When your “competition” helps you

So I was playing around with on-line quoting and of course had to use Geico.  Recently, now about 3 months late I received a well done email.  Obviously now part of a drip campaign.  This is not remarkable but what was there certainly is.

Coverage Coach

FANTASTIC.  First of all it is a very cool tool.  Clean screens, easy to use, etc.  But why is this important?

BECAUSE THE COVERAGE THEY OFFER IS NOT AS GOOD AS WHAT YOU DO!

That’s right.  I went through it ten times with a variety of combinations and every time I came up with less coverage than what I would offer a similar person.  Baffled by this but not surprised.  I’ve been replacing Geico policies for years.  When not replacing them I am encouraging(sometimes begging) people to please take higher coverage.  Most of the time it works.  Let me speculate on why;

  • They think they are saving you money?  In theory they might be.  In reality, 9 out of 10 times they aren’t.  Really.  If you could save $50 a year or have $400,000 which would you choose?
  • “But you don’t need that much coverage…”  Prove it.  While you are at it go to the store and by me a lotto ticket.  Same scenario.  Also, if you have not noticed, companies partially base your rates on previous liability limits.  Lower limits typically leads to higher rates.  Your call.
  • $250 deductible?  $500 deductible?  No coverage on a $5000 vehicle?  Baffled.  When it comes to your comprehensive and collision coverage(also known as physical damage) consider a few things.

1. If your car is safe to drive and presentable would you get that small dent fixed?

2. Ask a body shop how much work $500 actually is?  Also ask about $1000.  Oh, by the way, the odds of your rate going up for a claim less than a $1000 are as good as over $1000.  Basically whatever you collect for the claim you’ll likely pay back over the next 3-5 years.

3. What your car is worth and what it is worth to you may be two different things?  Math doesn’t lie.

Just some quick thoughts.  Unfortunately the philosophy behind Gecio may be getting more of a life with some of the new “quoting” companies.

Just some thoughts.  Use if you want.

 

Let’s go shopping

So it is time to take my own advice again.  With renewals for auto and home insurance pending I decided to do some shopping.  I’ve definitely written about what to do when your rate goes up but this time I did things  a little different.

START; Unfortunately my home is basically unmovable, two claims in less than five years.  So I look at what the rate will be without a multi-policy discount.  But wait, it gets a little worse.  I had a stretch in 2012 and early 2013 with three tickets.  Not good.  But, on a plus side, my wife’s two claims are now over five years old so they fall off.

  • no your record.  no that all claims/tickets are not being treated equally
  • time on a record will vary as well
  • make sure you are not being charged inadvertently.

Now that I know my record and know my real home rate lets go shopping.  So I am trying to avoid the “lead” companies so chose; State Farm, Liberty Mutual, Nationwide, Comparenow, The Zebra, Coverhound, Geico and Esurance.  Remember; there is always a better rate available but your time is likely worth more than what savings you’ll find.  Best to limit your search. So I learned a whole lot.

  1. The future is on-line, yes you already know that, but in insurance we are still in the early phases.  Lots of room for improvement.
  2. Expect to give some basic personal data.  Your date of birth and address as well as those from other drivers
  3. Don’t be uncomfortable; if your vehicle information, prior insurance information and driving history comes back automatically it is ok.  Saves you time.
  4. Might as well disclose your tickets and accidents.  Saves you time
  5. PLEASE PLEASE PLEASE read the fine print.  There was lots of it.
  6. READ CLOSELY, there were lots of not so good things with the coverage sections.  I find many to be unethical and quite shameful but then again I’m human
  7. Some of these sites really need to work on their writing.  Lots of inaccuracies and false statements.
  8. Pay attention to ESTIMATES everyone had a disclosure about when a rate was accurate.  Some only provide estimates then sell your data to the companies
  9. You would not want your family to be hit by a car with what most of these options consider great coverage
  10. Computers are not human and this exercise further confirmed that the programmers behind the sites could use some education

My observations are a bit different than most since I am in this business.  I also have a lot more observations about how inefficient these sites actually are.  But where would I start?  Anything(just about) that saves me time is a good thing.  Copywriting/Content writers whatever they are called are pretty important, they should really sit down with the attorneys and think things through.  Could easily list 3-5 errors on each site.

