What Home & Auto Insurance Coverage Do We Really Need?

[Midpack]

It seems every Jan I post a rant about home & auto insurance rate increases. A few years ago my inattention led to noncompetitive rates, my bad - and I was able to get a huge reduction without changing carriers. However since then we've had sizeable increases every year. In over 40 years, we've had 1 auto claim and ZERO home claims.

Once again, this year Liberty Mutual has jacked up homeowners 5% and auto 16% - I've had enough. Fool me twice...

I've gotten quotes from eSurance and Progressive, and of course they're lower - but comparing coverage is very difficult (at least for me). The online quotes are a little vague in terms of coverage, and they don't show any of the inevitable terms & exclusions. Of course my current policies are just the opposite. Coverage is a little hard to find and terms & exclusions are overwhelming - homeowners is 44 pages, auto is 43 pages.

So as I wade into the insurance morass once again, expecting to change insurance providers for the first time in about 40 years, I'd welcome any guidance on:

• what coverages & amounts do I really need, and/or
• ways to make wading easier.

Thanks!

 

[braumeister]

Might help:

How Much Car Insurance Do You Need? - Personal Finance - WSJ.com

How to Insure Your Home - Personal Finance - WSJ.com

 

[bradaz2488]

I understand your frustration with insurance. I have only one small claim and a few windshield replacements since I started paying car insurance at age 16. No claims on homeowner insurance for 25 years. I have been with Sate Farm since 1979. I have done some shopping around thru the years, but the savings was not that substantial to make me move. When I felt like I was paying too much I would call the agent and he would get me a better price knowing I was shopping around. Like other on this site we have insurance to protect our wealth. So I made sure I had a umbrella plan to cover a high law suite. To keep my premiums low I have $5K deductible on the house and $500 on cars. If you drive older cars, like we do, then you might want drop the comprehensive and/or collision coverage to self coverage your cars. I think some states require at lest one of these. IMHO the bottom line with insurance it what are you willing/able to pay out of pocket if you have a car accident or damage to the house. This seems to be the only way to keeps premium costs down. I rather not do the shopping around for insurance companies to save a few hundred dollars a year to only have then increase them back up to what I was paying.

 

[GrayHare]

That's now SOP in the industry: lure you with a lowball initial rate, then rachet it up until you either complain or leave.

 

[braumeister]

I know of at least one exception.
All my insurance has been with USAA since 1968 (except for the few years when I was overseas), and I'm still very happy with my rates.

Not available to many, but great for those who qualify.

 

[Bamaman]

The model for an insurance company is to quote low rates to begin with--and require both homeowners and auto policies are insured to get a 35% premium decrease.

Every year, premiums go up 15%. On the homeowners, they put a description of your house into a computer--and the computer says the cost of rebuilding in case of a major loss is up 15%. Look ahead 3-4 years, and your paying premiums by the $1000's and your house is insured for 150% of its value. Although you're overinsured, if you choose not to rebuild a total loss they're not going to pay even close to the coverage you've paid out the nose for.

I try to keep a low loss record, great FICO score and clean driving record so I can switch insurance companies every 4-5 years--starting out at lower rates.

I've been with Nationwide, Liberty Mutual and MetLife in the past. I have 1 house and 2 cars with State Farm--medium expensive. I have 2 houses and 2 cars with Allstate--lower premiums than State Farm. My new house is with Essurance (division of Allstate) and they're less than 1/2 the premiums of State Farm but very conservative on underwriting.

Keep your experience and losses clean, and change companies periodically.

 

[athena53]

That's now SOP in the industry: lure you with a lowball initial rate, then rachet it up until you either complain or leave.

Insurance rates have to be approved by the State Insurance Department and there's no way a company can lowball rates for new customers unless the experience justifies it (or they pay a lower commission on new business to their agents). Most studies show that it's the longer-term policyholders who are more profitable.

