One of the things I’ve been looking at lately, given the upcoming wedding, was how to optimize our insurance policies because, as we all know, multi-policy discounts are one of the best ways to get a discount. Two auto insurance policies with one insurer generally costs less than two separate auto insurance policies with two different insurers. In actuality, only the medical and auto insurance policies can be optimized because you don’t really share any others. Anyway, I was taking a look at our options and here’s what I came up with.

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I hadn’t until I read about nonowner auto liabilities policies in a Baltimore Sun article this past weekend. Nonowner auto liability policies are for folks who don’t have cars but find themselves renting them often enough that having their own insurance is better than taking the one offered by rental companies. According to the Insurance Information Institute, it costs only about $200-$300 a year and is a better alternative than the often $20+ a day prices from rental companies. By comparison, my insurance through Geico, which only covers liability, costs me $605 a year for a 2003 Toyota Celica. Nonowner Auto Liability policies are liability only, which means they only cover damage to the other car and not your own. Luckily, if you rent the car with a credit card, your credit card might offer a collision benefit (which one reason why you should decline the insurance offered by the rental company and rent with a card that offers insurance).

A brief look at on the Geico website didn’t yield any information about nonowner auto liability policies and when I tried with Kanetix (an auto insurance search engine I used when I tried to figure out the relationship with personal information and insurance rates) it wouldn’t let me continue without putting in vehicle information. I think that if you want to take advantage of this you’ll probably have to call up the insurance company directly.

Has anyone heard of this before or know someone who has used it? Seems like a good idea for people who live in cities.

This week I went in for a routine dental visit to get my semi-annual cleaning and passed the checkup with flying colors. Today I saw the claim hit my dental benefits website and the disparity between the Fee Charged and the Fee Paid (that is the negotiated price the insurance company agreed to) was a lot larger than I ever expected. My out of pocket expense was a nice $0, as expected for my routine cleanings, and this was the first time I ever looked at my dental claim so I was surprised to see how much less the negotiated fee was compared to the fee charged. (% Diff was calculated as $ Diff divided by Fee Charged)

This was something my friend first pointed out to me whenever he had work done on his car after an accident, that the fee you would normally pay for service is generally higher than the fee you would pay if the insurance company pre-negotiated the fee, but I didn’t think the difference was this high. But, if nothing else, gives you ammunition (and a big of confidence) if you’ve ever considered negotiating fees with your doctor. If the insurance company can get a 48% discount, by haggling a little bit you should be able to knock off a little from the starting price.

The biggest surprise was the “Additional Intraoral Film” item. I accidentally swallowed when they took the first X-Ray so they had to take another X-Ray of my front teeth. To think that it would’ve been $21 to pay for it on my own and a mere $4 otherwise is pretty ridiculous, an 85% difference!

This is a double-whammy for anyone who want to self-insure themselves because not only do they have to pay out of pocket, they don’t pay insurance company negotiated rates, they pay rack rates (to use a hotel booking term). So, if you’re thinking about self-insuring, certainly keep that in mind (and the fact that you have much more leeway than you probably expect when it comes to negotiating the fee itself).

I had written a post in which I talked about some companies I love and one of them was GEICO, mostly because they were cheap, and bostonmichelle left the following comment:

You like Geico only because you’ve never had a claim or any other problem. Someone put in a fraudulent claim against me, and [Geico] just went ahead [and] paid them even after:

1. I submitted professional photos (at a claim shop) documenting the total lack of damage to my car.
2. I submitted my own photos of my car backed up against a truck of the exact same model of the claimant’s to show there was no way my little car could have damaged his huge truck’s back bumper, and
3. I spent 2 hours on the phone with various people there begging them to look at the photos and tell me how I possibly could have caused that damage.

So, they pay anyway, and my insurance record gets dinged cuz they did so. I had to pursue this case because there was NO WAY I was going to pay higher insurance because they are so stupid. After spending many hours talking with MANY stupid, lazy people at Geico, I finally get a guy whose wife had a fraudulent claim against her. HE got it and fixed my insurance record. It still showed they paid out, but I was now shown as “not at fault.”



Idiots. I’ve gotten the best deal and the best service of my life going through Costco (one of your other favorites). They use Ameriprise, which has been wonderful so far. Plus, you can pay your premiums with a credit card. I bet you could save even more money with them – plus you won’t risk your sanity, insurance record, or finances should you actually need to use your insurance.

I was pretty surprised to hear this mostly because insurance companies aren’t in the business of paying out a lot of money needlessly, they’re usually on the other extreme, looking for ways to get out of paying for something. So I asked for more details and bostonmichelle provided:

The claim they paid was about $450. It sure would have been cheaper to listen to their customer and not the claimant (they lost me as a client immediately, and I’ve been telling my story ever since), but I’m sure they had their reasons.



