Can someone explain the point of insurance companies? (1 Viewer)

[MarkHastings]

Actually, the car was in really good shape. The body shop did a perfect job. But when the guy (who inspected the vehicle for trade in) saw that the car had been repainted, he put up a flag. I know, no matter how good a car looked, that I wouldn't buy a car that had been in a previous accident.

Since the dealership knew they were gambling with a car that had been in an accident, I guess I can't blame them for not giving me more, but it sucks that I got screwed. :frowning:

 

[Eric Huffstutler]

Let me get in on this insurance questioning...

I can see the one person's point of view about paying premiums for years that may and usually exceed the replacement cost of what is being insured. And on the other hand, I understand the concept of having insurance.

My gripe is when you have a policy in place on something like DVDs, why will they only pay $1 (devalued) each as opposed to replacement value? If I have a $15,000 DVD collection that took years to put together and contains many OOP titles, some even limited editions or numbered units, how do they expect you to replace everything "equally" on $1 per disc especially when you may have to get replacement on auction sites?

Is there such thing as replacement value insurance for DVD and CD collections?

Eric

 

[alan halvorson]

I'm pretty certain you can, assuming you selected "Replacement Cost" instead of "Actual Value" on your homeowners or renters policy, but you must have a list of every dvd and cd you have (keep the list in at least two places, one not in your home). There are programs that will help you do this. I doubt, however, that you'll be able to recover the value of OOP titles simply because it would be very hard for an insurance company to determine what a fair value would be (and no, telling them to just look at Ebay won't cut it). Start doing your homework now and document those values. Ask your agent or call the insurance company itself and find out what it takes to recover full value.

 

[Lew Crippen]

Even replacement value won ‘t necessarily return 100% of your investment. This is because many products decrease in price over time.

Electronics are spectacular examples of this. For example suppose you have a policy that pays replacement value (actually this is not at all uncommon, especially when insuring items on something like a move). And then suppose that you hit the HD wave early and hard, buying a $1,000 Blu-Ray player when it first hits the market.

Two years later, someone steals this player. How much do you think you will get back? Regardless of whether you get replacement value or ‘actual’ value, it won’t be close to the $1,000 you laid out.

 

[Grant B]

Just think of insurance as a casino you have to play and no matter where the roulette wheel stops; they win!

They set the odds and the only way to get out of the casino is by dying (they set the odds for that too!)

 

[Mort Corey]

To provide employment for lawyers.

Mort

 

[alan halvorson]

Several of you have described insurance as gambling, just like gambling in Las Vegas. You are wrong. A gamble would be going without insurance with the hope that your losses over time will be less than the premium you would have paid. It's a hell of a bet I would never take but some do (sometimes in violation of law).

Insurance is every bit a product as an A/V receiver or a car is with the exception that you can't sell your policy. You are buying financial security and that is no small thing. In gambling, you have the potential to suffer a loss or a gain (more likely a loss). You could end up losing more than you started with but you could also end up with a lot more. With insurance, you pay premiums. If you never make a claim, you're out only the premium amount. If you suffer a loss and collect on a claim, what do you gain? Nothing. The goal is to get you back where you were before but no more. Granted, often this goal is not wholly met but that's life.

After working in insurance for 16 years I learned one thing - there is no way to get rich in insurance. Legitimately, that is.

 

[DaveF]

Following Alan, I consider insurance most important for the unexpected, catastrophic event.

I can, and do, save for low-cost problems (by having high-deductibles). I'm not concerned about the fender-bender that costs $1000 in repairs. I'm worried about the time I was injured as a kid, hospitalized on and off for two months. Or having a prematurly born child, with the commensurate $250k - $1M hospital bills. Or the hurricane that washes away my home.

 

[SethH]

I agree with this statement 100%. Especially concerning home owner's insurance where it is so easy for them to cancel your policy if you make a claim. That is why I insured my wife's engagement ring under a policy completely separate from my renter's/home owner's policy. I would hate to make a claim for something relatively small, like her ring, and no longer be able to get home owner's insurance because of it.

