insurer may loathe the newly licensed driver. This is a great time to shop around. The difference could be hundreds of dollars!

4. After a Ticket, Accident or Claim – Your current insurer may have been the best bet when your driving record and insurance claims history was spotless. But after a ticket or an accident your premium may skyrocket. There are insurers who specialize in insuring those of us with MVR and C.L.U.E. activity that are a little more “forgiving.”

5. Home Refinance – You spent a few hours working on your new mortgage loan to save some money. Why not spend a few minutes online obtaining home insurance quotes to save even more?

6. Credit Score Change – This is a great time to shop your insurance. Some insurers prefer perfect credit and others don’t even look at it. If you have great credit you should be rewarded with cheaper insurance. You may want to obtain quotes from non-credit scored insurers if your credit is less than perfect.

7. Age Milestones – While it may be a myth that your auto insurance automatically drops at age 22 or 25, it is always a good idea to get premium quotes from other insurers who may have lower rates for more mature drivers.

8. Off to College – If you are a college student or a parent of a college student, you may be able to save a few dollars by getting quotes for an individual who drives less or not at all while on campus.

9. Significant Home Improvements – Not only does your insurer need to know if your home has been updated (which may increase its overall replacement cost), but this is also a good time to shop your coverage and premium…you’re already on the phone with them!

10. Getting Married? – You’re going to have to combine your auto insurance anyway. Might as well shop. Also, you are likely acquiring quite a bit more “personal property,” which will need to be added to the form of additional coverage on your homeowners or renters policy in the form of increased contents coverage.

Final Word

Think of this tidbit as a bonus to our list. The biggest and most well known insurers are those who have the largest advertising budget. They collectively spend billions of dollars (your insurance premium) each year meticulously crafting an image to relay to the public.

If everything you believe about your current “chain” insurer is what you’ve been told by their marketing department and celebrity endorsers on television, it may be in your best interest to shop your premium with an independent insurance agent who represents insurers that don’t spend your money on attracting new clients. The savings could be significant.

How many times have you racked your brain to find extra money in the budget for life’s necessities? Shopping your insurance with an independent insurance agent may very well save you hundreds of dollars for the same or BETTER coverage. It’s FREE money.

Read more: 10 ways to lower your car insurance premium.

Mileage Based Car Insurance: A Good Idea?

Mobile phone companies rake in millions of dollars each year on overage charges, lovingly known as “overages.”

You buy a specific number of minutes to save a few bucks on your bill, then you unknowingly “go over” and are hit with a bill that costs hundreds more than the “unlimited” plan you didn’t opt for. Ouch!

Can you see where this is going? While a select few benefit from predetermined limits of “usage” for various products, there is always an inherent risk of the unexpected…which leads many to second guess their attempt to save a few bucks by imposing limits on products in which the potential final usage is unknown.

What is Mileage Based Car Insurance?

With “mileage-based insurance,” you estimate the mileage you plan on racking up within your policy term and pay in advance (or by installments) based on that usage amount.

The general idea is that if you don’t drive very much, so won’t pay as much. Perhaps you drive significantly fewer miles than the average individual and don’t want to have to pay for the “base” limit of coverage, which may be 5,000 miles per year.

How Does Mileage Based Insurance Work?

You start by estimating the mileage you would drive within your policy term. This may be six months or 12, depending on the company you choose.

The insurer then calculates your insurance premium by assigning a “per mile” charge for each coverage type you choose. It may look like this (note: you can purchase any coverage available on a typical auto insurance policy).

Potential Disaster?

Just like the phone bill alluded to earlier, if you go over your predetermined mileage, you are hit with a HUGE over-charge.

How much? You may expect to pay as much as $12.50 or more PER MILE you drive over the 2,000 you purchased (using the example above). The “fee” may be broken down to additional mileage and a “per mile” administrative fee.

So let’s say you drive an additional 100 miles above you the 2,000 you purchased. Your six month policy now costs a whopping $1,590.60! This is the combination of your original policy premium plus the $1,250 “fee” for going over your limit. Having second thoughts yet? We thought so.

Yes, you are required to have your odometer read at policy inception and when each term is up. There is no way to get around an overage charge if you surpass your limit.

What It’s Not

First, we’d like to point out that these are not a “pay as you go car insurance” programs in which you submit your mileage monthly or yearly and are charged accordingly. That might actually be a better way to do it, but that product is not available right now…and probably won’t be any time soon.

Also, this is not the same as the Progressive Snapshot program, where your mileage (and driving habits) is monitored for a period of time BEFORE your premium is adjusted based on the recorded data.

Who Does This Program Work For?

Simply put, nobody…unless you are absolutely sure you will not go over the predetermined mileage limit.

Is it a good idea to “guess” way higher than what you believe you might drive? Guess again. The higher the predetermined mileage, the higher the cost per mile you can expect to pay.

The best bet is to simply purchase a policy from any regular insurer that doesn’t rate “by-the-mile,” but instead rates your vehicle as “limited mileage” or “pleasure use.” Doing so will ensure you get all of the discounts you deserve without the risk of your premium increasing three-fold if you go over a ridiculously low pre-set limit.

