‘Full Disclosure’ a Must When Buying Insurance

Question: I don’t understand why I got two different quotations on insurance rates from the same company for the identical car.

Some time ago I got a mailing from Colonial Penn Auto Insurance, which I filled out, asking for quotes on $100,000 bodily injury (per person, $300,000 each occurrence), $50,000 property damage, $10,000 medical and $30,000 for uninsured motorist--no deductions for both comprehensive and collision. This was for my ’86 Oldsmobile Cutlass.

A couple of weeks later, in the same mail, I got not one but two quotes from Colonial Penn--for the same coverage, the same car and, obviously, the same driver.

One quoted an annual premium of $1,628.30. The other was for $2,124.60--that’s a $496.30 difference!

I know that Colonial Penn is tied in with the American Assn. of Retired Persons (this is no longer true; see company statement below), of which I’m not a member, and I’m wondering if, by accident, they gave me an AARP quote on one and a non-AARP quote on the other. If so, either AARP members are getting a heck of a break on their rates or--if it’s the other way around--AARP members are getting stuck.

Except for a couple of minor differences in the computer-coding on the bottom of the quotations, they were identical. If I choose to sign up with Colonial Penn, which quote should I consider valid?--B.G.

Answer: A puzzling difference, indeed, unless there was something here that neither I nor Nina Kenney, Colonial Penn Auto Insurance’s vice president for consumer affairs, picked up the first time around. And, sure enough, there was.

First however, let’s establish that there is no connection between Colonial Penn and the AARP. “At one time,” Kenney says, “we wrote the AARP’s health insurance, but we lost that bid several years ago. Now, there’s no connection at all except that we have a friendly relationship with AARP.”

A check by Kenney reveals that the two quotes you received could not have come from a single application. There were indeed two applications, and both were received by mail by Colonial Penn. This prompted me to check back with you by phone and, in that conversation, you conceded that “in all probability” you did fill in two separate applications. Which is understandable, since the mail brings perhaps two or three pitches for insurance every day.

You also told me two other important facts that your letter had not mentioned: One, Colonial Penn was already your insurer and your renewal notice was due “any day.” In addition, when you submitted your two applications to Colonial Penn you also gave them two separate sets of facts: one application where you left blank any mention of prior traffic convictions and the second one where you admitted to one conviction three or four years earlier. That’s how those slight differences in the computer-coding came about: The lower quote was for a driver with a clean driving record and the higher one was for a person with a conviction “now in its fourth year,” according to Kenney.

And, you admitted to me, there was in fact such a conviction at about that time. There’s no problem here because, Kenney says, “I’m sure that we (Colonial Penn, as the carrier) already know about the traffic problem.”

But for anyone else filling in an auto insurance application by direct mail, there’s a warning here: Don’t gloss over the fact that you have a traffic violation in your background. It could get you in deep trouble at some future date if you file a claim with the company and the omission comes to light.

Q: My wife and I are in our 70s and live in a trailer court. I saw your piece in which you talked about rent assistance and wondered whether we could get it to help with our gas bill, as some others here are getting.--M. S.

A: We don’t have a lot to work on here. The Southern California Gas Co.’s public affairs spokesman, Richard Puz, knows of no direct assistance for the elderly on their gas bill. You may have it confused with Pacific Bell’s basic service, which offers a cut rate for minimal telephone service.

“It’s my understanding,” Puz added, “that some trailer courts--where they have a master meter--may give a break to the elderly when they pass along the pro-rata billing. But it would be small. He should check with his management.”

And HUD (the federal Department of Housing and Urban Development) says some trailer parks qualify for HUD Section 8, which offers rental assistance for the low-income and elderly, but you’ll have to check with your local housing authority to see if your trailer park is one of them.

Incidentally, according to HUD’s public affairs spokesman Scott Reed, our previous discussion of HUD Section 8 “was quite good” but was misdirected in one respect. In our final paragraph we suggested that those interested in HUD’s Section 8 check with the manager of the apartment complex in which they are interested as to when applications are again being accepted. “That’s not really the best route,” Reed says. “It’s more appropriate if they check with their local housing authority--and there are 66 of them in the Los Angeles area alone.”