The Happy and Totally Just World of Auto Insurance as Seen by the Oregon Insurance Division

Judging from the Oregon Insurance Division’s Consumer Guide to Auto Insurance, auto insurers occupy a happy land where competitive pressures and the profit motive are completely absent, where the companies are always reasonable, and there’s never any corner cutting or bad faith denials of claims.

Of course the guide does not completely ignore the issue that your experience with auto insurance might have a lot to do with the insurer itself – it does give Oregonians an extremely superficial gloss on the subject that leaves the reader with more questions than answers, such as “OK, how am I supposed to evaluate how these companies treat their insured policyholders.” On that, the Insurance Division offers nothing other than reference to a table of complaints, which is offered as bare numbers only, as part of a huge pdf (so that it can’t be sorted), with no interpretive information about the complaints or any information about the basis for the complaints. 

The division mainly promotes the position that the amount you pay for auto insurance is up to you because of your driving risk and the car you choose to drive – even though the division also notes that insurers are allowed to use your credit score to rate you.
 
The following sections from that “consumer guide” show how thoroughly the Insurance Division has adopted the point of view of the insurance companies. Insurance salesmen are called “producers” throughout, industry terminology. For example, the only reason suggested for a “misquote” is that you probably didn’t fill out the application completely or truthfully; the possibility that the insurance company was engaged in deceptive practices in the sale of the policy is never even considered.

Choosing an insurer

Auto insurance helps protect you and your family from losses resulting from motor vehicle accidents. Oregon law requires every car to be covered by automobile insurance.

The cost for coverage varies widely among companies doing business in Oregon. That’s why it’s important to shop around when choosing an insurance company.

This booklet can help you make an informed decision. It includes information about what kinds of coverage are required, how to shop for insurance, and tips to hold down your costs.

Comparison shopping takes a little more time, but it can save you money!

However, cost is just one factor to consider when choosing an insurance company. It’s also important to look at the company’s financial condition and how it treats its policyholders.

A company’s financial information is available from the following organizations that rate insurance companies. The organizations may charge a fee for these services.

A.M. Best Company 908-439-2200 www.ambest.com
Fitch, Inc. 800-893-4824 www.fitchratings.com

Moody’s Investor Services 212-553-0377 www.moodys.com

Standard & Poor’s Rating Information Services 212-438-2400 www.standardandpoors.com

TheStreet.com Ratings, Inc. 800-289-9222 www.weissratings.com

One source of information about how companies treat their policyholders is the Consumer Guide to Oregon Insurance Complaints, which annually ranks insurers from best to worst based on the number of consumer complaints received by the Insurance Division. To request a copy, call 503-947-7984 or 888-877-4894 (toll- free).

The guide is also on our website, insurance.oregon.gov; click on publications.

Saving Money on Auto Insurance 

B
efore you buy. Talk with your producer (agent) or insurance company about insurance costs before you buy a car. Certain makes and models, especially sports cars, are higher risks for insurance companies and cost more to insure.

Compa
rison shopping. Ask several companies for quotes. By shopping around, you may find several hundred dollars’ difference between quotes. Be sure to compare identical coverages when comparing policies.

Coverages. Drop collision coverage on cars that cost more to repair than they are worth. For example, consider carrying only liability coverage for cars valued at less than $1,000.

Increase your deductible. Take the highest deductible you can afford on collision and comprehensive coverage.

Discounts. You can save money on auto insurance by taking advantage of discounts. Ask your producer (agent) or company if you qualify for discounts for any of the following:
      You insure two or more cars on a policy.
      Your auto and home insurance are on the same policy or with the same company.
      Your child is under 25 and has good grades in school.
      Your child has completed a driver-education course.
      You’ve completed a defensive-driving course.
      Youre a mature driver between 50 and 65.
      Your vehicle has air bags, an anti-lock braking system, other safety equipment, or anti-theft devices.
      Youre a low-mileage driver.
      Youre in a carpool.
      You haven’t gotten any traffic tickets in three years.
      You havent been in any accidents in three years.
      You have a favorable credit history.
 
Driving record

      Maintain a good driving record. Your premiums are directly related to your driving record.

      Under Oregon law, an insurance company can use only the last three years of your driving record when deciding whether to issue or renew a policy or determining your premium. If you’ve had an accident or a violation, and your rates have gone up or your policy has been assigned to a nonstandard insurer, talk with your insurance producer (agent) or company. If it’s been more than three years since your accident or violation, you may qualify for a lower rate. If not, consider changing companies.

