This is a must read if you are even thinking
about shopping for insurance quotes.
Myths About Insurance
Before you decide to ran off and jump ship from your current insurance provider and switch to a new one, here are some "Myths" we thought you might find useful while doing your research.
Myth #1 - You can get an "anonymous" quote. WRONG. Do you really think that an insurance company is going to offer you insurance when they don't know anything about you? If so, I've got some great real estate deals for you. Listen, insurance companies base rates upon risks, when they don't know the risk they CANNOT give you an accurate rate. Companies that advertise these type quotes are only trying to get you to call them or visit their web site and hope to get you hooked.
Myth #2 - Do you really have to run my credit, the other place I called didn't mention it. TRUE. Nearly every auto and home insurance company uses credit scores to help determine eligibility and rates. In fact, if the agent you spoke to didn't mention it to you and they DO run your credit they are violating the law. There are just a few that don't use credit and these companies are generally dealing with people who are going to get really bad rates to begin with. These companies figure why spend the money on a credit score when it's going to be bad anyway? Rather than argue the validity of using credit we have provided a link to the Texas Department of Insurance web site which references the use of credit. This link will tell you everything you need to know about the use of credit for insurance purposes. http://www.tdi.texas.gov/credit/index.html
Myth #3 - The rate I just got was cheaper than what I pay now, I should switch as soon as possible. WRONG. Do a little more homework before you jump ship. Have you truely compared all of the coverages, deductibles, limitations, exclusions, etc.? There are many details to a policy that the average consumer CANNOT see by comparing a quote page side by side. For example, on auto insurance some companies don't automatically extend liability to a rented or borrowed car. You go on vacation and rent a car and it gets wrecked....your policy may not provide coverage. Or, when it comes to homeowners insurance it can be even more confusing. Take a water loss for example; some companies may not pay for ANY of the damages, some may only cover a specific dollars limit such as $5,000, $10,000 or $20,000, and yet some companies may not have a specific limit at all. In fact some companies offer different policies with different types of coverages even thought it is coming from the same company. We use a site sponsored by the Texas Department of Insurance that allows us to compare one policy to another and send our clients a link with a spreadsheet showing the differences. Does your agent do that?
Myth #4 - This is the quote the agent gave me and it is locked in as far as I'm concerned. WRONG. Just because you got a quote with a specific amount does not mean that it is locked in. Has the agent or company run ALL of their reports? CLUE reports provide insurance companies a look at what past claims you have FILED. MVR reports provide the insurance a look at your Motor Vehicle Reports (tickets). And "insurance scores" (as the insurance industry likes to call them) are credit type reports. This score helps determine eligibility and helps factor your rates. Some companies and agents (we won't mention here) DO NOT run all of these reports up front because there is a cost associated with these reports. Instead they will issue the policy and then run the reports later. What happens then is if they run the reports soon after the coverage is bound, you will get a notice in the mail stating that your rate has been adjusted (suprise) based on consumer related information that they previously did not have. Or, the company may wait until the first renewal to run reports and then adjust your rate. On top of all of this, most companies perform an inspection of your home at some point to determine if the home will pass THEIR inspection and to verify rating factors (such as size, construction type, proximity to fire protection, etc.). Additional factors that companies look at during inspections are: dogs (how many and what type), swimming pools, slides, diving boards, trampolines and more. All of these items can affect eligibility.
Myth #5 - My agent said it won't matter if I file a claim and they don't pay anything. WRONG. Nothing could be farther from the truth. When you shop for insurance, as we mentioned before, a CLUE report gets run. ALL claims that you have turned in show up on this report whether anything was paid or not. This information along with information for the other reports then places you in a TIER for rating. All of this is computer generated. We can tell you for a FACT that claims affect you when you are shopping. If your current agent tells you "it won't hurt you" they are only trying to keep you handcuffed to them.
Myth #6 - It's only a small claim, if shouldn't matter to the big insurance company. WRONG. Insurance companies look at frequency as much or more than severity. You are better off to have one $50,000 claim than 5 separate $1,000 claims. Even thought the total dollar amount paid out is less with the 5 claims the frequenty is much worse. I guess you could call yourself "an accident waiting to happen".
Myth #7 - I don't need an agent, they just make my policy cost more. Those other guys so they cut out the middle man. WRONG. Survey after survey show that people with a local agent are more satisfied that those without one. Sure it may feel good to get that "cheap" rate but have you ever bought anything else that was "cheap" and then failed to do what you bought it to do? Sure you can buy "cheap" steak too. You can go to a buffet and get all the steak you want for $12.95 or you could go to a real steak house and get something that probably tastes a whole lot better. Local agents are required to be licensed and to do continuing education every two years. Most of us are well trained and have years of experience. Additionally, those other guys never really cut out the middle man. When you call them there is someone there to answer the phone and take your payment or process a change for you right? That person probably isn't working for free so in reality they are paying a middle man. Odds are they are paying them, providng a computer and phone, A/C, benefits, vacation and more. Local independent agents are paid a set commissions percentage so in reality it is less expensive for companies to use local agents because it is a fixed cost that they can better project. Besides that who is really on your side when a claim occurs and the only people there to advise you actually work for the insurance company.
Myth #8 - Does it really only take 15, 7, or even 3 minutes to get a quote? MAYBE, but we doubt it. If someone is only wanting a quote from one company and they really don't care if they are properly protected or don't care what coverages they have then go for it. If you own any assets at all we hope you aren't thinking that way. We prefer not to deal with those type people. We prefer clients who appreciate the fact that we are here to help educate you and make you wiser about how you allocate your insurance dollars. We prefer to show clients ways to reduce or eliminate certain coverages and improve other coverages without putting themselves at risks for a huge financial loss. Doing this takes more than just 15 minutes. We give you real life scenarios and the potential outcomes based upon the coverages you currently have and the coverages we suggest after discussing it with you.
So as you can see there is a lot more to think about when getting a cheap price. Aside from food, insurance is said to be the most expensive recurring cost you will have in your lifetime. If not already, your house will eventually be paid for along with your vehicles. Don't just trust anyone when it comes to your insurance, find a local agent you know, like and trust. Do your homework on them- how much experience do they have, how much experience does their staff have, can they offer you more than just one company for a policy, do they have any negative reports with the Texas Department of Insurance, any bad reports from the BBB, can they provide you any testimonials?
And finally speaking of testimonials - below is link to comments from some or our clients. Enjoy-