Oregon Auto Insurance Buyers Guide

Oregon Auto Insurance Buyers Guide

© Doug Hartley, InsureSource Agencies, LLC

Whether you are a young driver of your first car or a seasoned operator of a high value vehicle, buying insurance can be a tedious task, not to mention confusing. Oregon state law says that all cars must have insurance while parked or traveling on Oregon streets, roads, highways and freeways. What's even more important to know is that if you have a vehicle that is registered with the Oregon DMV and has current and valid tags, it must be insured!

Yes, even if your car is broken down and in the shop, it has to have insurance on it by its owner. That seems unfair if you aren't driving it. Here are some 'what ifs' to consider:

What if:

the mechanic test drives the car out on the street?
you decide to fix it yourself this weekend?
you trade it in for another car and you don't have insurance to drive that one off the lot?
someone gets hurt playing in, on, or around the vehicle?
your car gets stolen?
your automobile burns up in a fire?
etc.

You get the picture. Yes, you may not be driving the car today because it is out of gas, not operational, broken down, but there are so many documented cases and claims involving vehicles that are in the process of being fixed that were not insured that even the State of Oregon made it mandatory to keep them insured.

What happens if you don't keep that parked car insured?

Every registered vehicle has a vehicle identification number (VIN) recorded at both the Oregon DMV and with an insurance company. Insurance companies are required to send daily updates to the Oregon DMV electronically of the status of every VIN it has insured. The DMV then matches up that VIN sent by the auto insurance company with all the ones it has in its database. That's why the police can run your plate before he or she pulls you over and knows whether you are insured or not! The DMV of Oregon then runs a report of all currently registered vehicles that have an insurance company status of canceled or uninsured. They then put all those VINs that have current tags but show no insurance into a sort of random lottery drawing or, in other words, a small percentage of those vehicles can be randomly checked for proof of current insurance.

Then, you could get a postcard in the mail from the Oregon DMV wanting proof that your car was insured on a certain date. On the card you have the option of indicating that the car was sold, taken to the junkyard, insured or not insured. If you write down a name of an insurance company, the DMV will check. If the insurance company you indicated insured your car on that specific date comes back and says you weren't insured, then, your status will be changed to "uninsured" for that date. So, whether you honestly state that you, the registered owner, were uninsured or they find out though checking with the insurance company, you will be penalized with a requirement for an SR-22 for at least three years.

What is an SR22 requirement?

An SR-22 requirement isn't as bad as some people think. But it can really be an annoying hardship for some. The bottom line is that SR-22 is a system set up to force you to buy car insurance if you got caught once already driving without insurance or got some other major violation. The law in Oregon, as stated above, requires all vehicles to be insured anyway. It is just plain assumed that your car is insured because you obey the law! Right? So, SR22 is a piece of paper. It is not any special type of insurance. It is a misconception by most that the SR-22 costs a lot of money. It does not! SR-22 is not insurance itself. It is just proof of insurance. Your insurance is what costs you money. And, the cost of your insurance is based on your driving record, your credit score in general and your insurance credit score specifically.

As indicated above, if a car insurance company wants to do business in Oregon, it must install a special computer that talks to the Oregon DMV computer electronically. Everyday, the insurance company has to send an update of which cars it has insured and which ones have cancelled. In addition to this electronic filing of auto insurance information with the State of Oregon by insurance companies, that the Oregon DMV requests to be filed by the insurance company for those drivers that have at least once been caught driving with no insurance. The form that is required is called an SR22 form. Again, this is not insurance, it is not any special type of insurance; it is simply an additional proof that you bought insurance.

Okay. Let's say you find out you need an SR-22. You buy insurance. You must let you're your insurance agent know that you need one. He or she does not automatically know that you need an SR-22. You must tell your agent that you need one. When the insurance company has been requested by an insurance agent to send an SR-22 to the Oregon DMV, the insurance carrier prints and mails a little piece of paper about the size of a postcard. On that form it guarantees that the driver has at least one car that is insured with that company. Up in the corner of the form it says "SR-22".

Some agents can print an SR22 right off the computer and hand you one in the office. You can then take it to the DMV yourself and ask for proof that you submitted one. Otherwise, you must wait for the insurance company to mail one in and that could take weeks for it to show up in the DMV system.

