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Ongoing escalation of insurance
Old 07-16-2012, 09:28 AM   #1
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Ongoing escalation of insurance

Guys, apologize if this isn't the correct forum.

As my wife and I are rolling toward ER, 65 months to go, knock wood. One of the biggest costs we face is home and auto insurance. Home insurance has gone up 90% over the last 10 years, without a claim.

My question is has anyone found a way to purchase a similar policy to an umbrella for home, cars, etc? Along the lines of a catastrophic policy, high deductible, covers all assets. We're located in Texas.

Any thoughts are greatly appreciated.
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Old 07-16-2012, 09:38 AM   #2
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Originally Posted by serie1926 View Post
Guys, apologize if this isn't the correct forum.

As my wife and I are rolling toward ER, 65 months to go, knock wood. One of the biggest costs we face is home and auto insurance. Home insurance has gone up 90% over the last 10 years, without a claim.

My question is has anyone found a way to purchase a similar policy to an umbrella for home, cars, etc? Along the lines of a catastrophic policy, high deductible, covers all assets. We're located in Texas.

Any thoughts are greatly appreciated.
Do you live near the coast then a few names are the reason, Eike, and Rita come first to mind. If inland its the number of hailstorms that lead to mass re-roofing, since people don't put on metal roofs.
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Old 07-16-2012, 09:41 AM   #3
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Part of this is due to the ongoing pathetic interest rates on income investments. Historically insurance companies make some of their money not just on the difference between premiums collected and claims paid out, but also on the "float" -- the ROI on the premium money collected but not yet paid out. RThis can be a significant portion of earnings in "typical" times. When the return on "float" gets closer and closer to zero as the Fed continues to keep near-zero interest rates, insurers aren't able to profit much at all from float and have to rely on the spread between what they collect and what they pay out a lot more. Thus they raise premiums to compensate for the loss of income that would normally come from "float".

Having said that, the homeowners insurance market in Texas is pretty dysfunctional and the regulation is rather insurer-friendly. Near the coast may be more problematic, too.
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Old 07-16-2012, 09:42 AM   #4
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Originally Posted by serie1926 View Post
Guys, apologize if this isn't the correct forum.

As my wife and I are rolling toward ER, 65 months to go, knock wood. One of the biggest costs we face is home and auto insurance. Home insurance has gone up 90% over the last 10 years, without a claim.

My question is has anyone found a way to purchase a similar policy to an umbrella for home, cars, etc? Along the lines of a catastrophic policy, high deductible, covers all assets. We're located in Texas.

Any thoughts are greatly appreciated.
I'm not aware of any alternative to carrying home and auto insurance as an umbrella policy requires those types of insurance to be in place and only kicks in once those policy limits are exceeded.

You must be located near the coast because I'm in TX as well and my homeowners premiums are actually less than they were 10 years ago. We did increase our deductible, but that certainly wouldn't account for the difference in our experience vs. yours. I assume you've considered your deductible amount and shopped the competition?
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Old 07-16-2012, 09:47 AM   #5
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A lot of people here have been surprised when they shopped their insurance around after being with the same carrier for several years. They found huge savings by switching carriers.

We haven't done that (yes, we are idiots ) but our insurance for car and home together is almost to the penny what it has been for at least 10 years.
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Old 07-16-2012, 10:02 AM   #6
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A lot of people here have been surprised when they shopped their insurance around after being with the same carrier for several years. They found huge savings by switching carriers.
+1

Being a loyal policyholder is sometimes a huge detriment when it comes to insurance companies. Many see inertia as a great way to run up the premiums.

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We haven't done that (yes, we are idiots ) but our insurance for car and home together is almost to the penny what it has been for at least 10 years.
I want to go on record here that I made absolutely no reference to you being an idiot. Call me stupid, but I thought I needed to point it out.
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Old 07-16-2012, 10:30 AM   #7
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We just got our quote for the next 6 months for auto insurance from USAA. The entire premium went up 10% which includes close to a 20% increase in the bodily injury, med payments, and PIP areas. Guess where all the fraud is?