Final thought; Geico and Esurance provided a pretty impressive “experience” despite their awful recommendations.  Like the rest of your life, it is buyer beware.  Computers can replace humans for many basic transactions but I have yet to find a site close to me or many of my counterparts.

What price do you really pay for your auto and home insurance?

With several hundred companies offering auto and home insurance in the U.S. you would think a bit more variety would exist.  The reality is that the majority of them are after the same demographic; good to great credit, home ownership, college educated, multiple cars. Then there is everybody else.  With a constant turn over of actuaries and heads of underwriting everybody else inevitably can get luck and fit into a preferred companies model.  Generally due to a fluke in the sophistication of underwriting.  But the reality is still that there are only three prices available to the public and YOU choose your price.

1. Best(see lowest)Price; reality is this is all on you to get the lowest.  If you really wanted this you would have to spend several hours on the phone and computer.  I am not aware of ANY agent who has access to every company and as of this post there is not an website with all of them either.** It’s coming**  So now what?  Be sure to decide on your coverage before shopping.  Also realize that you may have never heard of the company you end up with.  Also realize that the spread from the lowest to the highest rate may be 100% different but it is likely 1-5% in the lowest five options.  Was it worth the time?

2. Fair Market Price; this is what most people have.  Your rate is likely in the top 5-10 available rates and is solid.  Sure you can save a little bit but is it worth the time?  Is it worth any technology sacrifices?  Is it worth losing an agent(friend you buy insurance from)  To you it probably is not.  This is ok.  Honestly I think this is where you want to be.  Remember saving more than $300 or so between your auto and home is not a good thing.

3. Loyal Price:  Here is your warning.  If you are with an agent who only has one company in all likelihood  this is what you have.  Take comfort in the fact that your agent is doing the best he/she can with what they have.  In my experience(11 years worth) for most of your time with this company you will be closer to the top end of fair market than at the lowest.  But hey, you are supporting a person you like, I hope, and hopefully they bring more  to the table than just insurance.  Maybe some business acumen, maybe some friendship, maybe referrals, etc.

What do all three have in common? You choose which one you have.

Thanks, just some thoughts.

It is what it is they are what they are….

An awesome advertising company that happens to sell insurance.  Every week of the year your mailbox is likely infiltrated by a mailing from Geico.  Not always a letter, sometimes just an insert in something else but they are there.  The message is always the same ” How much could you save on your car insurance?”  They use that goofy gecko, a pig, a caveman, random “b list” celebrities, etc in order to try and get your attention in a crowded place and they do a really good job at it.  This is based on them recently being ranked the #2 car insurer in the United States.

So good for them!  They actually make it easier for me to stand out with a commoditized product.  The thing is they completely dumb down what is more often than not an important piece of a financial plan.  Let’s look at this weeks mail; 5 Important tips to help you save money on car insurance

1. Insure more than one car on  your policy;  Is that the best you can do for number 1?  Really, insure another car?  In many cases it is actually considered fraud to not disclose other vehicles in a household NEXT

2.Make sure your car is equipped with safety features:  Come on man(thanks CC)  you then point out Anti-lock brakes, air bags and anti theft systems.  2 of those three are basically standard features of any car 2000 and newer.  As far as anti-theft, the discount is so small since it is a percentage of comprehensive which is your least expensive coverage.

3. Find out if your alumni association, credit union or professional group partners with Geico.   Ok now you are offering something, nice play.  Enjoyed this for years at Liberty Mutual until I realized it was more of a marketing ploy than an actual discount.

4.Insure more than your car with Geico.  Great a multi-policy discount, how original.

5. Educate your young drivers, or encourage them to get their own policy.  Although I like this idea from an overall responsibility perspective there is a small chance of savings.  See do you think the 18-22ish year old can afford the rate?  If the parents still need to subsidize the cost where is the savings?  

My key take away on this and anything else Geico presents is this; They do what they say they are going to do.  They do not promise a solid policy, they do not promise great coverage they do not promise that this policy is a great piece of your financial plan.

Good for them, but most people want better value not better price.

Just some thoughts.

The real cost of a claim is

much more than the money you are given.

10:00 Thursday, August 22nd my car was hit.  I was deemed 100%, not at fault and only suffered a small cut and a few hours of soreness.  This is being written 23 days later and my car is still in the shop.

