Fresh off my latest car wreck, I just finished researching and buying new auto insurance online. This is quite possibly the least fun you can have online, apart from reading Digg. But before I get to that, I’d like to explain a few things so that the next person in my position who finds this post can figure out what the fuck just happened to them. This is the post I wish I had found, but didn’t. It is totally U.S.-centric, and quite possibly North Carolina-centric. I don’t know how things work in different states.

I am not a particularly good driver. I used to be a good driver, but I’ve had a string of bad luck in recent years, probably more bad than one could reasonably attribute to luck. At least, that’s what my now-former insurance company thinks. They kicked me to the curb, so to speak, with a letter stating that “to the extent Liability, Medical Payments, Uninsured Motorists, or Underinsured Motorists Coverages are included in your policy, those coverages have been reinsured through the North Carolina Reinsurance Facility.”

Having been a good driver for most of my life, I had no idea what this meant. If you’ve received a letter like this, here’s what it means: your insurance company is kicking you to the curb because you’ve cost them too much money. Your existing insurance policy has been stripped to the state-mandated minimum, which means, among other things, that they won’t pay for your car if you wreck it again. And what’s left of your policy will cost you a lot more money for very little return.

Of course they don’t come out and say that, they couch it in lots of lawyer language. That’s always a red flag. A few quick Google searches led me to several official-looking sites about reinsurance facilities and high-risk drivers and state laws and traffic laws, all in a confusing jumble of cross-linked non-information. (Apparently you can get kicked into the reinsurance hellhole for getting too many tickets too, even though those don’t cost the insurance company anything. Lovely system, no?) And all these sites basically ran around the only question I had: “what the fuck just happened?” Here’s what happened: your insurance company is in the business of making money, and you’re costing them money, and they don’t like that. It’s not like they make goods or services that they can fall back on. All they do is weigh risks, and you’re a bad one.

The “reinsurance facility” is some sort of government-mandated program that forces insurance companies to insure people (like you, and, well, me) whom they don’t really want to insure. It varies by state, but I believe each state has one. The coverage you get sucks and it will cost you an arm and a leg. Did I mention they don’t like you very much? In fact, the only thing they like less than you is the thought of people like you driving around uninsured, because if an uninsured driver goes and hits someone else they do insure, it’s going to cost them even more. (That’s the “uninsured motorist” part of a regular insurance policy.) A little cesspool of superrational thinking in the midst of a dirty business.

During your research, you may find references to “consent to rate” forms. Insurance companies have state-mandated maximum rates that they can charge you. But you’re such a bad risk, they can’t make any money, even if they charge you the maximum. In order to get the sort of insurance that you’re used to (i.e. the kind that pays for your car if you wreck it), you have to sign a form that gives the insurance company permission to charge you more than the state-mandated maximum. That’s a “consent to rate” form.

Now then, about researching online. I was actually afraid to search Google for “auto insurance” since it’s so likely to be a spam target, but the results were surprisingly spam-free. All the major companies can give you an instant quote without ever talking to a human being, after you give them enough private information to choke a horse. (Well, after all, it’s not like buying shoes. They do need to look up your terrible driving record in some scary central database.) The odd thing is that they make you fill in all your driving history — each accident, each citation, how much it cost your former insurance company, etc. — and then at the end of it all, they look up your real record (it’s called a “CLUE report”) and adjust their previous rate quote anyway. I can understand not taking my word for it, but then why bother asking me? I guess the looking up costs them money, so they try to avoid it until their more sure that you’re going to become a paying customer. Who knows.

All of the quotes you get will assume that you sign a “consent to rate” form, although no one will mention it until you go to sign on the dotted line. And about that dotted line: it’s virtual now too. At least at the company I finally settled on, all I had to do was read a few PDFs and “sign” by typing my name. (I won’t mention the company because it’s not really important to this rant.) They can even give you PDFs of ID cards to print out and put in your car. I literally bought insurance at noon and then went to lunch with my new insurance card in my car. Nice.

There’s not really much you can do to lower your rates in the short term, although you should definitely ask whether taking a defensive driving class or anything would give you a small break. But basically, you need to stop running into things, and they’ve reevaluate every six months. Happy driving.

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Fifteen comments here (latest comments)

  1. Actually, no. READING about you getting new auto insurance is possibly the least amount of fun one could have online.

    — Dave #

  2. I know you weren’t going to name names, but I’ll say that I’ve (so far) had a great time with GEICO. Their sign-up was really painless, and I mostly appreciated the ability to tweak my policy to precisely what I wanted. Seems like most other companies wanted me to choose from a limited number of packages, while GEICO let me control the coverage. Took several hours of research to figure out what each line item meant, but in the end I tweaked my premium from $1800/year with my old provider (who gave me waaaay too much coverage for my income bracket and car value) to under $700/year.

    I haven’t had a chance to test the really important part — claims — but the sign-up was great.

    — Justin #

  3. “There’s not really much you can do to lower your rates in the short term”

    Taking a higher deductible (say, $1000 instead of $500) often will.

    — Joe Grossberg #

  4. Yup, higher deductibles are good if you think you can afford them when you’ll need them. Unfortunately, if you’re in the habit of driving into large objects, that $1000 a pop can add up.

    — Jason #

  5. How do you make your driving skills sound like insurance companies are the bad people?

    Until March 1st, 2000 I was always speeding and had fines all the time. At that day I lost my drivers license (fortunately only for 9 days). Should I’ve blamed the cop that arrested me? Why? I knew I was speeding! At 190+ km/h you KNOW you’re speeding. But it changed me, and until now I only had 2 fines (a parking ticket and a going the wrong way because I wanted to avoid a traffic jam ticket).

