Is giving the 'Fed' MORE power really the answer?

I am troubled a little bit by this article I found on yahoo:

Bush seeks financial regulation overhaul


The article talks about something I've heard here and there over the last couple of weeks. It seems that the Power's that be, namely Bush and some, in my opinion naive Democrats are pushing to give the Federal Reserve Board more Power than it already has. Included in the powers and general changes that they are planning to make include:

• The Fed, would become a "market stability regulator," giving it the power to check the books not just of commercial banks but of all segments of the financial services industry.
• The proposal would shut down the Office of Thrift Supervision and transfer its functions to the Office of the Comptroller of the Currency, which regulates nationally chartered banks.
• The plan would consolidate the Securities and Exchange Commission, which regulates stock trading, into the Commodity Futures Trading Commission, which regulates futures trades for oil, grains and various other commodities.
• The plan would create a national regulator for the insurance industry (my industry*), which is now largely governed by the states (The Ohio Department of Insurance to be specific). So instead of state regulated insurance industries it would be one National Insurance department.
  
• It would create a mortgage Origination Commission
• "The role Federal Reserve Chairman Ben Bernanke and his colleagues have been playing to shore up the financial system would be formalized in the administration plan by giving Fed officials greater power to detect where threats might be lurking in the system." - not sure I like this at all - what exactly are those 'greater' powers and what else will the Fed - an entity that has no checks or balances on it - be able to detect?
  

SO basically after the past year, or at least 6 months of a dramatically declining market and economy based mainly on latent effects of the Federal Reserves actions - we are planning to give the Federal Reserve MORE power for putting the American economy on a Collision-course with a recession that many fear has already arrived?

I personally think this is ludicrous, the other thing is I think Federal Reserve Chairman Ben Bernanke and all the Power's that be who whisper in his ear have done a major disservice (at least in the long run) to the American Public but cutting interest rates so dramatically in such a short term. The fast decline of short term interest rates I believe will only serve to increase inflation dramatically over the long run.

Overall what I mean is by making money cheaper for banks in the short-term you also cheapen the American dollar in the long term for those who have less buying power as it is already. Think of the recent increase in the cost of bread, milk, and other commodities. Furthermore by giving so much power and influence to a part of economic system that is not elected by the people seems to say to me that only the elite and well-connected will have any say in the future if problems arise and they will likely only make changes that help the wealthy out rather than the bulk of America which is the lower-class (a growing Majority) and the middle-class (a shrinking minority).

Bottom line, if you were to ask me if the FED needs More power - I would without a doubt say 'NO THEY DO NOT!'

What little I know about: Auto Insurance

So today I'd like to take a little time to talk about Auto Insurance.

To be honest Auto Insurance, or any type of insurance is a very, very boring topic in general. That is, boring up until the point someone knocks out your window at 3 in the morning and steals your stereo! In that case, you're a member of one of two groups 1) fairly perturbed and angry because you weren't expecting this but, luckily you have insurance that will cover this - or- 2) extremely perturbed and angry because not only were you not expecting this but, you'll also be paying a bunch of money because you didn't have the right type of insurance at the time.

Q: Let's say you are driving home from work on the highway (in Ohio where you live), talking on your cell phone, you drop your cell on the floor bend down to pick it up then rear-end the car in front of you at about 50 mph , which in turn rear-ends the oil tanker in front of it and causes the oil tanker to explode and take out several cars surrounding the oil tanker. One car in particular veers off the road and into a building knocking out the majority of a wall.

You have $7500 PD limits. $12,500/25,000 BI limits. COLL with $1000 deductible. You have no LOU or MP coverage. The estimated property damage is in the range of $380,000. One person was killed, 3 were burned on over 50% of there bodies and 7 other people went to the hospital. The medical bills - so far for everyone , are around $500,000 Are you covered? we'll get to that later...

For now, I'll inform on some things you may or may not have heard of. Why? because I'm in the insurance industry now and know a little* about the subject.

First, some basic insurance terms**:

• Liability(3rd party): this is a type of insurance that covers your liability to other parties up to a certain pre-determined limit. This is the most basic and usually most minimal form of coverage.
  
• Bodily Injury(BI): this is one of the two main sub-types of liability coverage. As the name implies, this handles injuries to parties (usually) outside of your vehicle who were injured by you or someone using your vehicle in an accident.
  
