Admittedly, not everyone has access to USAA but, if you do, I highly recommend them.
Noting this because I've been using them for insurance for decades with no intention of switching.
They have been great. In fact, right now USAA is in the subrogation process against the offending party for a claim on a bicycle.
I've been happy with their insurance products, their even better customer service, and have no plans of changing.
Always shop around.
This is funny, I actually do say this. I co-founded Goodcover, we provide renters insurance and USAA is an inspiration. But we still have a really hard time beating them! I'm also a USAA Member (car insurance) and also can't say enough good things about them.
Sidenote: I’ve been with State Farm for over 20 years, and my rates have only gone down.
Go check out an independent insurance agent. It's not "gaming" it literally takes 20-30 minutes, and could save you $1500 over the whole year (especially if you have multiple cars).
To "nudge" you in the right direction, buy not switching, you're basically saying, "I make money at $1000/hour, so it's okay that I don't expend the mental budget to compare quotes".
It's free, takes less than a half hour, and there's no obligation to purchase anything, it's just a quote.
Then one day while I was on the way to IAH to fly to Europe, an illegal alien in a stolen van (so no license, insurance, etc...) crossed the median and hit me head-on.
State Farm took care of everything. Ev. Ry. Thing. Even made sure I didn't miss the flight.
When I came back to America a couple of weeks later, my completely repaired car was sitting in their parking lot waiting for me. That's why I stick with State Farm, and am OK paying more than I would for "discount" insurance.
Granted the best thing you can do for low auto insurance rates is to barely drive. Personally I drive less than 5k miles a year, and my rate reflects that.
I've never had to file a claim for my homeowner's insurance and I've never been at fault in a car crash, but I've heard some not so great stories about GEICO so hopefully I'll never have to find out.
A GEICO customer hit my car, entirely her fault, so I just went through her insurance, didn't even notify mine. GEICO was extremely helpful, polite, and prompt and I wasn't even their customer. I opted to use their "full service claims center" which was located at [local reputable body shop/dealership]. I showed up with my car, they had a loaner ready for me up front ready to go with the keys in the ignition and the loaner car was very nice (just a family sedan but a nicer one). The whole process was just very straightforward and easy.
Several years later my car was hit by a State Farm customer, entirely their fault, I went through their insurance again. That whole experience was just shit. First they were disorganized and unhelpful. I decided to use their "full service claim center" since my GEICO experience was so good. The place they sent me to was out of the way and somewhere I wasn't familiar with. When I arrived it was some shady looking dumpy body shop. [I almost walked away then, wish I did]. Clerk didn't seem to be expecting me and wasn't prepared, even though I had an appointment to drop off the car and nobody else was there, so I had to fill out paperwork because State Farm didn't send over my information, I guess. After that I had to wait forever for Enterprise to pick me up (so "full service" means that the clerk will make a phone call). Then at Enterprise I had to stand in line and fill out more paperwork. They gave me a Fiat 500, which doesn't have a full back seat and at some point I had two passengers who couldn't fit into the back seat. After they finished the body work they literally didn't put the wheel back on right and it was a couple inches from falling off my car while I was driving. My usual mechanic was shocked.
My agent understands the value of a long term customer who brings in other long term customers. When we started with him it was because my mother in law was already a customer. We just had car insurance at the time.
But as we moved on in life, we added a second car, then a house, then an umbrella policy, and so on.
Also, I recently tried to compare my current auto policy with a different insurance provider. The new insurance agent told me my rates would go up with them, so I obviously declined to change my auto insurance.
I understand that periodically shopping for better rates is the logical thing to do, but in my auto insurance shopping experience, the numbers all seem arbitrary so shopping is not useful.
In my experience, the websites use an entirely different algorithm than whatever phone agents have access to.
I don't bother going through insurance websites' lead generation workflows, I just call a handful and get quotes on the phone from them.
When there are few providers in any market, they are colluding to fuck consumers, that are forced into a musical chairs game for little savings.
Bank fees are a good example. To you and I, an extra $3 bank fee is annoying but not worth allocating enough of our attention to avoid it. We aren't in the business of spending our whole damn day minimizing random bank fees.
But bank administrators are in that business. They spend their whole day trying to figure out how to maximize thieir profit and when they roll out a fee they can apply to millions of customers. There are enough customers hit by this they could summon enough total attention to push back, but the attention is divided among all those people and easily conquered. Meanwhile, the bank's effort to apply that fee is concentrated among a small number of people whose very job it is to do stuff like this.
So banks and other businesses discover cases like this where the quantity of attention they are willing to devote to something is larger than what any individual customer is, and that's where they squeeze.
It helps that since they are insurers, they know how make this analysis with a large degree of confidence.
Sad world we live in, right?
