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Dirty Tricks Used By Auto Insurance Companies To Make More Profit

Dirty Tricks Used By Auto Insurance Companies To Make More Profit

There are plenty of ways that insurance companies can save money, but some of them will negatively affect their service and the deal you get. In order to compete, insurance companies have to find a way of taking more while giving less, so some of them turn to a range of dirty and unfair tricks. Here are the dirty tricks used by auto insurance companies.

Poor Customer Service

It is hell for you as you try to get through and then try to talk to somebody helpful, but it saves insurance companies millions in training and administration. An insurance company can invest more into a smooth-running sales team while leaving the customer service department with little money for training and wages.

Do Not Penalize Your Customer Service Department For Being Rude Or Abrasive

The insurance company wants you to give up on your claim. They do not want you calling and making progress, so they do not punish their staff for being rude or abrasive. After a while, the staff learn all the common tricks for getting out of work such as transferring you around different departments, leaving you on hold while they deal with easier cases, and being rude or abrasive so that you give up and hang up. Some will even goad you into swearing at them so that they may hang up. It gets the insurance company out of paying, and it saves on having to pay the HR department to train and control the customer support staff.

Giving You A Very Low Settlement

How much your insurance company offers you is up to you. Unless you are buying something such as gap insurance, the amount the insurance company gives you is up to them and their contract. The insurance company doesn’t want to reward you for making a claim, so they give you a low settlement with the knowledge that you will probably accept it and move on rather than trying to fight it.

Low-Balling Your Claimant

If you hit somebody else or cause damage, then your insurance company may low-ball the person who is trying to claim against you. Some companies will give you a good settlement amount, but will screw over whoever is filing a claim against you. This saves the insurance company money while keeping their customers happy.

Haggling With Repair Companies

Some people cannot understand why the repair shop or mechanic is taking so long with their repair. What many insurance customers may not realize is that the insurance company is haggling with the repair shop to lower the price. The sad part is that some mechanics will take the lower offer and then do a half-assed job without your knowledge. Plus, if an insurance company has a reputation for paying late or not paying, then there is a chance your local repair shops will not take your job on and you will have to take your car a long way in order to have it fixed.

Having Your Car Scrapped Or Totaled

There is a chance that the cost of repairs on your car will come to more than the insurance company would have given you if you scrapped the car. Some insurance companies will insist that you scrap or sell the car so that they may offer you a lower claim rather than paying to have your car fixed. This helps to save the insurance company money, but may also leave you out of pocket if the value of your car prior to the incident was far higher than the settlement the insurance company was/is willing to give you.

Ambiguous Policy Language

We honestly thought that this time-tested and archaic insurance trick was a thing of the past, but we still come across it when we review insurance companies. Ambiguous policy late allows insurance companies to get out of paying by inventing loopholes that fit their ambiguous policy phrasing. The agents are able to interpret the policy in whichever way that results in you getting the lowest possible settlement.

Hiring Teams That Look For Reasons Not To Pay You

Did you see the movie Saw VI with that insurance guy who hired a team, and the team’s sole purpose was to find ways not to pay people their claims.

Insurance man and his team from Saw VI

The team looked over every possible aspect in order to find a way so that they didn’t have to pay a claim. They pick on tiny things such as not updating your new address information in a timely fashion, or not updating your details around how you are driving more miles than you claimed you would when you signed up.

Training Agents And Customer Support To Be “Decisive” And “Strong”

Though insurance companies say they are training their staff to be decisive and strong, what they are actually doing is training their staff to be unsympathetic, abrupt and rude. The aim is to make the claims process so unpleasant that either you will give up on your claim, or so that you never make a second time because you want to avoid repeating the harrowing experience.

Sending Repairs Assessors

Instead of you getting a bunch of quotes from your local repair shops, or instead of having your car repaired with a local insurance-affiliated repair shop, the insurance company sends out an assessor who tells you how much your car will cost to repair. The amount the assessor comes up with has little to do with your evidence or anything you provide from your local repair shop. The assessor gives you a settlement price that hardly covers any repairs and the insurance company considers it a justifiable way of saving money.

