I’ve had an interesting week talking to folks about insurance and wanted to share one of the conversations I had. I’m not using names to protect the guilty. The call I received came from someone looking to get a car insurance quote. A nice family I have known for a while. They were complaining that Flo had promised them low rates but after signing up with them, the rates had started going up pretty dramatically. Once I started the quoting process, I found out Dad had gotten 2 minor speeding tickets and had one small at fault accident. It turns out he hit the neighbors fence backing out his driveway. All of this had occurred over the last 2 years. Now here is the problem. Most preferred insurance companies will not offer insurance to new clients if one person in the household has had 3 or more incidents in the last 3 years. He was shocked. He had driven for over 20 years without incident before this little hiccup over the last 2 years. But what I told him next pained him the most. His accident paid out a little over $500 to fix the neighbors fence. I told since there were no injuries involved, he could have paid that out of pocket and would have avoided having an at fault accident on his record that will cost him increased premiums for the next 5 years. He wanted to know why Flo didn’t tell him this. So then I got to have a somewhat long conversation about my insurance industry and how people obtain insurance and from whom they obtain insurance. Let me share that with you now.
There are basically 3 ways you can obtain insurance. The first is through a direct writer insurance carrier. These are the 1-800 companies you see on tv claiming to save you a million dollars for a few minutes of your time. You call them up or go online and get a quote. Generally they are not advising you in the process, only processing your order. Call back later with a follow up question and you will get someone other than who you originally spoke with. You do not have a relationship with an agent, but you have a team of faceless people (or lizards) to help. They do not have local offices for you to visit. You are acting as your own advocate if you feel you are wronged with a claim or service issue. Also I feel the need to point out that comparing coverages on your insurance declaration pages is not the same as comparing insurance policy language. Not all “things” that are covered are the same from one insurance company to the next. Flo wants you to believe all policies are the same only the price is different. That’s wrong. There are insurance companies that offer more value than others.
The second way to obtain insurance is through the captive agent. These are the good folks at State Farm, Farmers and Allstate, to name a few. Generally good people with a good product at a fair price. They live and work in their communities. But like the 1-800 companies, they (usually) can only offer you the one insurance company they work for. One size fits all. If you like your agent, but don’t like the price, sorry that’s all they have to offer. If your insurance circumstances change, they have a tough time offering you alternative insurance solutions. The advise they offer generally is specific to the company they represent and is not reflective of the insurance industry. For example, one of these companies commonly offers a homeowners deductible that is a percentage of the home value. That is done to reduce the company exposure on claims and to keep insurance premiums down. But it is not typical of most homeowners insurance companies doing business in New Mexico. A typical deductible is a flat dollar amount, say $1000.
The third way for you to obtain insurance is from an independent insurance agent like The Jemez Agency. We do not represent the 1-800 companies or the captive companies mentioned above.
We represent many of the hundreds of other companies that are generally not advertised on tv. We represent both preferred, non-standard and high risk insurance providers. Independent agents are knowledgeable of the insurance industry and have the ability to obtain multiple quotes from multiple insurance companies. We generally have professional relationships with associations like the IIABA or the PIA. We are a strong advocate for our clients since we are not beholding to one company. Since not all insurance policies are created the same, we generally advise our clients on insurance value and not just on insurance price. While most of the above companies spend millions of advertising dollars to become a household name, rarely does their advertising include the discussion of value and risk assessment.
As you can see, there are all kinds of choices on how best to obtain insurance for your family. One piece of advise I would offer to all insurance buyers is that if you do not review your insurance portfolio at least every 2 years, you may be doing your self a disservice. Our insurance products evolve. Make sure you are up to date on protecting your family