I would love to drop the BI limits but I can't because of the umbrella policy requirements (and I don't feel like self-insuring a gap in coverage from the auto policy to the umbrella policy) and it probably really doesn't make sense from a financial risk point of view.

I live in the Tampa Bay area and apparently the two hot spots for auto insurance-related fraud in FL (which apparently leads the country) are in the Tampa Bay area and the Miami area. This I learned from the poor USAA rep who got an earful while assisting me in trying to trim the policy in other areas to reduce my premium.

With USAA, I know the increases are related to real data and not just paying more dividends to stockholders but that doesn't make me feel much better. Insurance companies have no motivation to fight the fraud or to appy concentrated pressure on law enforcement to do it because they can just raise premiums.

Where is our FL state legislature? Our insurance commission? I know, stupid question. I can't remember all the details, but some law was passed in the late 1980's in CA when I lived there that capped the annual premium increases on auto policies. There was much hand-wringing about insurance companies leaving the state but how could an insurance company not participate in the huge CA market?

What I seem to recall happening was a big crackdown on fraud. The cap on premium increases made the fraud issue the insurance company's problem because they could no longer just pass along the increased cost of doing business. They brought their enormous influence and resources to bear on the fraud issue and something happened.

Unfortunately, there is no one with any power to advocate for the lowly premium payer in FL. There was a law passed to try and stem the PIP fraud but they must still be arguing the details and it's probably a bloody battle between the legislators and our huge population of personal injury lawyers and their HUGE lobby in this state. Every third commercial (well, at least it was before the presidential candidates got busy) and billboard is for a personal injury attorney.

Very frustrating.

The cost of homewoner's insurance and the unpredictable cancellations and increases keep us out of the real estate market.
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Old 07-16-2012, 10:49 AM   #8
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"Very frustrating." Preaching to the choir!

Appreciate the input all!
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Old 07-16-2012, 10:50 AM   #9
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I think the best things you can do is shop around for auto/home coverage and looks at increased deductibles (though in some cases the increased risk isn't worth the reduction in premium).

If you have an older car then sometimes it makes sense to drop collision coverage and self insure.
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Old 07-16-2012, 11:08 AM   #10
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Have you considered perpetual insurance? With such a policy you make an initial deposit, then no more again unless you want to increase coverage. When the policy ends you get your full deposit back. http://en.wikipedia.org/wiki/Perpetual_insurance
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Old 07-16-2012, 11:27 AM   #11
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Originally Posted by serie1926 View Post
Guys, apologize if this isn't the correct forum.

As my wife and I are rolling toward ER, 65 months to go, knock wood. One of the biggest costs we face is home and auto insurance. Home insurance has gone up 90% over the last 10 years, without a claim.

My question is has anyone found a way to purchase a similar policy to an umbrella for home, cars, etc? Along the lines of a catastrophic policy, high deductible, covers all assets. We're located in Texas.

Any thoughts are greatly appreciated.
Buying home and auto insurance from the same company can reduce your rates. Next just shop around, you can find big savings simply by changing companies. You can also increase deductibles. In the extreme you can downsize the house and your car so insurance is cheaper. I live in a city and when I ER and no longer have to drive to work I'm considering getting rid of the car.....I'd save $1000/year on car insurance immediately.
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Old 07-16-2012, 11:31 AM   #12
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I think the best things you can do is shop around for auto/home coverage and looks at increased deductibles (though in some cases the increased risk isn't worth the reduction in premium).

If you have an older car then sometimes it makes sense to drop collision coverage and self insure.
I'm getting my auto policy quoted with the broker that does my renter's insurance but he said even he was shocked by the latest increase in HIS policy in the BI/PIP/Med Pay coverages heavily affected by fraud.