There was no police report since we both agreed at the time that there was no damage. I hit the guy while I was rolling from a standing stop – about 1 or 2 miles per hour. He had a dented bumper on his tall SUV, but my bumper (on my short little Sentra) was far too low to do that damage. I had hit his tow package hanging down below his bumper. We both agreed there was no damage. Neither of us had a camera in our cars.



He later sent me a quote for $700 or so from a repair shop. It listed his make & model, so I went to a dealer who let me park up right next to the back of the same model and take photos. I had clearly hit the tow package. If he had no tow package, the front of my car would have gone clear under his truck, which certainly might have damaged MY car -but not his.



I sent those pics in AND I went to Geico’s claim shop which put a measuring tape on the front of my car and took their own pics. There was absolutely no damage to my car at all. They sent those pics in. When I talked with the various Geico people, most didn’t have access to the pics. And, no one WITH access ever called me back.



The one guy who helped me knew what it was like to have a fraudulent claim. He didn’t see the photos either. He just had been through it himself and was sympathetic. I don’t know the insurance business, so I can’t answer your questions any more than that. You can post this email if you like. Anyone who wants to help share the pain of dealing with Geico on a claim is doing a good deed, that’s for sure.



By the way, I have NEVER had an accident – one that was my fault or someone else’s. And, I’m 36 and have my license for 20 years.



Again, I would get the hell out of there, if I were you. At least look into Costco’s service. I think you’ll be pleasantly surprised.

Basically it sounds like the person she hit pulled a fast one on Geico and they fell for it, leaving bostonmichelle holding the bag. While you can’t do anything after the fact, this is why it’s crucial to keep a camera nearby (nice if you have a cell phone camera) to take pictures at the scene of the accident in order to have some sort of proof. Your word is nice but evidence is nicer.

All-State has been touting their accident forgiveness policy, going so far as to use President David Palmer as their spokesperson (24 rules!), but did you know a lot of companies offer this benefit? In fact, All-State’s accident forgiveness plan is only better than the competition if you have their more expensive levels of insurance (7-15% more expensive). With their standard policy, you get the same level of forgiveness as most other insurers – one forgiveness in the last five years.

Who else offers one free accident every five years? Basically every one else.

Here’s GEICO’s accident forgiveness policy:

Accident forgiveness eligibility — In most states, many customers who haven’t had an at-fault accident in the previous five years of being insured with GEICO may qualify for accident forgiveness. GEICO will not increase your premium as the result of your first at-fault accident after qualifying for this benefit. (source)

You’ll notice the “most states” part (which will appear in every insurer’s mention of accident forgiveness), that’s actually not a restriction made by Geico but one made by the state regulators themselves. Some states have regulations that change the rules regarding accident forgiveness but a lot of other insurers offer accident forgiveness for five years of insurance.

That’s one more reason, outside of potential loyalty discounts, why you might want to stick with one insurer instead of going with the cheapest option every few years.

Does anyone know if accident forgiveness is required by some state laws? I see mention of how the rules for accident forgiveness depend on state law but I couldn’t seem to find anything for Maryland when I searched.

Last week I played around with my personal details on Kanetix and we learned how the various characteristics affected the premiums you could expect to pay on auto insurance. Today, I played with the numbers some more, this time changing the various coverages and they behaved just as you’d expect.

One thing that was interesting was that when I played this game at the end of August, the companies listed weren’t the same ones that were listed today. The four companies I saw most often were Unitrin Direct, Travelers, MetLife Auto, and Electric Insurance Company (Drive Insurance from Progressive made an appearance too).

• When I took away the towing and/or rental coverage, the quotes from some companies didn’t change. That’s not to say that the coverage is free but when they’re trying to capture business, the $3 (towing) or $5 (rental) is small potatoes.
• The values in the row for bodily injury/property damage coverage for $25k/$50k/$25k is not a typo, it really only differed by a quarter! Also, $20k/$40k/$15k was also not that big. I suspect it’s because many states have minimums on how much insurance you must carry and these values are far lower than the ones at least in Maryland.
• What’s interesting is the curve that the prices take when plotted against the coverages. For example, the increase going from a $1000 deductible to a $500 deductible was only $66.88 per six months. If you go from $1000 to $250 you’re talking a price difference of $125.00. I expected the the curve would be steeper.

