USAA Auto Insurance

[REWahoo]

There have to be some pretty bad collisions due to inattention.

You mean like this one?

Truck driver indicted in church bus crash that killed 13

A National Transportation Safety Board report says Young told investigators he was checking his phone for a text when the crash happened...

 

[rdy2go]

I think a lot of USAA policyholders are overreacting to the notice they are mailing out. I've never worked for them but worked in insurance for thirty five years and sort of understand the beasts. There notice is removing the guaranty that they will renew your policy but is not a threat to cancel everyone. They would go out of business quickly if they didn't renew their policies. They can't cancel your insurance , but can non-renew your policy if you no longer meet their underwriting standards, just like all other insurance companies currently do. I'm sure that this is a shock to long-time USAA members as it is a change, but it won't affect those with a good claims and driving history.

What is most likely happening is their personal auto underwriting results have been unprofitable and they are trying to fix the problem by giving their underwriters the ability to move bad drivers to a different program with much higher rates that reflect their poor driving or claims records. They still want to keep their good customers and will be able to keep rates competitive if they get the bad drivers out of the preferred program. The reason that they refer to customer's "areas" is probably due to some states no letting them make the change to the policy without state approval.

Their online explanation they are giving customers is just corporate fluff and those reps are just trying to calm down the masses without being too specific about the program change. They are minions with no authority to do anything but fend off the pitchforks and torches. I doubt that complaints will change anything because they are trying to get the line of business (personal auto) back to profitability.

I've written about this before, but insurance rates have to go up to keep up with loss costs, operating costs and lower investment returns. The insurance company that does not raise premiums regularly gets behind the curve and later on will have to raise premiums a huge amount to catch up. That causes a mass exodus that takes years to recover from. Personal lines auto insurance has been a money loser for a few years for most insurance companies and USAA is getting more like all the rest of the industry. It is no longer the exclusive club of military officers and retirees and their families. They wouldn't insure me when I was an enlisted grunt many moons ago but will take me now if I want to switch.

USAA is still a good company but they are changing in an effort to fix an unprofitable line of their business that is very important to them and their members. If I was a USAA member, I would want them to be profitable so that they can continue to offer competitive rates to their members for a long time to come.

 

[samclem]

I think a lot of USAA policyholders are overreacting to the notice they are mailing out.
. . . .
What is most likely happening is their personal auto underwriting results have been unprofitable and they are trying to fix the problem by giving their underwriters the ability to move bad drivers to a different program with much higher rates that reflect their poor driving or claims records. They still want to keep their good customers and will be able to keep rates competitive if they get the bad drivers out of the preferred program.

To the degree that the USAA clientele is still career military officers and NCOs, the company should realize that this group is particularly accustomed to and appreciative of straight talk. If there's a problem/challenge, then making the situation known in unvarnished tems and showing the steps being taken to address it, to include sacrifices by the membership, is the way to handle this. It is not what is happening.

 

[JPatrick]

I suspect the batch of claims forthcoming from the gulf coast will do little to help profitability. Way to go Texas....

 

[REWahoo]

Way to go Texas....

I'd like to point out that unlike other states, Texas has little say in our choice of weather.

 

[travelover]

I'd like to point out that unlike other states, Texas has little say in our choice of weather.

And yet another good reason not to move there, beyond scorpions and snakes. I'm stickin' with a state that controls their own weather.

 

[Gumby]

I'm stickin' with a state that controls their own weather.

We custom order ours from a small shop in NYC, where old world craftsmen use the finest organic materials to deliver something that is not so much a product as an holistic experience. If it doesn't suit our palate, we simply pass it along to Massachusetts and Rhode Island, and then order something else.

 

[JPatrick]

I'd like to point out that unlike other states, Texas has little say in our choice of weather.

Well play it safe REW, I see it is about to be your turn.
There's no reason you can't put off calling the movers til Monday..

 

[REWahoo]

Well play it safe REW, I see it is about to be your turn.

Not much going on here - at least not yet. My rain gauge totals a whopping two tenths of an inch.

 

[rdy2go]

Five inches of rain and some wind about an hour and a half east of REWahoo, no flooding in the Hill Country yet to speak of.

I think that USAA should leave the renewal guaranty on any active duty personnel for a couple of reasons. One is that they can be deployed overseas and unable to handle things like insurance. The other is that a lot of standard insurance companies don't like to write insurance on active duty military due to the deployments. That is probably because of possible unoccupied homes, cars left unprotected or loaned out, etc. Active duty personnel need and deserve that safety net.