Comprehensive coverage is pennies and collision coverage is nickles compared to the cost of the BI/PIP/Med Pay and those costs actually went down this latest round. We did drop them on the oldest car but the cost for both coverages for the other 2 cars with $300 (comp) and $500 (coll) deductibles is $33 per month. There is no bang for the buck increasing deductibles as I could double the deductible and save maybe $20 over 6 months.
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Old 07-16-2012, 07:17 PM   #13
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Buying home and auto insurance from the same company can reduce your rates. Next just shop around, you can find big savings simply by changing companies. You can also increase deductibles. In the extreme you can downsize the house and your car so insurance is cheaper. I live in a city and when I ER and no longer have to drive to work I'm considering getting rid of the car.....I'd save $1000/year on car insurance immediately.
I couldn't go that extreme, but I take it to the level right before. A 12 year old car on liability for around $25 a month, and under $100 a year in property taxes. I could easily afford a new car, but I loathe giving the insurance company and the tax man any more of my money than possible.
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Old 07-16-2012, 07:40 PM   #14
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I have umbrella insurance and for me it is relatively inexpensive. Yet what I find is that it seems that only the major carriers offer them.
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Old 07-16-2012, 08:21 PM   #15
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We just got our quote for the next 6 months for auto insurance from USAA. The entire premium went up 10% which includes close to a 20% increase in the bodily injury, med payments, and PIP areas. Guess where all the fraud is?
I would love to drop the BI limits but I can't because of the umbrella policy requirements (and I don't feel like self-insuring a gap in coverage from the auto policy to the umbrella policy) and it probably really doesn't make sense from a financial risk point of view.
USAA stopped insuring Hawaii homes for a number of years due to their hurricane exposure, and when they re-entered the market they quoted me a premium that was over seven times as high as Armed Forces Insurance.

If you're eligible, I'd try AFI for umbrella and maybe even homeowner's. AFI may be like Vanguard-- great rates until you actually need some service-- but if you don't file claims then it may be fine.

In the meantime, I'd like to thank you for enabling USAA to lower our vehicle insurance rates last month... apparently they're going to make Florida pay more so that the other 49 states don't have to!
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Old 07-16-2012, 08:37 PM   #16
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USAA stopped insuring Hawaii homes for a number of years due to their hurricane exposure, and when they re-entered the market they quoted me a premium that was over seven times as high as Armed Forces Insurance.

If you're eligible, I'd try AFI for umbrella and maybe even homeowner's. AFI may be like Vanguard-- great rates until you actually need some service-- but if you don't file claims then it may be fine.

In the meantime, I'd like to thank you for enabling USAA to lower our vehicle insurance rates last month... apparently they're going to make Florida pay more so that the other 49 states don't have to!
Could we send you a few ambulance chasers personal injury lawyers? Why don't they like the sun in Hawaii as much as the sun in FL? Or do you think FL laws make it easy for them, in cahoots with our greedy citizens, to screw the system? No, that can't be it. Our state legislators and Gov. Skeletor ("I'm an ex-CEO. I'll whip the state into shape!") wouldn't let that happen.
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Old 07-16-2012, 09:50 PM   #17
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Have you considered perpetual insurance? With such a policy you make an initial deposit, then no more again unless you want to increase coverage. When the policy ends you get your full deposit back. Perpetual insurance - Wikipedia, the free encyclopedia
Thanks for mentioning this - I had never heard of this concept before!

After Googling for 10 minutes, I have only found 2 insurers that presently offer Perpetual Insurance policies - both only underwrite in the PA/NJ/DE areas.

Anyone know of a list of insurers that still underwrite Perpetual Insurance policies? I may not be that interested in it, but I know of someone that would be.
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Old 07-16-2012, 09:50 PM   #18
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Could we send you a few ambulance chasers personal injury lawyers?
All you need is a strict gun-control law and a 55 MPH speed limit!
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Old 07-16-2012, 11:49 PM   #19
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Just got my flood insurance bill today, and opened it with some trepidation, recalling this thread.

Luckily, it went up less than 5%. Whew. Could be worse.
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Old 07-17-2012, 10:01 AM   #20
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Just got my flood insurance bill today, and opened it with some trepidation, recalling this thread.

Luckily, it went up less than 5%. Whew. Could be worse.
Not much fraud associated with flood claims I guess. At least the scammers haven't gotten to that yet!
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