Liability issues are a major impact for any wealth strategy.
I'm talking specifically about Auto and Home insurance here. While life insurance and other types of insurance are important, this will specifically focus on physical things we touch and feel every day along and may involve liability issues. One reason why this has me asking you to think about this issue is that it affects your budget as well as one of your WMIs (Wealth Management Issues) Whether you pay monthly or annually, price checking is important.
Just like you should be reviewing your Gas and Electric supplier annually, you should be shopping around for alternatives to your Auto and Home insurance needs. “But how do I do that?” It's not like there is a website that does the work for me, or maybe there is. There are a couple of main ways to accomplish this goal with minimal effort.
Think about which companies you'd like to quote. Make a list of which companies you'd feel comfortable having insure you. Typically these will be the big-name companies you are familiar with like GEICO, Farmers, and Liberty Mutual. Taking this road typically takes around 15 minutes on the phone for each insurance company you’re getting a quote from. All you need to get started is your most recent policy. You’ll want to have that in front of you in case any questions come up about the make and model of your vehicle(s). Bundling both home and auto may apply discounts so have your homeowner’s declarations page with you.
Please note if you have the option to look at USAA, it may be another option. To be eligible for USAA you must be active, retired or honorably separated officers and enlisted personnel of the U.S. military. Officer candidates in commissioning programs (Academy, ROTC, OCS/OTS). Adult children whose eligible parents have or had a USAA auto or property insurance product.
Going to an Agent
First, there are 2 different types of insurance agents. Captive agents and brokers. Captive agents sell only 1 company; State Farm, Allstate, and Farmers are some examples of this. Brokers usually represent multiple carriers. While representing many carriers they may also help you with the service that these companies offer. One of the considerations is how well a company actually pays its claim and if they are in a timely fashion, otherwise called a claim experience. Tracey Regan of LakeShore Insurance said, “I like to say captive agents work for their carrier, brokers work for their client.”
Good questions to ask a broker or agent are:
- Tell me about any conflicts of interest like “What is your compensation for company A versus company B?”
- How long have you represented this company?
- Tell me about the claims experience of working with this company.
- Can you tell me about the premium increase history with this company?
The last question is necessary because changing companies is not something that you desire to do each year.
You can compare online rates with tools from companies such as Esurance which is owned by Allstate, Progressive insurance has a price comparison tool or several other platforms. While the big companies offer comparison tools there are many smaller companies that may offer different prices and policies. Even regional insurance companies such as Erie Insurance or try new companies like Root Insurance may offer better rates for specific coverages they allow you to adjust rates by adjusting coverage right online.
Be cognizant that you will need to enter personal information into these sites and will now be allowing those companies to market to you directly. Basically, these may be lead generation sites that you are opening yourself up to multiple marketing emails, text, or phone calls.
Also, some companies may offer you different rates based on how you drive by putting a piece of technology in your vehicle, pay per-mile-driven, tech algorithms, or even your Credit Rating. The evolution of the insurance and underwriting process will continue to develop at a rapid speed in the next few years and pricing revisions will reflect that change. How much is a self-driving car to insure? What about Gig economy workers such as Uber or Lyft? We may need to know those answers in the next few years.
Tracey Regan of LakeShore Insurance stated, "So many people think only about cost when it comes to their personal insurance. I was paying this much for this coverage and I can get it from another company for less." Of course, the cost is a factor but when you are looking at your insurance, but it is only 1 factor. Some other factors that must be considered are;
- How much insurance do I need to cover my assets and protect my family properly?
- Is the company that will be covering me reputable?
- Do I have an agent that can be my “Insurance Advocate"?
We’re advising clients to review their current coverage and, where appropriate, modify insurance provider annually
...Consider Adequacy of Coverage, Appropriateness of Policy and, Cost-Effectiveness.
Your Decision Tree should include these four inquiries;
- The Goals for the insurance
- The Issues you are covering
- The Solution the policy provides
- The Benefits
The result of this exercise allowed a client of ours to save $2,531 on their policy premiums for the exact same coverage. What is an hour of your time worth?
Additional takeaway: Consider and review whether you may need an umbrella policy. Personal umbrella insurance is a type of insurance designed to add extra liability coverage over and above another insurance policy, such as auto or homeowners insurance.
Lastly, before you go, put on your calendar a reminder to annually review your policy and make it a recurring item. Again, I am available to discuss this as part of your Personal Financial Plan.
* I am not associated nor compensated with anyone mentioned in this article.
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Gateway Financial, LLC is registered as an Investment Adviser with the State of Ohio and in other jurisdictions where exempted.