Insurance Information from the Inside

I hate purchasing insurance. I don’t know if it’s the result of hearing so many insurance fraud stories on the news or years of insurance reps trying to instill the promise of future disasters in my head, but I always have the sneaking suspicion that I am getting taken for a ride behind the guise of imaginative language (what is ‘inexperienced operator surcharge’ anyway?). Because of this, my experience with insurance agents has been to call them every six months or so and try to squeeze extra savings out of them—mostly with success—and to ignore them at every other possible forum.

                So when Insurance Agent Adam Miller came into our agency and offered to give a presentation on insurance, I was quite skeptical. To be quite honest, it was his offer of food that coaxed me away from my desk. But I was so impressed with the information he was willing to give out that I decided to interview him for an article and share his information to you all, my readers.

Urban Legends in the Car Insurance Industry

Adam mentioned several urban legends that people like me have about car insurance, and it was great to have these suspicions dispelled by someone from the inside. As it turns out, red cars are not more expensive to insure, and Adam assured me of this because insurance companies do not ask for the color of your car! Teenage boys are no longer more expensive to insure than teenage girls as insurance companies are now experiencing nearly the same amount of losses from both (could cell phones be the culprit behind increased risk in teenage girl drivers?). Also, your car insurance policy will not automatically drop at the magic age of 25; it actually starts to decline between the ages of 18-25.

Your Car and Home are Linked

 Sometimes I still find myself in the ole’ college mentality when my possessions were few and far between: I owned a car, textbooks, and some linens. Now I own a home, which I would not have thought needed to be addressed in my semi-annual conversations with my car insurance agent.

Adam gave me a nightmare scenario, but actually explained the logistics of it, and I would like to pass this information onto all of you: Let’s say you own a home and your car insurance has property damage coverage for $25,000 or below. Unfortunately, you get into an accident which is your fault. The other driver files a claim with your insurance agent, who gives them the maximum he/she can: $25,000. Except there is just one problem: it is Houston, and the guy was driving a $35,000 car. The victim now goes to his own insurance company and files a claim for the remaining $10,000 he is out to fix or replace his car. What happens next? The victim’s insurance company is going to want to recoup their $10,000, so they come after you. While your primary residence in Texas is protected through a homestead exemption, the equity in your home is not protected. The victim’s insurance company can place a lien on your home so that when you sell it, they recoup their costs before you get a check from the bank. If you never move from your home, they may even be able to garnish your wages in order to get their money back.

In other words, before I owned a home, I had no assets. Now I have an asset with which a person can sue me for in order to recoup their expenses because of my deficient car insurance policy. I better get on that…

Premiums: What will Save You Money and What Will Cost You Money

I recently had my car insurance premium drop by $100 per year because I got married in April! Getting married, purchasing a home (there is a continuum of premium discount for home ownership starting with an apartment, to a condo, to a single detached home), taking defensive driving, and carrying high deductibles will all drop your premium price. Higher liability coverage over a longer period of time will also result in lower premiums.

However, there are life events that will increase your premium. These include getting a divorce or declaring bankruptcy. In fact, if your credit score takes any kind of dip, you could see a premium increase.  Even if you renew with your same insurance company, each year they do a soft pull on your credit to reevaluate your premium.

Some Final Tips

Here are some final tips offered by Adam:

  • Search around for insurance quotes every six months to a year from various companies. Each company can offer you a different price because their pool of insured customers is unique to them and their price for you is based on their experience only. This is why one company may come in significantly lower than another.
  • Figure out if it is worth filing a small claim for things like fender benders and windshields. Look at your deductible that you will have to pay as well as add in the 10-15% your policy will increase after filing a claim (there is typically a 10-15% discount for claim-free histories); over the long haul it could be worth it to shell out the $500 yourself instead of filing a claim.
  • Purchase your car with insurance in mind. Cars that are made in Japan and America are cheaper to insure because the car parts are easier to find. Cars that are made in Europe will be more expensive to insure because their parts are sparse and are made overseas.
  • Try to insure everything under one company. This will prevent headaches down the road when you are dealing with a claim; Adam gave me an example of a client who recently drove a truck into his home, and now has to deal with two different companies. Also, most companies will offer multi policy discounts.
  • If you have a child who has moved to college or into their own apartment, do not allow them to have renter’s insurance on your home policy. There will be a deductible, and it will be much higher because it is tied to your mortgage than if they had their own cheap renter’s policy. The difference in deductible could be $2500 versus $250, and it is likely that your child’s belongings are not worth the higher deductible.  
  • Try not to renew or get a new insurance policy of any kind during hurricane season.
  • Allstate Home Insurance policies do not cover your foundation.

All in all, I was very appreciative of Adam’s honesty and openness of information. In fact, if you have questions or want him to check out any of your insurance policies, please feel free to contact him below.

Adam Miller started InsurTexas in 2006 and offers all kinds of insurance from cars to pets. He is an insurance broker, offering insurance from several companies, and lots of information you may not get from other insurance agents.

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