​Ohio auto insurance companies are having their own version of March madness! While this is a fun and exciting time to watch college basketball, things aren't so pleasant when auto insurance companies don't do well. 2016 wasn't a good year for the auto insurance industry. While some companies did do very well, other companies lost a lot of money. As a result a lot of the companies that lost money (or made very little) are making drastic adjustments.


Some of these adjustments include:

• changing payment plans (which means higher down payments and/or requiring automatic payments)
• suspending new business in certain areas 
• some companies have stopped doing new business altogether in Ohio
• tougher underwriting standards
• And, of course, raising premiums!

   This article will help you understand why some auto insurance companies are in the poor shape they are in. Understanding why this is happening helps you to keep an overall pulse on the auto insurance industry. This article will also help those of you who have already felt the negative impact of this downturn, and give you some ideas of how to minimize the effects.


Of course, only a small percentage of auto insurance companies lost money. A small percentage did very well. In between is the bulk of companies that did ok, but didn't make the profits they expected to make. It's the companies that had poor to mediocre results that are raising premiums.




Major reasons why some Ohio auto insurance companies had a bad year

• Competition. If you take the number of auto insurance companies in each state and divide it by that state's population, Ohio ranks #1 for having the most companies per capita. This higher amount of competition, which helps keep premiums low.

• Race to the bottom. When you combine the competition factor with the fact that Ohio has fairly minimal requirements, premiums tend to run very low compared to most states (many states require medical payments coverage and uninsured motorist coverage. Ohio requires neither). For an auto insurance company to gain significant market share, they need to offer low prices to be competitive with all the other companies.... Sometimes, they set the premium floor too low and lose money.

• Increasing cost of claims. Newer vehicles are coming out with safety features such as sensors, cameras etc. that are great for overall safety, but very expensive to repair compared to older model vehicles. And year after year health care costs go up and up and up.  This includes people with minor injuries and people with severe of life threatening injuries.

 Having lower costs in premium combined with higher costs in claims causes problems for many companies. Something's gotta give! This is why prices are going up.

 What to do if your auto insurance premium goes up


    If you get bit by the higher premium bug, the best thing you can do for yourself is shop around with other auto insurance companies. I can not stress that enough! Comparing quotes from other insurance companies is your single best way of keeping auto insurance premiums down. It is recommended that people should shop around for insurance at least once every two years. But statistics show that only a small percentage of people follow that advice. Some people go years without getting a quote from other companies. Oddly enough, those are the same people who tend to be offered the highest amount of savings when and if they do finally shop around.


Key tips about how to shop around for a lower auto insurance price


Whether you prefer to get an auto insurance quote online or over the phone really doesn't matter. What matters is WHO you are getting the quotes from:

• I recommend staying away from getting quotes directly through a company. When you do that, those companies tend to either bypass their agents, or not use agents at all. So when something bad happens, do you want to talk to an agent for advice or get advice from a customer service rep that's trained to give you only company preferred responses? Some of the lousiest advice I've heard people receive is about how to handle a potential claim from a customer service rep. Do your self a favor and go through an agent. They will give you sound advice rather than a canned company response that serves the company's best interest.

• Beware of lead generation sites! A lead generation site looks very much like an insurance agency's website. If you don't know what to look for, it can be hard to tell the difference between an insurance agency and a lead generation site. A lead generation site pretends to sell insurance, but they don't sell insurance at all.  Instead, they collect your information that is needed to run an auto insurance quote, and then sell your information to real insurance agents. The big problem with that is that they often sell your info to dozens of agents, which causes your phone to ring off the hook! Stay away from those sites..... Fortunately, there's a very easy way to spot these shady lead sellers. They try to stay anonymous and do not list important details on their website, such as name, address and phone number. Any agent or agency worth their salt will display those kind of things prominently on their website. If you do not see a real live person on the other end, beware!

• Independent agent versus captive agent. My opinion is obviously biased here since I'm an independent agent. I have nothing against captive agents and most all of them are great at doing their job.... But getting a quote with independent agents (agents who sell insurance with multiple companies) is much more efficient than getting quotes with captive agents (agents who are employed by and only sell through one company). For example: If you call or quote online with three captive agents, you will only get quotes from 3 companies.... However, if you call or quote online with three independent agents, you may get quotes from 20-30 (or more) companies with less than one hour's worth of effort. Independent agents will do the work of shopping around for you as opposed to a captive agent, whose hands are tied down to one company.

