Meanwhile, auto insurance

[keira]

So, today I bought a car (Thanks Actaeon!) and I decided to be all legal and stuff and buy insurance for it. I did shopping around and discovered that the cheapest insurance around that is not USAA (which is out for political reasons) is the Hartford, which offered me a decent deal (for, you know, a 19-year-old).

 

Anywho, do all the VINs and license numbers and fun stuff, and finally get to the "Throw money at us" step. I notice something strange:

 

As you can see, to do the autopay option I have to pay either a $2 or $6 service charge (which, as those experienced in buying things know, is complete crap as it's easier for them to do that than to process payments manually). There is no option to not do this. I only have the radio button for yes. Well, that's strange, but I figure it's just Adblock being overzealous as it tends to do sometimes once in recorded history. So I refresh and try again. No dice. Thus, as any computer science dropout would do, I check the DOM:

 

And, of course, upon disabling that CSS, guess what pops up?

 

What sleazy asshats have you had to deal with recently, SW?

[Randomizer]

See if there is a way to sign up by mail or phone. If there is a phone number, call them and ask if they want to lose a sale because of the service charge. Mention competitors names even if they are much higher and ask if you can speak with a supervisor.

 

I once spent time filling out an order form and then got to entering credit card info where it wouldn't work.

[Student of Trinity]

The service charges may simply be passing on charges from banks, that this insurance company has to pay. How much does it cost to open an envelope and deposit a check? I don't know, but it might actually be much less than $2, since at minimum wage you can handle a lot of envelopes in an hour. Why the banks charge for their services, I don't know, but it is a considerable convenience, so I suppose it should be worth something. And it must cost something for the banks to maintain the necessary infrastructure. Much less than $2 per transaction, however, I would say. In Europe automatic bank transfers are all free.

[Alorael at Large]

Forget automatic deposits (including automatic payments); most banks will mail a physical check, all filled out, for you if you give them the information. Regularly if it's a recurring bill, once if not. This service is also free, at least from the consumer's side. I've heard, but not from credible sources, that banks vastly prefer having full knowledge and control of the transfer like that. If anything, I'd expect the banks to be more cordial with businesses, not least because it's in the bank's interest to make business easy so they get more of it.

 

This smacks of raw, unabashed profiteering.

 

—Alorael, who has accepted that all things banking and billing are slimy at best and Kafka-esque nightmares into which time and money disappear, not at worst, but at baseline. He's terrified to find out what worst could be.

[Randomizer]

You are better off not using an automatic payment system since banks are known to be bad about canceling them when you stop it.

[Goldengirl]

Banks are rent-seekers? Who'd have thought!

[Aran]

"Hey boss, seems like some applicant just managed to check the Bill-by-mail option you told us to hide."

 

"HAAAACCCKKKEERRR!!! Throw her in jail for a bazillion years!"

 

---

 

Did you end up going with them, by the way? If they pull stunts like this on their website, I don't want to imagine how they'll cheat you if you ever need to make a claim.

[keira]

I did, mostly because i am still cheap and the next-cheapest quote was thirty bucks more. The only reason I am getting insurance is because it's required by law, I don't plan on filing a claim ever.

 

Also, I'm pretty sure that deliberately hiding an option like that is illegal as well. At the very least, I imagine people like the BBB would love to hear about this.

Edited February 20, 2013 by sylae
or something. i dunno

[Randomizer]

You never plan to file a claim, but even with a parked car you can get hit and find out the other driver doesn't have insurance since he let it lapse.

 

My father's parked car was hit by a drunk driver on an icy street and pushed forward into a police car parked in front of his car. One police officer got out to arrest the driver while the other called for an ambulance for himself since he had whiplash. My father's insurance company had to pay for the damage to his car and sue to recover from the drunk driver.

[Trenton.]

.

[nikki.]

Yo yo, ya know. I feel yo pain Sy. I ran inta dah same thing wh'n buyin' the limo, ya'lls know?

 

Wanted ta hit dah clubs, but had to buy mah limoh insure frum some otha company.

 

Why are you writing like this?

[Trenton.]

Why are you writing like this?

 

I got bored waiting to buy Minecraft.

[nikki.]

Well, please don't in future. I'm not even sure what accent you're going for and I'm feeling mildly offended by it.

[Trenton.]

Sorry. Yep yep.