So I made the claim. Then made 2 more claims through him that year (major road construction meant lots of debris on the highway I commuted on).
And then I got my premium notice and they increased my premium by 5X (something like $300 every 6 months to $1500) due my claim history -- I had no accidents, just $120 in window repair claims.
I immediately switched insurance companies and never went back. It was a good lesson for me -- don't use insurance if you can avoid it. So now I run $1000 decuctables when I can since I really don't want to make an insurance claim unless it's catastrophic.
A perfectly valid option is to have a higher deductible, and use offset that with putting the funds that would have been needed for the more expensive policy into a general savings account. However, that does require some financial discipline and planning.
And for people who make little enough money where saving that money every month isn't a viable option, they really have no business buying any sort of comprehensive auto insurance anyway. Liability only insurance is far cheaper, and provides all the protection necessary to prevent a car accident from being financially world-ending.
You might want to consider this from a different perspective.
For the well-paid like myself who has invested well and has substantial savings, a liability insurance claim that could potentially cost several hundred thousand dollars is "financially world-ending", while having to pay for repairs on my car after an accident is not.
But for someone with no savings, being unable to drive their car because they cannot afford to pay for repairs after an accident may mean losing their job (public transportation isn't so great where they live) and definitely qualifies as "financially world-ending" for them. Whereas several hundred thousand dollars of liability is actually LESS of a threat -- the lawyers can quickly discover that they don't own anything worth collecting and may not even go after their assets, but even if they do, at worst it empties their bank account (which we presumed has less than 400 dollars in it).
But if you decide "I can't really afford this $1500 colonoscopy this year, and honey if we defer that $3000 MRI for your abdominal pain to next year too, then we can do them both in one year and hit our deductible"... if you wait too long, something that would have been easy to treat may no longer be easy... or even possible to treat.
People shouldn't need to prioritize health care due to financial reasons.
I haven't seen any major rate increases on our car insurance, but our umbrella policy premiums went 4x this year (and we switched companies too). We're with Farmers for nearly everything now, but comparing rates with other agencies is on my to do list in case anyone has done the homework and has a recommendation.
Finally one day my windshield had enough chips to be replaced. Guy sees me pulling out my insurance card and goes "Mercury? They don't cover anything!" so now when the guy starts walking over I say "I'm with Mercury" and he immediately moves on.
The lesson may be that insurance agents are terrible people. I've heard plenty of FUD about Geico, but I wonder if it's really just because they sell direct.
A lot of industries are ripe for this kind of disruption. With availability of more and more data there is a growing asymmetry between companies and consumers. Just yesterday I looked up something on Amazon. Sent the link to my girlfriend. She saw a price that was $10 more. Same often happens with flights. And in US healthcare the patient doesn’t even have the slightest idea what things will cost or what discount the insurance gets.
To have functioning markets both sides need information but with all these algorithms the information gets very one sided.
Out of curiosity, are you and your girlfriend in the same geographic market & served by the same amazon warehouse? And are you both prime members?
I wonder if this is personalized to the individual or based on other factors.
Creating total transparency into this process would be suicide for these companies - they absolutely do rate on zipcode, and poor neighborhoods absolutely have higher rates because of fraud, break ins, and generally higher claim rates. However, if you didn't rate on zipcode, then you are under-priced for these areas and you will be killed by adverse selection.
TL;DR these companies have figured out how to obfuscate filings so people don't see them blatantly charging more for XYZ, and risk public outrage.
The information is there, therefore it is transparent. It's sort of on you if you are unwilling take it as a second job and/or hire a suite of professionals to help you understand.
The state based system allows for a diversity in regulatory regime that wouldn't happen at the federal level.
Since I hear relatively many "insurer didn't pay" stories (often because of a weird detail), I don't have much trust in insurance and do place a lot of value on actually understanding what will be covered.
I'm still a fan of a good deal, but confidence in reliability is a pretty important part of the features, no?
This man was being charged over $15,000/year for auto insurance?
If this person lost his ability to drive based on not being able to get insurance, challenging the insane amount he is being charged is just too much risk.
Who knows what kind of events have occurred in his credit history, personal life, social media, or other reputations where he doesn't believe he can get insurance again if he applied.
It's a don't rock the boat mentality when you are at a disadvantage.
Reality is, big data makes life utterly dystopian for many people. It was foreseeable, predictable, and as a society we let it happen.
Yes, you can get our insurance with your two DUI's but your price is 2x expected loss. Pretty solid odds if you're pretty confident in your pricing model.
The reason they did this is so that if you hit someone and cause physical injury to them or to their property, it's possible to pay them for the damage you did to them.