Summary: The auto insurance industry is no different than the stock market. There are periods of good and bad. But this is nothing to worry about in the long run. Like a bear market with stocks, you simply need to make adjustments in order to ride the storm out. So don't be afraid to shop around for other auto insurance. Chances are more often than not that you will save money by doing so.



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​There are three types of non-regular auto insurance policies in Ohio: A Financial Responsibility Bond, a Broadform Named Driver policy and a Named Operator policy. Most states have a Named Operator policy. A few states have the Broadform Named Driver policy. But only Ohio has a Financial Responsibility Bond. And only Ohio has all three options available. All other states only have one or two options.


      All three policies are intended for those who need auto insurance liability coverage but don't own a vehicle. People need these type of policies for various reasons. But the problem many face is knowing which type of policy is right for them. While all three types of policies are very similar in many ways, they are also very different in other very important ways. This article will help you understand what you need to know to make sure you're buying the right type of policy.


     I have summarized the key similarities and differences between the three. I also created a chart which helps you compare the three side by side. I used 12 key factors and how the three types of policies measure up. It's important that you understand these 12 factors. So let's start with the factors in which all three are similar.......


Similarities

• All three are secondary policies. This applies if you borrow a friend or neighbor's vehicle, and you cause a wreck. The vehicle owner's auto insurance policy is the one that pays any damages. A vehicle owner's policy is thus considered the primary insurance (meaning one who pays first). It's only when the vehicle owner either doesn't have auto insurance, or does have insurance but not enough to cover all the damages, that these secondary policies kick in.

• All three policies offer state minimum liability coverage. While state minimum liability coverage is lousy, it is the bare minimum that will allow you to drive legally.

• None of the three policies cover any other driver besides the one listed on the policy. Regular auto insurance allows your vehicle to be covered when you loan someone your vehicle. Not these three policies!

• All three will satisfy an SR22 state filing requirement.  If you've had your license suspended and need an SR22 to get your license reinstated, all three of these will work for you.

• None of the three policies offer comprehensive or collision coverage. Comprehensive and Collision are the coverages you need to be insured for physical damage done to the vehicle you're driving. Only a regular auto insurance policy offers Comprehensive and Collision coverage. Financial Responsibility Bonds, Broadform Named Driver and Named Operator policies do not offer either coverage.

Differences

• Limits above state minimum liability coverage. State minimum liability coverage is very limited, and only adequate for minor accidents. It will most likely not be nearly enough coverage if you were to cause a major accident involving serious injuries. Most Broadform Named Driver and Named Operator policies offer higher levels of liability coverage but the Financial Responsibility Bond does not.

• Uninsured Motorist Coverage. This is important coverage to have. But the Financial Responsibility Bond doesn't offer it. Most Broadform Named Driver and Named Operator policies do.

• Medical Payments Coverage. Again, the Financial Responsibility bond falls short. Only the Broadform and Named Operator policies offer it.

• Policy applying to vehicles you own. If you're driving a vehicle that you own, there is absolutely no coverage offered whatsoever with a Named Operator policy. A Financial Responsibility Bond and Broadform policy offer coverage on owned vehicles. This is the absolute minimal coverage you can carry on a vehicle you own and still be legal to drive. Although I highly discourage settling for anything less than a regular auto insurance policy for vehicles you own, many people go this route because of the cost savings.

• Policy applying to vehicles owned by a member of your household. Again, there is absolutely no coverage offered whatsoever with a Named Operator policy. Both the Financial Responsibility Bond and the Broadform policy do offer coverage. But again, I'd highly advise you to stay away from doing that.

• Running credit as a rating factor. 92% of all auto insurance companies use your credit record as a factor in calculating your auto insurance score. How much of a factor varies greatly from company to company. The Financial Responsibility Bond is the only policy of the three that does NOT run credit as a rating factor.

• Converting to a regular auto policy. This applies to those who do not currently own a vehicle, but plan on buying a vehicle in the very near future. Both a Broadform and Named Operator policy can easily convert to a regular auto policy by simply adding a vehicle to a policy. This only takes a five minute cold call to your agent. A Financial Responsibility Bond can NOT convert to a regular auto insurance policy. So you will need to cancel your bond and write a new regular auto insurance policy...... It's not that big of a deal. Just a little bit more of a hassle and less convenient. Especially if you are at a car dealership, waiting to drive off the lot.

    Here is a chart to help you compare the three types of policies and decide what's best for you.

Get a Financial Responsibility Bond Quote with Lyles Insurance


Get a Broadform Named Driver Quote with Lyles Insurance


Get a Named Operator Quote with Lyles Insurance


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