Insurance Reviews at a Premium

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When was the last time you reviewed your insurance coverage? Yeah, yeah, it’s likely not anything near the top of your To-Do list, but what if we told you that you could be losing out on hundreds (possibly thousands) of dollars for neglecting it? It’s true, and we can prove it. Check out this true story as reported by the New York Times recently. We’ve edited the story a bit for brevity, but we did not alter the facts concerning money.

The New York Times
February 04, 2012

After you hear the tale of Thomas Mitchell, a retiree living in Arizona, you may suddenly have the urge to run to the phone and call your auto insurer. And perhaps even your life insurer. And your cable company. And anyone else you may do business with.

Most consumers know that they aren’t going to get a courtesy call from their service providers telling them they qualify for a better deal. Yet they still fail to review their policies or contracts each year to make sure they’re getting the lowest rates possible.

Well, Mr. Mitchell’s accidental victory may provide just the needed incentive.

After retiring last summer from a long career as a programmer, Mr. Mitchell said he knew he should review his expenses and try to trim whatever he could. His hefty auto insurance premium on his two cars — he was paying $2,537 a year — seemed a juicy potential target. But he said he “dillydallied,” and didn’t call his insurer until a couple of weeks ago, shortly after AARP contacted him by mail and urged him to call another insurer for a free quote on his auto insurance.

And it was a good thing he decided to call. The new insurer told him it could offer him a policy with the same coverage for just half — yes, half — the amount he was paying with his current insurer, or about $1,267. Mr. Mitchell said he contacted his insurer with the news, and wouldn’t you know, the representative told him that it had revised its underwriting standards and he would now qualify for a premium of $1,207.

“I was happy to get the reduction, but I was dismayed to learn that the burden was on me, which means there are probably thousands of policyholders who are eligible for this but don’t know what they don’t know,” said Mr. Mitchell, who was insuring a 2002 GMC Envoy and a 2010 Toyota Prius. “It is a rip-off.”

Even more maddening, he said, was the conversation that ensued with a branch manager at his insurance company. Mr. Mitchell said he was really irked that the company was perfectly content to let him continue paying twice as much as he needed to, so he asked the manager if the company would have bothered to notify him of the “underwriting changes” when his policy came up for renewal this summer. “To my astonishment, he admitted that the premium reduction would not have been brought to my attention unless I asked for it,” he said.

Mr. Mitchell, who lives in Cave Creek, Ariz., is exactly the kind of customer you would expect an insurer would want to keep. A loyal client since 1973, he said he had a clean driving record with no accidents — just a few broken glass claims — and a credit score above the enviable 800 mark. Besides the auto coverage, he also has a homeowner’s insurance policy with the company, which Mr. Mitchell thought might have worked in his favor to secure the reduced rate, since insurers often offer multi-policy discounts.

The onus is always on you, the consumer, to do the heavy lifting, whether it’s a big-ticket item like auto insurance or smaller bills from your cellphone or cable provider. It’s a simple lesson, yes, but one that is worth remembering every so often. Of course, even when you make the time, finding the best deal isn’t necessarily easy.

J. Robert Hunter, the director of insurance for the Consumer Federation of America, an advocacy group, said he wasn’t at all surprised by Mr. Mitchell’s experience. After all, insurers aren’t required to let you know when you’re eligible for a lower rate, and it’s hard to know if you’re getting the best deal.

Your insurance rate is probably based on a variety of factors, including your age, gender, marital status, education level, occupation, the type of car you’re driving, where you live and your credit score. Of course, your driving record is also taken into account, as well as how much you drive.

As you shop around for a new (or better) quote, you should also consider factors beyond price alone, including the insurer’s rating and responsiveness to claims. You can typically find that information, including price comparisons and local consumer guides, on your state’s insurance commissioner’s Web site.

The average premium paid per car — for liability, comprehensive, and collision coverage — was about $901 in 2009 (the latest figure available), according to the National Association of Insurance Commissioners. But judging from Mr. Mitchell’s situation, you’re likely to encounter a wide range of prices.

Mr. Hunter said that consumers should specifically ask the insurer — not the agent — whether they were being offered the lowest rate they qualify for, or they should ask the agent to ask the insurer. And he suggested asking for it in writing.

“I was working on the assumption that they were all the same,” Mr. Mitchell said.

So would a story like this be enough to get you to give your current insurance policy the once-over? There could be quite a bit of money to be saved.

Now might be a good time to check out our Credit Union Insurance Agency (CUIA). We offer a wide variety of insurance options (including auto insurance), and while we can’t guarantee we can cut your current rate(s) in half, we do guarantee you won’t be left paying ridiculous premiums when you could be paying less. That’s because the professionals at CUIA provide periodic reviews. You’ll hear from them before any policy renewals to be sure you’re doing all right, or to check to see if you have any questions. You’ll always have the opportunity to re-quote or review your coverage. Why not compare your rates today?