What's the big deal if you let your insurance policy lapse or cancel that has SR22?

The big deal is that you will get your drivers license suspended. Here is where the threat or punishment lies. Like I said before, SR-22 isn't all that bad. It just means you have to comply with the law. But, if during those three years you fail to carry insurance on at least one car and there is no company sending proof, then the DMV will send you a notice to your last known address that you are not in compliance with your SR22 certificate requirement. The letter will state that you have 30 days to provide them with another SR-22 certificate or your drivers license or privileges will be suspended until you turn one in. If you turn one in on or after your suspension date, you will be charged a reinstatement fee.

Worse yet, if you get pulled over, even if you have insurance, but failed to turn in an SR-22 certificate, the police officer can give you a ticket for driving while suspended and impound your car. Yes, that's what I said. Your car could be impounded, even if bought insurance to cover it if you didn't have your agent give you an SR22.

One more thing on this topic of SR22s and suspension letters. If you get a letter threatening to suspend your drivers license, please don't wait until the day it says you will be suspended. Most people think they can waltz into the insurance agent's office and buy a car insurance policy, have the agent print off an SR-22 certificate and take it to the DMV that day. You will find out the hard way that you were already suspended that morning at 12:01 am and you will have to pay a reinstatement fee. Worse yet, you get pulled over by the cops on the way to the DMV from the insurance agents office. You can still get a ticket for driving with license suspended. You must turn in an SR-22 to the DMV BEFORE the date it says you will be suspended. Not ON the date. 12:01am means morning, not noon, not midnight that night of the date on your letter. Please, turn it in BEFORE that date. To avoid hassles, give yourself plenty of time before that date because it takes several days even after you turn in the SR-22 for it to get to the main processing center in Salem, Oregon and get posted to your account. Yes, you may have a receipt in your hand that says you turned it in on time, but the computer on board the police patrol car might still show you as not having one and even suspended simply because you didn't consider processing time. He may still give you a ticket and then you will have to waste everyone's time going to court to plead your case for dismissal.

So, auto insurance in Oregon is serious business huh?

Yes it is, very serious! Driving on Oregon highways is a privilege, not a right! How many times have you heard someone say, "I paid for this car and I'm a citizen of this state, I should have the right to drive on these streets without having to pay for insurance?" Well, maybe you haven't heard that said nor said it yourself, but I have heard it so many times I can't count them.

Privilege v. Right. Yes, we all have certain rights as spelled out by various governmental documents, but driving on the highway without insurance is not one of them. Privileges are earned. For the safety and security of all those who travel on the highway, one must be trained in drivers safety. The proof that you are a safe driver is that little piece of plastic in your wallet or purse that says 'drivers license' at the top. You passed the written and driving tests, provided sufficient proof of residency and the DMV took your picture and sent you a license in the mail. No, it wasn't your right to just march in to the DMV and demand a license. You had to earn it. Hours of practice behind the wheel with your mom, dad, brother, sister, or instructor earned you that privilege. You had to earn the money to buy that car. You had to earn the money to put gas in it. You earned the money that had taxes taken out to put asphalt on the streets and stop lights at the intersection. The privilege to drive on safe streets was earned.

Now you have to be held responsible for your driving activity should you cause injury to someone or damage to another's property. Do you carry around enough cash in your pocket to pay for the damage you could cause to another persons car if you were to run a red light and crash into them? Probably not. How much would it cost to fix their car? Who knows until the vehicle is towed away from the crash scene to the body shop for an estimate of repairs.

Everyone is in love with his car. Yes, it might be an old wreck, but it gets you to work and to the grocery store and out with your friends. So, damage to your car is a big deal because your car represents mobility to you. It's very inconvenient to be without an automobile. Taking the bus or train is tough if your destination is way out of the way. But, having your car damaged beyond drivable or causing another person's car to be un-drivable is the least of your potential costs if you get in an accident for which you are responsible. Imagine the unthinkable; you or someone else gets injured.