If you're getting a lower quote from another company, either the coverage isn't as good (more exceptions, lower limits, etc.) or they actually do have better experience with first-year policyholders or you happened upon a company that has decided that your particular segment of the market (single female farmer living in Manhattan, no accidents or violations, uses pubic transportation to commute) is cheaper to insure than your current insurance carrier thinks it is. And then they all raise rates when claim costs go up, which they generally do.

 

[Midpack]

I know of at least one exception.
All my insurance has been with USAA since 1968 (except for the few years when I was overseas), and I'm still very happy with my rates.

Not available to many, but great for those who qualify.

Not disputing your experience at all. Everyone else in my family insures with USAA and loves them, and I am eligible. But I got quotes from them a year or two back, and they were higher than I am already paying

 

[NanoSour]

I second the notion of not paying for collision & comprehensive on an older vehicle. According to insurance statistics the "average" driver gets into an at-fault accident once every 11 years. If your vehicle is valued at less than 10K, it makes sense to self-insurure, pocketing the extra savings to pay for the loss if, and when it occurs.

I do this and it does make me more conservative when deciding to get behind the wheel. Particularly in snowy weather. This is a good thing.

 

[Texas Proud]

I am one who also does not like the rate increases.... but I have Progressive... so all companies do it...


However, I was not able to get a cheaper policy than what I had... so I just sucked it up and paid...

 

[Sojourner]

I switched from State Farm to Progressive for both home and auto a few years ago, after noticing that SF has jacked up my home insurance premium by like 10% from the previous year. I called around and got some lower quotes from other companies, and when I called SF to see if they would match those rates (or just get close so I wouldn't have to switch), they basically said "Sorry, no can do." I was shocked they wouldn't play ball even a little, especially since I had never once tried to negotiate lower rates in 20-odd years of being a loyal customer. So I ended up going with Progressive and have been satisfied with their service and pricing so far.

Seems insurance is a lot like Internet and TV service these days. You have to shop around periodically and threaten to switch to other providers in order to get lower, competitive pricing. Otherwise, they are more than happy to take advantage of your complacence and drain your wallet. I renegotiate with DirecTV and with my Internet provider every 18 months to 2 years like clockwork, and going forward I'll be doing the same with insurance every 2-3 years.

 

[rdy2go]

No one likes rate increases on their insurance, but they are a necessary fact of life. The companies have employees that want raises, fleets that have to be replaced, computers that have to be upgraded and claims that increase in cost as cars, repairs and lawsuits go up in price. If a company does not raise rates with increasing costs they will go belly up in time. Any company that gets behind the curve on rates ends up having to take larger increases to catch up in the future. It is easier to ask for a nickel every year than to ask for a quarter every five years if you get my drift. No company is always the cheapest, they can get cheap for a while, but then then, after gaining market share, they have to raise rates to adequate levels. Buying business only works in the short term. There ain't no such thing as a free lunch.

Companies don't rate your policy on just your history, they are rating their book of business as a whole, factoring in your zip code, state, credit score and more along with your home's age, construction, type of roof, fire protection, etc. Pricing the book of business using their overall experience is what causes price changes. Personal lines (auto and home) have been unprofitable for the industry for the past few years and they are trying to catch up to what they call rate adequacy. Commercial auto is also an unprofitable line these days, nation-wide.

Insurance companies do not have teaser rates with low first year premiums to get jacked in later years. The companies have to figure in their acquisition costs per policy, pay commissions to the agent and set aside money for future claims. An agent for a direct writer like Allstate, Farmers, State Farm will usually get paid around 10% to 12% commission the first year and maybe 8% for subsequent renewals. An independent agent will usually get paid 15% or so first year and for each renewal year.

My advice is to find a good, professional independent agent in your area that represents a number of quality companies and let them place you with the best company that suits your needs. I say this because some customers need to be with a company such as Chubb - people with high-value homes, high net worth, expensive jewelry, fine arts, etc. Some people are best suited to be with a company that can handle their home, auto, boat and vacation condo in another state. Not all companies write in all states, so they would be unable to take the condo in Arizona or wherever. A smaller regional company may be best if you have farm property, livestock, etc. No one company is best for everyone and price alone is a poor way to judge what you are getting.

