Any damage that an insurance company pays out for you is considered a claim, but each type of claim can affect your policy differently.

Everyone that drives knows that you can lose your insurance coverage with a company if you have too many accidents or driving violations. Insurance companies are in business to turn a profit and if they are paying out one claim after another for you, they are losing money.

But what about claims that aren’t your fault, like broken windshields?

Glass claims are generally not counted by insurance companies as claims that stack up to a policy cancellation or non-renewal. But, like all things in the insurance industry it completely depends on your insurance company. Best thing to do is to contact your agent or insurance company and ask what their policy is in regards to this.

In the state of Massachusetts, an insurance company cannot cancel your policy in the middle of a term for too many claims. If they decide to not renew your policy they have to give you 45 days notice before they stop your coverage. In the case that you feel this is an unjust non-renewal, contact your own state’s Department of Insurance or Insurance Commissioner’s office.

What indemnification is, how it works and how to recognize exclusions and policy language that may lessen its impact.

Indemnification is how this loss can be compensated.

Like any other professional field, insurance is full of terms that may be unfamiliar to the outsider. One of these is “indemnification.”

Aside from being a mouthful, what is indemnification? Well, it’s a very important insurance concept which deserves a closer look.

What is Indemnification?

Indemnification is a central concept of insurance in general, not just auto insurance. It’s a term that comes up in every form of insurance, be it homeowner’s, renter’s, life, commercial liability or what have you. Indemnification is, in the recent words of a major carrier, the means insurance companies use to “get you back to where you belong.”

The concept is simple: by definition insurance should replace or otherwise pay for exactly what you lost. There should neither be profit nor loss in an insurance claim. That’s the theory, anyway.

How Indemnification Works

Say you’re in an auto accident and the other driver is found at fault. For the sake of simplicity (and because we like you) we’ll say that you weren’t injured, but your car was totaled. We’ll also assume the other driver had adequate liability coverage on his vehicle.

Depending on the policy and your preference you may be able to do one of two things: get a new car comparable to the one you had, or take a cash payment equal to the value of your car at the time of loss. Either way, the insurance company indemnifies you for your loss.

In another example, assume you have full coverage on your vehicle and you accidentally hit a tree. The car isn’t totaled, but there is $3,000 worth of body work needed. After your pay your $500 deductible, the insurance company picks up the remaining $2,500. While the deductible isn’t covered per the terms of your insurance contract, the rest is. That $2,500 claim payment is indemnification for your loss. You would profit from any further payment, but lose out from any less.

Indemnification isn’t automatic. Your claim must go through the proper channels and be investigated by a claims adjuster, who determines the amount of loss and what the insurance company is responsible for. If you disagree with the amount, you can hire a third party adjuster to take another look, or in extreme cases take the insurance company to arbitration or court.

Pitfalls of Indemnification

One should bear in mind indemnification does not take into account exclusions such as depreciation. It is very important to know if an item is covered for “replacement cost” or “actual cash value.” If the latter, you’ll only be covered for what the item was worth at the time of loss, which may or may not be enough to replace it.

Aftermarket accessories on separate auto inland marine policies are often covered at actual cash value, for example. Many commercial policies also make wide use of actual cash value clauses in their contracts. Ask your agent to be sure.

What insurability is, how it’s determined for both the vehicle and the driver, and the differences in insurability from company to company.

Check with your agent to make sure this baby is insurable.

As part of the larger property and casualty line of insurance products, auto insurance shares some basic characteristics with other forms of insurance. One of these characteristics is insurability.

What is insurability, and how does it impact you the auto insurance consumer?

At a basic level, if an insurance company deems a certain risk to be acceptable to its business, it is considered insurable. Otherwise, the risk is considered uninsurable and therefore ineligible for coverage.

This is true regardless of whether you’re talking about auto insurance, homeowner’s insurance, life insurance or any other line of insurance you care to name.

When it comes to auto insurance, insurability is dependent on two factors: the auto and the driver. Both must be deemed insurable before an auto insurance policy can be written. This is accomplished in the underwriting process.

Insuring the Auto Itself

With most auto insurance companies, the auto meets insurability requirements if it is built by a recognized manufacturer and has a vehicle identification number, or VIN. This includes the vast majority of cars on the road today. Autos that do not meet insurability requirements with most standard companies typically include kit cars, exotic sport cars and models with particularly poor safety ratings. Your insurance agent will be able to tell you if your vehicle meets insurability requirements, but barring unusual circumstances you’re probably in good shape.

