Insurance is supposed to be a safety net against losses from an automobile accident, hospitalization, or house fire. Policies protect us if someone sues for personal injury or property damage. Medical, life, disability, car, and house insurance are all necessities to protect us from financial disaster. Yet making a claim to one's insurance company can turn out to be a disaster in itself.
Several years ago, I was in an auto accident. I was traveling in an unfamiliar town where the traffic lights were on poles at the corners of the intersections, rather than suspended overhead. Just as I got to the middle of one of these intersections, where I saw no traffic light, I noticed a flash of yellow approaching rapidly from the left. I turned and saw a school bus bearing down on me. I accelerated, hoping to make it through quickly enough, while the bus driver climbed on her brakes to stop. Too late. We collided, the front bumper of the school bus hitting the rear bumper of my car. Fortunately, no one was hurt. I was ticketed fifty dollars for "failure to yield" and reported the damage to our insurance company, which paid for the repairs, minus the $500.00 deductible. Their costs: $1000.00. My costs so far: $550.00, plus trauma. This is the only accident I have ever caused in thirty-five years of driving.
A couple months later, another family member got a speeding ticket. The cost: $100.00. Shortly after the second ticket, we received a notice from our insurance company that we had exceeded the limit of moving violations allowed on the family policy (only one is allowed within a three-year period), so our policy would have to go into an insurance pool for high risk drivers, nearly doubling our premium. Additional cost: $1800.00. What about my thirty-four years with a spotless driving record? I paid premiums all those years. Add the forty-seven year history of accident-free driving by the rest of the family, and we have amassed eighty-one years worth of clean driving records. At a conservative premium estimate of $1000.00 per year, the total is $81,000.00. What kind of protection is that? We would have been better off to go without car insurance, but that is illegal.
If an insurance company penalizes customers for tickets and accidents by raising their premiums, fairness dictates that the same company should reduce premiums for customers who are ticket and accident free. The same rule could apply to health insurance, too. Healthy people who routinely practice preventive medicine would pay less than people who take poor care of themselves and therefore see doctors more frequently. Why should I pay the same amount for health insurance as a heavy smoker or a Hollywood stuntman?
Insurance companies have us in a variety of claim 'traps' which always seem to cost the customer. Protection against catastrophic losses is important, to be sure, but not when the protection becomes part of the catastrophy!
My letter of appeal to the auto insurance company fell on deaf ears. Have you had better luck? What can we do to make insurers more responsive to customer concerns?