Have you checked the cost of emergency room visits, hospitalization, doctor visits or therapy lately? You think it is expensive to fix your car. That's nothing compared to the cost of medical. Then, imagine getting sued for pain and suffering beyond the cost of the actual medical bills! In other words, the cost of the injury could be ten times or more the cost to fix your car. Next time you are in a little parking lot fender bender or someone dings your door, be grateful that there were no injuries involved. Cars can be fixed or replaced; human bodies are a little harder to repair.

Okay, now you're convinced you need to buy insurance, where do you start?

You can buy insurance from about a hundred or so insurance companies in Oregon. Home, auto, commercial, health, and life insurance are the most common consumer types of insurance you can buy. The field of companies narrows depending on your qualifications and your needs. Here we are talking strictly about auto insurance. That narrows the number of companies down about as many as you can count on your fingers and toes.

You get bombarded every day on television, in the newspaper, on billboards, in magazines with advertising to buy insurance. Have you ever asked yourself how the insurance companies can afford to do so much advertising? Yep, part of your premium goes to the expenses of the company. One major expense is advertising. The advertising is somewhat regulated though. In other words, there is only so much that insurance companies can promise you in a short 30 second ad. So, they use advertising gimmicks. Cute little cartoon characters or humans in comedic situations capture your attention. That's the job of the advertising agency, to get your attention and pound some brand name into your mind. People don't want to buy from a company they don't trust And they don't trust a company they haven't heard about.

Bigger is better, right? Not necessarily. You want to consider these factors as well as price:

Responsiveness after a claim,
Availability for customer service questions,
Ease of interaction through electronic media such as email or website,
Ability to pay claims/enough money to pay,
Variety of ways to pay the insurance bill,
Variety of companies to choose from,
Flexibility to move from one company to another if something changes,
Etc.

There are so many more aspects to the buying experience than who has the best cartoon character. How is it that five different companies can promise to save you money over the competition? Insurance prices are calculated based on classifications. One company might charge a lower price than another in a certain class. While that other company might be lower in a different class. That's how they can all say that they might be able to save you hundreds over the competition. Cool huh?

Aren't classifications considered discrimination?

Let's break down the word discrimination. Discrimination means breaking things down into classes or categories. The question is "Is it unfair discrimination?" Insurance companies cannot discriminate based on race or religion. But, they can discriminate based on age, gender, driving record, credit score, type of car, zip code you live in, how far you drive to work, what kind of business you use your car in and what coverages you buy. Yes, I said sex discrimination. In the State of Oregon, insurance companies can charge more for men than women because statistically, men have more accidents!

What does credit have to do with my ability to drive a car safely?

Geez! I can't tell you how many times I've been asked that question! I'm an insurance agent and I still am scratching my head over that one. But, regardless of which side you come down on this whole credit scoring thing as it relates to insurance companies, it's legal and insurance companies use your credit to determine your eligibility and the price for insurance. What the insurance companies say is that they can statistically predict how many claims and the severity of the claim based on a person's creditworthiness. They've done all kinds of statistical analysis to determine that if you have a bad credit score, you are more likely to file a claim or get in an accident. Yep, that's what they say. So, until the law says they can't use credit anymore in the State of Oregon, be ready with your name, address, date of birth, drivers license number and possibly social security number when you call any company up for a quote. We will check your credit!

Are there other things beside your actual credit score that are considered when checking your credit?

Yes! A big yes! Insurance companies now have access to your insurance credit score that also considers specific things like prior insurance, how long you've had your prior insurance, how long you've lived at your current address, how long you've worked at your current employer, how many claims you've filed, how many times you've made changes to your policy and how many times you were late on your payments or let your policy lapse.

Most companies now have created a model of the perfect customer. You want to know how to lower your rates? Keep a clear driving record. No accident, no tickets. Pay all your credit cards, auto loans and mortgages on time. Don't move more than once every five years. Keep the same job for more than five years. Change your policy no more than every two years. Etc. Insurance companies love signs of stability. If you don't have credit, get some. Take out a credit card and pay it off over a few payments. But, pay it off! If you get an auto loan, make sure they report to the bureaus. You could be paying a small auto loan company and think you are building credit. Not necessarily. Be sure and ask.

Now you're ready to go shopping for car insurance, where do you begin?