USAA may not be impacted too much by the hurricane since coastal property damage is mostly wind and flood and wind damage is excluded in what we call first tier counties in Texas and flood is not covered at all. They will have some submerged autos to pay for and some wind damage inland.

 

[FIREd]

I just received my auto policy renewal today. The premium jumped 14% "due to a rate change in your state or because of your policy's individual risk characteristic". Buried in the policy packet, I also found out that "the Guaranteed Renewal Endorsement is no longer offered in your location".

No accident, tickets, or claims since 2002 and no change in "risk characteristic" since last renewal.

 

[target2019]

Earlier this year I listened to numerous phone calls made and received by someone in the office. She and husband owned a home, insured by USAA, in another state. Sometime after a buyer signed agreement, the cold weather caused a broken water pipe in the kitchen wall. Heat was on, but something in the HVAC system failed, the extreme winter set in, and pipe burst.

Initially, USAA was not going to cover this. There were many phone calls about it. Eventually she ended up with $100K of repairs or more. This included a new kitchen, floors throughout, etc. She spoke of family members who were getting paid to do some of the repairs. Not sure if they sold the home.

My opinion is that they were at fault for not having someone regularly check on an empty home.

 

[meierlde]

Earlier this year I listened to numerous phone calls made and received by someone in the office. She and husband owned a home, insured by USAA, in another state. Sometime after a buyer signed agreement, the cold weather caused a broken water pipe in the kitchen wall. Heat was on, but something in the HVAC system failed, the extreme winter set in, and pipe burst.

Initially, USAA was not going to cover this. There were many phone calls about it. Eventually she ended up with $100K of repairs or more. This included a new kitchen, floors throughout, etc. She spoke of family members who were getting paid to do some of the repairs. Not sure if they sold the home.

My opinion is that they were at fault for not having someone regularly check on an empty home.

Unless it was hot water heat, I do wonder why they did not turn the water off in the house if gone. I always do, in particular when I lived in Houston in the winter when one christmas a lot of folks went out of town and the pipes in the attic froze to the point that the water pressure went to zero. It was boom time for plumbers for a while.

 

[REWahoo]

Unless it was hot water heat, I do wonder why they did not turn the water off in the house if gone.

+1

Whenever we are leaving overnight we turn off the water (a 90 degree twist of a lever behind the water softener) and breakers to the electric water heater. No concerns here about freezing, but I've had concerns about freaky water damage since waking up one morning to find the tank on one of our toilets cracked and leaking.

 

[gayl]

I never turn off the water when gone, even though it mght get down to the upper 30s° for 1-2 nights in January.

 

[Rustic23]

I did not realize this, but many building codes use to require that water meters have a back flow preventer on them. Maintenance for our water district show me how this causes pressure to accumulate on the hot water side when hot water is not used. With the water shut off to a house, which had been vacant for a couple of months, we opened a hose bib. Lots of pressure and the water was hot! This coming from a cold water line.

 

[RE2Boys]

Earlier this year I listened to numerous phone calls made and received by someone in the office. She and husband owned a home, insured by USAA, in another state. Sometime after a buyer signed agreement, the cold weather caused a broken water pipe in the kitchen wall. Heat was on, but something in the HVAC system failed, the extreme winter set in, and pipe burst.

Initially, USAA was not going to cover this. There were many phone calls about it. Eventually she ended up with $100K of repairs or more. This included a new kitchen, floors throughout, etc. She spoke of family members who were getting paid to do some of the repairs. Not sure if they sold the home.

My opinion is that they were at fault for not having someone regularly check on an empty home.

Many homeowner insurance policies have exclusions if the home is not occupied for a certain period of time. That may have been part of the issue.

 

[travelover]

I did not realize this, but many building codes use to require that water meters have a back flow preventer on them. Maintenance for our water district show me how this causes pressure to accumulate on the hot water side when hot water is not used. With the water shut off to a house, which had been vacant for a couple of months, we opened a hose bib. Lots of pressure and the water was hot! This coming from a cold water line.

Most new houses have a pressure relief tank to take up this pressure increase.

