The Walters Agency Podcast

The Truth About Coverage: What Your Insurance Agent Really Needs to Know

• Timothy Walters • Episode 12

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What Are Some Common Insurance Myths Or Misconceptions That People Should Be Aware Of? 

What if everything you thought you knew about insurance was wrong? Timothy Walters, licensed insurance agent and owner of The Walters Agency, tackles the most persistent myths that trip up consumers when shopping for coverage. We dive deep into why insurance agents ask so many detailed questions during applications, and it's not because they're being nosy. The real reason might surprise you and could save you from serious headaches down the road.

Credit scores and insurance premiums have a complex relationship that varies dramatically by state, and Timothy breaks down exactly how insurance companies use this information to assess risk. We explore the statistical reasoning behind credit-based insurance scoring and why companies rely on the law of large numbers rather than individual circumstances. The conversation also covers auto liability coverage, which remains one of the most misunderstood aspects of car insurance, and Timothy explains why smart drivers choose higher limits to protect both their neighbors and their own financial futures.

We also bust the old myth about red cars costing more to insure, revealing how modern insurance companies actually determine your auto premiums using sophisticated data analysis. From VIN numbers to safety features, discover what really matters when insurance companies calculate your rates. Whether you're shopping for homeowners, auto, or business insurance, understanding these facts will help you make better decisions about protecting what matters most. Subscribe for more insurance insights that cut through the confusion and help you stay properly protected.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

Speaker 1:

Welcome to the Walters Agency Podcast, where insurance meets peace of mind. Hosted by licensed insurance agent and owner, Timothy Walters, we're here to help families, homeowners and small business owners throughout East Tennessee protect what matters most Our mission Creating win-win-win solutions for insurance.

Speaker 2:

Let's dive in what's fact and what's fiction in the world of insurance. Welcome back everybody. Skip money here. Co-host slash producer. Back in the studio with licensed insurance agent and owner of the Walters agency, Timothy Walters. Tim, how's it going?

Speaker 3:

All right, how are you doing? Skip.

Speaker 2:

Doing just fine. Doing fine In the market, as we were discussing in the green room for some homeowners insurance, and so one of the things that I wanted to ask today was what are some common insurance myths and misconceptions that people should be aware of? What should I be aware of?

Speaker 3:

I think in my experience as an agent on our side of things, one of the biggest misconceptions that a lot of people have is that details don't matter somehow. I have a lot of people, I talk to a lot of people, I do a lot of quotes for lots of different types of insurance homeowners insurance, auto insurance, business insurance, life insurance. We're pretty broad in what we do here and what I've noticed is a lot of people don't seem to realize that the details do matter. They matter a lot, and so when an insurance agent is asking you questions, it's not because we're nosy some of us are, but that's not why and it's not to get to be oh gotcha, it's not a gotcha thing. It's literally, you know, for us to do our jobs correctly to best represent the risk that you know your homeowner's insurance, your life insurance, represents to the companies that we're going to be quoting you with. We have to ask questions and we need honest answers Because I promise you, there's a long process from when someone contacts us as an agency to get quotes to the final issuance of a policy, and part of that process is the company does underwriting investigations after we submit a policy to BIND, and BIND means basically we've taken payment and sent the policy to the carrier for final consideration. So we ask a lot of questions on the front end in order to make sure that there's not an issue after we submit a policy, where the company does their own investigation and something comes up that either wasn't disclosed to us or maybe even the client didn't know about.

Speaker 3:

That happens sometimes. So, yeah, details do matter. If you're watching this and you're talking to an insurance agent, you're kind of debating because we're giving you the Spanish Inquisition treatment. I know it seems like that sometimes. It's not because we just love asking all these questions. It's literally part of our job and to do our job effectively we have to ask these questions and for you, the clients, to get the best insurance and have the least aggravation after you submit a policy, you know you do need to answer those questions honestly as best you can, and if there's things you don't know, that's fine to say, hey, listen, I don't know, I'm not sure, and we can try to find out using other methods. But I would say, yeah, the details absolutely do matter and yes, that's number one, I'd say Pretty much across all lines of business.