I say all this not to apologize for the insurance companies, but to explain the reason s for the increases in premiums. I don't like paying insurance premiums any more than the rest of you, but I have seen what happens to companies that don't keep their rates in line with costs - they go broke or get bought by a larger competitor.

 

[pb4uski]

We have been lucky in that our rates have been quite stable... while it is hard to judge due to changes in insured items (added garage, upgraded vehicles) it seems that our increases have been modest. In our state, there are standard policy forms for home and auto so coverages are comparable. I suspect this is the same in other parts of the country. Check out Cincinnati Insurance.

 

[zinger1457]

I've had really good luck with Progressive for auto insurance, had my last vehicle for 8 years and what I paid for year 8 coverage was almost the same as year 1 (with same coverage). Bought a new vehicle in 2016 and premium increased $20 for a 6 month policy.

I have had to shop around for home insurance through the years but have been with Travelers the past 4 years with reasonable (<5%) increases, just got my renewal notice yesterday for 2017 and it's actually $1 less than 2016.

 

[Texas Proud]

I will say one thing that I think stinks about Progressive.... not sure if other insurance companies do this or not...


A few years ago I totaled a car, and a month ago my son 'totaled' out his car.. what they do is look at cars on sites like Autotrader etc. to come up with a price... they adjust for items on or off the cars listed and for mileage... however, they do not give much credit for a low mileage car... my sons car was a 2010 with 18,500 miles... the difference they gave with one that had 60K miles was only a few hundred dollars...

The other thing they do which I just hate is they 'discount' the price listed by about 9%... so if it is listed at $10,000... they say it will sell for $9,100 (maybe a bit less).... then they list a price for the 'car' for salvage... for my son's car it seemed fair.... the repair shop found someone that would pay me a couple hundred more.... but for my car it was not even close...

My car had so much damage that I took the money.... my son's car was close and we had it fixed with cheaper parts.... the reason we fixed his was it was close and we could not find a car that was even close in mileage for what they said we could buy one...

 

[athena53]

I called around and got some lower quotes from other companies, and when I called SF to see if they would match those rates (or just get close so I wouldn't have to switch), they basically said "Sorry, no can do." I was shocked they wouldn't play ball even a little, especially since I had never once tried to negotiate lower rates in 20-odd years of being a loyal customer.

I'm not sure what you expected them to do. As I noted earlier, they're obliged to charge the rates that the State Insurance Department approved for your coverage and your rating characteristics (location, car make and model, loss history, etc.) An agent could get the premium down by offering higher deductibles, dropping Uninsured Motorists (I DON'T recommend that!), sharpening his/her pencil and deciding that the replacement value of your house was overstated, or selling you less coverage- maybe paying the depreciated value of your roof instead of full replacement cost if it's damaged. Those are changes that need to be explained and agreed to. They can't just knock 10% off to keep you as a customer. The State Insurance Department would be all over them for that. Unlike the cable company, they can't cut deals that mean two people with the same rating characteristics are paying different amounts for the same services.

 

[Options]

I've used a broker who supposedly shops HO/auto/umbrella insurance for me since before the internet. When rates were increased last year, I personally shopped and could find nothing lower in any category, even when bundling. My $1M umbrella requires $300K underlying coverage minimums each in auto and homeowners. I considered doubling umbrella as I currently live in sue-happy Los Angeles, but several discussions on the BH forum convinced me otherwise.

https://www.google.com/search?sitesearch=bogleheads.org&q=how+much+umbrella

 

[Bflotomny]

Something I find interesting is when companies value a home they include the total value of the house including the dirt. Think about it... the company says your house is valued at $150k so you should insure for that amount. But lots in my area might sell for $10,000 or 20,000. So even if you experience a complete loss (think of those folks out west that have gone thru a wild fire) the dirt is still there with various improvements water, waste, ect.

 

[Katsmeow]

[*]what coverages & amounts do I really need, and/or
[*]ways to make wading easier.


Thanks!

