AMICA: A Great Value You Might Not Know About
Jul 12, 2000 (Updated Jul 12, 2000)
Review by Chris Ellis
Rated a Very Helpful Review
A common reaction to mentioning AMICA insurance might be: AMICA insurance? Who the heck is that? Never heard of them.
Recommend this product?
Itís not surprising, really. They donít really advertise, so theyíre not nearly as well known as larger companies, such as State Farm, etc. Yet in numerous surveys I have read (including one that was featured on ABCís Good Morning America several months ago), AMICA consistently ranks among the companies with the most favorable customer ratings. I, for one, consider myself among those who is quite content with the coverage AMICA provides, and believe it to be a good value for the money.
So, how did I come to know about AMICA? The simplest way, actually. My parents were customers, and had always indicated that they were satisfied with the coverage and price. However, this ďendorsementĒ carried extra weight with me: my father spent many years working in the insurance industry, and I naturally tended to trust the fact that he was an AMICA policyholder even more given that background.
I did my homework, checking with several companies for quotes once I had settled on a car, and finding all of the rates to be rather similar, I went ahead and chose to go with AMICA. In the ensuing 7+ years, I can honestly I say I have not had a complaint (well, only that rates in general are so ---ing high, but thatís not really fair to blame on a single company).
Iíve had three occasions to file claims on my policy, and in each case the agents to whom I have spoken have been the epitome of courteous, helpful and professional service. The first claim involved a large tree branch falling smashing into my windshield (I thought it looked more like a Trident missile as it flew at me while driving, but thatís another matter). The resulting damage was a small crack, but it was enough to ensure that the car would not pass the next state safety inspection. After only a few minutes on the phone explaining the particulars of the situation, the claims agent gave me the number of a mobile windshield replacement agent. Two days later, the windshield was replaced while my car sat in the parking lot of my office building. Piece of cake.
Under the heading of ďit never rains but it pours,Ē a few months later, I walked out of my house to go to work, and something just didnít seem right. It was almost as if something was missing. Wasnít there a car parked in my driveway last night? Oh [insert stream of expletives here]! I was a bit frazzled when I contacted AMICA, but once again, I received polite, helpful service, explaining to me the procedures for such a situation (getting the police report, which rental company to contact, etc.). About a week later, my car was found, damaged but salvageable. The appraiser was quick to arrive at my mechanicís garage to compute the costs. There were no hasslesóI paid my deductible, and the rest of the major costs were covered.
Then, just about two years ago, someone hit the side of my car while I was in a parking lot---and not in the car. It was a hit and run, leaving an ugly dent along the passenger side, and there I was with no witnesses to attest to what happened. Once again, I was not in the best frame of mind when I contacted AMICA---still fuming and outraged at what happened (heck, I still get pretty ticked when I think about it!). But once again, the claims staff was polite and helpful, and sympathetic to my plight, arranging to have a claims adjuster check out the damage while my car was parked at my office building. No muss, no fuss.
There is one feature to AMICAís policies (not including life insurance) which sometimes seems confusing, and may not appeal to all customers: the practice of paying out dividends on policies upon their expiration. Generally, these dividends average 20% for auto policies. (Important note: AMICA makes it very clear that these dividend payments are not guaranteed; they have, however, been paid out for at least 20 continuous years.) Simply put, on the day after my policy expires, AMICA mails a check equal to 20% of the previous yearís premium. Since the first installment on the new policy is also due at the same time, that check covers most of the minimum first payment for the new policy (though, of course, customers may pay more than the minimum amount due).
The fair question this raises is wouldnít it be preferable to have the lower premiums up front? In fact, AMICA introduced an option addressing that issue last year. It offers customers a choice: take reduced premiums up front, but not 20% less, and receive no dividends, or take the dividend option and be likely to pay less in the end. Itís completely your choice; if you donít like the dividend option, donít take it. The big appeal of the dividend option: that 20% payback makes the actual premium paid to AMICA significantly lower than just about any other reputable major insurer in the market.
The argument that AMICA is investing the money over the course of the year and earning money on it before paying out the dividend is valid. However, Iíve looked at how much money I would be likely to make if I invested that same amount of money individually for twelve months, and the fact is, it isnít all that much, even if I assume an abnormally high rate of return on my investment. So yes, barring a catastrophic year for the company, AMICA is investing the money. But economy of scale means that AMICA is making more of a return on that investment than the individual customers would make separately. That return is then paid back to the customers in terms of ultimately lower premiums. Net result: the amount of money I save in lower premiums is greater than the amount of probable return if I invested that ďextraĒ up front cost myselfóso I end up better off.
Thatís the more complex financial reason I am a fan of the dividend system. From a practical day-to-day perspective, itís something of a ready-made savings account for auto insurance. Sure, I know the bill comes due at the same time each year. But if youíre anything like me, setting aside money to prepare for that bill just isnít foremost in your mind. Whatever can be saved goes into the bank, and when that initial bill comes in the mail, itís a rude shock. Receiving a check that covers a good portion of that bill cushions the inevitable blow. Nothing can take the entire sting out of car insurance, but Iíll take whatever I can get to make it less painful.
Would I recommend AMICA insurance to friends? You bet. I would also always advise comparison shopping, taking into account not just the cost, but the companyís reputation and stability as well in order to establish the best overall coverage for their individual needs. Insurance is too important to be gambled on a cut-rate, possibly unstable company who wonít be there when you need them. Do your homework and find out what most closely suits your individual circumstances.
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