Wanna save some money on insurance?

[Uben]

I was forced to shop for a new homeowner's policy because my rates were getting very high with my current policy. I found coverage for half of what I was paying, saving me an additional $1500/yr.

I let my old agent know I was disgusted with the service I was getting. I told him I was paying him to keep my coverage as small as possible and that I was getting nothing from him at all unless I bitched about it.

If you don't shop insurance every year, you are most likely losing money. As long as you let them handle things, they are going to get as much money from you as possible. They'll raise the value of your house and your liability coverages while quietly pocketing more of your money. If you tell them you need a better deal, they will raise your deductible and tell you what a good deal you are getting when in reality, they are screwing the shit out of you!

I want an insurance company that looks out for me without me having to initiate the deal I mean, what the hell am I paying them (carrier) for? I tell them I am not in the business of giving my money to someone who puts their interests above mine.

Of course, they will tell you what you want to hear, but it's up to you to figure out if they are lying or not, which they probably are. It's what they do. Never, ever, trust an insurance agent!
The game is to get as much out of you as they possibly can. Read the fine print, question every line of the policy, and make them explain, in detail, everything you do not understand.

The insurance industry (ponzi scheme) isn't what it used to be. Chances are you are paying twice what you need to to get the coverage you actually need. They will try to insure the full value of your home, including the property it is located on. I have four lots at a private gated lake, and the lots alone are vaalued at $100K. I don't need coverage on the lots. They aren't going anywhere if the house burns down.

So, get out that policy and shop around. You can save a bundle with a little work!

[WatchWhatISay]

1. When considering how much coverage you need

People dont think about the fact that if your house burned to the ground, your lot would still have value and the slab can probably be re-used. So find out what local builders are charging per square foot and how much it would cost to have what is left demolished and removed. It might be different than the current market value.

[superduperfarleft]

2. Absolute BS.

Insurance agents, good ones, are meant to act as advocates for you when dealing with the various insurance companies. You should've changed agents long ago if you were unhappy.

Dealing with insurance without an agent is like representing yourself in court, or performing surgery on yourself. These are people that are held to incredibly high ethical standards (and if you find one that isn't, report him and don't do business with him), and have very little incentive to screw you over.

"Read the fine print, question every line of the policy, and make them explain, in detail, everything you do not understand."

Well, duh.

[unblock]

4. "... like representing yourself in court, or performing surgery on yourself"? uh, not quite.

those two are nearly always a huge mistake, perhaps not counting "little" things like traffic court or putting in a couple stitches in your leg.

but getting insurance without an agent is rather more like buying or selling your house without a real estate agent. it requires more homework but if you put in the proper effort, the amount of money you might lose by your lack of expertise is usually outweighed by the amount of money you save by avoiding commissions.

that's not to say that a good insurance agent doesn't provide a valuable service, just as good real estate agents do as well. but they're much more optional than lawyers or surgeons.

[superduperfarleft]

5. Rates are generally not increased or decreased by the presence of commission.

If anything, working directly with an insurance company is just letting them keep the money they'd otherwise pay out in commission.

[unblock]

6. the advantage is mainly in shopping it around

agents have commission incentives to steer you to policies (in terms of both carrier and parameters) that benefits them, not you.

yes, a good agent will do their best to put that aside and serve you, but that incentive is still there and they don't get rewarded for saving you that extra nickel.

[superduperfarleft]

7. In my experience (life & health), steering is rarely done.

In fact, with premiums skyrocketing and companies bottoming out as to where they can go to save money, I've seen brokers take huge cuts in commissions by moving companies to cheaper policies to keep them from dropping insurance altogether. I know the OP is talking homeowners, so maybe that's the case there.

I realize that, rightfully so or not, people hold insurance agents with the same level of contempt that they hold lawyers or used car salesmen. I mainly just bristled at the "never trust an insurance agent" line in the OP.

[unblock]

9. i guess that it does happen more with homeowner's than with life and health

homeowner's insurance may be paid for invisibly out of the mortgage escrow account, and it often seems like a small consideration compared to buying and moving and getting the mortgage and all that, so i can see people not paying too much attention and therefore less scrupulous agents taking advantage or just busy or lazy agents failing to shop around aggressively.

mrs. unblock has worked in the insurance business and of course we've been consumers of insurance and i can assure you that there are plenty of agents out there who need to be watched carefully. if nothing else, life insurers have a tendency to oversell.

just doing the math, the primary idea of life insurance is to replace after tax savings of an income earner (yes, there are other motivations, but that's the primary one). but a life insurance agent usually will tell you that you need to replace a person's INCOME. this ignores that when an income earner dies, you no longer have the expenses or taxes associated with it. and even this presumes that the plan is for the survivor to not need to change financially one bit. if tragedy hits, the plan might be for the surviving family to move to a cheaper place, as there's no longer a need to live near the deceased's place of work or in a house that big.

nowadays, you might be right about agents being more focused on getting their clients good deals as people have become MUCH more price sensitive in the last couple of years. but eventually, many agents will respond to their capitalist incentives and try to make as much commission as possible.

[Uben]

10. Yes, homeowners specifically

I used the same agent for 23 yrs, and figured he was doing a pretty good job. But, everytime I told him I was going to shop around, he came up with something that costs less, sure, but it covered less, too! This latest claim due to hail ran to $11K. I haven't had a claim in over ten yrs, but found out that somewhere along the way they changed my policy to a 2% deductible from a 1%. Now I have to pay over $5K out-of-pocket to get the roof replaced. The new carrier I am using got me the 1% deductible and the same coverage for about 40% less. WTF? If they can do it, my old agent could have to, so why didn't he? I thought I was paying him to be my advocate, but he was doing nothing in the way of reducing my costs and keeping them as low as he could. He just didn't do anything for me....most probably because it meant less money for him! Damn, if I can find better coverage at a lower price, why couldn't he? He's in the damned business!

Anyway, I have a new agent now and I'm happy. We'll see how well they service accounts.

[my2sense]

3. i just did the same thing

My insurance company was covering my house for FAR MORE than what it is valued at. It seemed each year the quietly upped the coverage. Never again. Always keep an eye out on your insurance company....never assume they are dealing square.

[davsand]

8. You REALLY want to make sure you know what you are doing when it comes to insurance.

You can REALLY screw yourself over bad if you start pinching pennies on your insurance. There are a lot of questions to consider when you are shopping for insurance. My first question would be how much is covered if you have to replace the contents of your house. (Not to put too fine of a point on it, but if you have a huge house you are probably gonna have to spend more to get new furniture to fill it up if it all gets destroyed in a fire...) Similarly, you want to know about coverage for stuff like clothing and jewelry.

The entire liability issue is a huge one, and if you have four lots at a private lake, I'd be kinda concerned about getting sued if some kid drowns when he jumps your fence and wades into the lake. Literally, with a judgment from some wackaloon court you could be forced to hand over everything you own unless you have solid insurance coverage for liability. Those four lots could belong to somebody else, and that would really suck. (What if that same kid is only injured and needs lifetime care? That could be a few MORE millions in judgement...)

I'd also want to be damn sure that my policy was covering RECONSTRUCTION of my house rather than replacement. I love my hardwood floors and my woodwork, and it would probably not be covered with just "replacement" cost coverage. "Replacement" is more like "substitution" rather than a reconstruction of your house. I know several people that got burned on that when a tornado took out a local town.

I know insurance is a bitter pill, as far as expenses go, but it is one place that I really do not suggest trying to "DIY."



Laura