Model year does not have much of an effect on insurability itself, but it does have an impact on overall premium. For the most part, newer vehicles cost more to insure than older vehicles all other things equal.

Trailers and RVs are subject to similar insurability requirements, but remember that it is not possible to insure a trailer for full coverage. You can only get comprehensive and collision with them.

Insurability on the Driver

From an insurance carrier’s standpoint determining insurability on the vehicle itself is pretty easy. It’s either insurable or it’s not. Determining insurability on the driver, however, takes many variables into consideration. These include age, sex, marital status, driving history and past insurance history.

Further, if a vehicle is driven by multiple drivers then all drivers must be considered for insurability. Generally speaking, auto insurance on a vehicle is rated for the highest risk driver in any given group of drivers. This is why teenage drivers can cause their parents’ insurance premiums to dramatically increase.

Driver insurability is periodically reviewed by the company, and a driver may be dropped by the company if he or she no longer meets the company’s insurability requirements. Remember an insurance company can only drop a driver at renewal, so you may have time to shop around for a new policy if you find yourself uninsurable with your current company.

Driver insurability on commercial auto insurance policies takes into consideration a slightly different set of criteria. For example, drivers under 25 or over 74 are often deemed uninsurable on commercial policies regardless of other circumstances.

Insurability is Not Uniform

If your vehicle and/or you do not meet insurability requirements with one company, don’t fret. One company’s definition of insurability is always at least slightly different than another’s. Chances are there is a company out there that will take you. While many standard auto insurance companies shy away from kit cars and sports cars, there are other auto insurance carriers that specialize in them. Your agent may have access to one of these companies through a brokerage.

If a standard insurance company says you’re uninsurable, a non-standard or high risk company will probably take you instead. You might have to get an SR-22 or join an assigned risk pool to get insured, but auto insurance is available for just about anyone driving just about anything.

Every year insurance companies are ranked by outside sources to provide you with information to make an informed choice in which are the best insurance companies to do business with.

Using research and consumer opinion brings the best insurance companies to you in an easy list.

Which are the best insurance companies to purchase car insurance from?

This is a question that is wondered by all drivers. Everyone wants the lowest priced premium that has the best customer service and claims process. But, you can’t trust the advertising from the insurance companies so how do you know which are the best insurance companies?

Here at Car Insurance Guidebook we have collected the rankings of the best insurance companies (and the worst car insurance companies) for you to view and make a decision for yourself. These are nationwide lists of the best insurance companies so keep in mind you may not have heard of the ones that don’t write insurance in your area.

Fortune 500 – 2011 Best Insurance Companies

Let’s start with the best insurance companies that are making the most money.  The rankings of these top 10 best insurance companies on the Fortune 500 list are more based off information that a business person or an investor would be interested in. They are not based off anything that we as insurance consumers look for in our best insurance companies such as premium, customer service or claims services.

However, as an insurance consumer, going with an insurance company that is a solid company all around does protect us. It protects us from paying a large amount of premium to a company that may not be around to pay our claims if that time ever comes.

The following listing is the rankings of the best insurance companies in the “Insurance: Property and Casualty” category.  The numbers listed after is their ranking on the complete Fortune 500 list with all of the business categories combined.

1. Berkshire Hathaway (7)
2. AIG (17)
3. State Farm (37)
4. Liberty Mutual (82)
5. Allstate (89)
6. Travelers Cos (106)
7. Hartford Financial (117)
8. Nationwide (127)
9. United Services Automobile Association (145)
10. Progressive (164)

Top 3 Insurance Company Mascots

Company identification is very important in the insurance industry.  The better known an insurance company is the more likely people are going to seek them out for an insurance quote.  More insurance quotes lead to more business.

Insurance mascots can help an insurance company achieve this recognition. The mascot helps by making the insurance company that they represent stick in a potential client’s mind. So every time a consumer sees the mascot, they think of the insurance company. To test part of this advertising gimmick, a TV study was done to see the effectiveness of insurance advertising on consumers.

When study participants were provided with insurance TV ads these were the top three most recognized insurance company mascots:

1. The GEICO Gecko (Geico is a subsidiary of Berkshire Hathaway)
2. Flo from Progressive
3. Allstate’s Mayhem

If you will notice the companies of all three of the most recognized insurance company mascots are listed above in the Fortune 500 best insurance companies list.

