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What does Bait-and-Switch have to do with Insurance?
Jeff Ryan - CLU, ChFC, AIA, CIC, CPCU
February 20, 2024
What does Bait-and-Switch have to do with insurance? And why has it recently been in the news?
Who knew that Insurance companies could “bind” coverage without having all the information necessary to rate a policy accurately?
While most companies do not use a Bait-and-Switch strategy, it has been a strategic practice by a minority of carriers. The guilty companies would purposely implement a policy
without running the household driver's Motor Vehicle Reports (MVR). An MVR is one of the essential factors in developing an accurate insurance rate. This practice would assume a clean record on the original policy term only to run the report and adjust the rate before the next renewal.
In many cases, this would significantly change the premium charged to the policyholder. The practice was successful because the vast majority of competing companies would not offer a policy without first running all necessary reports, including an MVR.
With this practice, some insurance shoppers made decisions based on inaccurate information. They became stuck with a company and in some cases, ultimately caught with a less attractive insurance carrier than the company from which they switched.
The Professional Insurance Agents (of which The Ryan Agency is a member) have fought this practice for years. On December 26th, 2023,
the governor signed S.5764B, with an effective date of June 2024, takes aim at these harmful practices.
Until then, insurance shoppers should ask their agent or company representative if the auto insurance quotes they received were rated utilizing Motor Vehicle Reports for all licensed drivers in the household.
At the Ryan Agencies, any
final quotes provided to our clients consider all available rating factors. Before you decide to switch companies, our agency wants quotes provided to you to be as accurate as possible
For more information on what rating factors influence car insurance rates, see our previous blog posts here:
- What are the Major Factors that Determine What I Pay for Car Insurance?
- What Factors Make Car Insurance Expensive?
- Top Five Factors That You Control When Looking to Reduce Your Auto Insurance Rates
- What Determines the Cost of My Car Insurance
This article may have been originally published at Quora.com.
To see Jeff's Quora.com profile click here.
“Am I covered if I drive someone else’s car?” Or, “Am I covered if someone else drives mine?”
Many don’t realize that the insurance industry is one of the country's most regulated business segments, especially in New York State. The New York State Department of Financial Services (NYS DFS) wields significant control over the insurance business and has a stated goal of protecting consumers.
Most property insurance companies offer Actual Cash Value or Replacement Cost settlement options. Typically, insurance companies will require that you insure the property to the settlement value you choose. If you select Actual Cash Value, the amount you may be required to insure the property for will be less than the corresponding Replacement Value.
In that spirit, the Ryan Agency is sponsoring a Stearns BBQ Dinner pickup at our office on 57 Broadway Mall in Hornell on September 12th from 3:00 PM to 4:30 PM.
Today, an individual’s credit history can play a more significant role than any one of those traditional factors. Good Credit Scores lead to a Positive Insurance score. A good Insurance Score greatly influences what someone will pay to insure their vehicles.
Insurance companies offer various discounts for which their policyholders may qualify.
Great Eight number Six (6) suggests taking a look at removing Comprehensive and Collision on Older Vehicles.
By reducing the number of claims in your insurance history, you can significantly affect your rates in the future.
Sometimes, this concept meets with resistance from policyholders. The thought of paying more in the event of a claim is off-putting to some. Even if that means I pay more for my insurance.
OK. Admittedly, this strategy doesn't benefit everyone, but it can be very beneficial for those it does. You may have unique home or auto insurance needs that prevent you from bundling with the same company. Alternatively… you might have a better rate without the bundle discount by splitting up your insurance between multiple carriers.
