Lexington, KY - There was once a time when it was relatively easy to rate a driver for insurance purposes. Generally, it was based on several things: the number of tickets or accidents you had, the number of miles you drove and the type of car.
stewartperry
“I used to carry a calculator and a rate book with me and could basically figure out your insurance rate on the hood of your car if we were standing in a restaurant parking lot,” said Stewart Perry, a State Farm agent in Lexington who has sold insurance for more than 30 years. “That’s not the way car insurance rates are figured now.”
Drivers were often rated in only several categories. Now, Perry said, computers slice that information up, and there are hundreds of bands or categories in which people fit. It’s all designed to save insurance companies money.
“Vehicles now have rates based on liability and physical damage. They’re rated based on an insurance company’s experience with that particular vehicle. Is it in more wrecks? Does it cost more to fix it? Does it get stolen more often?”
Why didn’t insurance companies do that before?
“They didn’t have the technology and ability to track all that information like they do now,” said Perry.
That means two people living across the street from each other with identical vehicles may be rated far differently. It’s all about risk — and an insurance company being better able to assess it. A person’s personal credit score is also a factor being considered by many insurance carriers today.
“A person paying their bills on time, not filing many claims and doing due diligence when purchasing a vehicle will get a better rate,” Perry said. “Companies reward drivers.”
One of the more fascinating changes in car insurance is the introduction of “pay as you drive” plans. This type of insurance includes the placement of a device on a vehicle to track how its driver(s) use it. The monitor records things like total miles driven per day, week or month; the times of day it is driven, the speed driven, number of sudden stops and even how many left and right turns were made. If you score the right numbers, the insurance company will lower your rate.
gerrylemothe
Gerry Lamothe, an independent agent with Sullivan Insurance Agency in Lexington, offers customers the option of using the monitoring device through companies such as Progressive. “You can get as much as a 30 percent discount, compared to the average insurance discount in Kentucky of 18 percent,” he said.
Lamothe said the device plugs into a port under the steering wheel of most cars. The insurance company mails it to the customer, who agrees to use it. After a period of time, perhaps six months, the customer mails it back. The company then reads the data and issues the appropriate discounts. There have been concerns expressed about privacy issues, because the devices basically track a person’s whereabouts and lifestyle habits.
More than ever, drivers insist on discounts. The insurance carriers know it and, as evidenced by the huge number of ads seen and heard on TV and radio, are trying to meet that demand. Insurance companies devote more of their operating budgets to advertising. TV sports events seem to carry many insurance ads. There are more companies selling car insurance in Kentucky than a decade ago.
Agents have also had to stay on their toes.
“The amount of training required in order to stay current has dramatically increased compared to 30 years ago. I’m in training more than I ever was,” noted Perry.
Since Lamothe is an independent agent, he can insure anybody, whether they have a poor driving record or a good one.
“I’m not limited. I have companies that accept people who have troubling driving records,” he explained.
Of course, those drivers pay through the nose for coverage.
One car insurance trend that Lamothe has noticed is an increase in uninsured motorists, perhaps because of the economy.
“They seem to be involved in more accidents. Companies that study data say uninsured drivers tend to have more losses; they may be less responsible or less careful,” said Lamothe.
More companies in the industry use e-signatures, and people don’t need to meet an agent to sign paperwork. It is emailed to them, and they can accept the terms merely by opening the message.
All the TV commercials for auto insurance stress the personal relationship drivers can expect with their agents, but in reality, Lamothe said, if you don’t have driving or vehicle issues, you’ll rarely be in touch with an agent.
“If you drive without making claims and pay your bills on time, you may not deal much with them,” Lamothe said.
Despite new insurance technology, Perry still wants customers to remember that agents are always there when there’s trouble.
“They need to carefully assess who is going to be standing beside them on the worst day of their lives, if their house burns to the ground or their car is totaled. They need a real, live person to talk to,” Perry concluded.