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HSFPP Update # 190—Double Check Your Car Insurance Coverage

Message from Flashman: This week’s update helps teens understand the value of vehicle insurance. They need to make sure that they are dealing with legitimate insurance companies that are authorized to sell insurance in Kentucky. Always make sure that you make the check out the insurance company and not the agent. Many teens learn skills that teach them how to drive, but they have no idea how much car insurance costs, if the company is legitimate, or even how to go about shopping smart for their coverage. As early as high school, teens need to begin thinking about how they will take care of car insurance needs once they leave home. The Kentucky Office of Insurance Web site can teach teens the importance of having car insurance and how to double check their car insurance coverage. Teens also need to understand that having good grades in high school really does pay off in good student discounts and Kentucky’s Graduated Licensing Program.

Note to Educators: Answers to Discussion Question # 2 are: sex; location; age; credit rating; type of car you buy (ones with larger engines—8 cylinders vs. 6 cylinders); theft record on vehicle type; who you buy the car insurance from.

Web Site Pick of the Week: 

http://doi.ppr.ky.gov/kentucky/documents/news/web/doigetsmart.asp

The Kentucky Office of Insurance Web site is one of the best sites for information on discounts for good student drivers, as well as free publications and consumer guides about car insurance. You might find their “Get Smart” quiz, which tests your knowledge of car insurance, especially useful.

In the New$... Make Sure Your Vehicle Insurance Is Real!

by Robert H. Flashman, Ph.D., University of Kentucky Cooperative Extension Service

Car insurance is very important, especially for teen drivers. Parents will tell you the most expensive part of having a teenager is adding them to their vehicle insurance policy; and any teen who bought coverage for their own vehicle will tell you how expensive it is, even if they bought state minimum coverage. However, you need to make sure you’re really covered. This June the Kentucky Office of Insurance (KOI) began investigating an individual who was selling insurance in Kentucky without proper authorization. A flyer was sent to consumers that offered insurance, but did not specify a company name. A Fort Mitchell man was arrested for issuing fake insurance cards and collecting premiums from 43 people for fake auto insurance. KOI charged the man with 13 felony counts of insurance fraud for allegedly accepting more than $9,000 in premiums from the victims.

The KOI began investigating after a consumer in northern Kentucky called the Consumer Protection and Education Division, reporting that she had tried to transfer the title on a vehicle at the Boone County Clerk’s office and was told that her insurance card from Amtrek Two Insurance Co. was invalid. Amtrek Two is not authorized to sell insurance in Kentucky and the agent was not a licensed auto insurance agent.

Unfortunately, this is not an isolated incident. Other charges and convictions posted on KOI’s Web site are the following:

(1) A licensed customer service representative with Kentucky Farm Bureau (KFB) accepted premium payments but failed to forward the money to KFB. On March 5, 2007, she was charged with one felony count of fraudulent insurance acts in Barren Circuit Court.

(2) On September 5, 2005, this person presented a fake insurance identification card to an assistant county attorney in Jefferson District Court. On July 23, 2007, he was charged with one felony count of Fraudulent Insurance Acts in Jefferson District Court, and pled guilty to the amended misdemeanor charge of Attempted Fraudulent Insurance Acts. He received 365 days conditionally discharged for two years and had to pay $130.00 in court costs.

(3) On or about January 12, 2005, September 8, 2004, and August 17, 2004, this person presented fake insurance identification cards to the Carter County Clerk in order to register three motor vehicles. On February 7, 2005, he was charged with three misdemeanor counts of fraudulent insurance acts in Carter District Court. On August 20, 2007, he pled guilty to the three misdemeanor counts of fraudulent insurance acts. He received 30 days conditionally discharged for one year and was ordered to pay a fine in the amount of $800 to the Fraud Division for investigative expenses. He also was required to perform 300 hours of community service.

Remember, before purchasing any insurance, consumers should verify with KOI that the company is licensed to do business in Kentucky. Their toll-free number is (800) 595-6053. Also make sure to write your check to the insurance company and not to the insurance agent. Consumers should be suspicious of offers that seem too good to be true.

There are several steps that you can take to help you get better insurance coverage: 

Contact the Kentucky Office of Insurance and ask for their publication, “Consumer Guide to Auto and Home Insurance,” which not only educates you about the various types of coverage, but also shows the cost of coverage from all companies that are authorized to sell insurance in Kentucky.

Before adding a teenager to their insurance policy or buying them a vehicle, parents should contact their agent to learn the cost of coverage.

Consider the possible benefit of higher liability coverage and higher deductibles for collision and comprehensive coverage to lower your premiums and better protect you in case of lawsuit. Be sure to ask about discounts for drivers who have good driving records, who make good grades, and/or are taking (or have taken) driver education.

Shop around for the best price and service. Not all companies charge the same rate for teenage drivers, and the difference ranges from a few dollars to hundreds of dollars for same coverage.

Sources:

(1)  “Kentucky Man Allegedly Sold Fake Auto Insurance to Dozens” [News Release], Insurance Journal, 10/11/2007.

(2) “Office of Insurance Warns Of Unauthorized Insurer” [News Release], Kentucky Office of Insurance, 10/11/2007. http://doi.ppr.ky.gov/Kentucky/Documents/news/Unauthorized Insurer.asp

(3) “Fort Mitchell Man Arrested On Insurance Fraud Charges” [News Release], Kentucky Office of Insurance, 10/11/2007. http://doi.ppr.ky.gov/Kentucky/Documents/news/InsFraudArrest.asp

(4) “Charges and Convictions Activity – March 2007” [News Release], Insurance Fraud Investigation Division, Kentucky Office of Insurance.

(5) “Charges and Convictions Activity – September 2007” [News Release], Insurance Fraud Investigation Division, Kentucky Office of Insurance.

(6) “Take Time to Double-Check Your Insurance Coverage,” Kentucky Office of Insurance, ca. 2003. http://doi.ppr.ky.gov/kentucky/documents/news/web/doigetsmart.asp

Discussion Questions:

1.) Did you know that good grades and a good driving record could lower the cost of your insurance?  Yes___ No___

2.) What else will affect what you pay for a car?

 

Follow-up Activity:
Go to the Kentucky Office of Insurance Web site and click on “Get Smart”; take their interactive quiz to test your knowledge of car insurance.
http://doi.ppr.ky.gov/kentucky/documents/news/web/doigetsmart.asp

 

Kentucky High School Financial Planning Program:

http://www.ca.uky.edi/hes/fcs/hsfp

The purpose of the HSFPP financial updates, video lessons, and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP, updates, and video lessons meet Kentucky core concepts. The web site, updates, and video lessons are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.

If you are not already on our listserv:\

The video lessons are available only to members of our listserv and will not be posted to the HSFPP Web site because of the timeliness of the information. If you would like to receive our video lessons, which are sent to our listserv biweekly, on alternate weeks from these updates, please sign up at the following page of our Web site:

http://www.ca.uky.edu/hes/fcs/HSFP/response.htm.