I talked with a prospective client last week. We’d worked together in the past and he wanted to see if I could help him lower what he was paying for all his insurance policies. We reviewed his current coverage on his car and home insurance, as well as his umbrella policy and I prepared quotes on each of them for us to discuss. As it turned out, the auto quote I presented him was about $1,000 lower than his current rate, and the umbrella was about the same as what he was currently paying. The issue was he had a lower rate on the home and he wasn’t sure what to do.
I run into situations like this from time to time. A prospective client has an incredibly low rate on the home but not on the auto (as was his case), or they have a great rate on the car insurance but not the home. Should they leave both policies with the same insurance company or split them between two different companies?
Insurance companies prefer to write both policies together and provide multi-policy discounts on both policies to encourage a combined package. In most cases, this presents a win-win scenario for the individual and the company. There are, however, cases, where a company may be very competitive in one area but uncompetitive in another. There are many reasons this happens such as a company is looking to grow the number of car or home policies they want to write in a particular market, they may feel they are too exposed in one area and want to balance their exposure, and many more.
In these cases, I advise the client look at splitting the policies between the two companies. This was a little disconcerting for my prospective client because he’d never done that and wasn’t even sure he could. I explained he could do this and outlined the steps to take on how to evaluate which was best for him:
- The first step is to total up what his annual rate is on the auto, home, and umbrella policies with his current insurance company.
- The second step is to find out what the home premium will be if he leaves it with his current carrier and add that to the annual premium of the auto and umbrella policies I proposed.
He was very surprised at what he found out. By moving his auto and umbrella policies to me and leaving his home policy with his current company, he still saved between $600 and $700 a year overall. This approach does come with one caveat though, he has to work with two different companies and agents. For some people, that would potentially complicate things for them and the savings would not be worth it, while others would welcome the savings and have no issue working with two different agents and companies.
One of the things I enjoy about being an independent insurance agent is working with multiple companies gives me many options for car, home, and umbrella insurance. When it makes sense to place all the policies with one company, I do that. When it makes sense to place them with different companies, I do that too. It’s about tailoring the right coverage with the right company or companies to best serve each client.
What do you think? Share your comments, questions, and experiences with me in the comments section of our blog or on our Google + and Facebook pages. I’d love to hear from you!