The Survival Podcast Forum

Finance and Economics => The Money Board => Topic started by: EMichael on April 09, 2010, 12:49:58 PM

Title: Vehicle insurance - another form of consumer debt
Post by: EMichael on April 09, 2010, 12:49:58 PM
For a number of reasons we changed insurance companies recently....and then the company changed agents on us.  Anyway, last night I met our new agent for the first time and had a pleasant conversation.

In the discussion of uninsured motorists, he shared with me the number of these motorists is on the rise in our current economy (and of course, I should increase my UIM coverage).  People will drop their insurance right after renewing their licensing (have to show proof of insurance) and go ahead and drive without coverage.  Eventually when the economy improves they intend to reinstate their coverage.

The catch is, insurance companies will put people in a high risk category for at least one year if they do not have coverage.  If they receive a ticket without insurance, that high risk category extends to three years.  The high risk rates are roughly 3x the normal rates.

Anyway, it occurred to me this is another form of consumer debt (with a high interest pay off).  People keep their money today, but have to pay it in the future at exorbitantly high rates.  It really sounds a lot like credit cards!

Interesting stuff.  I had not considered this issue.