Yesterday, I explained the importance or an annual insurance check up, and showed you the first step: use my Web site to understand & decide on the auto insurance & home insurance coverage you need.
Visit my site to get price quotes, complaint statistics, and customer service & claims satisfaction ratings for all the leading auto & home insurance companies in the USA. How is your insurance company rated? Does it have a lot of customer complaints? Find out at my home page and CLICK HERE!
Each day this week, I will walk you through my steps to a successful insurance check up, which may save you $100s on insurance. Now you know the coverage you need, here is step 2.
The second step: Know what to expect when you have your policy review with your insurance agent or company.
Before you contact your agent or insurance company for a policy review, it is important to know what to expect.
Agents & insurance companies often recommend additional coverage or policies during insurance policy reviews. From my own experience, customers often pass on additional coverage they need, or do not give it the proper consideration. However, customers should not blindly buy whatever an insurance agent recommends.
Agents & insurance companies love to have policy reviews with customers, because it gives them a chance to show their value to the customer, and sell you additional products.
Discussing additional insurance needs is a very important part of the policy review, and it is not about selling you something you don’t need.
If you could get a 20% discount on your auto insurance, if you insure your home with your auto insurance company, isn’t it in your interest to at least get a homeowners insurance price quote from your auto insurance agent?
If your agent knows you have kids, or other people financially dependent on your income, the agent is not doing their job if they don’t discuss life insurance with you. How would you feel, if you had regular insurance reviews with your agent, then one day you found out you have a terminal illness, and your agent never brought up term life insurance, which you could have had for $30 a month?
Given the reputation of insurance agents, I understand why customers may consider agents, recommending you purchase additional coverage or policies, the same as a car sales person trying to get you to buy the extended warranty, undercoating, & rust-proofing.
It is normal for people to be wary of sales people trying to sell them something. Particularly with insurance, it is human nature to think you will never need it, then regret not having it, if it turns out you needed the coverage.
However, when I conducted insurance policy reviews, I was often astounded at customers declining to make prudent decisions to buy the additional coverage they need, when they could afford it.
Do you want to make smart insurance decisions and avoid expensive mistakes?
LISTEN to what your agent or insurance company has to say.
Don’t tune out your agent because you think you are getting a sales pitch. If your agent recommends buying additional coverage or another insurance policy, listen to(or ask) the reason the agent recommends it. Don’t be quick to dismiss it.
For example, if your agent recommends an individual life insurance policy for you, don’t ignore your agent because you have life insurance through work. It is easy to think, if you have some life insurance coverage, you have enough life insurance. There are drawbacks to group life insurance through your work, and depending on life insurance through work can be a huge mistake. Your agent can explain why this is so.
Take advantage of your insurance agent’s knowledge & expertise, and listen to your agent. If you have questions, ask them. Make sure you are understanding what your agent is saying to you. Remember, you are in control. Your agent can’t force you to buy anything. The advice you get from your agent is free, so take advantage of it.
A good insurance agent will ask you questions to discover your insurance needs, and then discuss the pros & cons of any option. Good agents will discuss with you the consequences of not buying the additional coverage, actions you can take other than buying insurance, and the likelihood of you needing the coverage.
Generally, insurance coverage at a reasonable price, which protects you from a large financial loss, is a good purchase, unless the event is extremely unlikely to occur.
For example, it is not unusual for an agent to recommend increasing your liability coverage, when reviewing an auto insurance policy.
Not too long ago, I increased my Bodily Injury Liability (covers you if you are legally liable for injuring someone due to the use of your vehicle)from $100,000 per person, $300,000 per accident, to $250,000 per person, $500,000 per accident. The increase in premium was less than $20 more every 6 months.
In this example, the pros to making the decision is more coverage, in case I am responsible for injuring someone in an auto accident. Also, higher liability limits are a sign of a responsible driver, so you can actually save money, when you shop your auto insurance with other companies, by having higher liability on the auto insurance policy you have now. Don’t expect your agent to tell you about this benefit (but my Web site does, along with other money-saving tips).
The con is the higher premium, but since it is less than $20 more every 6 months, it makes sense to increase the coverage.
Even though I am not wealthy, and don’t drive much, I don’t know if I will be in an accident where my coverage may not be enough. If it happens to me, and I don’t have enough coverage, my assets are at risk, and I might have to file bankruptcy. Even though I think it is very unlikely I will be liable for auto accident injuries that severe, the additional cost is low enough, and the financial impact of not having enough coverage is so severe, increasing my Bodily Injury Liability coverage was an easy decision for me.
However, say I was an 18 year old, just licensed, having only $15,000 per person, $30,000 per accident for Bodily Injury Liability. It may cost several hundred dollars more every 6 months to take $250,000 per person, $500,000 per accident, for Bodily Injury liability. An 18 year old may not be able to afford it. The cost of the higher liability coverage is an indication the 18 year old is much more likely at risk of needing that much coverage, but the cost may be too much to pay.
A good agent discussing this with the 18 year old, would ask about any assets owned & the type of work the 18 year old does. If the 18 year old has no assets, like a healthy bank account or owning a home, and is working part time to get through school, risking the need to file bankruptcy, because of not having enough Liability coverage in an auto accident, might be the only option, due to the high cost of the insurance.
Furthermore, a good agent will offer higher liability in an amount of coverage, the 18 year old may be able to afford, such as $50,000 per person, $100,000 per accident, for Bodily Injury Liability.
A good agent gets information from you, recommends insurance coverage you need, shows you different options, and lets you make the decision to buy it.
But what if you DON”T have a good agent?
You can protect yourself, by getting unbiased information on auto insurance & home insurance coverage, at my Web site, www.smartshopyourcarinsurance.com, as recommended in Step 1. Bookmark, or place my site in your favorites, and you can access it when you need it, to find out if you are getting a good recommendation from your agent. If you have a question not addressed, or not clear on my Web site, e-mail me, and I will give you my opinion.
How do you know if your agent does not have your best interest at heart? Almost all agents are likable people. They couldn’t make it in this business if they weren’t nice. Every agent will tell you they put their clients ahead of their own interests. Not all of them do, so you have to watch out for warning signs.
Not-so-good agents ask few questions, don’t explain your options, and are most concerned with trying to close a sale.
Don’t buy anything you don’t understand, and if you feel pressured by your agent to buy, tell your agent how you feel. Your agent may strongly believe in the importance of the coverage, and may not realize you feel uncomfortable. If the agent persists & pushes you to buy, it is time to change agents.
Insurance agents have the reputation for being aggressive sales people, but few really are. Don’t put up with a pushy agent, when there are many good agents out there wanting your business.
The Other Steps:
How good is your insurance agent? When did your agent last contact you for your insurance policy review? If you haven’t spoken to your agent in over a year, your agent is not doing their job. Tell me about your experiences. Please leave a comment on my facebook page. Or, you can e-mail me at email@example.com if you have questions and would like my help. Follow me on Twitter for important insurance consumer news and new blog entries at CarInsWatch.