Best Insurance Companies for Customer Service

Customer service is essential in the insurance industry. If you treat your customers rudely and do not try to be flexible to their needs, there is very little keeping them from leaving for another company.

Each year JDPower.com awards the best insurance companies that exceed customer service expectations for their clients.  The following is a list of the 2011 Customer Service Champions for the best insurance companies in the industry:

• Amica
• Auto-Owners Insurance
• Erie Insurance
• Farm Bureau Insurance
• NJM Insurance Group
• USAA

(A full listing of all the best insurance companies that earned the Customer Service Champions award can be found at www. JDPower.com)

Best Insurance Companies for Claims Service

The whole essence of insurance is the claims department. Insurance is a promise that is made by the best insurance companies to you that they will pay your claims for the coverage that you buy. If an insurance company does not hold up their end of the promise, they are not an insurance company that is worth paying premium to.

Below is the list of the best insurance companies for claims service from JD Power’s 2010 Auto Claims Satisfaction Survey:

1. Auto-Owners Insurance
2. American Family*
3. Amica Mutual*
4. California State Automobile Association (CSAA)*
5. Erie Insurance*
6. The Hartford*

*Numbers 2 – 6 all tied for 2^nd best “Overall Satisfaction” rating for Claims Satisfaction.  These companies all earned a 4 out of 5 ranking on the study.

Worst Insurance Companies Based on Claims Service

An insurance company that is rated poorly on claims service is a lot of times a combination of bad customer service and also a claims department that clients just don’t think is keeping their claims promise to them. In JD Power’s 2010 Auto Claims Satisfaction study there was no one company that stood out as the worst in the rankings.

These insurance companies on the Auto Claims Satisfaction study were rated on: First Notice of Loss, Service Interaction, Appraisal, Repair Process, Rental Experience and Settlement.

In “Overall Satisfaction” these companies tied at the bottom of the list only earning a 2 out of a possible 5.  In alphabetical order, the following three companies graced the bottom of the list:

• 21^st Century
• Commerce
• Mercury

So there you have it, the best insurance companies and the worst in the insurance industry as ranked by businesses and consumers like you.

An accident is categorized as an LSVI when the injuries are more serious than the damages to the vehicles, leading the insurance company to think fraud.

The history of exaggerated and fake injuries with an LSVI is why the fraud department is automatically notified when these types of claims are reported.

There are just some insurance claims that make an insurance employee immediately think of one word – fraud. Claims where the person’s vehicle was found at the bottom of a lake, but there was no police report that it was stolen and the insured claims not to know how it got there, brings the fraud word to mind. Injuries for multiple people in a small car all treated by the same doctor for an accident that has no police report or other party involved also begs for the fraud word. Out of all the possible fraudulent claims though, the one that is the most frequently reported is the LSVI accident.

What is an LSVI?

A LSVI is just the insurance industries internal word for Low Speed Vehicle Incidents.  These are accidents that happen at a low rate of speed and there is hardly or any damage to the vehicles that were involved in the accident. What automatically flags these types of accidents for the fraud department is not what happened in the accident itself, but the result.

With these accidents, people claim to have serious injuries that should not be seen with this type of accident. Injuries such as: sprains, pulls, strains and soft tissue injuries. Whiplash being the most common of these injuries that are claimed. Conveniently, these types of injuries cannot be recorded with a machine by any doctor, like a broken bone or other serious injury can. Meaning that there is no evidence other than what the person is complaining about to the doctor and the doctor’s diagnosis from an exam and taking the patients word for it.

Are All LSVIs Fraud?

No, not all LSVI accidents are fraud. There are some very legitimate injuries that can happen as a result of an LSVI accident. The limited damages to the vehicles may be a result of a well-made car or the way that the vehicles hit each other. Injuries can also happen very easily to people that are fragile, already have injuries that were just exacerbated by the accident or to minor children and the elderly.

Are LSVI Fraud Criminals Stopped?

Yes, some LSVI fraud claims are caught by fraud investigators before any money is paid out to the people trying to collect on the claim. Then the wheels are set in motion to charge them with insurance fraud. Catching people in a fraudulent claim early is the result of vigilant claim CSRs and claim adjusters that have worked on the case.

However, there are times when the claim is paid out before catching the fraud. In cases like these the insurance company then goes after the criminal through legal recourse to get their money back and to file charges. Other times, the fraud is not caught or the insurance company is not able to find enough evidence to accuse the person of fraud. In cases, like these, the criminals get away with committing fraud through a LSVI.