You have so many outlets to buy insurance. You can buy from an independent agent, one that offers you more than one competitive quote with a single phone call. You can buy from a large exclusive company agent; one that only represents one company. But, it's a big name company and most likely been in business a long time. You can purchase your insurance from a direct company online or over the phone. You may even have access to auto insurance through your employer in a group policy arrangement.

You can call around on the phone for quotes. Where do you find the numbers? Just look on the internet the same way you probably found this website. If you are going to fill out a form request for a quote on the internet, just be sure it is secure and that it has the little lock symbol up in the corner of the URL and starts out https:// (that 's' in there means it is secure). Otherwise, your personal information might get stolen between your computer and the agent who will actually do the quote. Yep, identity theft!

If you are more comfortable with a face to face quote, come on in to your insurance agent's office. Look on line or in the phone book for an agent office near you. Make sure you are happy with the agent, how you are treated, if you get your questions answered, etc. Just be sure you put some thought into buying your first policy or switching if you are unhappy with the pricing or service you are getting. The insurance marketplace is very competitive and, just like the ads say one television, you could save hundreds of dollars by shopping around for car insurance. Just be sure you understand what it is you are getting in return for your hard earned insurance dollars.

Are all insurance companies the same as far as coverage?

Yes and no! Yes, the State of Oregon regulates what the insurance companies that are authorized to do business in this state must sell as far as minimum requirements. All must offer you at least four coverages. You as a driver must insure your car with at least these four coverages:

Bodily Injury Liability (The injury you cause to another)
Property Damage Liability (The damage you cause to another)
Uninsured Motorist Bodily Injury (If you or your passenger is hurt and the other guy didn't have insurance)
Personal Injury Protection (If you or your passenger is hurt and it doesn't matter who caused the accident)

These coverages are all the same with every insurance company and must meet certain minimum defined guidelines. The price you pay for them may differ. But they must offer you at least these coverages. They are not optional. You must buy at least these and for the following limits:

25,000 (per person injured)/$50,000 (per accident)
10,000 (for property damage you cause)
25,000 (if you or your passenger is injured)/ $50,000 (for everyone in your car)
15,000 (per person no matter who is at fault)

Beyond these coverage limits are where insurance companies really differ in price and limits offered. Some companies stop here at these limits and don't offer anything higher. That's fine if you buy from them. You are in compliance with the law. However, is it enough? That's up to you to decide.

We insurance agents are instructed to teach you that these minimum limits are not enough. But, you have the free will to choose those limits or to choose higher. And, you have to balance the cost of higher limits with your budget or ability to pay for them. You might be surprised, however, just how inexpensive higher limits are. It doesn't cost you double to increase your limits to double or even quadruple the minimum. No. Most of the cost of issuing a minimum limit policy involves just getting the policy on the books and sending you the paperwork. Only a fraction gets invested and ready to pay a claim. The insurance company is betting on the statistics that are more likely that you won't even be in an accident. But, should an accident happen, your valid proof of insurance card in your wallet is like having a wad of 250 one hundred dollar bills in your pocket.

While shopping for insurance, ask! How much is it for higher limits. Get a quote for each limit. You might just decide to go a little more for a little more peace of mind. Also, something else to consider when buying higher limits. Insurance companies factor in that you are more of a responsible person when you voluntarily buy higher limits and actually reward you buy offering you lower prices for having had higher limits. That sound strange so let me repeat it. You get lower prices than the guy who has minimum limits because you have kept higher limits!

When should you buy 'full coverage' insurance?

First, we have to define 'full coverage'. There is a lot of confusion among consumers about this term. Full coverage does not mean that when you get in an accident that every possible scenario will be 'covered'. No, it won't pay a million bucks for the guy you just hit. No it won't guarantee to buy you a brand new Mercedes, No it doesn't mean you will get your car repaired without a deductible. Full coverage is often confused with these outrageous beliefs and more.

