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12 things your auto insurance agent knows that you don’t

Car insurance companies employ armies of underwriters and actuaries who crunch insurance numbers all day, but it’s the auto insurance agents who really know the score. Agents know a company’s guidelines and products inside and out as they stand on the front lines and field questions from customers.

“A lot of consumers think they have an idea of how car insurance works and think they are informed, but they aren’t,” says Amanda Shore, operations analyst for Insurance.com’s call center.  “They understand a new Hyundai is cheaper to insure than a new Mercedes and that their driving record is pulled, but many aren’t aware that where they live is such a big deal and that many other reports and rating factors are looked at.”

When consumers call for a car insurance quote, Shore estimates that agents spend about 20 percent of a 10-minute call explaining coverages and making recommendations – even more if the person is a first-time buyer.

Ultimately, you can make a more informed decision on your own if you know what’s going on behind the scenes. Here are some of the things agents know that customers typically don’t.

1. They know which reports are pulled about you when you request a car insurance quote.  

reports pulledInsurance companies don’t operate on the honor system when you tell them how long your commute is or whether you’ve gotten any speeding tickets. But your agent knows that all the information you provide is double-checked.  You probably suspect that insurers look at reports showing your claims history, motor vehicle record and credit history, but an agent also knows if the carrier is pulling reports on your mileage, vehicle registration, undisclosed drivers who live with you, whether you’re a homeowner and your current carrier.

And agents know whether the reports are used in the calculation of your insurance score, which is similar to a credit score. You also don’t have access to your FICO insurance score, by the way.

2. They know your vehicle’s ISO rating.

vehicle iso ratingsISO’s Vehicle Series Rating program assigns one of 75 “symbols” to vehicles based on items such as make, model and safety ratings and then takes into account real-life loss records for the vehicle. The vehicle rating helps insurance companies determine the risk of insuring your particular vehicle.

The higher the rating, the higher the risk for the insurance company, which translates into higher premiums for you. There are ratings for the physical damage, liability and medical portions of a car insurance policy. You’ve probably never seen your car’s ISO rating, but your agent can easily see where your vehicle falls on the list.

Not all insurers use ISO symbols to set rates.

The New York Department of Financial Services published a partial list of ISO symbols.

3. They know if a ticket will jack up your car insurance rates.

car insurance rate increasesAh, it’s the age-old question: Will that speeding ticket make my rates go up?

Not all traffic tickets are equal. An agent knows which types of tickets won’t affect your rates (typically parking, equipment and other non-moving offenses) and which ones will, and by how much. How? Agents are privy to your insurance company’s surcharge schedule, which outlines the offenses that trigger insurance points and of what value. The points are added up to determine how much your rates will go up. You can ask your car insurance company for a copy of its surcharge schedule, but may still need an agent to decipher it for you.

Here are examples of surcharge schedules and rate increases.

4. They know when your tickets will drop off your driving record.

tickets call off insuranceYou may have forgotten when your last traffic ticket landed on your driving record, but your agent knows.  Since your car insurance company pulled your driving record, your agent can see the violation date and should also know when the infraction will drop off your record and can no longer impact your premiums. 

If your state doesn’t remove traffic violations from your driving record, then ask your agent when your car insurance provider stops surcharging you on the offense. Typically it can be three, five or seven years. Your agent also knows this: The surcharge won’t drop off until the next renewal term after the required time period has passed, since changes like this aren’t made mid-term.

5. They know whether your rates will go up if you make a claim.

rate increases for claimsYou rear-ended someone on the way to work, and now you’re wondering how long this will haunt you. Should you try to pay off the other driver or let him make a claim against you?

Car insurance companies have strict rules about when surcharges are applied after an accident or claim, and they vary by insurer. Your agent will know the details about which claims raise rates.

Even if you have a copy of your auto insurer’s surcharge schedule, you will probably still need your agent's help to understand the complex formula used to determine a surcharge. The process is usually even more complicated if it is your second or subsequent accident or violation in recent years. The type of claim also plays a role. For instance, a bodily injury claim may hike rates more than a property damage claim.

All in all, you’re unlikely to know a claim’s impact until you make it.

6. They know whether your crashed vehicle will be considered a total loss.

total loss carIf your car’s frame is bent or the mechanic tells you it can’t be fixed, you can bet your car is going to be deemed a total loss by your car insurance company. But sometimes what appears to be only minor damage can get your car totaled.