Yes, I have a rental and have had it available since the day of the accident.

Yes, I have no out of pocket expense for this accident since I am not at fault.

No, I am not terribly pleased with this whole claims process.

See I have consulted with a few hundred claims and know how to handle them but I missed the worst part when there are no physical injuries of course.  Cars can be fixed or replaced.  In most cases, people will heal.  But I did overlook the immeasurable and uncompensated annoying part that goes along with claims.

It sucks to not have your car.

Yes, that is a bit petty since I do have a nice enough car to drive around but it is not my car.  My driving habits have not changed, I have not changed my usage, I’ve just enjoyed it much less.  See there is something to be said for this situation.  See your home/rental/condo policy has loss of use coverage which basically provides living expenses if you are displaced from your home.  Now within that coverage, I am aware of claims adjusters having a little leeway when it comes to what they pay out.  This coverage pays for a hotel or even a place to rent but it also compensates for meals if you need to eat out and the cost exceeds what is normally spent.  I’ve personally had a claims adjuster work with me to pay for a hotel in a different city since we were to be out of the house anyhow.

What is the comparable thing for auto insurance?  I’m not looking for much, just a little something to acknowledge the inconvenience.  Maybe Geico sends me a $20 Starbucks card with a little note;

” We know this is annoying, hang in there your car will be ready soon…”  Of course, it would be funny if they wrote  “Sorry the dopey kid we insure chose to test his 0-60 time while coming out of a Dunkin Donuts.  Have a coffee on us”

Just a little something to be a bit more human.  After all, this is not a transaction, you actually have had an impact on my household.  Either way, I think I’ll start doing this for my friends.

Just some thoughts, do with them what you like.

Dear Enterprise Rental Car,

8/29/13

I had an unfortunate moment last Thursday when my car was struck by another one.  Now that I have had some time to relax and think I thought I would right you a letter.  I believe that if you are going to hand out feedback you need to be willing to share good and bad.  DISCLAIMER, I have been haphazardly recommending you for about ten years since a previous employer had arrangements with you.  Shame on me.

The good news is my first two conversations with Geico representatives were wonderful.  Great job empathizing with me, made me feel like they really cared.  Not once was I put on hold in about 20 minutes on the phone.  The bad news, in my first conversation with your rep I was put on hold twice and could tell he had a lot more he was working on than just my car.  I also let him know that I would need a larger car.  Since I have two children that would not fit in the Fiat he offered maybe something else would be available,  he really was unconcerned.  I asked him if he really wanted to send me out in a car that was not safe and he did not answer.

More good news, Geico stepped up and made sure I had a comparable car available.  More bad news, when I arrived there were two options but neither was washed and ready.  When I did get the new car it was then washed while I waited.  FAIL.  Then when I started the car I realized the car needs an oil change.  This has been great, every time I start the car I am reminded of how little your employees care about it.  Should be real fun for the next two weeks while my car is fixed.

Good news, Geico checked in to make sure things went smooth.  I informed them of how great their service was but how your bad service actually reflects negatively on them as well.  Of course they were not pleased.  More bad news, you have young impressionable adults who could and should become wonderful pieces of society.  Instead the person that handled the paperwork followed his script and made sure I was just another transaction.  Thought it was particularly wonderful when I told him about a stain in the back seat and he told me “don’t worry about it we are only concerned with the outside..”  So we don’t care about interior or the engine, nice.

Now these may be small things but the reality is small things add up to big things.  Like the 1000+ people I do business with each year and the couple of dozen claims my customers have each year, they all add up.  One person at a time I try to provide a good experience, I own all my actions, good and bad.  I am by no means perfect but I always try.

Thanks for reading.   Best of luck on improving your experience.

Dissatisfied in Poughkeepsie,

 

Billy Van Jura

 

P.S.  Also, shouldn’t all your cars have satellite radio?  Why make someone have to look for stations in an unfamiliar location?  I am sure XM can give you a volume discount like you give Geico and other insurance companies.

Who causes “higher” insurance rates?