Poor Excuses Why Your Car Is Worth Less

Another very old trick is to receive your claim and all your evidence, and then offer you a very low settlement amount with the argument that your car is worth considerably less than you claim it is. They will then give you a bunch of dumb and unfair reasons as to why your car is worth less than what you claim. Read online reviews and you will see some of the most pathetic reasons why a car is worth less than it is listed in the policy/claim, such as how the paintwork has received excessive sun damage.

Giving You A Large Silent Discount For Your First Year

The insurance company hooks you in with a loss-leader during your first year. It is a large silent discount that is far less than what you would or should pay. The second year, the insurance company tells you that they are giving you an exclusive renewal rate and they tell you it is a great price, but it is actually a very high and very unfair rate. Their hope is that either you will believe them and take their renewal rate, or that you will accept their renewal rate for the convenience and hope that you do not shop around before you renew.

Comparing Rates Unfairly

A great many service providers do this sort of thing and insurance companies are no different. The most typical technique is for your insurance company to compare their insurance rates with the higher insurance rates offered by other insurance companies while omitting comparisons with companies that have lower rates. Another trick is where your insurance company will show you their best rates while showing you their competitor’s worst rates.

Agents Who Miss-Sell And Hope You Don’t Notice

What an agent says and what it says in your small print may be two very different things, and the problem is that many times the way things are being phrased by the agent may seem legitimate, but they are intentionally giving you to wrong impression. You make the purchase, the agent makes the commission, the insurance company takes your premiums, and you have been sold something that doesn’t live up to your expectations. Tyicpally, you only find out it doesn’t live up to your expectations when you make a claim. The insurance company cannot make such intentionally misleading statements on their websites or insurance policies, but agents can make them, and the most experienced agents know how to make such statements and get away with it consistently.

Having A Short Cancellation Period

Some insurance companies only give you 26 hours in which you may cancel your policy. The trick is to then charge a nasty fee for cancellation so that if somebody is not happy with their policy, they have very little time to figure out what is wrong and even less time to cancel the policy without being charged a fee. In many case, the customer keeps the policy with the justification that canceling would cost more than letting the policy continue.

A Bait & Switch Rate

You are given a rate on a comparison website or by a website’s quotation tool, and that rate seems to appear again and again while you process your application. However, at the very end, your rate changes and either you see it and change your mind, or you don’t see it and sign up for a policy that is more expensive than you expected. One of the most common reasons why your rate goes up at the final moment is because they ran a credit check on you and that is why they increased your rate, but the truth is that the original rate you saw was just to draw you in and to make their insurance company look like the cheapest on the comparison websites.

Raising Rates For Arbitrary Reasons

Some of the reasons that insurance companies give for raising rates are almost whimsical. Yet, what they don’t explain is why your rate goes up, and yet if you were a new customer who had never used the company before, then you would have a lower rate.

Poorly Training Your Agents Or Customer Support Workers

Invest as little money as possible into training and hope that the staff pick up the job as they go. Sadly, this results in high staff turnover, systematic mistakes, and a very negative staff attitude. Yet, this saves the insurance company plenty of money while inconveniencing their customers.

Poorly Paid Trainers, Agents And Support Workers

Pay peanuts and you attract monkeys. Paying lower wages is a common method that insurance companies use to save money, but it always makes the customer’s life harder.

Dropping People After They Make A Claim

This is both legal, and a cost-cutting measure that some insurance companies use. You may expect your insurance company to raise your rates, but instead they dump you. They dump you because you now have a track record for making claims, and they make more money off of people who never make claims.

Holding On To Your Claim Money For As Long As Possible

Some insurance companies take weeks and weeks to pay a claim, and they do it so that they may hang on to your money for a little longer because the longer they have it then the more money they can make from interest (plus whatever else they have the money invested in).

Poor And Underfunded Administration

Bureaucracy is an ugly word, but it is needed if you want actions to have consequences within an insurance company. You often find that the administration teams working for the sales team is slick, smooth and highly efficient; e.g. you don’t see sales taking six to twelve weeks to go through. Some insurance companies save money by under-funding the rest of their business’s administration (except for accounting). This means that when a claim is filed, or when a customer support worker makes an instruction, such claims and instructions are not acted upon, or they are acted upon in a very slow way. If you have ever worked in a call center, you will know how frustrating it is having to talk to the same customer over and over again when you know you have done your job, but the administration/bureaucrats have not acted upon your instructions.