• Property damage(PD): this is the other sub-type of liability coverage. This covers, of course, other cars that your car may hit talking on your cell phone, but it also covers fences, buildings, guardrails (yes the government wants their money back for their guardrail even though you're a taxpayer), and other random things that might just 'come out of nowhere' and enter your path - while driving, talking on your cell phone (you know who you are!) It will be covered only up to the limit listed in your policy.
  
• 1st party coverage: This is a broad term [used usually only by insurance people] that describes any coverage that helps you - the customer out in case of an emergency/claim.
  
• Comprehensive(COMP): this is a type of optional coverage, [whereas liability coverages are usually NOT optional] that you can place on your car that will cover your car in case a deer (or sometimes another animal) jumps in front of you while driving and you hit it. Also covers you if your car magically catches on fire. Also covers you if some twerp brakes into your car and decides to steal your stereo as well as your dashboard and driver's side window in the process. Also covers you if that same twerp is so fascinated with your decade old vehicle that he(or she) decides to take it the local chop shop and sell your car for parts. This coverage includes a deductible.
  
• Collision(COLL): This is another optional coverage. It's also one of the most expensive types of coverage and thus most sought after types of coverage because (with a few obvious exceptions) if you wreck your car - your insurance company will pay for it. All they'll ask in return is your deductible. Unless, you own a brand new 1.4 Million Lambo...you're insurance company most likely has a a clause that says something in really tiny print about the fact that they will replace the value of the car or say $250,000 whichever is less - but honestly, if you have money to spend 1.4 million on a car - what do you care, you have money to burn! That, and/or your really stupid.
  
• Deductible: this is what you have to pay out of pocket for using your Comprehensive or Collision coverages to repair your car. If you damaged, or God forbid, injured someone else, your insurance company won't ask you to pay anything until they reach your policy limit - then it's all you.
  
• Policy Limit: is a pre-set amount that your insurance company will pay for specific liability coverages. Assuming you have PD limits of $100,000 - that is the most your insurance company would pay in an accident. Anything above that limit you would be responsible for. BI limits would work the same way.
• Rental(LOU): This is another optional coverage that gives you a rental car while your car is in the shop (usually) because of your Loss Of Use of your own car. This coverage generally only applies when you already have Comprehensive or Collision coverage. A further option generally given is how much coverage per day you can have.
  
• Medical Payment(MP): This is another optional coverage in Ohio. medical coverage for anyone injured in your car regardless of fault. An amount that you decide on can be paid to your Doctor, hospital, etc if it's related to an accident. Other states have PIP coverage - which to be honest I know nothing about so I won't even go there.
  

SO back to the question:

Q: Let's say you are driving home from work on the highway (in Ohio where you live), talking on your cell phone, you drop your cell on the floor bend down to pick it up then rear-end the car in front of you at about 50 mph , which in turn rear-ends the oil tanker in front of it and causes the oil tanker to explode and take out several cars surrounding the oil tanker. One car in particular veers off the road and into a building knocking out the majority of a wall. There are several witnesses that saw you yakking away on your cell phone.

You have $7500 PD limits. $12,500/25,000 BI limits. COLL with $1000 deductible. You have no LOU or MP coverage. The estimated property damage is in the range of $380,000. One person was killed, 3 were burned on over 50% of there bodies and 7 other people went to the hospital. The medical bills - so far for everyone , are around $500,000 Are you covered?

A1: Yes you are covered.

A2: Yes you are covered but, not by much. Your liability coverage, would cover the damage done to all those vehicles and the building up to previously specified limit of $7500. In Ohio - they would all most likely split the $7500 amongst themselves. You would be responsible for the $372,500 left. So the oil company, the building owner and a couple other angry people would most likely start calling you about the remaining balance.

Also assuming you had say the state minimum limits for Ohio - $12,500/$25,000 for Bodily injury. Your insurance company would pay for up to 12,500 for injuries to any one person and 25,000 for all parties involved. Seeing as unfortunately, someone ultimately lost their life due to this accident - that person's family would most likely get $12,500 for their pain and suffering. The remaining $12,500 would be split up amongst the the 10 other injured parties. Those burned severely, would most likely get first priority. You would be responsible for the $475,000 (or more) in medical bills. You would most likely also become fairly familiar, maybe even on a first-name basis, with several attorneys in your area.