      Take a defensive-driving course.

Older
drivers. Drivers 55 and older must be given a discount if they complete a state-certified safe driving course.

Parents of teenagers. If your teenagers don’t own cars, make sure your insurer understands which cars they are going to be driving and whether it will be occasional or principal use. If they do own cars, consider covering them under your policy. Otherwise, they’ll probably have to pay higher premiums.

Check into discounts such as those listed on this page. If your young driver goes to school more than 100 miles away without a car you may qualify for another discount.

Paying
premiums. You can save on service charges by paying premiums in full rather than on a quarterly or month-to- month basis.

Reviewing your policy. Review your policy periodically and update coverage accordingly.

Notify your producer (agent) immediately if you move, substantially reduce your annual mileage, sell your car, change your marital status, or change the number of drivers in your household.

Young singles on their own. Avoid performance or “turbo cars.” A turbo engine can add more than 10 percent to your premium.

Auto insurance questions & answers 

Why
does my insurance cost more than my producer (agent) said it would? 
This is called a misquote. Determining your premium depends on many factors, including where you live, the kind of car you drive, how much you drive, how much coverage you want, your driving record, and your age.
 
If an error is made in reporting any of these facts, your rates won’t be quoted correctly. Misquotes can also happen if your producer (agent) makes a mistake in applying the company’s rating system. Auto insurance misquotes can happen when your application information differs from your actual driving record.
 
Companies ask states’ motor-vehicle divisions to verify the records of drivers they insure. If you told your insurance producer (agent) you have a perfect driving record, and you don’t, your insurance company will charge higher premiums than your producer (agent) quotes.
 
To avoid misquotes, provide accurate information about your driving record and any other facts affecting the cost of insurance, such as the make of your car or how far you commute to work. Verify all information before signing the application.
 
How does my driving record affect my insurance premium? 

The
premium you pay is a direct reflection of your driving record for the past three years. Insurance companies order driving records from the Oregon DMV and from other states where you’ve been licensed. Statistics show that drivers with tickets and accidents are more likely to have accidents than drivers with clean records.
 
Why is it harder to get insurance if drivers in my household have bad driving records? 

Many companies wont insure you if you live with a relative who has a poor driving record. If your teenager has a poor driving record, you may have trouble getting a preferred rate because he or she is defined as an “insured” under your policy. Some companies will exclude this person by name from the insurance policy. Many companies wont insure anyone in the family unless every driver in the household meets their requirements.
 
What do insurance companies consider when they decide whether to cancel or not renew policies?
 
Insurance companies evaluate the risks associated with each policyholder to determine if you are a “good risk” or if your policy should be canceled or not renewed. Some of the areas insurance companies review:

·      Claims. Do you file claims frequently or for large amounts?
·      Driving record: Do you have a bad driving record (speeding, driving under the influence, etc.)? 

M
y car was “totaled. Why didnt my policy pay what I think my car was worth? 

Most
auto insurance policies pay the actual cash value (ACV) of a vehicle totaled in an accident. The ACV is equal to the market value of an auto immediately before the accident.
 
Insurers must use a fair and reasonable method to determine the value of your car. They also must  tell you in writing that information about how they determined the value is available if you request it.
 
Tell the insurance company what you believe makes your car worth more than the insurer is willing to pay you. It may come down to negotiations between you and the insurance company. But remember, an insurance company wont compensate you for your car’s sentimental value.
 
What happens if my loan was more than my insurance company says my car was worth? 

The value of
a car is sometimes less than the balance on your car loan. There can be several reasons for this. Interest rate changes may have increased the amount of your loan. Rebates may not have applied to the purchase price or poor maintenance of the auto may have reduced its value. The insurance company bases its payment on the actual cash value (ACV) of the car at the time of the loss, not on the amount of your loan.
 
You can purchase a special type of insurance called Guaranteed Auto Protection,or GAP, when you buy a car and GAP may help in case of loss if you owe more on your lease or loan balance than the ACV of the vehicle. This coverage is sometimes available as an endorsement to your regular auto insurance. Your agent can tell you if your company offers the coverage. Auto dealers, or your lender, may also offer GAP insurance when you buy the vehicle.
 