Most “normal” insurers will take your word for it, and only second guess you if your mileage seems out-of-whack in the event of a claim. If you are actually a low mileage driver, you’ll save money and have little to worry about.

You will still be charged slightly less than those with longer commutes, but won’t be subject to bankruptcy in the event you have to drive a little more than you expected at any point during the year.

Tip: 10 ways to lower your car insurance premium.

Questionable Insurance Claims Rise as Economy Sputters

So-called questionable claims increased seven percent in the first three quarters of 2011, compared to the same period in 2010, according to a new report from the National Insurance Crime Bureau (NICB).

Most of this year’s increases were associated with workers compensation and casualty lines (bodily injury).

Vehicle claims were largely flat, though “hail damage” increased 103 percent from the third quarter of 2010.

Insurance money has always been a target of unscrupulous individuals and/or companies. We’ve all seen the movie in which a struggling business owner burns down his restaurant in order to collect insurance money to stave off bankruptcy…and gets caught.

While those situations represent obvious fraud, the insurance industry also tracks “questionable” claims to identify industry-wide trends. This information helps insurance companies determine their future rates, which means the costs are passed on to us consumers.

Not surprisingly, as the U.S. economy continues to suffer, you might expect questionable insurance claims to increase overall. While there may or may not be a direct correlation between the two, our money is on “yes.”

What is a Questionable Claim?

A questionable claim may be any insurance claim where the “facts” don’t add up according to the insurance adjuster. There are literally millions of potential scenarios, but we will highlight just a few based on the results of the study.

Casualty – This type of questionable claim may be very common in the form of personal injury protection coverage in Florida, and is usually associated with “soft tissue” damage that results from an auto accident – or staged auto accident. For example, a casualty claim may be flagged as questionable if an insured claims to have soft tissue injury as a result of a 3 mph fender bender in a parking lot. While it’s certainly possible, it is highly unlikely that an individual would suffer any injury from this type of accident.

Workers Compensation – Again, this type of insurance is an easy target for fraudulent claims due to the potential for soft tissue damage. A worker may have a minor slip and fall at work and then claim to be unable to work for six months. While there may have been no verifiable bodily injury (broken bones, swelling, torn ligaments) an individual may claim they are unable to perform their duties at work based on “pain” that cannot be verified.

Final Word

Insurers record and evaluate every discernable data point they can get their hands on in order to protect their bottom line. Their pricing models are based on previous loss experience for every type of claim that has been filed and tracked.

The main goal is to be able to offer the cheapest insurance possible while still making a profit. The cheaper their insurance, the more policies they sell.

Insurance fraud leads to higher prices for everybody. The cost of claim payments is passed on to the consumer in every instance. The only people who win are the ones that commit insurance fraud and get away with it. Everyone else loses.

What is a Statement of No Loss?

Okay, so you’ve missed your insurance payment and you coverage has lapsed. Yeah, that’s right; insurance is a no-pay, no-play game. If you don’t make a timely payment within the “grace period,” your coverage stops.

If we’re talking about your car insurance, pull over. Don’t risk driving uninsured. The consequences can be dire. Try to imagine replacing your car, the person’s car you hit, and paying their medical bills out of your own pocket.

Not only will you have to call your insurer to attempt to get your coverage reinstated, you’ll also be signing some paperwork…specifically, a statement of no loss.

You may be wondering what the document is and why it is necessary.

Simply put, the statement of no loss is a document that attests to the fact that you did not have any losses (either liability or property damage) occur while your coverage was lapsed.

(Is it bad to let insurance coverage lapse?)

Not only that, but it also demonstrates that no “situation” occurred during the lapse in coverage that may lead to a liability or property damage claim.

The million-dollar question; why does the insurer care if I had a loss when there was no coverage in place?

Good question. The answer lies in what a reinstatement of your policy actually does for you and why the statement of no loss is necessary.

Why a Statement of No Loss?

It is easier and less expensive for both you and your insurer to reinstate an existing policy than it is to completely re-write a new policy. The re-write requires starting the whole policy process from scratch. This means a new quote, new signatures, a new down payment and more paperwork…all of which costs more money for you and your insurer.

Your insurer would prefer to simply collect the overdue payment, reinstate the policy and move on. If this occurs, you may not be subject to higher insurance premiums in the future (as a result of being a less attractive client to the insurance companies).

However, an insurance company would be NUTS to reinstate your policy without asking for proof you did not have a loss. You see, some unscrupulous individuals will let a policy expire…then try to get the policy reinstated because they had a loss and don’t want to suffer the financial consequences.

We know…gasp…right?

Insurance companies have seen it all. The insurance industry is too big of a target by criminals to NOT force us to sign a document that states this sort of thing didn’t happen.

You sign the document, then if an insurance claim is filed and it’s determined the loss happened during the period for which the statement was valid, you can forget receiving any money from the insurer.

You may actually end up in court for insurance fraud!

Read more: Top 10 car insurance myths.