We in the industry refer to 'full coverage' as being the minimum limits as stated above with comprehensive and collision coverages added to the policy. These are optional coverages, not mandatory. You choose them. They may be mandatory by a lender if you are financing your automobile. The bank that lent you the money may not let you buy comprehensive and collision coverage ('full coverage') with deductibles higher than $500 for each coverage. Again, this is where insurance companies must define a minimum set of things covered under the collision or comprehensive part of your policy. If you choose these coverages you can be guaranteed only that your car will be fixed or paid for up to the value of the car at the time of the loss minus the deductible you have chosen.

Who says what my car is worth at the time of the accident?

Here is another area completely misunderstood by the general public. After your car has been in an accident and has been considered a total loss, no matter whose fault it is, the insurance company responsible for paying the claim gets to determine how much they will pay you. Yep, that's right, they decide! It doesn't matter how much you paid for the car. It doesn't matter how much you still owe the bank! The attitude that all insurance companies have is that it is not their fault that you 'paid too much for your car"! So, buyer beware.

When buying a car you consider book value. First, there are a couple of 'book' standards. The two common ones are NADA and Kelley Blue. These two standards companies base the value of all years, makes and models of cars based on retail value, wholesale value, trade-in value and perhaps salvage value. They even try to base it on regional variances. These books are not interested in the value of cars after a loss usually. The deal mostly in the trade of cars in whole, undamaged condition. Yes, mileage and amenities are considered in determining the value of your car. Insurance companies usually don't use these books for the purpose of determining the value of your car after it has been totaled. This is worth repeating. These book values are for the trade of undamaged cars not damaged and the insurance companies typically don't use them for the purpose of determining how much they will pay you for your automobile if it is totaled in a car accident.

What do the companies use then to determine the value of your car? They use a separate source or bureau that keeps track of how much other insurance companies have paid for your particular automobile after a total loss. So, don't be surprised if just two months ago you paid $7000 cash for your car and the company only offers your $5000. Worse yet, you still owe the auto loan company $12,000 and the company offers you $6200. It happens. That is a real example! And that was before applying the $500 deductible after an automobile theft.

What can you do if the insurance company offers you less than what you think your car is worth?

Negotiate! You have to do your homework. Get prices and values of cars off the internet or in car sales magazines. Look in the newspaper. Find the listed prices for cars for sale that are similar to yours. You might be surprised to find that the company's offer isn't that far off. Then again, you might be able to put together enough evidence that they are offering you less than what is available out there for sale. Yes, you have to fight for your settlement! You just might be amazed at how much flexibility the claims adjuster has in settling on a more appropriate value for your car.

What are other options beside comprehensive and collision insurance that are often considered when buying 'full coverage'?

Towing, rental reimbursement, roadside assistance, loan balance, gap, additional equipment and many more. Gets kind of confusing. And, you should really question whether the cost is worth it.

Towing for example, as offered by the insurance companies, is usually only worth about $25 to $100 per time you get your car towed. Have you checked the price tow companies charge to come to the scene of your accident or breakdown and tow your car five miles to your home? In Oregon, it's about $300 minimum. So, for the $8 you spend to buy $25 worth of towing every six months might not be worth it. And, you'd have to pay the bill then send the receipt in to get reimbursed. If your company offers 'roadside assistance', now that might be worth it. Not all 'roadside assistance' coverages are the same. Ask the agent to give you the exact details of how the company he or she is offering you treats the topic of 'roadside assistance'.

Rental reimbursement coverage is a critical coverage to have if you don't have an extra car waiting around for your use. Most people don't have a backup car. Rental reimbursement coverage pays a certain number of dollars per day up to a maximum number of days to rent a car while yours is being fixed after a coverable incident whether you were at fault or not. If the other party was at fault, then their insurance might authorize full payment of a rental for you. But, imagine if you were at fault or there is a dispute over who was at fault. It might take days or weeks to get the other company to authorize payment to the car rental agency. That is why this optional coverage is critical and usually only available if you have purchased comprehensive and collision coverage. It is not automatically part of the 'full coverage' as many people think. You must ask for it.

Talk to your agent while shopping for insurance. If you are not sure what coverages you have on your existing policy, talk to your agent. He or she should be happy to explain in detail what each coverage means and what options are available from your company. Bring your policy in to us, regardless of the company, we'll be happy to review it and explain fully what coverages and options you have. We'd even be happy to compare the price you are paying with the ones we have to offer.

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