Speaker 2:

Yeah, what about credit scores? Does that really impact premiums?

Speaker 3:

It can, but depending on the state. Some states have regulations that's forbidding insurance companies from taking credit scores into account in the underwriting process. Most states do allow it to some degree or another. I would say credit score may or may not directly affect your insurance rate. May or may not directly affect your insurance rate. I think what insurance companies really look at your credit score is statistically speaking and insurance companies are all about the law of large numbers, right?

Speaker 3:

Statistically speaking, somebody with a lower credit score probably has that credit score because they've had something happen in their life. Maybe they went through a tough period of time, maybe, who knows, maybe they have bad habits. It might mean that they don't pay their bills. Let's just be honest In insurance companies, one of the biggest causes of them losing money is writing policies and that there is an expense to write policies. They have to staff. They have their staffs that do the underwriting, that do all this stuff. They have their overhead, they have their technology. This is a business, so there is a cost to writing new policies.

Speaker 3:

Most companies, most insurance companies, don't see a profit on a policy for at least the till the end of the second term usually, and so if they're looking at somebody who has good credit score, that's reasonable to say, oh, this person probably pays their bill, they're responsible. Then you have somebody who maybe has a lower credit score. The law of large numbers says there's something has happened in their past that maybe they weren't great about paying their bill. And again, that doesn't mean that they're that way now. Maybe they're recovering.

Speaker 3:

I haven't always had the best credit score myself. It doesn't make you a bad person. It just means they're looking at the statistics. Like I said, they don't know you from Adam's house, kim. They're looking at what they can tell from the statistics, the data that's available to them, and they're gauging the risk, the potential profitability, because, again, this is a business Profit's not a bad word in America, or it didn't used to be and companies to stay in business, they have to make more money than they pay out in overhead in the case of insurance companies and claims and all that kind of stuff. So yeah, absolutely, your credit score could potentially affect your rates. Different companies weighted differently, but yeah, no. So yes and no, and a little bit in between, right, which is an odd answer to give, but there you go.

Speaker 2:

It's the case. Are there common misconceptions around what auto liability actually covers?

Speaker 3:

Yeah, there's a lot of misconceptions about auto liability. A lot of people don't even know what liability is and, like I said, I didn't really understand it Until I got into this business. I was 30 years old. I got into this business. I just, you know I have to have insurance. You know if I get pulled over so the cops don't harass me, but you know liability at the end of the day is you taking responsibility for damage you cause to other people. So if me, tim Walters a pretty good driver most of the time, but if I make a mistake driving and accidentally run a red light or a stop sign or turn into traffic, thinking it was clear and then I missed a vehicle at dusk right.

Speaker 3:

Accidents happen and God forbid I hurt somebody or kill somebody or cause damage to their assets, their vehicles.

Speaker 3:

I this is me personally I want to be in a position to where I can try to make good on those losses. So I carry basically the maxed out liability available with the company that I use for my auto insurance because I want to try to be a good neighbor, I want to try to be a good citizen and thank God I'm in a position financially where I can afford the premium because it's not super expensive for me. I have a pretty good driving record right now. I could get it less expensive if I cut some coverage back. But again, I'm not immune to making mistakes and if I do make a mistake that causes serious damage to somebody where they're on the hook for hundreds of thousands of dollars in medical bills, I want to be able to take care of that first and foremost in my insurance and also I don't want to have to be paying that out of my own pocket, liquidating my assets to pay for medical bills or funeral costs or lost wages, bereavement, expensive vehicles, repair, all that kind of stuff.

