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When Should You Change Insurance Companies?June 5th, 2012 Noyes Hall & Allen
We’ve all thought it:
“My homeowners insurance bill went up again!”
“I’m paying too much for car insurance!”
“I need to cut my business insurance costs!”
“My insurance company wants me to repair my house, and I don’t have the money!”
Is it time to shop your insurance? No one really enjoys doing it, but sometimes it’s necessary. When is it smart to change insurance companies? How much savings is enough to make a switch?
Everyone’s price “pain threshold” is different. We have clients who didn’t want us place them with another insurer in spite of $300 savings per year and similar coverage. We have others who want to switch insurance companies to save a fraction of that, with a higher deductible. Neither is right or wrong. It depends on your risk tolerance and price sensitivity.
Is Your Agent Shopping Your Insurance For You?
Does your insurance agent represent more than one company? One reason people choose our Greater Portland Maine Independent Insurance Agency is that we represent several insurance companies. This offers you the ability to shop and change insurance companies without having to start a whole new relationship. In the current insurance market, we typically check insurance prices for you when your renewal price goes up by more than 7.5%. We communicate the results if we think we have a good alternative to present to you.
Related Post: When a Great Car Insurance Quote Isn’t
Compare the Costs, Savings and Risks
Changing insurance companies is not to be done lightly. You can save money, but there are costs and risks to consider, too. If the savings outweigh the risks, maybe it’s time to change insurance companies. We can help you evaluate that.
- Saving Money on Insurance – This is easy to measure – or is it? Insurance is a competitive business. You can sometimes find savings of $300 per year for similar coverage – or that quote might have less coverage or a higher deductible. An insurance agent can tell you the difference.Make sure that the quote you get is as close to “apples to apples” as possible. Compare the liability coverage, property deductibles, and type of coverage. Consult an insurance agent to help you review the quotes. A good agent will tell you if their program is not the best for you. Pay attention to their answer.
- Cost of Time – How much is an hour of your free time worth? It can easily take 3 -5 hours to switch insurance. You have to:
- research insurance companies,
- choose one (or more)
- provide information for a quote
- compare the quotes and coverage
- apply for a policy
- cancel your old insurance
- set up new billing arrangements.
An independent insurance agency that represents many companies, and can save time. But even if you use an IA you can’t eliminate these steps completely. It still takes time. And time is money.
- Cost of Lost Benefits – Many insurance companies reward longevity. Some offer insurance discounts to customers who are claim-free for 3 or more years. Others are more lenient in underwriting or billing for long-term clients with a good payment or claim history. When deciding whether to change insurers, estimate a dollar value on those lost benefits and advantages. Your agent can help evaluate them. If you perceive the value to be less than the price difference, you may want to change. Everyone values them differently.
- Risk of Missing Coverage – Insurance companies’ coverage can vary a lot. When you change companies, it’s difficult to impossible – even for an experienced insurance agent – to duplicate the coverage you had before. Trying to match coverage on your own (on a web site or 800 number)? That’s risky. A local insurance agent can help you evaluate and discuss whether there are important differences.
- Risk of a New Insurance Company – Insurance companies quote your insurance using a “quick qualification” process. They don’t want to spend money on expensive reports for people who don’t intend to buy. After you apply, they inspect your property and order more reports (motor vehicle records, claim histories, etc). At that time, they may charge more than their initial quote if you’ve had accidents or tickets. Some auto insurers even surcharge your policy for accidents that were not your fault.If the company underwriter sees something they don’t like in your reports or inspection, they can reject your application. The insurance company can dump you for any reason in the first 60 days of the policy. If you’ve already cancelled your other policy, you could find yourself looking for insurance in a hurry – and end up worse off than you were before. If you shopped on your own, without an agent to advocate for you, you’ll be on your own to fight the insurance company.
If you would like an insurance quote for your Maine business, contact Noyes Hall & Allen at 207-799-5541. We’re also happy to review your homeowners, condo or renters insurance. You can get a Maine auto insurance quote from 5 companies at once on our web site, and continue the discussion if you see something that interests you. Or, if you just have questions about insuring your business or personal belongings, contact a Noyes Hall & Allen agent.