PSA: If you make changes to your policy mid-term, your billing will look weird

[tigerryan]

P&C agent here. I frequently find myself explaining billing to customers. I'd say about 85% of the time, I can make it make sense to them. This is for the 15%.

Most companies charge in advance. So if you pay today, 8/10, that's to cover your insurance until 9/10. Let's say you paid that, but tomorrow you call to add a vehicle to your auto policy. It adds $1,000 to your premium, pro-rated. You still need to pay for basically all of August's insurance for this vehicle, but you already paid your August bill, so we can't put the charge there. So let's say including August, that $1,000 is to pay for 10 months insurance. But because August's due date is past, that only leaves 9 payments to spread that $1,000 to. So instead of paying $100 more for 10 payments, you'll need to pay about $111.11 for 9 payments. We're not "charging you extra." We just need somewhere to put the cost of August.

If I need to pay you $100, and I give you $25 four times, you're still getting the same amount as you would if I paid you $20 five times. It's the same core concept.

Thank you for your time, I just needed to gripe about that in writing. If this helps a customer, awesome. If it gives an agent a tip about how to explain it, also awesome.

 

[teddy]

@tigerryan Or you can make changes every month and then complain that that your bill always changes.

 

[angelflightpilot224]

@teddy It’s ALWAYS the people who are constantly changing their policies who want to call in and complain about the bill always changing

 

[tigerryan]

@teddy Dude, I've seen policies where they'll have like 8+ transactions in the year - adding/ removing drivers and vehicles, changing address, getting a discount, doing something that removes that discount. It'll send their billing out of wack so bad, they'll have had like four $0 bill months but a monthly payment of $800 on the last 2 months of their policy with an annual premium of $3k. They're still paying the right amount for the year, but they always forget about those $0 months when all the pro-rating comes back around

 

[tgrubin61]

@tigerryan Apparently "pro-rate" is something 98% of customers don't comprehend. Bring back home ec classes for the love of God and teach these sheeple some basic economics and homesteading like, balancing check book, baking a pie and common sense.

 

[tigerryan]

@tgrubin61 The call that spawned this was one where I spent 30 minutes going over billing with this woman. It's an annual policy, renewal in November, so we're close to the end of the year. Part of it was another agent kind of screwing up or trying to be nice - the caller had renewed her policy a month late, so she SHOULD have had to pay 2 months to renew, but the agent only collected one. Billing is already out of wack from that. Sparing the details, I had the caller pull out her calculator, read off every single payment, had her add it up. I asked her to read off the number - it equalled her annual premium. I then asked her to divide that by 12, she gave the answer, which was exactly what her expected monthly payment was.

She still thought we were screwing her over.

 

[alodiafaye]

@tigerryan It always has to be the “my bill was always $100 a month and why is it $120 a month now?” while conveniently forgetting they missed a payment that caused the account to rebill on the lost factor month people.

 

[tigerryan]

@alodiafaye I wonder if those same people think buying a car from a place offering "NO PAYMENTS FOR 3 MONTHS" means they only pay 57 months of their 60 month loan

 

[tgrubin61]

@tigerryan What's my montly?

 

[sovereignone]

@tgrubin61 I had a like that situation recently.

"So with the change today, your new annual amount is X. From now until your renewal, it's a pro-rated increase of Y. With that divided over your remaining payments, your new monthly amount is Z."

"Can you explain that?"

"Which part?"

"All of it."

"I... thought I did. OK, let's start from the beginning, do you know what pro-rate means?"

 

[alodiafaye]

@tigerryan Don’t get me started on NC insureds who cancel mid-term and find that they actually OWE money when they just paid their bill.

 

[tigerryan]

@alodiafaye Outside my territory, but we get those when they remove a car, get a credit for the rest of the term for that, which gives them a $0 bill, but then cancel a few days after the bill was due and can't understand that they can't keep 6 months of credit if they cancel now

 

[austinmiles89]

@tigerryan The only annoying thing for me about policy changes is that if I raise a coverage online, they often make me call in if I change my mind and want to lower it back down.

 

[carldnovin3]

@austinmiles89 It’s to prevent fraud. Insurance is very serious.

I’d be willing to bet lowering requires some kind of verbal confirmation no losses have happened even if you didn’t raise them first. (Raising them is no concern to the insurance company, it’s more money out of your pocket)

 

[shinwoo]

@tigerryan If they would just take 10 minutes to understand insurance and/or how paying in arrears vs paying in advance works it would eliminate 70% of the calls. And no, you’re not suddenly being overcharged and scammed…you got behind on your bill so you don’t get a waiver on paying what’s due.

**also quit texting and driving- all these accidents caused by distracted drivers have ballooned claims frequency at a time when the safety features on vehicles cost twice as much to repair as they used to.

So when you see the clown with a phone in their left hand and a burger in the right, driving with their knees, that’s the guy costing everyone money.