More on Insurance
New Jersey has the highest automobile insurance rates of the USA, which results in people driving uninsured, thereby increasing the insurance premiums again, etc.. To solve this problem, the New Jersey State decided to start their own insurance plan. They formed two companies: the Personal Auto Insurance Policy (PAIP) and the Commercial Auto Insurance Policy (CAIP) that do not give insurance, but assign drivers to the state’s auto insurers based on each company’s market share. The private insurance companies are required to accept the insurance designations, unless they can prove that there is really something wrong with the person that takes the insurance.
Both PAIP and CAIP are ways to get into the insurance system when you are a foreigner. The PAIP is the so-called ‘bad drivers’ pool, and was started Oct. 1, 1992 to serve as an ‘insurer of last resort’. The 90,000 drivers in the PAIP typically have nine or more violation points on their license, have been convicted of drunken driving, or have failed to pay their bills. Persons in the PAIP will pay about three times the premium of the average driver without license violations, so you do not want to end up in the PAIP. As a foreigner, by definition a high insurance risk, I was suggested by my agent to try getting insurance via the CAIP. The ‘Commercial’ indication does not relate to commercial driving, but to commercial risks, so I was told.
The interesting thing was, that CAIP allocated my insurance to Aetna (one of the top insurance companies in the USA). That same company refused to accept me some weeks earlier because I did not have a New Jersey driver’s license, and their premium also was about $ 500 higher with that bid than via the CAIP! All used cars that you buy need insurance inspection within seven days to get full insurance. See the section on cars. Reason for this inspection is that some people bought old cars, fully insured them, and crashed them, cashing the money for all the extra’s that were not on the car. With the insurance inspection, they take some pictures of the car and list all the goodies in it. The inspection is not required in cases where you only insure liability or if you buy a new car.
My insurance affair became a continuing story. The insurance company did everything they could to get rid of this new customer. They started by requiring me to get my driver’s license. Without this license, they wrote me, they could cancel my policy after 3 months. As result of the pressure, I agreed to get my license (see story on next pages) and provided them with a copy. They thanked me, and further stated that I was not supposed to be in a commercial insurance policy with a private car. My insurance agent helped me to convince them that that was allowed because I was a foreigner. Just before my first renewal date, they wrote me a letter, cancelling my insurance because I had a NJ license and therefore was not eligible for the special CAIP policy anymore! More calls to Aetna, from my agent and from me, were made to make them aware of the situation. They refused to continue the insurance. My agent referred the matter to the New Jersey Insurance Committee: an institute that is run by the State to support customer complaints. After only a few weeks they returned their verdict: They agreed with us, and told Aetna that they would take punitive actions against them in case they would discontinue my policy. That helped. With some nice formulations, Aetna told me that they had granted me one more year of insurance. In the same letter they cancelled my policy for the next renewal date. All because I was a good citizen with zero accidents and a NJ license. Result was, that none of my fellow-expats applied for their NJ license anymore, and simply extended their international licenses in their home-country once a year.
Eventually, I had to get a new policy, and it took me only an hour on the phone to find a new insurance agent and automobile policy (insurance agents usually deal with only one insurance company). Being in New Jersey already for two years was sufficient to overcome the earlier problems and I got a ‘real’ auto insurance for a reasonable fare and got a better deal on my property insurance as well. During this process, I noticed that there are also non-profit insurance companies in New Jersey, offering a low premium in combination with a membership. Example of this is a company called ‘The Cure’ which is entirely supported by its insurers.