"I'd found this flyer in a women's magazine in South Africa. It details the benefits of women-specific insurance, such as road-side assistance, and accidental HIV exposure medication. I thought, "Why is HIV medicine part of car insurance?" It was explained that carjacking and rape isn't all that uncommon. Yikes," wrote Flickr member Squishy underneath this photo.
If Squishy lived in the U.S. and opted to purchase that road side assistance it could end up being one of the very expensive decisions she ever made. On the surface adding this to your insurance is a money saver. Insurance companies just charge about $10 a year for the add-on. Auto clubs like AAA can charge anywhere from $50-$100 a year.
While any financial adviser will tell you that living without insurance is very risky business, any one who has wanted to file a claim for a small item knows that insurance agencies keep track of the number of claims you file in any given year. Their advice: If it's under $2,000, pay it out of your pocket.
Depending on the firm, it's three strikes and you are out. As Diana Ransom writes in this free area of the WSJ by calling for a tow or jump-start through your insurer, you run the risk of increasing your insurance premiums and possibly lowering your eligibility for future coverage.
"...many auto insurers -- including giants State Farm and Allstate -- typically treat these calls as claims, which the insurers may report to data-collection companies and which get used to determine premiums and decide whether or not to cover new applicants.
"We take all claims into account when we are trying to measure the cost of making a promise," says State Farm spokesman Dick Luedke. But he and an Allstate spokesman say their companies don't weigh roadside-assistance claims as heavily as accident claims.
How bad can it get? At The Newspaper.com, a website devoted to the "politics of driving" reports that insurance companies are raising the rates for people who lock their keys in their cars or file claims under their road side assistance benefit.
Several insurance companies, for example, refused to cover Andrea Davis, 31, after she had two flat tires and locked her keys inside her 1999 Isuzu Rodeo. Davis learned her old insurance company, Geico, had reported her three claims to CLUE. Davis paid Geico $12 a year for roadside assistance, but the company never disclosed that using flat tire assistance would raise rates.
Chances are those companies checked out Ms.Davis in a little known database called CLUE.
"The CLUE report and the insurance scoring system are tools insurers use to decide your risk profile, that is, how likely you are to file a claim against your policy. Insurers feed information about paid claims - perhaps even your inquiries about coverage that do not result in a claim - into a national database for use by insurers. Information included in the database, along with your insurance score, makes up your risk profile. Insurers use the profile to decide whether you get new insurance. At renewal time, your current insurer will probably review your claims history as well as your current insurance score to set your premiums - even to decide if you get to keep the insurance you have. When you shop for new insurance, the company may order a CLUE report. If information is inaccurate, you can be left without insurance while you work to correct the errors."
It's not just auto insurance of course. The same theory applies to homeowners insurance and of course if you pay that $5.95extra each month to insure your mobile phone.
Beware. These policies really only allow one claim a year. Once you file two claims in a 12 month period, your insurance on that phone number is suspended for 12 months.
What does that mean? Well, let's say you file two claims on a regular phone, Your insurance will be suspended for that phone number for 12 months. If you buy a new phone...let's say you want to upgrade to a smart-phone that costs $400, you will not be able to get insurance on that phone.
If you think you can add the insurance on the new expensive model once your 12 months of suspension is lifted, think again. You can only put insurance on a phone with 15 days of the sale. Gotcha.
Hat Tip 
to FAST COMPANY Blog"Guess Mom was right.Nothing is as good as it seems."
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