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Author: TMFSelena Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 214215  
Subject: GEICO discount for shareholders? Date: 1/9/1999 12:42 PM
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I fear this has probably been asked perhaps too many times before, but here goes...

I've heard that BRK shareholders can get discounts on GEICO insurance. I recall my sister, a shareholder, not finding any success when calling GEICO's 800-number and asking about it. The people at the other end didn't seem to know about this alleged discount.

And now that I'm preparing to get a new car, I'm interested for my own sake.

-- Does the discount really exist, and if so, how much of a discount is it?

-- How should one go about securing the discount?

Thanks for any info!

Selena
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Author: Hunzi Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3603 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/9/1999 6:18 PM
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Selena,

I spoke to Geico earlier this summer, and asked this question. They gave me my auto quote before I asked this, and I was told that indeed there would be an additional 8% discount for shareholders.

Hope this helps!
Always ;-)
Hunzi

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Author: JeanDavid Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3627 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 4:21 PM
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I've heard that BRK shareholders can get discounts on GEICO insurance.

It does not matter to me, but I seem to recall hearing the same thing. Some years ago, GEICO left the State of New Jersey because the insurance commissioners would not allow them to raise the rates on the grounds that those in New Jersey paid the highest auto insurance rates in the country, and that GEICO should be making enough money. GEICO called their bluff and left the state. While our rates may well be the highest in the country, the drivers here are so bad that the claims are probably the highest in the country, too. Be glad you do not have to insure a car here.

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Author: JeanDavid Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3628 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 4:27 PM
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I spoke to Geico earlier this summer, and asked this question. They gave me my auto quote before I asked this, and I was told that indeed there would be an additional 8% discount for shareholders.

I am curious about this discount. As a Berkshire shareholder, I do not wish my company to make unsound premium charges. Do they figure that we Berkshire shareholders are 8% more astute, resulting in wiser choice of low repair cost vehicles and are 8% more prudent driving? Or do they figure that the number of Berkshire shareholders who purchase GEICO insurance is so small that the lost revenue will make no difference?

Actually, this is a serious question.

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Author: damguy Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3632 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 5:17 PM
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JeanDavid,

Does New Jersey have a resident auto licensure requirement. This varies from state to state. I've lived in 2 states that did not have this requirement. Residents could have there cars permanently licensed in any state. Also lived in a state that issued non-resident plates for cars owned by out-of-state entities.

If any of these are possible, you could create a legal entity in another state to own your car (trust,business,etc), then insure in that state, with disclosure to your insurer that the majority of miles driven will be in NJ. Over several years the cost to set up out-of-state ownership might be more than covered by savings on insurance.

Just a thought. You might even qualify for the GEICO discount.

Damguy

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Author: JeanDavid Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3633 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 5:20 PM
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Does New Jersey have a resident auto licensure requirement. This varies from state to state. I've lived in 2 states that did not have this requirement. Residents could have there cars permanently licensed in any state. Also lived in a state that issued non-resident plates for cars owned by out-of-state entities.

If my car is licensed in another state, I can drive it here for as long as a N.J. licensed car can be driven in that other state. Where the other state has no limit, N.J. imposes a 3-month limit, wherein I must get N.J. registration. (It might be 6 months, but I doubt it.)

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Author: damguy Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3634 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 5:24 PM
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JeanDavid,

I should have read both your posts and used one reply.

I think this has an actuarial basis. The claim rate is known to decrease with age. Surely Geico's actuaries are sharp enough to know that there are not many 18-25 year olds that have enough investment savings to hold shares of BRK, even b's. Those that do are surely so financially astute that they do not take reckless risks with their automobiles.

I think the discount should be greater. Wonder if we can demand an analysis of the claim rate of those on shareholder discount with overall insureds? I'll ask them, and post response.

Damguy

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Author: JeanDavid Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3636 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 9:19 PM
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Surely Geico's actuaries are sharp enough to know that there are not many 18-25 year olds that have enough investment savings to hold shares of BRK, even b's. Those that do are surely so financially astute that they do not take reckless risks with their automobiles.

If I were living in Manhattan, where car insurance could easily cost one share of BRK.B per year (perhaps two shares if teen-age drivers in the household), it might well make sense to buy a share just to lower the insurance rate. Even if the stock price and insurance rates stayed flat for 12 years, it would pay for itself. A parent could buy a share for his teen-age son and get a lien on it (so as to reduce risk of loss). Then the teenager's insurance might be reduced. Wow. I wonder what the fine print says...

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Author: Lonnol Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3637 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 9:37 PM
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I am curious about this discount. As a Berkshire shareholder, I do not wish my company to make
unsound premium charges. Do they figure that we Berkshire shareholders are 8% more astute,
resulting in wiser choice of low repair cost vehicles and are 8% more prudent driving?


Lonnol: I have had the chance to work at a small high risk Auto insurance firm. I had a chance to see what information they used in the setting of auto rates.

The typical Berkshire stock holder would be less likely to commit insurance fraud against the company they own stock in.

There will be a certain % of Berkshire stock holders that will have points on their record, DWI, Speed, cause accidents; but, on the average it will be somewhat less than the average person of the same age group, sex, marital status etc.

Once a Berkshire stock holder buys Geico insurance the person will be less likely to switch to another insurer.

Hopefully this helps :-)
Lloyd

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Author: Hunzi Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3640 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/10/1999 11:25 PM
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I don't have the source for this but I thought I read somewhere that 8% was Geico's profit margin on premiums, therefore they take no profit on Brk Shareholders....(it's a thought ;-))

Always ;-)
Hunzi



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Author: sometomfoolery Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3649 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/11/1999 2:22 PM
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Is there a Geico discount for California Berkshire holders? ALL discounts in California must be approved by the Cal DEpt of Insurance and I curios if there is one before I begin baggering a Geico sales rep?

Also, I can see a rational reason for a discount for a large enough, and or lonterm enough BRK holding (to prevent investors for that reason only). People are by nature uniclined to sue there own portofolio, and would try especially hard to reduce the amount of a loss. Most of us Brk holders probaly go out of our way to drink Coke instead of Pepsi, buy Dexter shoes, drink minutemaid oj instead of tropicana etc.

Also people owning Berkshire are less inclined to be the type to look for "an angle" on things, like seeing an accident as a way of getting a new car, or acting in such away that compounds a loss. Buying a stock and holding it for ever like most Berkshire holders, selects a pretty straighforward group and eliminates a lot of hustlers that cause large insurance losses.

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Author: gmulaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3651 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/11/1999 2:44 PM
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I believe the discount is 8%. Just tell them you're a shareholder. If the person on the phone doesn't know about it, ask for his/her supervisor. If the supervisor, doesn't, ask for the supervisor's supervisor. Eventually, you will get to Warren Buffett. At that point, tell Warren Buffett about all the other's lack of knowledge of the discount. You will have solved the problem.

I for one, asked for the discount, the day I heard about it, and the person who took my call was very helpful and professional and gave me a great deal on my wife and my cars' insurance. BTW, I had called at 2AM in the morning, just to see if anyone really does answer 24 hours per day. The next day I bought more Berkshire shares.

True story.

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Author: KennyMc Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3921 of 214215
Subject: Re: GEICO discount for shareholders? Date: 1/20/1999 9:38 PM
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Well, I'm a Berkshire stockholder who was turned down by GEICO. Didn't like the # of annual miles my duaghter was putting on the odometer. Based on the # wrecks she's had since - they were right! Kinda makes me feel good to be associated with a company that is so careful they won't even insure me!

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