Sheri’s and my home insurance renews in March. Over the past few weeks, we’ve received a number of offer letters from insurance agents with a variety of companies. All of them offer what appears to be huge savings. If I were not an insurance agent, I would be very interested, however, I am an insurance agent and I know what I’m looking at when I read these offer letters. The savings they promise really is too good to be true!
The purpose of these letters is to get you to call the agent so they’ll have the opportunity to provide you with a real quote for home insurance. They hope to have the opportunity to sell you a policy at the real rate which is usually higher than what’s being advertised. This process isn’t quite a bait and switch, but it’s too close for my comfort level which is why I don’t use them.
The most common “mistakes” to look for in these quotes are inaccurate coverage on the home, missing coverage, wrong policy type, deductibles, and discounts. Let’s look at these in more detail.
Dwelling Coverage: Dwelling coverage is the amount of insurance, or the limit, on the home. The quotes we received show dwelling coverage ranging from $100,000 to $225,455, which is a very broad range. If I divide the offered dwelling coverage by my total square footage, the replacement cost coverage ranges from $69.44 a square foot to $156.57 a square foot. In other words too little to too much home insurance. Most Texas carriers are using a minimum level of $100 a square foot of coverage on the home, and that’s for an entry level home.
Missing coverage: None of the home insurance quotes included coverage for water leaks, water or sewage backup, or foundation coverage. Only one included coverage for extended replacement coverage on my home. Most of the quotes showed acceptable medical coverage, but one offered only $500 of coverage which is a joke. This agent also skimped on personal liability coverage while everyone else offered appropriate levels. You can only guess what happens to the rates when missing coverage or appropriate levels of coverage are added to the quote.
Wrong policy type: One of the quotes I received this year had an annual premium of $446. That is a great rate if my home happened to be a rental property, and not an owner occupied home. In addition, the quote was for a rental property with actual cash value coverage which is basically no coverage at all.
High deductibles: Most Texas home policies carry a deductible on wind / hail as well as other perils (water leaks, hail, fire, etc.) of 1% of the home or dwelling value. In other words, if the home is covered for $120,000 then a 1% deductible is $1,200 for a covered claim. I was pleasantly surprised to see all of this year’s quotes showed a 1% policy deductible. Some of the quotes I received over the last two years showed deductibles ranging from 2% to 5%.
Discounts: Each quote contained virtually every home insurance discount they could offer including, early signing, multiple policy (auto / home), protective device (monitored alarm), claim free, responsible payer, smoke free, welcome discount, and in one case, the home buyer discount (Sheri bought the home 10 years ago). Most people don’t qualify for all of these discounts and that means their rate will be higher.
I personally find these types of offerings misleading and offensive. I don’t use these letters to market my agency because of their misleading nature. Almost all of my clients have to come us because they were referred to us by satisfied clients. Real savings is available and it starts with a simple conversation where we gather a little information on your home and run it through a dozen companies. If we can’t provide a better deal than you have with your current insurance, we suggest you stay put and we’ll circle back with you next year to see if can do better then.
Have a question or comment you’d like to share? Post it my Google +, Facebook, or LinkedIn pages. I’d love to hear what you think, or even review your policies to see if legitimate savings are available!