This is a reason to use an independent insurance agent. Ask for a comparison between different options. Ask to see a specimen policy and all the endorsement and changes. But, specifically ask about what the differences are. I did this a few years ago and my agent had a handy chart at the time that pointed out the differences.

One limitation of an independent agent is that they usually do business with specific carriers and not with others. But, one thing you can do is solicit quotes from different agents.

I do think it is difficult for the ordinary person to compare, particularly on homeowner's coverage.

 

[Texas Proud]

Something I find interesting is when companies value a home they include the total value of the house including the dirt. Think about it... the company says your house is valued at $150k so you should insure for that amount. But lots in my area might sell for $10,000 or 20,000. So even if you experience a complete loss (think of those folks out west that have gone thru a wild fire) the dirt is still there with various improvements water, waste, ect.

But it takes into account that there are more costs involved then just building a new house... I also think that it takes into account that a one off house cost more to build than one of many in a new tract development...

 

[travelover]

No one likes rate increases on their insurance, but they are a necessary fact of life. The companies have employees that want raises.........

I wish I'd worked at a place that gave 15% raises to their employees - I mean average employees, not CEOs.

 

[meierlde]

Actually in Tx you find a lot of the increases happen when a hail storm hits a big city, (since hurricane losses tend to be near the coast and thus localizable). Of course in both Tx and La and Fl so many insurance companies dropped out of windstorm insurance that the state had to set up a pool. Likewise a big hail storm can jack up auto comprehensive rates as well. At least once a large hail storm went thru Fort Worth and took out most of the roofs in the city. Where I live in the hill country in 30 years there would have been 4 roof replacements, except that after the 2nd one I talked my dad into a metal roof, and that has saved 2 roof replacements in 10 years.

 

[coveredbridge]

It seems every Jan I post a rant about home & auto insurance rate increases. A few years ago my inattention led to noncompetitive rates, my bad - and I was able to get a huge reduction without changing carriers. However since then we've had sizeable increases every year. In over 40 years, we've had 1 auto claim and ZERO home claims.

Once again, this year Liberty Mutual has jacked up homeowners 5% and auto 16% - I've had enough. Fool me twice...

I've gotten quotes from eSurance and Progressive, and of course they're lower - but comparing coverage is very difficult (at least for me). The online quotes are a little vague in terms of coverage, and they don't show any of the inevitable terms & exclusions. Of course my current policies are just the opposite. Coverage is a little hard to find and terms & exclusions are overwhelming - homeowners is 44 pages, auto is 43 pages.

So as I wade into the insurance morass once again, expecting to change insurance providers for the first time in about 40 years, I'd welcome any guidance on:

• what coverages & amounts do I really need, and/or
• ways to make wading easier.

Thanks!

Not sure about your part of the country, but in PA most HO and Auto policies are fairly standard. To determine what coverages you have, find the declarations page in the policy. This is the schedule of coverages, with deductibles and policy limits, and usually the associated premium for each. I think the best way to compare is to take your declaration page and call customer service for some companies you want to compare. If you give them the information from the declarations, you should be able to get quotes for comparable coverage.

As for what coverages you need, my approach is to maximize liability protection to preserve my assets and self insure as much first party risk as I can handle with deductibles. Again I don't know about where you live, but in PA we can select "limited tort" coverage that limits your ability to make claims for "pain and suffering" on first party coverages. I made this change and it substantially reduced my premium. I also periodically increase my deductibles, especially on HO policy to keep premiums in check.

 

[sheldon cornped]

Have had Progressive in the past. It was reasonable. I'll bet you a beer if you are a Costco member and get a quote through Ameriprise it will be the best deal around. Currently have auto and new home with them. Can't be happier. I was shocked at how low both premiums are.

 

[travelover]

Have had Progressive in the past. It was reasonable. I'll bet you a beer if you are a Costco member and get a quote through Ameriprise it will be the best deal around. Currently have auto and new home with them. Can't be happier. I was shocked at how low both premiums are.

Do they do umbrella insurance, as well?