As far as your car - yeah you're covered. But first you have to pay your $1000 deductible that you thought didn't seem that much at the time you signed up. You also have to hitch a ride to work while they fix your car - because you have no LOU coverage. Oh and that neck injury and broken nose you got? I hope you have health insurance cause your auto insurance ain't paying squat. You told yourself you didn't need no silly Medical Payment coverage. You're an excellent driver. You only got that Collision coverage cause your lease company said you had to...You now have $847,600 of debt all cause you dropped your cell phone. But hey, you were 'covered'

Hopefully, that gives everyone a slightly better understanding on auto insurance. To be honest, back in the day (before I got into the insurance biz) I used to think insurance was the biggest scam. All these big faceless insurance companies charging hundreds of dollars for accidents that never really happen.

Now, after being in the biz for a bit - you hear some horror stories. Of course the above example is a little extreme but similar accidents happen everyday. If nothing else, stop using your cell phone when you drive (you know who you are) or at least buy a Bluetooth phone or use your speaker phone.... jeez!

*by 'little' I mean extremely close to 'none' on the aforementioned subject
**these definitions are in all likelihood very far off from the equivalent definition on your own policy. Honestly, you should call your personal insurance agent and ask him or her what's on your policy and what isn't.

Dang it! - happy to have insurance though...

So I finally found that Insurance-writing inspiration I was looking for:

Around 5:15 this morning I realized that I no longer have a driver's side window to my car! I also realized my stereo had been stolen. To add insult to injury my dashboard is completely smashed.

I called the police, an officer came out around 6:00AM and took a report but found no finger prints. The officer did point out the fact that my apartment's 'safety light' as well as several neighboring apartments' 'safety lights' are out currently and this may have helped the bastards use the 'cover of darkness to get the job done. I think I'll be talking to my apartment complex about that very soon.

Then I called my Insurance company and filed a claim. around 6:15 - I was there after hours
service and the real office doesn't open until 7:00 AM.

I called the real office at 7:15 and they instructed me on what to do. I have to pay a $250 deductible for the damage.

I was soooo close to having 2 accidents fall off my record too. Most likely this shouldn't count against me though as it wasn't my fault.

This brings to mind the importance of insurance:

I used to think that insurance was just a scam ran by the state and government but now, after working in the insurance industry for a while I realize how important insurance can be.

Although I have to pay the $250 deductible, I will not have to pay the possible full $1,000 or more in total damage done to my vehicle.

I will also not have to worry (as much) about dealing with a glass shop(for the window) , dealing with a body shop (for the dashboard damage), & dealing with a stereo shop for the same.

My insurance company, will hopefully help facilitate this.

I don't think the full amount of anger has really hit me yet. But I can feel it growing.

I now want a new car - like my old car - with an alarm in it.

There are several different types of insurance coverages that come into play for different types of accidents. In this case, I will be using my Comprehensive coverage for this accident.

Comprehensive coverage - depending on your insurance company and policy - covers things that are not directly related to an accident. In this case it covers theft of my stereo and incidental vandalism as a result of my stereo being stolen.

Comprehensive coverage also covers - again depending on the policy - fire damage, deer hits, minor glass damage & falling objects aka 'random stuff landing on your vehicle'.

OK I think the anger is increasing now. And just the other day, I thought to myself "Wow, I actually live in a pretty nice neighborhood" ... time to think again.

bad credit? pay more for insurance...

I read an excerpt of this article that was sent to my work e-mail through a news feed we get.

this section kind of bugged me:

But the long-awaited Federal Trade Commission report also found that blacks and Hispanics consistently end up with lower scores and therefore pay higher insurance rates.

But, I guess it's something I already sort of knew. From what I understand, for the past decade or so, insurance companies have been consistently pulling your credit before they give you an accurate quote. Quotes you might get online might give you an idea of what your rates will be but you won't know for sure until you call a company over the phone and get a definite rate quote or go into an Insurance Agent's office.

It usually shows up as a hard pull on your credit - just an FYI when shopping around for rates. The better your credit score though, the cheaper your insurance. If you have horrible credit though well you pay the price for failing to pay on time I guess.