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Expenses and Savings – Insurance March 15, 2007

Posted by pf in Expenses and Savings.
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I’ve decided to tackle my homeowners and auto insurance next.  First, I thought about what my criteria were:

  • Coverages should be at least what I have today
  • Insurer should have a reputation for meeting the needs of their clients
  • Insurer should have a solid financial rating
  • The “price is right”


Generally, I think most (if not all) insurers should be able to provide me with the coverage I need.  It’s on the next three criteria where insurers start to differentiate themselves.  My perception is that many people focus on the price and sometimes do not take the other two criteria into consideration.  Unfortunately, until you have a claim (particularly if it’s problematic), it’s sometimes hard to appreciate how important those aspects of buying insurance can be.  Personally, I’ve never run into a problem…and I’d like to keep it that way.

In my experience, buying these types of insurance is more a question of time and effort as opposed to complexity.  Generally speaking, these products are fairly standard in their structures with the flexibility to meet the needs of your individual situation.  As there are so many carriers out there, I thought I would narrow down my list of potential targets.  To do so, I looked up insurance company satisfaction ratings from JD Power and the financial strength ratings received from AM Best.

JD Power Homeowners Insurance Company Ratings

JD Power Auto Insurance Provider Ratings

I initially chose to get quotes from:

USAA (A++)
Amica (A+)
Allstate (A+)
State Farm (A++)

Although I had never done it before, I also decided to try one of the internet sites where you can get quotes from multiple insurers.  For no real reason at all, I went ahead and tried insure.com.  My thinking here was that I could enter the information once and get more quotes in less time…including some of the carriers on my list:  

The companies chosen for me by insure.com were:

Nationwide
Hicks (Independent carriers)
IA (Independent)
State Farm
Farmers
Allstate
Country Insurance

I’d like to make a few comments / observations on my experience with insure.com

  • Forms were straightforward to fill out
  • You could not get a combined quote online at the same time (both homeowners and auto).  You would actually have to talk with the insurance co. representative to put that together (to get multiple policy discounts, etc)
  • Some insurers responded very fast with either an e-mail or a phone call (mostly the big ones), while others were very slow (mostly the independents), or have still not contacted me yet
  • Although the initial “application” was easy enough, ultimately, you still had to speak with someone as the form was not all inclusive (ex: did not contain a field to list endorsements like sewer backup…important as I have a full-finished basement). 

Generally, going online was positive and included a number of the carriers from my initial list.  As you were also able to give them all the basic information include coverages, etc. you save some time versus having to give it to each an every one of them separately.   However, as I mentioned earlier, you will still need to have contact with the agent – from that point, the online aspect of it falls away and the process is exactly the same.

Similarly, I encourage you to have contact with the agent as they will be able to refine the quote (potentially suggest alternate coverages) and help make you aware of things you might not have really considered (ex: only $6 more a year to increase a coverage by X).

For my initial quotes, I kept all my existing coverages, etc about the same as what I have now:  Here are the estimates I have thus far with an indication of the amount + (savings) / – (costs more) versus my existing policies (annual):

Carrier Homeowners Auto Combined
USAA -54 142 88
State Farm -422 -102 -524
Allstate 287 416 703
Allstate 2 199 283 482
Amica -187 100 -87
Farmers 87 190 277

You will notice I have two quotes from Allstate. Interestingly enough, I decided to try one on my own and the one through the online.  The lower quote was from the online.  However, the fact that it is online was not the reason for the difference.  Fortunately, the agent I spoke to from the online application was very friendly and seemed open / honest.  When I asked him about the discrepancy between the two quotes, he told me that variations in quotes from different offices happen very frequently.  He cited the most common reason being the experience of the person doing the quote as they may not know all the questions to ask / things to consider, etc. 

Additionally, although he didn’t say it, my perception  was each agent had some discretion in how much profit they would build in.  While this makes absolute sense, it was also a bit surprising.  I had always figured that quotes from the same insurance company would be identical…regardless of where you got it.  Assuming this is not unique to Allstate (has anyone else had a similar experience?), I might suggest that you conduct a similar experiment the next time you are shopping for insurance.   Of course, you will also notice the wide discrepancies in pricing between the various carriers.  It’s really amazing how much you can potentially save if you shop around. 

 Although I might receive a couple more quotes over the next couple of days, the clear front-runner is Allstate.  Although they are not the highest ranked in customer satisfaction from JD Power, nor have the highest financial rating from AM Best, they are far from the worst and the “price is right”. 

Although my previous research on improving my yields on cash was s0-s0…it looks like I’ll get my first real hit (~$700 annually) by switching insurance carriers. 

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