 

[drobbins]

Here is one that I don't understand.
I have lived in my house 6 years and had the same insurance co the whole time. Last year a water filter broke when nobody was at home. I have replacement coverage and they gave me about $19,000.00 to fix my house. (you can see some in my Theater Page) During the repairs I also put in allot of $ to upgrade and remodel. Now I get a letter from them stating that they will no longer cover me. :frowning: I have to find new coverage and I am now in a different rate category.

I did not add up what I paid them over the years, but it was probably less then what they paid out to me. Why are they dumping me? That guarantees their loss. Now I have to pay a higher premium even though it will be with a different company. Isn't that racketeering? Just like a winner can be banned from a casino, why am I blacklisted for having a legitimate claim?
Dave

 

[SethH]

Unfortunately home owners insurances do this all the time. Many (possibly most) will drop you after the first claim. This is the reason I insure my wife's engagement ring under a separate policy (as I mentioned above).

The worst part is that many people aren't able to get insurance through other companies either, as apparently these companies share some amount of information. I hope you have a better experience than many that I've read about.

 

[MarkHastings]

That's a very apt comparison and (unfortunately) it's quite normal for insurance companies. :frowning:

How DARE you actually USE the very thing you are paying for!!

 

[DeathStar1]

I did not add up what I paid them over the years, but it was probably less then what they paid out to me. Why are they dumping me? That guarantees their loss. Now I have to pay a higher premium even though it will be with a different company. Isn't that racketeering? Just like a winner can be banned from a casino, why am I blacklisted for having a legitimate claim?
Dave>>

I've heard about that too, and I don't get it either.It's not like you're making these claims every few months, or even once a year, so why drop you?

That's why in my above post, I wanted these companies explained better in the case I was missing something

 

[drobbins]

I was expecting my rates to go up with my current company. That would make more sense to me and I would understand it. But dumping me and sharing my information with another company? Aren't there any privacy rules? What about free market competition?
Dave

 

[SethH]

Well, I think the sharing of information may be more of a conspiracy theory, but it wouldn't entirely surprise me.

However, I'm pretty sure you're required to disclose all previous claims on an insurance application form, so it will come out eventually.

 

[alan halvorson]

Having worked for an insurance company for 16 years as a programmer and having worked on homeowners, auto, and commercial lines, I have never seen an area in our programs where an applicant was asked about previous claims. In Personal Auto, however, it's standard procedure to run an MVR on the applicant, so that information will be used to determined how you should be rated. As for sharing information directly with other insurance companies, no way.

 

[SethH]

hi alan,

perhaps you're right. my main arguement would be this: if there is no way for another company to know what claims have been filed, then why wouldn't everyone switch companies after filing a claim? Your rates will almost always go up after filing a claim, so why wouldn't everyone simply switch to another company to keep a low rate?

 

[SethH]

I just found this article which discusses some of what I had read in the past.'

Here's an excerpt:

 

[drobbins]

WOW!
I read the article. Scary!
I need new insurance by July. We will see how it goes.
Dave

 

[Brett_B]

Insurance companies are just out to make money.

I just had a little fender-bender due to ice on the roads. I slid into the back of a minivan which barely caused damage to their vehicle and there was no damage to my car. The other driver said that they would get an estimate, and would call me to see if I wanted to report it to my insurance company. I contacted my insurance company right away, and asked them if this "accident" would affect my rates at all.

I was advised that if the claim was less than $1150 my rates would not go up. I asked what would happen if it was above that amount, and was told that my rates would go up $60 a month for the next 3 years since I would no longer be "accident-free".

So, if you do the math, if the claim was above that amount say $1300 that would mean that I would pay my deductible of $500, plus the additional $3600 to account for the increase of my insurance. So to report this, I would be spending $4100 so that the insurance company could pay the difference of the claim of $800. Basically, I would be paying the insurance company $3300 to cover a $1300 claim.

Remember, this is not counting what I have actually paid for insurance prior to this "accident".