philosophyonwheels.com

Car insurance.  Who doesn’t enjoy paying that?  It is a useful and sometimes legally required service to have to guard against theft, hail, missiles, explosions, riots, and … oh yeah, accidents.  Maybe the actuaries of the world deserve a tip of that hat for mitigating financial risk on the highway and enabling the car culture that we enjoy.  Otherwise, could you imagine getting in an accident and then being saddled with $50,000 in liabilities?  Or you could pay a conveniently small fee every month to have a big company assume that risk.  I’ll opt for the latter.

Recently I switched my car insurance in order to save some money.  A few days after I placed the phone call I received an impressive package of syntactically exacting legal documents describing exactly what services I will be paying for.  (While leafing through I happened to find the legal definition for war!…I felt like a senator.)  Included in the package was a letter addressed to my current car insurance company.  I was instructed to sign the document and send it ASAP.  It was a short letter politely informing the reader that I was switching my coverage.  And the last sentence was a request for the company to send my refund in check form to my address.

A refund.  This is something that I think not a lot of people realize.  Paying a six month car insurance premium does not bind you to insurance company X for the entire six months.  (That sounds more like a cell phone plan.)  At any point in time you have the financial right to switch insurance companies and then claim a refund for the money that insurance company X did not use.  For example, I start a policy on January 1 with insurance co. X and pay for six months at $400.  But on April 1 I find a better deal with insurance co. Z and switch, I can politely request from X a check for nearly $200.  Free your mind and your car insurance will follow…

Why is this not well known?  It’s because business preys on ignorance.  Any financial edge that a company can use against the masses is a good business strategy.  And unfortunately ignorance tends to fall in big business’s favor.  Insurance companies love to advertise on TV and their ads are always filled with reasons to switch to them or why their current policy holders are happy (i.g. lower rates, better customer service, etc.).  This angle of advertising is win-win for the company.  But a commercial that informs people of their right to a refund on their premium can potentially encourage current policy holders to seek cheaper rates elsewhere. That kind of television commercial would be a bad business decision.  

Let’s continue with insurance commercials since we’re already there.  As far as I have observed, the leading representatives for car insurance on television include a British-accented lizard, a bubbly sales associate from California, and the former President of the United States from the series ‘24′.  The odd one out is a venerable looking actor dressed professionally!  Get with the times, the President should be replaced by something like Big Bird to completely distract people from that product they represent which is … damn, I forgot.  Oh well.  My point is that Big Bird looks like a big safe and yellow airbag that will protect me no matter how fast I drive.