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The Porsche 911: World's Sportiest Tractor

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On: Thu, Aug 11, 2011 at 9:03AM | By: Chris Weiss

The Porsche 911: World's Sportiest Tractor

The insurance industry is a chicken-and-egg-type conundrum. Those that believe human beings are inherently evil could argue that fraud and dishonesty amongst their customers force insurance companies to find ruthless, penny-pinching ways of making profits. Those that believe corporations are naturally more evil and self-serving than any disorganized group of humans could ever be could just as easily argue that customers have to use fraud and corner-cutting in order to squeeze their money out of ruthless, more experienced insurance companies.

Whichever side or combination of sides you choose, the insurance market is a contentious system that can often play like a battle of legal (and not so legal) and technical wits. Insurance companies find any small-print excuse to dismiss your claim and raise your rates, and consumers dismiss law and truth in order to get what they believe is rightfully theirs. It's not uncommon to hear even the most honest and law-abiding folks discussing—without inhibition or remorse—ways of sticking it to the insurance man.

A recent study of the insurance industry details one rather humorous way of doing so: Claiming sporty, luxurious and otherwise completely unrelated vehicles as "farm equipment."

A report from Quality Planning, a San Francisco firm that checks into policyholder information for insurance companies, analyzing "farm use" claims on 80,000 vehicles across the United States cites that policy holders have claimed luxury and sports cars like the Porsche 911, Mercedes SL550, and BMW Z4 as farm equipment. Now obviously those aren't the most utilitarian, farm-friendly vehicles out there, but since auto insurance companies offer farm-use discounts up to 20 percent, some unscrupulous folks have claimed such vehicles as farm equipment.

Now maybe you'd like to believe that there's some well-to-do farmer out in Nebraska speeding around his cornfield with a bright-red Porsche 911. Well, Quality Planning's report went a little deeper and looked at the locations where supposed farm-use vehicles were housed. It found that about 8 percent of the vehicles were in geographical areas where less than 1 percent of the population is involved in agriculture. Specific finds included a Cadillac Seville in Los Angeles and an Audi A4 in Brooklyn.

While the most obvious cause of this problem is customers looking to save money on a discount that companies rarely verify, the LA Times says that it also happens when dishonest insurance agents use the maneuver to cut premiums and win business.

According to the LA Times, this type of misrepresentation costs the insurance industry about $150 million in unpaid premium monies each year.

So insurance companies will likely raise rates across the board and find new loopholes toward dismissing claims to cover those costs. And then people, expecting that insurance companies will raise rates and find loopholes, will prepare by finding loopholes of their own and boosting their claims and discounts to offset increased rates and lowered claim payments. And the cycle continues...

Quality Planning's senior vice president Robert U'Ren even alludes to this very phenomenon: "Honest people end up subsidizing the insurance premiums of dishonest people."

Is it honest people subsidizing the acts of dishonest people or is it once-honest people turned dishonest by trying to pull some value out of a dishonest industry? Chicken, egg...


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