Speaker 3:

I mean that's to protect me as well. Liability, the way I look at it, is, first and foremost is to protect my neighbors you know the people I'm out on the road with and secondly is to protect me in my financial future. Some people might flip that. Some people will be like, hey, I want to protect me first and foremost, which is perfectly fine, perfectly reasonable, and then they might. You know, and also you know these yahoos that I cut off and caused a massive accident, helped them out too. I don't know, everybody looks at things differently, but that's what liability is. It is there to provide funds to make whole people who you damage or I damage, or the world, all these people out here driving. We're all capable of causing accidents, accidents, and that's what it's there for is to protect the well-being, the financial well-being, of the people who are damaged and to protect you from having to pay that out of your own pocket. So that's what it is in a nutshell.

Speaker 2:

In a nutshell. Now, this is kind of crazy because I've always heard this is a myth or misconception that I've heard about a lot of stuff. I've always heard that if you drive a red car, you're more than likely to get pulled over faster, but I've also heard that red cars cost more to insure. Is that true?

Speaker 3:

Okay, so I think maybe a long time ago that could have been true, I'm not sure. Like I said, I came into this business when I was 30 years old, back in 2012. And I can tell you, none of the companies that I work with currently, to my knowledge, care even a little bit about what color your car is. They're going to ask for the VIN number, the mileage, that kind of thing, because all the things that they care about as far as the vehicle is concerned can usually be pulled from the VIN. They're concerned about safety features, they're concerned about survivability, they're concerned about statistics on how badly people are injured in car accidents with that particular make and model, your make and model. Okay, that's what they're concerned about. Now, you know, I've heard that too. I've heard oh yeah, if you drive a red car, your insurance can be more expensive. That has never been my experience Quoting auto insurance for a long time now.

Speaker 3:

It could have been true in the past because I know, back in the old days, they had tables that they worked off of because, frankly, you know, computers, you know, and internet and the interconnectivity of data didn't exist. So, yeah, they had to have basically have tables they worked off of to establish risk ratings, but that's I don't think that's true now. Or if it is like somebody on the internet, right? Oh yeah, tim's wrong, because this one Insta and this weird state, you know, in the middle of nowhere, they do that with this in-state company. Maybe they do that. Okay, I'm not saying it's impossible. I'm just saying in all the years I've been in insurance, I've never seen that specific issues. And in all the years I've been in insurance, I've never seen that specific issue.

Speaker 2:

That's good. I don't have a red car and I don't want another. I used to have a red car.

Speaker 3:

I can't speak for the cops. It could be true that the cops are going to see a red car before they see my little beater tan Toyota creeping down the road.

Speaker 2:

Right. Well, I wonder if it's a derivative of or a result of. Back in the day, maybe a lot of cars weren't red unless they were a hot rod or had a big engine in them. Maybe I don't know.

Speaker 3:

It's possible. Like I said, it's entirely possible. That was a thing back in the day, I know the old way of establishing rates was very different from what it is now. It's very specific these days with automobiles because, like I said, companies are not going to issue a policy unless they've confirmed the VIN number. They're just not because that VIN number is the golden key to all the or most of the information they want to establish the rating on that particular vehicle.

Speaker 2:

Gotcha, so don't worry about red, I'm not worried, Wouldn't fuss about it.

Speaker 3:

You know, if you like red, buy your red car you know, I mean, first vehicle ever bought is a Ford Ranger deep red, that kind of burgundy red.

Speaker 2:

Yep.

Speaker 3:

Yep.

Speaker 2:

That's a great car. Yeah, I love Rangers too. Tim, thanks so much for busting some myths open, wide open for us and, as always, enlightening, and we'll see you next time on the podcast.

Speaker 3:

Sounds good. Thank you, Skip.

Speaker 1:

That's a wrap on this episode of the Walters agency podcast. Ready to find the right coverage for your home, business or family, call or text. 4, 2, 3, 4, 1, 7, 2, 0, 7, 0 for a free 20-minute consultation. Until next time, stay covered, stay protected and keep winning with the Walters Agency.