Romanov Report 30 - Jan 5, 2006

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Top 10 "Need To Know" Aspects Of Insurance

1) Credit scores and how they can affect your insurance

Insurance companies can look at your credit score and decide whether to renew or issue a home insurance policy. Insurance companies are NOT permitted to use your credit score underwriting for your auto insurance.

2) Does a lower rate mean "Worse Coverage" and "Bad Claims Experience?"

NO. Auto insurance policies are identical, word for word. Drivers who pay hundreds of dollars more than necessary "DO NOT" receive any extra coverages or value. All standard insurance companies report their claims satisfaction levels at 75% to 85%. You'll "NEVER" know if you're going to have a claims problem, until you have it, regardless which insurance company you're with or how much you paid for your insurance.

3) Fear of changing insurance companies

Whether you have been with an insurance company for 20 years or 20 minutes, their conditions for non-renewal or cancellation are fixed. If your driving profile falls into their cancellation conditions, your previous insurance history or "time-in" does not come in to play. So feel free to go with which ever company has the best rate for you:

4) No demerit points means no ticket, right?

Wrong. A ticket is a ticket "regardless" of demerit points when it comes to your car insurance rate. Tickets such as seatbelts, driving in the high occupancy lanes with no passengers and not carrying proper registration such as your driver's licence or insurance card holds the same significance to your insurance company as a speeding ticket does:

5) If I lend my car and my friend has an accident, their insurance will pay

When you lend your car, you lend your insurance. Your insurance will pay for your damaged car, your rate will increase, and the claim will show on your record just as though you had the accident:

6) "No Fault Insurance" means "Not My Fault"

There's always fault. No Fault only means "your" insurance company pays for your damages "regardless" who is at fault:

7) Accident Forgiveness means "No Consequences"

There is no such thing as "Accident Forgiveness", so don't be fooled by this terminology. If you have an accident where you are at-fault, your "star ranking" with your insurance company drops, your rate will increase and the accident will show up on your record. You can purchase "Claims Protection" which means your rate will not increase, but your accident will still remain on your record:

Note: A small claim will affect your insurance rate as much as an expensive one will. Even if the insurance company doesn't pay a dime, an accident is an accident, and your rate will increase for 6 years. While some insurance companies may only increase your rate by a couple of hundred dollars, others will increase it by thousands, regardless of the payout amount of the claim.

8) Tickets and accidents do NOT mean having to pay "High Risk Rates"

Standard insurance companies have low rates available for drivers with tickets and accidents. Although, it's hard to get quoted these rates. A broker is not obligated toquote you the lowest rate that they have in their office. The government published a rate comparison guide showing $15,000 difference in rates between insurance companiesfor the "exact same policy" and "driver". is a valuable resource, directing drivers to the insurance company with the lowest rates:

9) "Acts of God" are always covered under your insurance

Home Insurance: Most "Acts of God" are covered; wind, ice storms, tornadoes, hurricane, rain and hail. Comprehensive Coverage is needed to cover your contents. Auto Insurance: Most "Acts of God" are covered; wind, ice storms, tornadoes, hurricane, rain and hail, ONLY if the driver has Comprehensive Coverage. Acts of terrorism are not covered.

10) The government reduced insurance rates by 10.6%

There was an "overall" rate reduction in 2005, but for some drivers to get a rate decrease, others got rate increases. Each insurance company lowered their rates where they were making money, but increased their rates where they were losing money. If you have a good driving record you need to move to an insurance company where you're not paying for other drivers' accidents: