How to be a clever insurance consumer

DATE | 07/21/21
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Choosing the best auto and home insurance for your needs involves more than price. We help you know what to look for so you can avoid unnecessary risk.

When it comes to personal insurance, there are numerous options to choose from out there. Many people grab quick insurance quotes online, looking for the cheapest rates. But think about this statement: “Insurance doesn’t matter…until it does.” What might you be sacrificing for a cheaper premium? If you’re underinsured and something happens, you could be on the hook for a significant sum of money.

Let us help you raise your game when it comes to personal insurance knowledge. We’ve been helping Wisconsin public school employees make better insurance decisions since 1972. By becoming a more clever consumer, you’re more likely to find the right coverage with the right insurer for your needs—lowering your financial risk and providing appropriate coverage for you and your family.

Here are a few tried and true guidelines to follow.

The three principles

When purchasing insurance, following a few basic principles can help guide you to the best decision for your needs.

1. Buy value, not price

Say you go online and get a quote that could save you over $400 a year compared to your current insurance. Seems like a good deal on the surface. But you need to look deeper than just the price quote.

Make sure you’re comparing apples to apples. Is their liability coverage the same as you what currently have? Is it appropriate? Are all of the necessary coverages included in the quote? There are many reasons you could be seeing a lower premium estimate, which may leave you at higher risk. For example, shorting yourself on liability coverage will leave you exposed to potential loss. Lower liability limits may also make you ineligible for umbrella insurance, which requires underlying liability limits of $250,000/$500,000. If this is the case, saving about $33 per month isn’t really any savings at all.

At Member Benefits, we strongly believe insurance should not be bought as a commodity. Your insurance needs are not the same throughout your life nor are they the same as your neighbors’.

2. Maximize your insurance dollar

If you’re going to spend money on insurance, purchase the most appropriate coverage you can get for your dollar to lower your financial risk. Kay Licciardello, Personal Insurance Consultant, explains it this way: “Think about risking the small dollars to protect the big dollars. Raising a deductible from $250 to $500 only exposes $250 of your assets, but the savings there could potentially pay for protection of an additional $400,000 in assets and future earnings.” This concept is sometimes difficult to understand, because many of us tend to think about risks we have experience with or can conceive of, like a fender bender or losing a cell phone. The risk of catastrophic events is often dismissed because they happen less frequently, even though they can be far more financially devastating.

3. Insure for the catastrophic

It’s the real reason we have insurance. The safety net of liability insurance only stretches as far as the coverage amount you have. Umbrella insurance is overlooked by a lot of people, yet most financial advisors consider it a must-have. Many people think it’s only for the wealthy and that it’s expensive insurance to carry, but it’s actually very affordable.

Do you have a car? Teenage driver? Watercraft? Use the internet? These are four of the biggest causes of liability losses. You don’t have to do outlandish things to be at risk. And it’s very possible to be sued like a millionaire—even if you aren’t one.

Umbrella insurance kicks in when your liability limits on your home policy have been reached. Say you cause a car accident that results in severe injuries for multiple people and the medical bills are $400,000, which exceeds your $300,000 liability auto insurance policy limits. Your umbrella insurance can cover the remaining $100,000.

Another advantage of umbrella insurance is that it provides you with protection if you face liability for certain acts not usually covered by your home policy, such as slander, libel, invasion of privacy, and more.

Lastly, scheduled personal property is an optional insurance policy that can be added to your home insurance to help ensure full coverage of expensive items. But Steve Schofield, Personal Insurance Consultant, reminds us, “Scheduling items like electronics, collectibles, and jewelry is something to consider, but if you’re doing that at the expense of coverage for the catastrophic loss, it isn’t the best use of your insurance dollar.”

“Insurance doesn’t matter…until it does.”

Major considerations

Keep these things in mind to help maximize what you’re getting from your auto and home insurance policies.

Be smart about submitting claims

Making multiple claims in a short period may trigger a rate increase or even cause an insurer not to renew your policy. For example, making three claims in two years may cause an insurer to think you have a proclivity for claims.