 

[Nords]

As far as how much USAA is paying out, I believe Nords shared some staggering numbers a while back (can't remember if it was here or on his blog). I do recall that for every $1 in premiums they took in, they were paying out MORE than $1 in claims, and that's not a good business model. I also recall that the #1 auto claim were accidents where an "overlapping front end collision" occurred, and the brakes were NOT APPLIED (as in...NOT PAYING ATTENTION). Add that to the fact that many loses are very expensive; technology in cars is making it cheaper to total them in many cases when a few years ago, that wasn't the case.

I don't think other insurers are immune to this, so I can see that ALL of our rates will continue to rise and claims will get more and more expensive and not-so-great contract terms for the consumer will become the norm.

Yeah, paying out more in claims than you take in premiums is not a sustainable business model.

The numbers you remember came from an interview that I had with Wayne Peacock, USAA's President of the Property & Casualty insurance division. I did more research from the III and other industry resources (including Berkshire Hathaway). I've linked the post below.

I'll point out that USAA could have just kept sending out press releases (and policy cancellations) but Wayne sought me out personally to ask me to interview him. We've known each other for several years (through conferences) and he wanted to explain the issues in as many different channels as he could.

If there's a common theme among the issues that USAA is facing (along with the rest of the insurance industry) it would be: "It's not about you."

The primary reason for changing insurance rates (and removals of guarantees) is almost always due to a concentration of risk in a specific area of the country. Lesser reasons include vehicle design (especially safety features) and other trends (cheap gas, higher speed limits). But unless you're specifically called out at fault for an accident, then insurance companies don't scrutinize your record as closely as some people might feel. Frankly it's a lot cheaper for the company to click the "renew" button than it is to send a policy to underwriting.

On the frugal front, another reason for higher vehicle insurance rates is insuring your vehicle against collision and comprehensive loss. My spouse and I have not bought a new car since 1981, and we have not had collision or comprehensive insurance for over 30 years. In a stunning coincidence, our vehicle insurance rates have remained flat for... over 30 years.
Your Auto Insurance Premiums Are Rising, But It's Not Just You - Military Guide


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Related subject:
Would you like to have your insurance question answered by a USAA exec or program manager?

Next month I'm returning to a USAA conference for military bloggers. (I've attended them since 2011 and, for some inexplicable reason, I have a reputation there as a hardcore personal-finance nerd.) One of the privileges of this conference is my opportunity to interrogate their execs on various programs, policies, and future projects. I might already know the answer to your USAA questions, but if I don't then I know how to find out.

The conference is 19-20 September and I'll blog about it (both before & after). Feel free to ask me your questions here or by PM or by e-mail at NordsNords@Gmail.

Here's an example from last year's Digital MilEx:
USAA Provides Answers To The Most Important Member Questions - Military Guide

 

[Rustic23]

Travelover:

Not sure what is considered new. Mine is 12 years old and it does not. In fact I am not aware of any homes in our area that have one. Could this be a local or state code?

 

[travelover]

Travelover:

Not sure what is considered new. Mine is 12 years old and it does not. In fact I am not aware of any homes in our area that have one. Could this be a local or state code?

I'm not sure about codes, but the tank needs to be installed when the water meter has a one way valve, as that is what allows the pressure increase. They are not expensive.

https://www.lowes.com/pd/Utilitech-2-Gallon-Expansion-Pressure-Tank/1038591

 

[meierlde]

I did not realize this, but many building codes use to require that water meters have a back flow preventer on them. Maintenance for our water district show me how this causes pressure to accumulate on the hot water side when hot water is not used. With the water shut off to a house, which had been vacant for a couple of months, we opened a hose bib. Lots of pressure and the water was hot! This coming from a cold water line.

Another good reason to turn the heater to pilot if gas or flip its breaker if electric. No need to keep water hot anyway if no one is there.

 

[target2019]

I'm guessing that the heat was on, as the house was up for sale, and being shown.

 

[Dash man]

Just got my USAA auto policy renewal with a $50 increase spread over three cars, a 2012, a 2015 and a 2017. No complaints because it could have been much worse. The notice about the removal of the guaranteed renewal clause was in there. I've been with them for 35 years with multiple cars and homes covered, along with several million in multiple investment accounts. If they cancel my auto policy everything goes somewhere else. I've written the CEO when I felt the service wasn't up to par and gotten issues resolved quickly. I wouldn't hesitate to do it again.

 

[jazz4cash]

Most new houses have a pressure relief tank to take up this pressure increase.

And I guess that's why they addd an expansion tank when the water heater was replaced 5 yrs ago in our 18 yr old house.