Decoding Insurance: From Car Policies to Health Challenges with Karl Susman
Published Date: 12/12/2023
Decoding Insurance: From Car Policies to Health Challenges
By Karl Susman — The Insurance Hour
Insurance can feel like its own language — full of jargon, numbers, and fine print. But behind the complexity lies a simple truth: insurance is a tool for financial protection, not confusion.
In a recent episode of The Insurance Hour, host Karl Susman took on some of the most common (and misunderstood) questions from listeners. From auto insurance pricing to rideshare coverage, gap policies, and even the state of health insurance in America, Susman peeled back the layers of how insurance really works — and why knowledge remains your best defense in a rapidly changing market.
1. The Purpose of Insurance — and Why So Many Misunderstand It
Susman began the episode by reminding listeners that insurance is not designed to eliminate risk entirely; it’s designed to transfer risk.
“There’s a lot of misunderstanding about what insurance is and what it isn’t,” he said. “My goal is to help people understand how insurance works — what it’s designed to do, what their expectations should be, and how to get the most out of it.”
He pointed out that consumers often perceive non-renewals, denied claims, or rate increases as random events. But, as he emphasized, “nothing happens in a vacuum.”
Whether it’s a string of claims, an increase in repair costs, or systemic inflation, there’s almost always a logical explanation behind insurance company decisions — even if it’s frustrating.
2. Where’s the Best Place to Buy Car Insurance?
This listener question is one Susman receives frequently, and it served as a natural bridge into one of his recurring themes: how you buy insurance matters.
There are three main purchasing paths:
- Direct from the insurance company – easy and convenient but lacks advocacy.
- Through a captive agent – great for product-specific expertise, but limited to one carrier’s options.
- Through an independent broker – the most flexible option, allowing multiple quotes and tailored coverage.
“Buying direct gives you speed,” Susman explained. “Working with a captive agent gives you deep product knowledge. But with an independent broker, you get choice — and someone who represents you, not the company.”
However, in California’s current “tight market,” even choice is constrained. Over 87% of insurers are either not writing new policies or have strict underwriting restrictions.
“It’s not shopping anymore,” Susman said with a laugh. “It’s hunting. You’re hunting for a policy right now.”
3. Why Car Insurance Costs Don’t Drop as Cars Get Older
One of the most common listener frustrations — and misconceptions — is why premiums go up even as a vehicle depreciates.
At first glance, it seems logical that an older, less valuable car should cost less to insure. But Susman explained why this isn’t necessarily true:
“If you were strictly insuring the vehicle’s value — just fire and theft — then yes, the premium would drop as the car gets older. But most people carry far more than that.”
Rising labor costs, parts shortages, and technology-driven repair expenses have pushed overall claim costs higher.
“What used to be a few hundred dollars for a fender bender now costs thousands because bumpers have sensors, cameras, and require specialized technicians to repair,” he said.
When you analyze your bill, you’ll often see the comprehensive portion drop slightly — but the collision and liability portions increase to reflect rising external costs.
4. Auto Discounts You May Not Even Know You Have
Insurance companies often apply discounts automatically, based on a car’s features or driver profile. Susman offered a few examples:
- Anti-lock brakes (ABS): When first introduced, they earned drivers discounts for reducing accidents.
- Automatic seatbelts and airbags: Also led to rate reductions, though few drivers even noticed.
- Modern safety tech (lane assist, adaptive cruise control): Increasingly factored into actuarial pricing models.
“You may already be getting discounts you don’t even know about,” Susman said. “They’re baked into the VIN number data — the insurer knows exactly what features your car has.”
He also reminded listeners about proactive discounts:
- Defensive driving courses
- Good student discounts (for high GPA drivers)
- Multi-policy or safe-driver bundles
Each can yield incremental savings that add up over time.
5. The “Maintenance Myth” — What Insurance Doesn’t Cover
Another listener complained that their insurer refused to pay for vehicle maintenance work. Susman clarified the distinction between maintenance and insurable loss.