The government has decided that it is a good idea to make sure that people generally have a way of getting money from people that have caused accidents. We've also decided that it's in our collective best interest to allow people that don't have hundreds of thousands of dollars of cash on hand to be able to drive to the supermarket. However, because of these two conflicting goals, we need a third party that can pay in these cases.
Since it's a legal requirement to give money to a third-party when someone wants to drive, state governments have also determined that it's in our collective best interest to not allow for bad behavior by insurers in overcharging drivers for things not directly related to risk.
The reason for this is that making car insurance generally unaffordable to classes of people tends to exacerbate divisions in society, at least in the United States.
Further, members of minority communities do vote in elections, and will generally not support candidates whose position on insurance companies engaging in price gouging is "the free market will figure it out, sorry you can't afford insurance."
Finally, it cannot be taken for granted that companies always discriminate fairly when there are no laws to prevent them from not doing so. The example we see here is evidence of this. If Allstate is making pricing decisions not based on risk but based on willingness to shop, then that means that people are being unfairly overcharged; it just so happens that it's not as immediately offensive to our morals when it's "willingness to shop" vs. "being a member of a historically discriminated group of people".
2. "state governments have also determined that it's in our collective best interest to not allow for bad behavior by insurers in overcharging drivers for things not directly related to risk." This doesn't follow. You need to argue for a market failure of some sort to justify regulation. Seatbelts are mandatory, but it doesn't follow from there that the government must regulate the pricing structure of seatbelt manufacturers.
3. "The reason for this is that making car insurance generally unaffordable to classes of people tends to exacerbate divisions in society, at least in the United States." This is properly handled with subsidies, not mandates, as I already mentioned in other comments.
4. "Finally, it cannot be taken for granted that companies always discriminate fairly when there are no laws to prevent them from not doing so."
We don't need to take that for granted. The only relevant question is whether there is competition. If there's a monopoly, perhaps created by onerous government regulations, then there might not be sufficient competition. Again, you need to argue for a market failure, which you have not.
I wouldn’t even shop around if only buying the liability insurance because it costs like 2 tanks of gas anyway.
That's not alleged here at all. "People have a very hard time figuring out how much they would be paying" no, what's being said is people are having a hard time reading the documents submitted to the regulator. If you want to know how much you'll pay, just get a quote from the insurer directly.
You realize that, say, age is a protected class and yet an obvious risk factor, right? Do you think all ages should have the same rates for car insurance?
Mandating everyone pay the same price when their risks are different distorts incentives and makes us all worse off on average. Some may benefit in the short term by being subsidized by others, sure. Even if subsidies were socially desirable, price regulation is one of the least efficient ways to implement such subsidies. If the concern is that some people can't afford insurance because they're higher risk, then you can have subsidies targeted to them that pay for their insurance. That's far better than forcing an insurance company to take a loss on them.
I recently tried to figure out how I could optimize the amount of renter's insurance coverage I got from State Farm for the premium paid (I'm currently paying the minimum premium that they'll charge for any renter's insurance policy; $125/year) and their posted document was so dense and filled with jargon that I couldn't do it [1]. The document only contained the changes made since the previous approval. But I couldn't actually find the previous approval. So I was missing quite a few critical pages.
[0]: This is for NY: https://filingaccess.serff.com/sfa/home/NY
[1]: The overall filing package (https://filingaccess.serff.com/sfa/search/filingSummary.xhtm...). The rate document is named "NY HO 2019-05-01 Pages Changed.pdf"
Many states allow complete opacity, and in those states, the companies operate completely opaquely. In states in which information is required to be made public, it's buried in overwhelming detail and hidden behind "change X from 0.04 to 0.007 from sub-reference 37N" language. That's deliberate.
If insurance is so overpriced, then why don't other companies enter the market?
I don't think insurance companies have crazy profit margins, so I don't think it is really price gouging going on. It might be shady competitive practices, to trick people into not realizing they are paying more, but I don't think it is because people are required to have insurance.
Anyway the reason I think those dynamics instead is because I have seen it in cable, garbage collection, ISPs, and banks. They could be attempting old school dark patterns to exploit inertia and cognitive load in customers but that is a pennywise pound foolish move - the new customers have sales overhead expenses in addition to "maintenance" recurring costs.
Unless that number varies by state, someone may not be being honest with you.
I have a renter's policy with them for $115/yr.
The actual story is: they developed a radically different risk model that assigned new rates to everyone, but, in an effort to retain customers, decided to spread increases over multiple years to decrease sticker-shock cancellations.
Folks with cheap policies (which are the biggest flight risk, because are good insurance risks and every company wants them) got the increases more slowly, and high-risk folks (who were already paying more) got their increase in fewer, larger steps.
This whole article is trying to make simple business into some sort of evil scam.
How on earth does someone pay that much on INSURANCE?!?