As a reminder, here were the baseline characteristics I input:

Benchmark - One car with one driver garaged in the zip code where I live in what can be classified as suburbia. I’m male, 26, single, own a home, Master degree, engineer, with current employer for 3 years, licensed since 16, never suspended or revoked, not been ordered to carry an SR-22, 0 violations, residential insurance policy, no defensive driving-type course. I own my 2003 Toyota Celica, I drive it to and from work (~10 miles, 5 days), putting on approximately 12k miles/yr.



The coverages I selected are $100k/$300k/$100k for Bodily Injury and Property Damage and the same for Uninsured/Underinsured Motorists and UM/UIM Property Damage. Personal Injury Protection-Medical (and Funeral) Expenses set at $2500 Basic (everyone covered). $1000 deductible on both Comprehensive and Collision, yes to Towing and Rental coverages.

Benchmark Rates: 4 results, Average rate of $617.25. The quote at the end of August was for $628.70, but I’m pretty sure the difference was because of the different companies and because I probably entered in some of my information different (not every question is covered in the benchmark information I listed above). Regardless, it shouldn’t affect the analysis, you just can’t compare the numbers today with the ones in August (not that you would anyway).

Rental and Towing Service Coverages:

Collision and Comprehensive (C/C) Coverage: (baseline $1000k deductible)

Collision and Comprehensive Coverage are usually connected, the deductible you select on one is the what you will use for the other.

** If you don’t elect collision or comprehensive insurance, you can’t have rental or towing coverage. The value in the table wasn’t changed to reflect the $8 difference, but if it were included then the price for coverage would be $372.50, a drop of 39.65%.

Bodily Injury, Property Damage Coverage (plus Uninsured/Underinsured) (baseline $100k/$300k/$100k)

Your uninsured/underinsured motorist coverage can’t exceed your regular bodily injury and property damage coverage so the two match in both instances below. So, if it says $250k/$500k/$100k then you get $250,000 personal injury, $500,000 accident coverage, and $100,000 property damage coverage. Normally, you can elect to have lower uninsured/underinsured but we didn’t in our analysis.

Personal Injury Protection-Medical (and Funeral) Expenses – includes reimbursement for Lost Wages

This is called PIP, or no-fault coverage, and legally required in Maryland. The baseline had it set at $2500 Basic which covers everyone, the one listed in the table below is the Limited version which covers only persons under 16.

Using Kanetix, an auto insurance comparison site, I decided to play around with the various driver characteristics to see what effect each one would have on my premiums. I chose Kanetix because it’ll give you multiple quotes and it had the easiest interface for you to change details about yourself, your plan, your vehicles (I’ve never used it to actually get insurance). This little unscientific study won’t tell you how much to expect your insurance premiums to go up if you do something bad but it should give you a relative idea of how “bad” certain offenses are with respect to premiums. As expected, insurance is all about dollars and percentages and the results, while unscientific, are pretty consistent with generally accepted thoughts.

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About a month ago I quoted auto insurance rates to get a pre-25 year old rate so that I could re-quote and get a post-25 year old rate. Well, the time now has come for me to re-quote and see what the “big 25 year old milestone auto insurance rate quote drop” people always talk about really amounts to…

Given my current plan (Liability only) where I paid $436.60 for six months, my post 25 year old rate dropped -$59.50 to a mere $377.10. Looking back, carrying $1000 deductibles on collision and comprehensive coverage would cost me $959.50 for six months… now, a mere one month later, it only costs me $808.50 (-$151).

As for Progressive, for identical coverage it actually costs more now, $497 – an increase of $49! For full coverage? $816.00, a jump of $79! As for “the rates of other top companies” – this time four companies (one of them Progressive) were listed, including our old friend State Farm Mutual Automobile Insurance Company. Two newcomers to the show are Erie Insurance Exchange and Erie Insurance Company (same company really but two quotes).

For my coverage, the Erie brothers show a rates of $205 to $232 and $230 to $269 (based on credit score) which is ridiculously cheap auto insurance. State Farm came back with a quote of $412 – still more expensive than Geico. For full coverage, State Farm would charge $750 (cheaper than all comers including Geico), and the Erie’s would charge at least $350 and $380 per six months.

(Incidentally, Erie Insurance Exchange is “better” and only accepts folks with at most one violation, all others fall to the Erie Insurance Company, hence the price differences)

To recap, in table form:

So what’s the moral? You can probably expect a rate drop of at least 10% whenever you turn twenty-five. Is it a huge drop? Depends on your perspective but there is definitely a noticeable drop. I think my quoting from Progressive itself may have been flawed either this time or the first time because there is now way the price should’ve increased when all others dropped. What’s interesting is the appearance of Erie Insurance – as if to say they only trust drivers over twenty-five…

What other major auto insurance milestones have you reached and seen a big drop in insurance? I’m curious to see how significant each of these commonly assumed milestones truly are.