Auto Loan Problem Revealed!

Mystery solved! The finance company no longer had my insurance information. My insurance company no longer had my finance company information. The declaration page didn't get sent for the insurance renewal, and the finance company charged me their own insurance.

The interesting part is that this isn't at all reflected on the payment. The numbers simply don't add up. If I had not checked it, found the problem, called to determine why the money was missing, and called both companies to get the paperwork back in order, I would have continued to be charged this extra insurance while already being covered. I do not know how long the finance company would have done this before bothering to notify me that there was a problem, but I am guessing that they never would have.

In fact, this happened before at the beginning of the loan, but was apparently corrected after 2 months. However instead of taking it from the monthly payment, as they did this time, they just tacked the insurance (I did not ask why their insurance was $2,200 a year) onto the balance of the loan. Supposedly I had not been charged interest during those two months, but I have asked for a full history report so I can check the math myself.

Hopefully this will be taken care of by the end of the week. I have updated the information with my insurance carrier, and with the financier, and had them fax the declaration. It should take 24-48 hours for the fax to go through, plus another 2 days for the financier to update their system and make the correction. I also requested a hard copy be mailed to me so I can fax it to the finance office myself.

Then, I will be having fun all next week checking the account to make sure the remainder of the payment has been properly applied.

So the lesson here is always check your payments, review your statements, and don't finance stuff!

Home owner's insurance nightmare

My home owner's insurance is a nightmare. I purchased my home two years ago, got the home insurance for around $700 a year. Then a few months later my mortgage company sends me a letter:

Did we forget to mention? You need additional windstorm insurance, we've happily applied some of ours at a hugely inflated rate for the few months since you've owned the house and adjusted your escrow to pay it. If you find your own insurance, let us know. Enjoy your new mortgage payment.

I wrote back complaining that they never told me about windstorm insurance and that I could have signed up for it in the first place, and didn't feel like I should be paying insurance for previous months for a disaster that never happened. Thanks for taking 3 months to bother realizing your mistake, and thanks to the insurance company and the mortgage company for never even mentioning that I needed this insurance. Oh, and thanks for telling me it's my fault and to pound sand when I complain about it.

So I go out and get my own insurance, which is cheaper, but my home owners insurance has still tripled. Our mortgage payment went up $200 (I inquired with a lawyer, btw, and they advised me that there was nothing I could do about it). Nightmare over? Hardly.

6 months later the insurance company that holds my windstorm policy goes bankrupt. So again I'm scrambling to find a new insurance company. I do, but now my insurance rate is again higher by a couple hundred dollars. Again, my mortgage payment (escrow) goes up.

Now my insurance policy is renewing. And apparently the complete lack of any hurricanes for the last 2 years is causing the rates to increase again! I get to pay another $25 a month for home insurance.

I'm going to shop around, but if its anything like the experience I had last year, the place I'm with is already going to have the lowest rate. Which begs the question; how much can we possibly pay in insurance before the citizens begin to riot?

Shop for insurance yearly

I personally use an online service insweb.com to shop yearly for insurance. If I don't like the price it gives me, I will start calling around to the local and well known insurance carriers. But last year, insweb saved me over $200 a year on my family's car insurance. More if you consider that my previous insurer, State Farm, raised my rates by about $100 a year for no reason at all. As far as I can tell, insurance companies are no longer rewarding their long term customers.

I suppose it makes sense. The longer I stay with one company, the more likely I am (statistically) to file a claim. By raising my rates after a few years of paying into my policy, they encourage me to go elsewhere and eliminate their risk.

You should shop for insurance once a year. Twice a year might be pushing it, I personally don't want to deal with changing companies every six months. That's why insweb is a great tool. I can take 10 minutes out of my day once every year, input my info, and see if I can cut my rate significantly. If not, and if my current rate has not been increased, I stay.

Don't forget to shop around for home owner's insurance as well as auto. Life insurance is different because typically you are locked into your rate for the life of your policy, 20 or 30 years.

Shopping for insurance should be an annual event, like filing your taxes. Not doing it is just throwing money away.

Tip: Sign up with insweb with a secondary email address, as you will get quite a bit of mail from them.