The Myths and Reality of InsuranceJun 19 '01 Write an essay on this topic.
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The Bottom Line This information applies to all kinds of insurance. Just remember that you are protecting yourself, your family and your future!
Ok, let's get it over with. I'm NOT your worst enemy. I am an insurance agent, though. And believe it or not, I don't wear a suit and I don't try to sell you a bill of goods. You see just like you, I have to buy insurance. I don't want to pay more than I have to, but I want decent coverage. And it's with this thought that my father and I conduct business. We know we don't want to pay a lot, so we know you definitely don't. I've personally been in the business for about 14 years. I'm 31 now and the business will be mine one day. Oh, and insurance agents DO NOT get discounts - we pay the same premiums as you! But the gist is that most customers think we are the enemy. And I have to admit that in some cases, some agents are your enemy. But take it from me and my over 1300 clients, we try our best take care of you. We want you to be educated and we want you to know that price isn't always the best way to choose insurance. I am an independent agent. I represent about 5 auto/home companies. And though many companies will have you think that an agent only jacks up the price, that's not the case. We make, on average, only a 5 to 10% commission on what we sell. So if your premium is $500 per year, we make $25 to $50. That's it, no more. And be advised that it costs money for companies to have 600 people ready to quote your insurance over the phone or on the net. The costs are even higher in those circumstances. I am licensed in the State of Michigan only, so some of the limits and coverages I go over may not be available in your state. Make sure you discuss your options with an agent or company licensed for business in your state only. When shopping for insurance, keep in mind some basic principles: - We will find out about your tickets and/or accidents eventually. Be truthful up front. It gives us the best idea of what company to quote you with. Every company has a niche where they are the most competitive and if you are truthful with us, we can get you to that point. - Don't buy minimum limits for auto insurance. You are only going to hurt yourself. If you buy PL & PD (Liability only) at state minimum limits, you are hardly covered. First, if you should ever be unfortunate enough to injure or kill someone, do you think that $20,000 will be enough? I doubt a jury would think so. You could end up paying for a $500,000 judgement for the rest of your life. And don't think "Hey, I don't have that kind of money, it's like getting blood from a turnip" will fly in court. They'll get their money. Dollar by dollar for the rest of your life, they always get their money. Buy the highest limits of liability you can afford. - Always make sure your homeowners insurance offers replacement cost on both your personal property AND the building. This will afford you coverage to make sure your items are replaced with like kind and quality and NOT depreciated. - Most home insurance policies DO NOT cover floods. As you have witnessed with the rash of flooding taking place as of late, if these people did not have flood insurance, they had NO COVERAGE. Your agent has access to flood insurance for you. - Save your receipts. If you ever have a loss, receipts will make the claims process go that much faster. Insurance companies have a tendency to get a little suspicious when people have no receipts. This happens a lot and we always say SAVE 'EM! - Make sure that the agent does a full replacement cost on your home. This is where we'll ask you many details about your house including, but not limited to: square footage, # of baths, fireplaces, basements, pools, decks, porches, garages, etc. When an agent does this, they make sure that your home is insured to value. What this means is that should a loss ever occur, your home would be insured for what it costs in today's market to rebuild your home. In Michigan, the lowest cost per square foot to build a home with very basic building - nothing fancy, is $85 per square foot. A "normal" home with some upgrades runs approximately $125 to $200 per square foot to build today. And if you have an older home, your value may be even higher than you realize. Plaster walls cost more to rebuild as do crown mouldings and woodwork. Don't forget to mention if you have a pole barn or unusual structure somewhere on your property. You may need additional coverage for this. - Let your agent know if you conduct business out of your home. In the State of Michigan, none of the companies I am familiar with will provide coverage if you have a home day care. They can add the coverage on for a fee subject to strict limitations. - Liability for homeowners insurance is just as important as it is for your cars. It follows the same principal that if someone is injured on your property, they can sue you. The basic liability limit for my companies (yours may differ due to state regulations or requirements) is $100,000. Again, is that enough? - Deductibles. Higher isn't always necessarily better. Ask for a couple of options and make the decision that best fits your needs and situation. - Rental Cars. If you have full coverage on your vehicles, consider rental car coverage. It only applies and provides coverage in the case of a covered loss, not just to rent a car to go on vacation, but if your car is out of commission for a week to ten days, do you have a ride? It doesn't cost that much per day and can really be a lifesaver. - Don't believe that if you go with a "name brand" company that your rates will automatically go up. You want to do business with a company that is financially sound. You want to do business with an insurance company that can and will be able to pay their claims. Always find out the "A.M. Best" rating of your insurance company. The A.M. Best company rates the financial stability of insurance companies in the United States. The highest rating is A+++ and it goes all the way down to a D. I would always suggest doing business with a company with an "A" or higher rating only. Name Brand insurance companies are usually companies who have been in business the longest and have the reputation for paying claims. - Nearly every insurance company is in the midst of raising rates in both home and auto insurance. These rate increases can be caused by: Catastrophic Claims Experience - look at the rash of tornadoes and storms we have had on-going since 1998. These affect your rates. Your Driving Record - Has a direct effect on the rates you pay. - Consider Umbrella insurance. An umbrella policy provides you with additional liability coverage, usually in amounts of $1,000,000 and up for a very low premium per year. This additional liability would be in addition to the limits of liability you carry on your home and auto insurance. Ask questions and be informed. Insurance protects YOU and your future.  |
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