Most people will immediately think it is the company.  The company sets the rates and the underwriting standards that you accepted when you signed your contract with them.  The company determines which of your tickets, accidents and claims will have an impact on your rate and for how long. ** Despite what you may have heard corporations are not people and cannot get tickets or have accidents or claims**

The company determines which of your personal  characteristics influence the rate.  They also decide which factors of the house or  other property you chose to buy will determine the cost to insure.  Insurance companies decide what the rates are where you  chose to live.  The company set up any billing fees that exist as well as any discounts that exist for paying your premium in one or two payments.  Each year before your policy renews the company mails you new paperwork to review so you have a chance to ask questions and make adjustments.  You  also have a chance to review everything on your policy and if you felt so inclined could call around to other companies for a review. **Per a Google search, there are about 2648 insurance companies doing business in the U.S. that offer auto and home coverage***

So who makes insurance rates higher?

P.S. You  also may be with an agent or company that takes advantage of your loyalty and offers you some sort of silly ploy about accident free credits, etc.

P.S.2 Just like when looking for somebody to date, there  is somebody out there that likes you and your characteristics.  Maybe it is time to find that company….and be willing to find a new one next year.

 

Just some thoughts to consider.  You have more control than you think.

 

Did you know….

That by taking minimum coverage, $25,000/$50,000 in New York you are actually setting yourself up for higher rates.

That I tend to see this coverage more often from the company that does the most advertising.

That your low rate actual makes you pay higher coverage and in the event of an accident could hinder you financial for years to come.

The difference between minimum coverage($25,000) and better coverage($100,000) many times is about $5 a month.

That I cannot think of a circumstance that I would ever do this disservice to anyone.  But then again I don’t provide quotes or promise you cheap insurance.  Who wants to buy cheap things anyhow.

Thanks for reading.

Appreciate your agent…if

Yes I believe the agent, me, works for you, the customer.  This is no different than any time you are spending money on a product or service.  This relationship tends to go better if you appreciate the person providing the product or service.  How do you do this?

UPDATE 5/19/2015

How do you “appreciate”‘ the person you are paying for a service?

  1. Give them a chance to work for you.
  2. Rather than carrying over the poor previous experience you may have had give your potential new agent the chance to shine without thinking he or she is as bad as the last one.
  3. Ask questions without questioning.  You should ask lots of questions and the agent should have lots of answers.  BUT, at some point you need to trust the person you hire.
  4. You pay them.  As they saying goes, ” A deal is a deal…”
  5. Life happens and buying  insurance is no acception.  Remember, we are all, first and foremost, human.

Sure we could get into buying gifts, sending referrals, etc.  But these five are a great start.

 

Just some thoughts.

Are you overinsured?

I am aware of no way to ever say someone has too much insurance, the fact is you just never know.  There is just one circumstance you can say you may be overinsured when it comes to a home.  An insurance company is insuring the cost to rebuild your home.  They are not covering your tax assessment nor are they covering the market value of the home or even what you think your home is worth.

So how do you become overinsured?  Generally, I see this when a policy has not been thoroughly reviewed in a 2-3 year period and the coverage has been allowed to automatically inflate.  The other is when agents simply insure a home based on the previous carrier information and do not actually review the replacement cost of a home.

Recommendations/Ideas

  1. Figure out the square footage of your home and multiply it by $130  $150(updated 5/12/15) per sqft this will give you a rough idea.
  2. Call your agent and ask for a full review of the dwelling coverage on your home insurance.  Before you do this assemble a pretty thorough description of the details of your home including square footage, types of floors, bedrooms, bathrooms, etc.  They can then input this into whatever evaluation software they are using.
  3. The other thought is if you happen to know a builder, not a handyman, plumber, roofer or another specialist an actual person who has built a home.  Check with them as well.

FURTHER, update 5/12/15

The more things change the more they stay the same.  The challenge may be slightly greater now that the overall “market” for home purchases has leveled a bit.  Think of it this way;

  • You can buy homes all over the U.S. that would cost more to build than buy used
  • Based on insurance company math people are building brand new homes at 50-100% more of what they are worth on the open market
  • With a choice of at least three if not seven different replacement cost calculators, who is right?  I have no idea

Bottom line, a little homework goes a long way.  Do your best.  Don’t settle for less but know that settling on a comfortable figure is the likely outcome.  As always, hope it never matters.

 

Just some thoughts.