Insurance Protection

[M!TCH]

Will, thanks for the wealth of information. I need to sit down and seriously review all this stuff. I appreciate you looking into the Term versus Whole Life rates for me. I think once I start working full-time here shortly I'll be picking up a life insurance policy. I am averse to having debt, even a mortgage on a house (very well versed in financial leveraging so let's leave that topic out), but I think it is important for me to pick up term insurance assuming that in the future I would have dependents.

Would you mind commenting on motorcycles insurance? I remember for my R6 my rates were out the roof and have heard nothing but horror stories from people about the actual coverage the company will give you once you submit a claim.

[Will MaXimal]

Will, thanks for the wealth of information. I need to sit down and seriously review all this stuff. I appreciate you looking into the Term versus Whole Life rates for me. I think once I start working full-time here shortly I'll be picking up a life insurance policy. I am averse to having debt, even a mortgage on a house (very well versed in financial leveraging so let's leave that topic out), but I think it is important for me to pick up term insurance assuming that in the future I would have dependents.

Would you mind commenting on motorcycles insurance? I remember for my R6 my rates were out the roof and have heard nothing but horror stories from people about the actual coverage the company will give you once you submit a claim.

Hey Mitch,

Again its my pleasure! Insurance is certainly not sexy nor is ever really running through anyones minds other than cutting their renewal checks, but for the people that take the time to understand their coverage and plan ahead, these are the people that will never have an issue recovering their assets and keeping their households secure.

As far as motorcycle is concerned...

The best way i can answer that questions is this.. Insurance policies are essentially contracts you are entering into with the company you are insured by. When you are inquiring about a policy/coverage you must ask the questions i stated above and make sure you understand the policy and what it covers and what it excludes. Motorcycle policies are pretty much the same as auto policies in the way of coverages and exclusions.

When you say "have heard nothing but horror stories from people about the actual coverage the company will give you once you submit a claim".. I believe what you are talking about is the claims process in which the details of the claim are reviewed by the adjusters and in their investigation they are determening if the loss is a covered loss.

As a rider myself, being on motorcycle is very different from being behind the wheel of a private passenger vehicle. Often, depending on the conditions things happen faster while on a bike. Lesser raction times for emergency maneuvers, road debris... Loss of control and of course more open to the elements especially when it comes to possible injury. The insurance companies know this.

In short, this all ties into the credibility of a company and if they really have your back. You want to make sure you know the exclusions on the policy so you can hold them accountable for holding up their end of the policy contract although I have heard of companies bullying their own customers because they simply dont want to pay for the claim.

When it comes down to it though, whatever your limits are on the policy if you have a covered claim the insurance company cant back out of the contract, they have an obligation to cover the claim. If they ever try and bully you this way then contact the Department of Insurance and file a complaint, that always tends to help

[M!TCH]

Will,

I am looking at picking up a new Subaru WRX STI in a few months. I have not changed my address on my insurance policy because they jack up my rates significantly. I'm assuming because I live downtown in the ball park area, which I understand from the standpoint of theft and what not. But, it pisses me off something fierce because my car is in a secured underground garage parking that is only available to tenants. I don't think my insurance company is taking that into account (either that or the accident rate in this area is phenomenal). Is this something that should be taken into account with my policy? I'm not going to stick with my current provider if they are not going to take this into account when I get my new car.

[Will MaXimal]

Will,

I am looking at picking up a new Subaru WRX STI in a few months. I have not changed my address on my insurance policy because they jack up my rates significantly. I'm assuming because I live downtown in the ball park area, which I understand from the standpoint of theft and what not. But, it pisses me off something fierce because my car is in a secured underground garage parking that is only available to tenants. I don't think my insurance company is taking that into account (either that or the accident rate in this area is phenomenal). Is this something that should be taken into account with my policy? I'm not going to stick with my current provider if they are not going to take this into account when I get my new car.

Hey Mitch,

You bring up a very valid point that all ties into modernizing the industry. In the beginning, people all paid the same rates even if they were in a city or on a farm 50 miles outside of one. Today, the industry is still changing but they are a long ways away from individual custom rates. Of course, when I say that I mean based on the kind of parking arrangements ect.

I get asked this all the time... "Will, i live in the city but my car is kept in a ________" Just replace the blank with (Garage, Gated Garage, Sub Level Parking, My Own Private Yard) and so on.

Crime is a problem, but statistics show that the real risk is during the day when everyone is out and about driving. So yes, its a great benefit for you to have secure parking.. But the insurance company is more concerned about those times when the general public are out and about during the day. Most people that work during the day will leave their secured parking garage and park their car in some shared lot with cars constantly coming and going.

This all ties back to the individual customized plan. Because there are so many people out there and so many variation of behaviors and habits, its not yet possible for us to offer a truly unique and personalized "per client" plan. We can offer something along those lines when it comes to the basics like long/short annual mileage and rates based on whole areas.. but when it comes to the super detailed, we simply lack the resources and information tracking abilities to pull it off.

Just remember, a tighter contract = double edged sword. If the insurance companies offer special contracts at super discounted rates, it will cause them to heavily regulate it. This will also mean that if you are taking advantage of a super discounted rate and something changes, you will have to notify the insurance company. You would be surprised how many people forget and those that say they forgot but just didnt want to lose their rate... For these people this could mean a claim being denied.

[M!TCH]

Ugh...I totally get it, that does make sense. I want a custom policy haha. I don't ever need to park in parking lots downtown because I...live downtown? My car rarely leaves my garage as I walk/public transportation to get anywhere I need to go. Thanks for the info, Will. Any idea on how I can get them to get my rates down? It is literally an $80 between a place 9 miles away and here. Just seems ridiculous.

[Will MaXimal]

Unfortunately, if you live in the city then you will pay the city rates. Having a sportier car with expensive replacement parts will also drive up premium.

You can shop around or see if they have a pleasure class that allows you to tell them you only use the car for pleasure and use other means for commuting to and from work like the bus and/or train

[M!TCH]

Will,

Just started looking into term insurance (I'm not sure perm is right for me as I do my investing already unless there are tax breaks I am unaware of). At 24, should I be looking for the longest term I can get for quite a sum of money? If I get 20 year term (if they offer that) for half a million is that a better choice than doing two 10 year terms one for a lower and one for a higher amount but the higher amount one being started when I am in my mid-thirties? I don't have any debt at the moment but based on what I'd like to do with my life want to make sure I have money for wife and kids (If I ever have any) if something were to happen. Perm is $$$ for just putting money into a savings account.

[M!TCH]

Will, bump for my questions above. In addition, can you expand on diminished value claims with regards to auto accidents?

[Will MaXimal]

Hey Mitch,

The idea with term insurance is to buy more at a younger age and when you are older... You should not need as much as most of your assets should be paid off and you should have built up a nice savings.

In that scenario I would say get a nice size policy with the max term.. say 30 years. Then after 20 years take out another 20 year term for less coverage that takes you near retirement. Hopefully by that time you will not need a policy because you have enough in savings to pay for final expenses and any lingering debt.

Of course can stagger the policy by reversing it... Taking out a twenty year term then by the end of it taking out a 30 year or another 20.

You are right in not going with a whole life policy. They are nothing more or less than a legal scam.

Diminished Value is tricky. We have it in California and its essentially a way to be reimbursed for the shortfall between your vehicles worth before and after an accident. You have to have the car looked at by a specialist and they determine the shortfall.

http://www.diminishedvalue.com/