A recent survey of Consumer Reports members who filed one claim in the previous three years said they saw no subsequent premium increase. Only 12% had hikes of $200 or more annually. That suggests there’s not much of a downside to filing a single claim.

However, it’s generally best to avoid making claims of just a few hundred dollars above the deductible. Doing so might erase discounts you’re getting for remaining claim-free.

Also keep these two things in mind regarding claims:

  1. When you buy insurance, you are essentially buying a legal document—a contract. The fine print in the document will make all the difference when you file a claim.
  2. When you decide on an insurer, you also get the people who will interpret the document and decide whether they will pay your claim or not.

Be sure you have people you can rely on to give you the best service possible. Bob Manor, Senior Claims Specialist at Member Benefits, shared a recent story. “A member was in a car accident which rendered the car undriveable. She believed the driver of the other vehicle was at fault and asked if we would provide a rental car. Unfortunately, she had not purchased Rental Car Reimbursement coverage, so her policy would not pay for one. She was very nervous about trying to locate someone at the other insurance company to ask about a rental car, so I made a few phone calls and put our member in touch with the right person at the other insurance company. The member replied back, ‘I couldn’t be happier. Member Benefits staff explained the situation to me, but they also went beyond what was normal.’”

How much of a house will your insurance build?

You may have seen in the news recently that the cost of lumber has skyrocketed. The high demand for housing has escalated the price of lumber to triple or even quadruple in recent months. In fact, the cost of all building supplies has gone up, from glue to foam to insulation (PBS Wisconsin).

It may be a unique time but now as always it’s important to know that your home insurance policy has you covered. When insuring your home, it should be insured for 100% of its replacement cost. “Replacement cost is different from both assessed value and market value. Make sure you know the difference when insuring your home. We can help explain it to you,” says Dave Stelmaszewski, Personal Insurance Consultant. “Replacement cost reflects how much it would cost to rebuild your house in the same spot, with materials of like kind and quality.”

For homes built during or after 1950, Member Benefits’ home policy pays the full cost to repair or replace your home with materials of like kind and quality without the limits imposed by most other insurers. For homes built prior to 1950, this coverage provides up to 125% of the dwelling limit on your policy.

Choose your car wisely

Premiums can vary by model. When car shopping, ask your insurer for premium quotes on the different vehicle models that you’re considering.

Tim Ganoung, Personal Insurance Consultant, adds, “Older cars don’t necessarily need extra coverage. Consider dropping collision coverage if your car has decreased in value or you can afford to replace it. However, if you have any classic cars, make sure they’re appropriately covered. We offer optional coverage specifically for vintage vehicles.”

Actively pursue discounts

Discounts may include breaks for bundling home and auto policies with the same carrier; taking a safe-driving course; letting your carrier know about your lower annual mileage; and reporting your teen driver’s good academic average, typically a B or better. (See Member Benefits’ auto insurance discounts and home insurance discounts.)

Keep your credit and driving record clean

Both have an impact on the price of your insurance premium. Insurers maintain that credit history is a good predictor of risk that they’ll have to pay for insurance claims.

Factor in life changes

If you get married, add a teen driver to your policy, add or remove a vehicle, etc., those things can impact your premium. Be sure you discuss any changes with your insurer so you remain properly insured. Personal Insurance Consultant Stefanie Walsh adds, “Do you have children who bought their own car, are getting married, buying a home, or renting their own apartment? They may be eligible for policies with us. And if you’re retiring soon, don’t worry—you’ll still be our member and can continue your insurance with us. You may be even be eligible to start a new policy if you’ve already retired.” Call us to find out more.

Lastly, can you say this about your insurance carrier? One of our members recently told us, “(The person I worked with) was so very patient working through all my questions and explaining all of my options for home and auto. He made me feel so confident in my decision and broke down each step. I am so thankful for this amazing benefit, the Member Benefits community, and him. Thank you.”

Here’s the bottom line: Find an insurance company that provides fair and fast claims settlements, offers great customer service, helps you review your policy thoroughly, and proactively offers help and advice. That’s what you’ll experience at Member Benefits.

Give us a call at 1-800-279-4030 with your questions, or schedule a personal consultation to review your current insurance coverage. We’re here for you.