Be aware that GAP coverage might not pay off your entire loan balance, as there are items that GAP insurance will not cover. The way the GAP policy or endorsement arrives at the value of the vehicle and the way the primary insurance arrives at the value of the vehicle are sometimes determined by different methods.
 
In addition, GAP policies usually do not pay for the deductible from the primary auto insurer, missed payments or late fees. Depending on the percentage of the vehicle value to the loan balance, GAP may only pay a portion of the loan. There could be other limitations, so check your policy carefully.
 
Why didnt I get a notice that my insurance policy was canceled? 

Yo
ur company must send you a notice at least 10 days in advance of canceling your policy for nonpayment. If your policy has been canceled or “non-renewed” for a reason other than nonpayment, the company must give you at least 30 days’ advance notice. An explanation of the reasons for the cancellation or non-renewal must be part of or accompany the notice.
 
Under Oregon law, insurance companies must be able to prove notice was sent but not that you received it. It’s your responsibility to tell your insurance company if your address changes. Keep track of your payments.
 
Whats the difference between comprehensive and collision coverage? 

Com
prehensive coverage typically covers damage from fire, theft, explosion, glass breakage, animal collision, and other incidents not covered by collision coverage. Collision is usually defined as colliding with another object or overturning. Most auto policies have a lower deductible for comprehensive coverage than for collision coverage. If you have an older car that may cost more to repair than it’s worth, consider the following to save money:
 
·      Raise your deductible.
·      Drop your collision or comprehensive coverage.
·      Drop both your collision and comprehensive coverage.

Required Coverages

Oregon
law requires every vehicle to be covered by auto insurance. Nevertheless, millions of dollars in damage is caused each year by uninsured drivers. This includes damage to vehicles and medical care for those injured in accidents.
Oregon’s mandatory-insurance law requires that drivers have at least these minimum coverages:

 
Bodily injury (BI) liability$25,000 per person, $50,000 per accident for bodily injury to others.

 
Property damage (PD) liability$20,000 per accident for damage to the property of others.

 
Personal injury protection (PIP)

PIP is Oregon’s version of no-fault insurance. It allows you and your passengers, regardless of who caused an accident, to have insurance coverage for “reasonable and necessary” medical, dental, hospital, surgical, ambulance, and prosthetic services incurred within one year after the date of an injury up to a maximum of $15,000.
 
In Oregon, minimum PIP benefits include limited coverage for loss of earnings, funeral expenses, essential services, and child care.

Medical services: Treatment is considered reasonable and necessary unless a provider receives a denial notice within 60 calendar days of claim notice. After that, the burden of proving that treatment was not reasonable and necessary is on the insurance company.

Loss of earnings: This benefit is available if your injury prevents you from returning to work. It begins on the 14th day of your disability. You receive up to 70 percent of wages up to a maximum benefit of $3,000 a month for 52 weeks.
 
Essential services: If you are not employed, you are entitled to reimbursement of reasonably incurred expenses for the essential services that you would normally perform. You will receive up to $30 a day for up to 52 weeks. This benefit begins on the 14th day of disability.
 
Funeral expenses: You will be paid for reasonable and necessary funeral expenses within one year of the date of injury up to a maximum benefit of $5,000.
 
Oregon law and your insurance policy allow PIP benefit disputes to be resolved by arbitration as long as both parties agree at the time of the dispute.

Know your PIP limit. Review this coverage care- fully and consider raising your limit.
  Uninsured motorist bodily injury (UMBI) and underinsured motorist (UIM) coverage$25,000 per person, $50,000 per accident for bodily injury to you and your passengers caused by an uninsured or underinsured driver.

UMBI and UIM coverage require your insurance company to pay all expenses that would normally be paid by the other person’s company if you are hurt by an uninsured or underinsured motorist.

Consider increasing this coverage on your policy, because an uninsured or underinsured motorist probably cannot compensate you for your losses.
 
Remember, these are the minimum coverages required by Oregon law, not levels of coverage recommended by the Insurance Division. 

Proof of insurance
 
Oregon law requires drivers to carry proof of liability insurance. The law also requires your insurance company to send you an insurance card that shows the effective date and expiration date of your policy. Keep this card in your vehicle at all times.
 
Driving without liability insurance could result in fines, suspension of driving privileges, and impounding of your vehicle.
 
If a judge convicts you of driving uninsured, you will have to file proof of financial responsibility with the Driver and Motor Vehicle Services (DMV) for three years or face suspension of your license. This is in addition to any fines you must pay.