The following is an article sent to me from State Farm Insurance. They originally sent me a list of their top 15 questions consumers should arm themselves with when looking for a new policy. I asked them to provide answers to the questions as well, and that's how this piece was born. Enjoy!
1) How do I know that I’m getting the right amount of coverage for my situation – not overpaying for things or leaving me exposed?
A: There are several things you can do. First, make sure you find an agent you’re comfortable with, who provides you with talk that’s straight and clear. You’ll get a sense of whether an agent is right for you if she listens and asks the right questions in order to understand your individual and/or family situation. Furthermore, you should shop around and make sure that you’re getting several estimates/opinions from different companies to ensure that the cost is in line with the coverage and level of service meets your expectations. You should also sense that an offer feels like it’s tailored specifically for you, not just a one-size-fits-all approach.
Prior to meeting with an insurance agent, speak to a financial advisor to evaluate your current economic situation – income, emergency funds, investments, debts – to ensure that your current financial state is aligned with your financial goals. Understanding your entire financial picture is critical to understanding the types and amounts of insurance coverage needed.
2) What are the advantages of having different types of insurance policies (home, auto, life, etc.) with the same provider?
A: There are many advantages to having different types of insurance policies with the same provider. First and foremost for consumers is that it can save you money. It’s common for insurers to offer discounts if people have multiple lines of insurance with their provider. At State Farm, our customers can get discounts of up to 40% if they take advantage of all the potential discounts they can learn about from talking to their agent.
Here’s how this can work: There are discounts for people who insure more than one car; discounts for people who have multiple lines of coverage – for example, they insure both their home and their car; and basic discounts related to things like having a safe driving record, having a student away at college, or even having a student driver who gets good grades. In addition, there are discounts for renewing your policy – even someone who has been a State Farm auto insurance policyholder for only three years may qualify for a 15% discount on their policy.
The second big advantage is that your agent will have a big picture look at your insurance needs. And, it’s easy and convenient for you, as a consumer, to work with just one company; often times the company will consolidate your insurance bills into one payment as well.
3) What disadvantages are there of having multiple insurance policies (home, auto, life, etc.) with the same provider?
A: While there are no inherent disadvantages to having multiple policies with one provider, it is first and foremost to make sure you want a provider that will be there for you when you need them. You’ll want to make sure that if you do have just one provider that it’s a stable, trustworthy and reliable company. Look for a company with a strong heritage, community involvement and a track record of a fast and fair claims process.
4) How can I understand what comprises a good policy for my situation under each of the insurance categories? Language is complex and difficult to understand.
A: The best way to determine the right policy for yourself across the different categories of insurance (home, auto, etc) is to speak directly with an agent in-person, make sure he/she knows your current situation and what you’re looking to get out of your policy.
If the agent uses complex language or you’re having difficulty understanding what they are talking about, do not be afraid to ask them to clarify it for you in a way that makes sense to you. After all, it is their job to make sure you know exactly what you’re getting with your policy.
5) How does your company make sure that I can get smart, trusted advice if my personal situation changes?
A: You need to feel like your insurance company is going to really take care of you versus constantly try to sell you…and possibly sell you coverage or products you may not need. Your agent should be a true counselor to you – able to answer your questions and tailor your coverage to your new or current situation. In addition, you definitely want a company that you can connect with whenever you need it – as you never know when an emergency or more routine situation will arise. Look for a provider with a website that provides solid information, and 24/7 customer service to ensure that you can get smart, trusted advice if your situation changes.
6) What can I do to make sure that I get all of the discounts I’m entitled to?
A: Many companies offer a variety of discounts for a variety of policy holder characteristics and behaviors, such as safe driving. To make sure that your agent can best serve you and identify the right discounts, you should make sure that you’ve given him all of the relevant information about your situation, your family, upcoming life transitions, etc. If you have any doubts at all, the thing to do is to ask your agent.
7) Are there benefits to renewing with the same company when my policy ends?
A: Absolutely. For starters, you can save money. There are renewal discounts that can save you between 15% and 25%.
8) How can I ensure that I’m making an apples-to-apples comparison if I’m price shopping among several companies?
A: You really need to look at and understand the coverage of each policy and determine what is included vs. excluded in each. Often times, a huge price advantage will mean that something critical to the coverage you need is not included. An agent can help you understand these distinctions.
If you need third party advice, there are also some good associations that provide people with assistance such as the Insurance Information Institute; and industry experts like Ben Baldwin, who wrote The Complete Book of Insurance are also helpful, as are other personal finance experts.
9) How can I make sure that my insurance decisions fit into my overall personal financial picture?
A: Your agent can help quite a bit with that. If you have multiple lines of insurance or even other financial services products with one company, your agent can help you to see the big picture – understanding your total financial situation. It’s also absolutely critical that as you evaluate your overall situation that you think about how your individual insurance policies fit into an approach for preparing for financial emergencies – and you should look at it across policies, including auto, health, etc. Understand what your deductibles and other out-of-pockets could be and do your best to have an emergency fund that takes those factors into account.
10) What is the impact on me if I file a claim? Explain to me why my policy goes up when I make a claim? How is this protecting my financial needs if my insurance company raises my premium?
A: Your agent can explain the claims process to you and what you can expect. Your premium does not automatically go up if you make a claim – in fact, if you meet certain criteria, it’s possible that you will have an accident “forgiven.” However, there can be a number of factors that ultimately determine whether a policyholder gets dropped or not. Those kinds of decisions are usually influenced by underwriting experts within the insurance company itself.
11) What are the most overlooked discounts that are relatively easy to get?
A: Discounts that are tied to changes in your life or behaviors are probably the most often overlooked. Things like a student going away to school, students getting good grades and safe driving records can all help you qualify for a discount. Multi-car and multi-line (having auto and homeowners or renters insurance) discounts are also important to keep in mind.
12) How frequently should I review insurance policies to ensure they are up-to-date and meet my needs?
A: It absolutely depends on your personal situation, but a good guideline is once a year or if something significant in your life changes. One way to think about it is to evaluate your insurance every time you have some kind of major life transition – change in marital status, having a baby, changing jobs, moving, buying a car, etc. Those are often good times to assess whether you have the right coverage. Your insurance agent may also have good advice on how frequently to review the policies, and that will likely vary by policy type – life, health, auto, etc.
13) How can I tell if an insurance agent is being “straight” with me, or just trying to sell something else?
A: If an agent seems pushy or doesn’t seem to be “consulting” with you, but is rather just coming with “sales talk” – you might want to get another opinion.
14) Do my kids get a discount when they buy a policy with the same company that I have been with for years and years?
A: Some companies offer a teen driving safety certification that can carry a pretty significant discount.
15) Will a poor credit rating influence the coverage I qualify for and my premiums? How do I know if an insurance agency is investigating my credit report? Is that legal?
A: That’s a great question for your agent. The laws vary by state. Good organizations to reach out to for more information are the Insurance Information Institute and the National Association of Insurance and Financial Advisors.
State Farm, eh? Ask them this one:
16) How does one know if their insurance company will engage in a "pattern of racketeering" by manipulating engineering reports on hurricane damage so the company could deny policyholder claims?
Posted by: Strick | September 25, 2009 at 05:15 PM