Costly Phone Charges And Keeping You On Hold

This trick may have expired since President Trump has made it illegal for companies to make money from phone calls while repeatedly leaving people on hold. However, companies usually find a way around these rules, and they usually involve stationing the call centers overseas or directing calls through the Internet.

Selling Your Details

It is illegal to sell your details, but it is a very difficult crime to detect because your personal details run through so many hands that it is difficult to see who is doing the selling. For example, I received a call from a hospital on my unlisted phone number, and the next day, for the first time since having a landline in my house, I received a spam call from an accident-claims service. Who sold my details? The hospital? The Administrator? A rogue communications worker? Is the system being monitored by a hacker? Plus, the people who buy the details are very difficult to detect, and it is rarely possible to charge them or force them to say who sold them the details. Plus, some insurance companies have you tick a box to say that you understand their privacy policy, but in the policy it actually says that they are allowed to share (sell) your details with other advertisers. People tick the box thinking that their details are safe when there is no way to sign up with the insurance company without agreeing to share your details with whomever the insurance company likes.

Blaming And Firing The Agent To Shift Blame

If you are left thousands of dollars out of pocket, the insurance company may fire the agent prior to you suing. They then blame everything on the employee, which makes the suing procedure more expensive. They show how the employee is contractually obliged to do this and that and show how most/all of the blame lands with the employee. If your lawyer is good (and expensive), then you can still sue the insurance company, but you will probably get your claim back and not your expensive lawyer fees. If the insurance company is successful, then you go from suing a multi-billion dollar insurance company to suing an unemployed agent.

Issuing Disputes As Part Of Protocol

One way to make the claims process long and harrowing is to issue disputes for the sake of issuing them. Customers start to worry that maybe they filed something wrong, or that the repair shop made a mistake, when in fact the insurance company files these sorts of disputes all the time with the hopes of finding fault and paying out less.

Family Plans That Charge Disproportionately More For Younger People

Parents will sometimes put their kids on their insurance because their kid’s insurance costs are too high. Insurance companies will offer what they say is a fantastic deal for parents who wish to create a family plan or for parents who wish to put their kids on their insurance plan. The hideousness of the quote is hidden by the parent’s already-lower insurance costs. For example:
Parent-only quote = $55 per month
Teen-only quote = $110 per month
Family plan quote = $179 per month
Stack the figures side-by-side in the manner I did there, and you can see how unfair it is, but when the quote for the family plan appears via email as a “Big discount” email saying “Add your kid and pay only $179”, then it looks quite enticing after hearing your child complain that he/she cannot afford the $100+ insurance premiums he/she keeps getting quoted.

The most common occurrence is where a parent assumes that it is cheaper to add his or her teenager onto his/her policy without shopping around or doing the math first.

Pressuring You Into Accepting Low-Ball Figures

Insurance companies still bully people and pressure people into accepting lower settlement amounts, which is why each year there are insurance companies that are successfully sued for bullying and unacceptable pressuring tactics. However, the amount that the insurance companies save is far in excess of the small fines they have to pay for unfair or unethical behavior.

Claiming Exclusivity While Still Offering Terrible Rates

Plenty of companies offer an exclusive rate for a select group of people and still charge them a terrible rate. Just because an offer is only for a select group of people doesn’t mean it is a good rate. The most prolific perpetrator in the auto-insurance industry is USAA. They claim they offer fantastic rates for people in the military, but they have some of the worst rates in the auto-insurance industry. There are many other auto-insurers that offer better rates, and many of them have military discounts that dramatically beat anything that USAA offers. Just because a rate is exclusive, it doesn’t mean it is good or fair.

A Bit Of A Giggle

A woman in New York filed a home insurance claim for her expensive engagement ring. The insurance company asked for a photo of the ring. The photo she sent had a meta tag that showed it was taken just a few hours after the photo request was made, which was over a week after the date she claimed she lost it.

About The Author

Ash The Great

After a varied career in different industries from the hospitality industry to the financial consultancy industry, Ash now spends his days working as a professional writer.

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