You're in good hands...or are you?

In a recent Allstate car insurance commercial, they explain that they reward their clients with a good driving record by sending them a cheque each year if they did not get into an accident. I have no idea how much the cheque might be for, but regardless, let's think about this, shall we?

Do you believe that Allstate had all this extra cash laying around that they wanted to get rid of? Do you believe that Allstate's premiums are equal to or lower than other car insurance companies and they give away cash to their customers? Let's face it--what they're probably doing is raising rates just a bit across the board, taking that extra cash and redistributing it to the good drivers. That's all well and good if you happen to go year after year without an accident. You can bet your bottom dollar, and you will if you have an accident, that if they are rewarding the good rivers, logic says that they must be penalizing the "bad" drivers by an equal amount just to break even.

Further pondering suggests that not only are you just getting back your own money (if you go accident-free), they've also been kind enough to store it in safe-keeping for you for a whole year. When you get that first cheque, ask them what happened to the interest they earned on your money.