    So why blame the insurance company of not wanting you? Why not do something about your driving skills? Heck, your new company will through you on the curb just as easily if you don’t change it.

    — SwitchBL8 #

  6. But what you haven’t really spelled out – and asked with all due respect – is your driving record. Your tickets, your accidents, your at fault accidents.

    It really gets tough to sympathize with your situation when you give NO CLUE about such things.

    Hey – we ALL were young at one time. Lord knows I have my share of everything between age 16 and 26. And after that? Been 23 years with exactly one at-fault fender bender (that I simply paid for out of pocket) and one ticket for doing a u-turn because traffic was stopped for construction and I needed to get home to work.

    Hey Mark…. Dave Winer is harping about Gnomedex two weeks after he spouted out. Seems he thinks he can sway people by simply being himself… you know what I’m saying – posting near-slanderous rewrties of history.

    Tonite I’m reading the exact kind of thing from you. Really, I’m sorry to say this – but you haven’t given me any reason to give a damn. Maybe you have this sparkling driving record. Maybe you never shopped for the cheapest insurance (emphasis:cheap). Maybe you don’t know why insurance companies exist – which is to make money. And maybe this is the very first time you got screwed by the system.

    I kind of doubt it.

    Try explaining – in full terms – why you know this thing called “reinsurance”. I’m guessing it has to do with something called “driving history”. Or how those in the business would call it – driving risk. You seem to be… just… a… bit… silent… about that part of things.

    Or are you really of the belief that uninsured drivers should be out on the road? Sorry, but this sort of bullshit hits home – I have a family member who will pay for the rest of her life because of unisured drivers who think they have rights that supercede insurance companies and laws.

    — DaveD #

  7. I’ve had two total wrecks in 3 years. Yes, this is the first time in 17 years of driving that that’s happened. And the rest of my household’s driving record is none of your business. Sorry to hear about your family troubles, but please spare me the pathetic attempts to put words in my mouth.

    And who’s Dave Winer?

    — Mark #

  8. Sorry to hear about your troubles, but I bet you’re still paying less for car insurance that we are, here in Ontario. It’s not unusual to pay $2K+/year even with a clean record. Throw in couple of accidents and pretty soon you couldn’t afford to get insurance at all. There are some guys who practically forced to have their cars insured under their friend’s name – because otherwise it would cost >$10K (!) a year to get basic coverage.
    So it’s all relative – relax and and enjoy your life, it’s just money after all. ;-)

    — MaximDim #

  9. So were the two car wrecks your fault, or just bad luck?

    — Andy #

  10. The US system sounds certifiably insane. Not because “high-risk” drivers shouldn’t pay up, but because it sounds totally inaccountable. Here in Norway the system works roughly like this: There are two kinds of auto insurance — one to cover the costs and damage you incur on other people’s property (cars, buildings, people, etc.). This one is mandatory. The other one is strictly voluntary, covering the costs to your own vehicle, but if you have a debt on your vehicle, or you can’t actually afford to replace it if you wreck it yourself. Medical costs are kept entirely out of this system, since we have a working health-care system where you are entitled to paid sick leave, and treatment is essentially free (you pay a small fee, but the cost roof for medical expenses is around 1500NOK/year – ~250 USD)

    The insurance system itself is bonus-based, and everyone starts off at 0% (even if companies are often willing to give you a starter bonus, if you negotiate). This bonus increases every year, unless you crash, and is to blame for the accident, in which case you lose a part of the bonus.

    — Arve #

  11. The insurance system in the UK sounds pretty much the same as what it is in Norway. The somewhat amusing part of it is that you can take out insurance on your no-claims bonus, which essentially correlates to insuring the bonus you get paid for not claiming on your insurance.

    — Andrew Ho #

  12. Mark,

    I completely sympathize. I had just read your post when I went off and had a fender bender of my own . . . seriously.

    I’m really taken aback by the self-righteousness of some of the replies here (the assertion that you “have it coming for your mistakes”). What many people don’t realize is that most insurance companies don’t care if you are at fault or not. I was hit by an uninsured motorist and the insurance company counted the accident against me despite years of being a perfect (no accidents) customer. I suppose it is the “lightning rod theory” at work: this guy just attracts trouble.

    Some day these folks with perfect driving records (we’ve all been there) will also have a string of bad luck or be forced to drive in more difficult conditions (environment plays a role too).

    Regards,

    Matt H.

    — Matt H. #

  13. For the love of god, never move to Massachusetts. I made that mistake and the only sane way to get insurance was through AAA. (Which is a group I’d recommend to anyone who spends more then 15mins on the road a week) No sane large Insurance company will give you insurance, Geico closed my policy after I moved to the state.

    My initial research before giving up indicated that these companies wouldn’t insure in Mass.
    State Farm (Will insure for drivers with previous policy that moved to the state)GeicoNationwide21stProgressiveAIGAllstateesurance

    In summation, car insurance (and most insurance) is completely screwed up in the US. That’s my experience with a squeaky clean record, god help me if do get into an accident.

    — Scott #

  14. so they try to avoid it until their more sure

    They’re.

    – Chris

    — Chris Cunningham #

  15. GEICO won’t touch you if you have a bad record — they started by insuring government workers and tend to prefer people who are pretty boring at a cut rate.

    And if you live in a highly regulated state with fucked up roads and bad drivers like Massachusetts or New Jersey, forget it.

    — Duff #

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