When I was looking at buying a superbike, to get full coverage - it would be $1000/month. Clean record - but 22-23. Just liability with high deductibles was around $200-300/month. I've since become older - so it's cheaper for full coverage.
Welcome to the 21st century. Comcast, Verizon, Toyota, Nabisco - the list goes on and on.
Here in New Zealand, Toyota dealers no longer negotiate price with consumers, which have gotten a good reception from the public who hate negotiating with car salesmen.
Maybe you needed some super expensive expensive exam (when you didn’t).
Local news station has had two recently articles about them. From finding methods to not pay damages at a cemetery caused by a car insured by them [0] to be called out for not paying bills when their insured drivers caused damage to other drivers [1]
The second story is more damning because it is law firms that end up court for suits call out Allstate for having the most issues, it also noted that ten years ago, the American Trial Lawyers Association named Allstate the worst insurance company in America. Google searches still return that note but it should be noted that lawyers tend to call out most insurance companies.
* Both have video components that may start on their own [0]https://www.wsbtv.com/news/local/2-investigates-car-crashes-...
[1] https://www.wsbtv.com/news/2-investigates/are-you-in-good-ha...
[2] https://www.consumerreports.org/media-room/press-releases/20...
My father and his whole neighborhood had storm damage. All State approved all the work but still took 6+ months to pay out after the work was finished.
> In this case, Allstate’s model seemed to determine how much a customer was willing to pay —or overpay—without defecting, based on how much he or she was already forking out for car insurance.
They didn’t determine how much the customer was willing to pay, they modelled how much they could change the renewing price and still retain the customer.
In general insurance, there is a large cliff for rate change, where if you change the price higher or lower by more than a certain percentage (different in each case, and for different products) you are much less likely to retain the policy.
Actuarially you have a ‘technical price’ which is the real cost of insurance, and this includes things like acquisition cost and other operating costs, in addition to the risk costs.
When you update your risk model you often have policies that jump in price (if rated as ‘new business’, on technical price) so modelling the retention of the entire portfolio is extremely important. Your price elasticity is in part based on what percentage of the renewing policies you expect to retain with your new rates.
Implementing a ‘capping and cupping’ strategy to limit the amount of rate change delivered in a single year is extremely common, and allows this estimate of retention to be more accurate.
You need policies to eventually get to the technical price (which for large policies, like a fleet of cars, is literally based on prior claims experience) but you also need to sell and retain policies. Capping the amount of rate change applied in one year is a compromise between the two.
And there's a github repo: https://github.com/the-markup/investigation-allstates-algori...
I feel like the point of the article is a little bit undermined by the last section, though. A 71 year old having his rate increase "small amounts during the life of the policy" is pretty normal, and the fact that he was able to find a substantial discount elsewhere is evidence that the market is competitive.
No, not companies of "all" sorts. Just insurance companies. Other companies are regulated by Congress as part of antitrust regulations which would prevent them from doing this kind of thing. Insurance companies, however, are not regulated by antitrust laws. Insurance is declared to be "not commerce" and therefore not answerable to antitrust laws. They are permitted to break any antitrust law they please. This is why medical insurance companies, for instance, hold national meetings every few years to decide what price they are willing to pay for medical goods and services. This is price-fixing, and it is illegal in absolutely any industry - except insurance. In insurance, they can do it publicly because there literally is no law against it. There's a law PROTECTING it. It was called the McCarran-Ferguson Act. The plan was to repeal it as part of the Affordable Care Act. It was the clause that enabled the ACA to survive the entire revision process... and was then promptly removed from the bill immediately before its passage. This is why the insurers have never really fought very hard against the ACA. If it ever gets repealed, the McCarran-Ferguson act, that is, insurance companies will fall under antitrust regulation and have to change almost every business practice they follow. They will have to compete against one another on price, compete against each other on what prices they pay, etc. It would destroy their profit margins and probably result in the majority of them going out of business quite quickly. Don't hold your breath. It's why the insurance industry spends so much on lobbying and every lobbyist for every single industry will fight its repeal. In other words, it will NEVER happen. The law has been in place since 1945.
I immediately dropped them, switched to another company and got a much lower rate. Added bonus, my premium drops every year or so.
Said every company that ever failed to comply with state laws and regulations
A black husband and wife sit by a dinner table:
- Honey, did you see that article on Allstate? I think we may be overpaying...
- Why?
- Well, it says here that Allstate plans to hike prices for the people who pay the most even 20% more, and they call them... suckers.
- What?
- It also says that they plan that for people living in "nonwhite" communities...
- That's us!
- Yeah... who would knew a gecko would be right? We need to call them now, maybe we save 15% or more on car insurance as well...
And then at the closure message: Allstate admits to hiking prices for people who pay the most and calls them suckers. Don't be a sucker, get Geico insurance now!