[Actaeon]

Well, please don't in future. I'm not even sure what accent you're going for and I'm feeling mildly offended by it.

 

I'm pretty sure he was going for "thug" not "Brit". So unless you've been holding out on us...

 

So, today I bought a car (Thanks Actaeon!)...

 

Ain't no thang.

[Kelandon]

I'm pretty sure he was going for "thug" not "Brit". So unless you've been holding out on us...

Nik spends all day every day proving that those are not mutually exclusive.

[Balladeer]

Speaking of getting hit, my boss backed into my parked car today. Fun times, fun times. At least I'm not at fault this time.

[Aran]

I don't plan on filing a claim ever.

 

Well, who does? I think that's the reason why it's required by law.

[The Reverend]

A few years back, our parked car was hit while my wife was working the night shift at the hospital, and the other driver didn't stop to leave a note or anything. Fortunately, a pedestrian witnessed it, took down their license plate, and did write us a note (left it on our windshield). Our insurance company ran the plate to try to recover damages from the other driver. Unfortunately, the plate came back as a stolen car. But fortunately (for some reason that I don't exactly recall any more), this caused it to be classified as an incident for which we had a $100 deductible rather than a $200 deductible. I had been expecting the higher deductible, so I was impressed that the insurance company didn't try to swindle us.

[Student of Trinity]

Insurance companies don't actually have to be horrible. If they charge fair premiums, then they ought to be able to make a fair profit based on the fact that even the people who never make a claim have enjoyed security. So the business itself ought to be sound. What that might mean, though, is that the best companies won't offer the lowest rates. The ones offering the lowest rates may be planning to boost their profits by swindling claimants.

 

That having been said, one might argue that buying cheap insurance from jerks is really just taking a higher deductible. Presumably you're still covered for the bulk of the worst case, where you injure someone and are on the hook for immense medical bills. The laws that say you have to have insurance to drive are there to make sure injured people are covered, not to bring auto body repair to the masses. So even the most noxious insurance company is probably legally obliged to offer ironclad contracts about paying up for major liabilities.

[Actaeon]

Well, who does? I think that's the reason why it's required by law.

 

The point was, I think, that even if Rocinante was damaged, there would be little point in making a claim because the car is old enough to vote.

[Kelandon]

The economics of insurance turn out to be kind of a nightmare. The most famous result is adverse selection, and there are issues arising from psychology/behavioral economics such as excessive optimism and discounting of future costs. These straightforwardly lead to certain kinds of market failures.

 

But there's another problem that I'm not sure that I can explain very well, which is that economics tends to assume that you have a buyer and a seller, but most insurance transactions involve a buyer, a seller, and the insurance company acting as a middleman. If you get hit by another driver, your insurance pays the auto body shop or hospital and then tries to get reimbursement from the other driver's insurance. That's too many steps for the basic economic models.

[keira]

 

 

The point was, I think, that even if Rocinante was damaged, there would be little point in making a claim because the car is old enough to vote.

This. If it gets damaged enough to where I would need insurance rather than paying out-of-pocket, it's not worth it because it'd be more than what I paid for the car

 

That would be why I only got liability, not the complete-coverage-pay-a-kidney-every-month-and-we'll-pay-for-dents-or-something coverage.

[Goldengirl]

But there's another problem that I'm not sure that I can explain very well, which is that economics tends to assume that you have a buyer and a seller, but most insurance transactions involve a buyer, a seller, and the insurance company acting as a middleman. If you get hit by another driver, your insurance pays the auto body shop or hospital and then tries to get reimbursement from the other driver's insurance. That's too many steps for the basic economic models.

 

In practice, I don't think this is different than the informational asymmetry problem you identified earlier; rather, this just compounds it. There's opportunity for adverse selection, obviously, when initially selecting insurance. Good drivers are going to expect low interest rates, since they're good drivers. However, there are very few ways for these drivers to signal to insurance companies that they are good and therefore deserve prime insurance rates. Instead, insurance companies have to squint and stare at data to try and guess based on categories (eg teenagers pay more, males pay more, etc.), look at past trends in accidents, etc.

 

Beyond that, though, there are opportunities for moral hazard in how the insurance company deals with you, the other driver in an accident, and other firms. They can swindle you or others, or they can't; the problem is, just as early, that it's really hard to know if they're actually acting in our best interest or not.