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This is nuts! I had to write about it because this has happened one too many times now. Once again, I came across a client totally getting hosed on their home and auto insurance. We’re talking about very smart people here. I can’t help but assume this situation is very common – even with extremely educated consumers.

Backwards Business

So as part of our services, every 2 years we prompt our clients to shop (or at minimum review) their home, auto and other personal insurances. We normally suggest they talk with their current provider and preferably two other insurers to ensure they have the best plan/deal possible.

We were going through this process recently with a new client. They had not reviewed their home & auto insurance for some time – more than 2 years – and we found their liability limits were way too low and the premiums disproportionately high. We also suggested that they get an umbrella policy. As we normally do, we suggested that the client share this with their current agent as well as shop it with two other carriers. Here is their current agent’s response via email (I will always keep names and companies private – no sense asking)…

Dear Susie Random Client,
I am happy you messaged me as Sinking Sands Insurance Company just came out with a new Auto policy with lower rates for some of our preferred customers. When I re-quote your policy, and I increase your liability to 300/300 limits ($300K per person, $300K per accident) AND add on a million dollar Umbrella policy, your monthly premiums would only be $199.84 compared to the $253.93 you all are paying now for the minimum liability limits. I can raise the limits to 300/300 on the Auto policy today and can add the Umbrella, we would just need $18.15 to start that and then it would be factored in with your normal monthly bill each month. This would definitely be the best option for you, and I know this is what your finance guy was probably referring to and what he would highly recommend. Let me know if you have any questions 🙂
-Jane Doe Insurance Agent

Are you kidding me? Aside from changing names, the above email is the word for word response. So our client can significantly INCREASE coverage while also ADDING a $1M umbrella policy for $55 LESS per month?! That is crazy talk.. so much so that at first I thought maybe I had misread it. But after re-reading, I came up with a translation:

Dear Susie Random Client,
Thank you for contacting us, valued long time customer! You have been a loyal client of Sinking Sands Insurance Company and we know the odds are that loyal customers will continue to be loyal. Therefore, we have stuck it to you on your rates for many years. We slowly increased them each year because we knew you would pay them and wouldn’t notice it as much. Now, since your “finance guy” (ME) prompted you to check this out, we happened to have come across a new program just for our preferred customers like you. It will allow you to dramatically increase your coverage while at the same time considerably reducing your premiums. We will do this only because you are such a loyal customer – and because you messaged us. If you had not messaged us, we would have continued to stick it to you. Thank you for your business.
-Jane Doe Insurance Agent

What is Going On?

Apparently some home and auto insurance companies are using the cable company business model – they treat new customers to the best deals and stick it to the most loyal and longtime customers. The good news about home and auto insurance is that there are many more options out there than with cable.

Do yourself a favor: review your home and auto insurance every couple years. Make sure your limits and coverage amounts are appropriate for your situation. Make sure you are getting a fair deal. If you’re not sure what’s fair, ask someone for help. Remember, nobody cares about your money more than you do!

If you are too busy for this, hire a financial planner that will help you keep an eye on these things. If you already have a financial planner and they aren’t doing this for you, get rid of them.

Have you had any fun stories or experiences dealing with home and auto insurance companies?

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