I don’t know about you but my social media lately has been flooded with ads telling me I can get my auto or homeowners insurance in 60 seconds and save a ton of money while I do so.

Wow!  Sounds great…until you stop to think about it…

Let’s just think about your homeowner’s insurance.  Can you list off all of the details of your home that would determine it’s value in 60 seconds?  Probably not.  I do this for a living and I couldn’t.

Your home is more than a year built, square footage and type of roof.  It’s more than what type of siding you have and whether you have a finished basement or a crawlspace.  It’s even more than how many bathrooms and fireplaces do you have.

A good homeowner’s policy and more importantly a good Insurance Agent will help take into account whether you have laminate countertops or granite.  Is your finished basement just some drywall on the walls and a drop ceiling or a fully furnished media room and wet bar?  Do you have a collection of jewelry that would go above what would be covered under the standard limits?  Are you covered if your kids have a party and someone gets hurt?

When you use one of these 60 second apps you are basically using a “bot” or script that a developer has set up to check online rates for multiple insurance companies.  It isn’t a person reviewing what is right for you it is just a piece of computer code spitting numbers back at you.  It isn’t checking for discounts you might have missed.  It isn’t asking questions to see if there is an important coverage you might need or should have but never knew wasn’t included in the policy you are being sold.  It is something you could do yourself if you really wanted to.

But here’s the best part of what they don’t want you to know….they are probably charging you more than if you went out and did the online quotes on your own.  If you use one of these insurance apps and they spit out a rate for a bigger name company such as Farmers or State Farm…you are being over-charged.  Why?  Because the larger and better known insurance companies operate on “captive” models where they only sell policies through their own agents or directly through their own websites.  If you get a quote through an app like these, look for a “policy fee” or something added onto the cost of the policy because they aren’t being paid a commission from the big name companies and they aren’t doing it for free and this can be over $100 extra.

Call your local agent or even send them an email if you don’t like talking on the phone.  They know their products, they know the business and the good ones want to help you understand what you are buying.  (There’s a really great Farmers agent in Belvidere I have heard.)

 

 

 

 

Sometimes you just don’t want to sit down and pour out the details of your life and health in an office right away.  If you have done your independent research and have an idea of what type of life or disability coverage you are looking for, here is a resource you can use to get an idea of what it could cost.

Online Life and Disability Insurance Quotes

Once you get an idea of the pricing please contact my agency and so we can assist you in getting the right policy set up correctly for your needs.

This is one of the questions that insurance agents get most often and the answer is frankly one that most people do not want to hear.  You as an insured driver or homeowner may have a policy for 20 years and never have a claim or even a speeding ticket and yet your rates may increase.

To understand this you have to understand how insurance works.  The basic principle of insurance is that a group of people pool their money together so that if a major unexpected event should ever impact one of them the money from that pool would be able to pay for it.

As a simplified example, Smiley Insurance Company has 1000 people that it has provided auto insurance for that each pay $1000 per year for their auto insurance.  Smiley has a pool of $1,000,000 from which it can pay claims.  Joe Textsalot is a client of Smiley Insurance Company and he just had an accident where he injured three people and damaged their new SUV.  The medical payments on this accident come up to $150,000 and the damage to the SUV comes up to $15,000 to repair.  The $165,000 that Smiley Insurance will pay for this accident represents 165 years of Joe’s insurance premiums, obviously more than he will ever pay.

Now if only 7 of the 1000 insured drivers of Smiley Insurance Company have accidents similar to Joe’s, the entire pool of money would be spent.  And what Smiley Insurance is selling is a contract to indemnify its insured clients in situations like these.  Smiley needs to make sure that there is money available to cover other accidents and claims and so they need to increase their rates to be sure that they have enough of a reserve to pay any claims that will come in throughout a year.  (How much an insurance company must keep in reserve is mandated by law and we won’t get into that here.)

Joe’s rates will increase due to the at-fault accident he was involved in.  But the increase in Joe’s premium is not enough to cover the payout.  So while Joe’s rate may increase 25%, Susie Gooddriver’s rate may increase 5% as well because all of the good drivers and homeowners who do not have claims have to help keep that pool funded.

In another example, Susie and her family are out of town visiting the grandparents and their home is struck by lightning which causes a fire.  The fire does enough damage to the home that it needs to be rebuilt completely.  Susie’s home costs $300,000 to rebuild.  In addition to that, Susie’s family lost all of their possessions and Smiley Insurance pays them $150,000 to replace everything.  Susie’s family also needs a place to live while their home is being rebuilt so Smiley Insurance pays them $50,000 to rent a home while they wait for it to be completed.  Altogether Smiley Insurance pays Susie and her family $500,000.  Susie had been paying $1000 per year for her homeowner’s insurance, so it would take another 499 clients like Susie for Smiley Insurance to pay for this claim.

While these examples are hugely simplified the fact is that auto and home claims in the insurance industry are increasing not only in frequency but in dollar amount.  Distracted driving (especially texting while driving) is causing auto accidents at an unprecedented rate.  Medical payments are also increasing greatly especially with the increase in pain management plans and therapies.  Repairs to vehicles that used to cost a few hundred dollars are now costing thousands of dollars due to the technology integrated in vehicles.  Hail damage has been a huge issue in the midwest in the past few years resulting in multiple “catastrophes” that damaged homes and autos.

Insurance rates are going up.  It is an unfortunate fact but it is a fact.  Sometimes your agent may be able to find a way to help you offset this increase and sometimes they will have to tell you that there is nothing they can really do about it even though they would like to.  If they are able to lower your rates be sure to ask them exactly what they did to do so.  Sadly there are some agents out there that will lower coverages or remove them entirely to reduce the premium and not explain what they did.  If you encounter this situation it might be a good idea to have another agent review your policy (such as getting a Farmers Friendly Review here).  Cheaper insurance is not always better or even equal insurance.