Author Topic: Insurance savings vs staying with same company  (Read 3187 times)

icefr

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Insurance savings vs staying with same company
« on: July 18, 2013, 12:06:22 AM »
So I have two questions on insurance here. I have plenty of cash/taxable investments to pay for most catastrophes that could come up.

First question: How do I decide what deductible to pick for my condo owner's insurance? I have a $1,000 deductible on my car and I think that's a reasonable spot. But what about the condo insurance?

I have a few options:
* $500 deductible, annual premium is $X
* $750 deductible, annual premium is $X - $12
* $1,000 deductible, annual premium is $X - $28
* $1,500 deductible, annual premium is $X - $37

Which one would you pick and why?

Second question: At what point would you switch insurance companies? My current annual cost for auto, condo, and umbrella insurance is $2,000. I turned 25 recently and my (third party) agent sent me a quote for another company that would be about $1,500 total for the same coverage across all three. I am reasonably sure that one of my (current) policies will go down by $80 at the next renewal and my auto policy, which is the big one, is up for renewal in < 4 months. I called my current insurance company to see if there was anything they can do to lower my rate right now and they said that all I can really do is increase the deductible on the condo policy (see first question). I kind of want to wait and see what things look like when my auto policy is up for renewal later this year and then re-evaluate switching. I've had pretty good customer service with this insurance company and I'm not sure that I want to switch. I've been with them for almost 3 years now and I know nothing about the potential new company.

Thanks in advance for the help.

Rural

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Re: Insurance savings vs staying with same company
« Reply #1 on: July 18, 2013, 05:47:47 AM »
Why such a low deductible? If you have the cash, consider a $5,000 or even $10,000 deductible. You probably aren't going to want to file on much below $5,000 anyway; that would make your rates go up for years.

Perhaps if you tell us the companies, someone will be able to tell you more about each of them.

MissStache

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Re: Insurance savings vs staying with same company
« Reply #2 on: July 18, 2013, 08:14:39 AM »
I think the good rule of thumb for picking deductables is to ask yourself how much you could handle out of pocket if a disaster struck.  Could you get $1500 in cash tomorrow if your roof caved in?  If not, that is too high for you.  If you could handle more, then see if you can get a higher deductible and save more money.  I would agree that you many want to look at a much higher deductible like $5,000+ if you have the funds to cover it.

Why do you have Umbrella Insurance?  Those are usually used by people with high net worth who wouldn't be sufficiently protected by a $300,000 liability coverage policy. Not to generalize, but most 25 year olds wouldn't need that coverage.  YMMV, of course.

As for switching, if you are happy with your current company then I would recommend staying with them, but $500 is a LOT of money.  I find that most reliable insurance companies are pretty similar in their rates, so I would worry that you would be moving to a sketchy company.  Like Rural, if you wanted to tell us which companies we may be able to give some info on the companies.   I will add that many companies reward loyalty and will often give accident forgiveness to customers without prior claims once they have been with the company for a few years, so there may be some other value in staying with them. 

icefr

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Re: Insurance savings vs staying with same company
« Reply #3 on: July 18, 2013, 08:42:23 AM »
Why such a low deductible? If you have the cash, consider a $5,000 or even $10,000 deductible. You probably aren't going to want to file on much below $5,000 anyway; that would make your rates go up for years.

The policy just seemed so cheap that I never considered raising the deductible. I mean, $X is between $200 to $250 for an annual policy. I can't really think of what I would file on with my condo insurance policy other than all of my belongings getting stolen or my building going up in fire or something. What else would you file a claim for?

Perhaps if you tell us the companies, someone will be able to tell you more about each of them.

Well my current company is local only to my state and the one south of me. The other one isn't one I'd heard of before (so not GEICO, State Farm, Allstate, or Progressive) and it starts with a K.

I think the good rule of thumb for picking deductables is to ask yourself how much you could handle out of pocket if a disaster struck.  Could you get $1500 in cash tomorrow if your roof caved in?  If not, that is too high for you.  If you could handle more, then see if you can get a higher deductible and save more money.  I would agree that you many want to look at a much higher deductible like $5,000+ if you have the funds to cover it.

Hmmm well I keep about $20k in cash in a savings account. So a $5k deductible would probably be okay - that's < 2% of my net worth now.

Why do you have Umbrella Insurance?  Those are usually used by people with high net worth who wouldn't be sufficiently protected by a $300,000 liability coverage policy. Not to generalize, but most 25 year olds wouldn't need that coverage.  YMMV, of course.

Well, my net worth will hit $300,000 in another month or two and my yearly income with bonuses is in the high $100,000 range. It was recommended to me to protect future earnings in case of a problem.

As for switching, if you are happy with your current company then I would recommend staying with them, but $500 is a LOT of money.  I find that most reliable insurance companies are pretty similar in their rates, so I would worry that you would be moving to a sketchy company.  Like Rural, if you wanted to tell us which companies we may be able to give some info on the companies.   I will add that many companies reward loyalty and will often give accident forgiveness to customers without prior claims once they have been with the company for a few years, so there may be some other value in staying with them. 

Somehow I doubt it's a sketchy company since my credit union has a relationship with them, but it still feels weird since I know nothing about them. My current company gives me a 2% discount on my auto insurance for every year I'm with them up to 10 years and after 3 years of having my condo insurance with them without claims, I will start getting discounts. (So far I've had the condo insurance with them for a bit over a year.) If it was $100, I probably wouldn't be considering switching since the one policy will go down by $80 next year with my current company, but $500 is ~25% of what I'm currently paying! I also like that with my current company, when you call them, you immediately talk to a human, there are no crazy phone menus or anything.

MissStache

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Re: Insurance savings vs staying with same company
« Reply #4 on: July 18, 2013, 09:11:05 AM »
The only one I can think of with a "K" is Kemper.  I don't know much about them, but they aren't one that I would be wary of (like The General, or Safe Auto, or Elephant...).   

If it was me, I would probably switch to save that much.  Like you say, $500 is a huge portion of what you are paying.  When you called your other company, did you tell them what the other company was offering and that you were planning on switching?  Some companies offer what they call retention rates that are lower, but they are only offered as an absolute last ditch to keep a customer.   



Eric

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Re: Insurance savings vs staying with same company
« Reply #5 on: July 18, 2013, 09:41:00 AM »
Well my current company is local only to my state and the one south of me. The other one isn't one I'd heard of before (so not GEICO, State Farm, Allstate, or Progressive) and it starts with a K.

Is this like a game of password?  If we guess correctly, do we get a prize?  Or do you really just want general advice instead of specific advice?

My general advice is that insurance company one is approximately equal to insurance company two in almost all cases.   Go with the one that's cheaper.

icefr

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Re: Insurance savings vs staying with same company
« Reply #6 on: July 18, 2013, 12:07:32 PM »
The only one I can think of with a "K" is Kemper.  I don't know much about them, but they aren't one that I would be wary of (like The General, or Safe Auto, or Elephant...).   

Okay, thanks!

If it was me, I would probably switch to save that much.  Like you say, $500 is a huge portion of what you are paying.  When you called your other company, did you tell them what the other company was offering and that you were planning on switching?  Some companies offer what they call retention rates that are lower, but they are only offered as an absolute last ditch to keep a customer.   

Yes, I did. They said that they can't do much and the customer service person said basically what I said in my above post. I'm mostly worried that I switch companies and then the new company increases the rate next year, I don't really know that they won't and then I'll have lost my continuous no-claims discounts with my current company and the rates could be more expensive there in another year. Is it normal to switch insurance companies every 2-3 years and it be cheaper?