“Insurance policies aren’t maintenance plans,” he explained. “They cover sudden and accidental damage — not wear and tear.”
Oil changes, worn tires, and failing belts fall under routine upkeep, not unexpected events.
“If it’s gradual, it’s maintenance,” he summarized. “If it’s sudden and accidental, that’s insurance.”
This distinction often confuses policyholders who assume that “comprehensive” means “everything.” In reality, every policy has exclusions designed to distinguish normal upkeep from covered loss.
6. What Is Gap Coverage — and Why You Probably Need It
Gap coverage protects you when the value of your vehicle is less than the loan or lease balance you owe.
“Drive a new car off the lot and you instantly lose about 7–8% of its value,” Susman noted. “So if that car gets totaled or stolen, the insurance company pays market value — not what you owe on the loan.”
Gap coverage bridges that difference. Some leasing programs include it automatically, while others require a separate endorsement.
“It’s a small add-on, but it can save you thousands,” he said.
7. Rideshare Drivers: The Hidden Coverage Gap
Rideshare drivers (for companies like Uber or Lyft) fall into a legal and coverage gray area — especially when deciding when they’re “on duty.”
“When you have the app open but no passenger, are you working? What about after you drop someone off?”
Different insurance companies — and even rideshare platforms — draw the line differently.
“Uber does provide some coverage, but it’s limited,” Susman warned. “You need to tell your insurer you’re doing rideshare. Otherwise, they may deny a claim.”
He added that adding rideshare coverage typically costs little but is critical for full protection.
8. The Legal Minimum — and Why You Should Avoid It
A listener asked whether it’s legal to drive without insurance in California. Technically, yes — if you post a bond as proof of financial responsibility. But Susman was blunt about the risks.
“It’s legal, but it’s a terrible idea,” he said. “Bonds are small — maybe $10,000 — and you have no claims adjuster, no advocate, no one to help if something goes wrong.”
In short: it’s not worth the risk.
9. Personal vs. Commercial Use: Are You Driving for Work?
Susman explained the fine line between personal and commercial auto insurance.
If you drive to and from work, that’s personal use. But if your vehicle is registered to a business, regularly carries tools, or transports clients, you may need a commercial auto policy.
“Where does the car sleep?” Susman asked rhetorically. “If it’s parked at your house, probably personal. If it’s parked at a job site, that’s a red flag for business use.”
10. Health Insurance: A System Out of Sync
The final listener email touched on one of the most frustrating topics — health insurance. Susman’s answer was sobering:
“Health insurance today isn’t functioning the way it was designed to,” he said.
Originally built to protect against catastrophic medical costs, modern health insurance now tries to cover everything — from minor checkups to major surgery — without an efficient pricing system to support it.
“The structure can’t keep up,” Susman explained. “Too few carriers, too much bureaucracy, and prices that don’t align with what’s being offered.”
While he supports universal access to health coverage, he argued that the system needs a fundamental redesign — one that balances care, cost, and sustainability.
11. A Personal Moment — And a Human Touch
In a candid break from industry talk, Susman shared a personal update: his battle with chronic migraines — and his attempt to quit caffeine.
“Today’s a big day,” he laughed. “I went from four double espressos to one shot. Tomorrow, zero.”
The story wasn’t just relatable humor — it underscored his larger message: balance, moderation, and adaptability are as essential in life as they are in risk management.
Final Thoughts
Insurance doesn’t have to be intimidating. As Karl Susman reminds listeners week after week, it’s not about selling policies — it’s about understanding them.
“Don’t assume you’re covered,” he said. “Ask questions. That’s what licensed professionals are for. Questions are free — and the answers can save you a fortune.”
From car coverage to health care, Susman’s “Decoding Insurance” lesson is simple yet powerful:
The more you know, the safer — and smarter — you are.
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