The criteria for determining whether a vehicle is a total loss varies from one car insurance company to the next, and is also guided by state law.  While your car insurance agent isn’t a claims expert or adjuster, he is aware that your car insurance company will compare the cost of repair to your vehicle’s actual cash value and then look at the total loss “threshold” to see if the car is totaled or not.

If the repair costs are over a certain internally set or state-set threshold, your car will be totaled. 

7. They know if you're at risk for non-renewal.

insurance nonrenewalYou might think your third accident in as many years isn’t a big deal, but your agent knows the real score.  Your agent is aware of the company’s guidelines for non-renewing a policyholder, and at a glance can see if anything in your file will result in a non-renewal notice at the end of your policy period.

The guidelines vary by state law and by company.  A variety of issues may prompt an insurer to wave goodbye to you --  too many accidents or claims within a certain period of time, a DUI, license suspension or revocation, multiple traffic offenses, a conviction for leaving the scene of an accident or insurance fraud.

8. They know the insurance company is not "on your side" if you make a claim.

not on your sideYou know that your car insurance policy provides you certain protections, but your agent is keenly aware that the policy is also an insurance contract with two sides – the policyholder’s and the insurance company’s.

This doesn’t mean that your auto insurer is your foe – although some would beg to differ -- but the insurer will keep an eye on its bottom line when settling your claim.

9. They know that certain types of claims will be rejected.

insurance claim denialWhile agents aren't claim adjusters, they know that your policy has exclusions for certain actions of drivers. For example, if you tell your agent that your spouse purposely rammed your car, your agent knows that claim will be denied because the damage was intentional. Here’s more about spouses ramming each other’s cars.

Other common exclusions encompass damage you do to your own property, damage caused while you’re off-roading or road racing, and damage due to wear and tear. 

Your agent also knows you’re out of luck if you want to be reimbursed for personal items stolen out of your car. The theft of your car is covered under comprehensive coverage, but your car insurance policy doesn’t cover the theft of belongings such as your purse, purchases from a store, or computer.

10. They know what you can do to lower your premiums.

save moneyAgents can do more than give you a car insurance quote or field your questions about your policy; they also know ways you can save on your premium.

Car insurance discounts aren’t always spelled out on a company’s website, but agents know what is offered. Your agent can tell you if your insurer offers a discount for taking a driver improvement course, if your child goes off to college, if you renew early, if you go paperless – just to name a few. 

Your agent can also tell you what safety features on a vehicle earn you a discount, if your insurer offers a discount for bundling your insurance plans (such as home and car), what the mileage threshold is to get a low-mileage discount and if the company offers any type of pay-as-you-drive program.

Some car insurance companies also offer discounts for certain occupations and affiliations, but it’s hard for policyholders to get a complete list. Your agent should have it, and can help you find out if you’re missing out on a discount or can gain one easily by joining a listed organization.

Agents won’t always offer this information unless asked. Insure.com’s car insurance discount tool also shows discounts in each state.

11. They know that you won’t be covered if you hire out your car.

ride-sharingIf you want to make money giving rides in your car, your agent knows you’re likely voiding your car insurance coverage.  An agent can point out to you the specific portion of your policy -- which can be referred to as a “for hire,”  “for a charge” or “livery” exclusion -- that clearly states using your vehicle in the transportation of goods or people for payment is not covered. This means that if you get into an accident while doing so, you will be held liable and have to pay for the damages. Agents also know that some auto insurance companies have amended policies to specifically exclude personal vehicle-sharing programs.

Here’s more on the troubled relationship between ride-sharing apps and auto insurance.

12. They know how much money they’re making off you.

agent commissionWhile “captive agents” sell policies from only one insurance company (think of an agent working in a State Farm office), “independent agents” represent several insurance carriers. While independent agents make it easy to compare quotes from multiple companies, they're not always objective. An agent might steer you toward a certain insurance company because he knows he will receive a higher commission or needs to sell more of that product to keep a certain insurer happy.

Independent agents can be helpful, but “regulators have not imposed suitability or lowest cost requirements” on them, J. Robert Hunter, the Consumer Federation of America's insurance director, told a U.S. House of Representatives subcommittee on insurance regulation in 2007. That allows them to possibly “place the consumer into a higher priced insurer with a bigger commission rate.”

In New York, under Regulation 194, an insurance agent must tell you he’s being compensated for the sale, and must tell you his commission amount if you ask.

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