Personal Finance Tips

What are the disadvantages of contacting an insurance agent for your insurance requirements? How do online insurance quotes compare against these disadvantages? Read ahead and find out more.

The first and the biggest disadvantage of dealing with insurance agents is that you have to spend lot of time and effort obtaining the estimates. You can forget about finalization of the policy because that is going to take a very long time indeed.

The process of getting numerous quotes from insurance agents can be very laborious one. On the other hand, multiple quote comparison website help you get in touch with a large number of insurance companies in a span of few minutes. This means that you will get estimates from cost of insurance as determined from your requirements in a jiffy.

This is a very big advantage considering the fact that time is one thing that we all lack in today’s busy world. The recession still going on, nobody can afford to take time off work.

The last thing we want is to be classified as unproductive worker and laid off. Multiple quote comparison websites help you save time that otherwise would have invested in contacting and dealing with insurance agents.

Obligations – Each and every insurance agent stands to gain by your decision to opt for a particular policy. This naturally creates a bias and leads to complications. There have been innumerable instances where people run scared of insurance agents because they pester a lot.

You can avoid all such complications by making use of World Wide Web and online multiple quote comparison web sites. You just have to specify the contact information so that you can obtain the quotes.

You will not be contacted by any agent until and unless you permit. Further, you will not be answerable to anybody insofar as your decision making is concerned.

You can simply indicate that the deal offered by the insurance company is not the most profitable one. This should be enough to justify your decision to opt for some other insurance company. Chances are that the agent will come back with a better policy after knowing that you are doing your research the proper way.

There are companies that are in the business of issuing home owner insurance company rating figures. A.M. Best and Moody’s are companies that rate insurance companies. A third party rating is helpful for insurance brokers and home owners because it gives an independent opinion of a company’s fitness.

With these figures in mind, brokers can be confident in the companies they recommend and confidently sell their policies. Home owners can investigate for themselves whether a company is worth using. All you need is a little background on what the ratings are and what they mean.

A financial strength rating tells about the insurance company’s ability to pay policy holders.

The ratings go from A++ which is the most Superior rating, to F which means the company is in liquidation. The ratings are only an opinion, but they are a very educated estimate. Quite a bit of data goes into the ratings to determine where any individual company stands. A home owner insurance company rating is important to the rating company.

Another aspect of the financial strength ratings are the ratings outlook summaries. These describe the expected strength of the company over the next one to three years. The companies may be viewed as positive, negative, or stable.

A final measure of financial strength is the financial size rating. Home owners tend to think that the more financial capacity a company has the better. In reality, it may be more important to think about the difference between how much the company has and how much the company is obligated for. Yet it is still a measure of financial strength.

Issuer credit ratings and debt ratings show whether the company is able to pay its obligations.

Issuer credit ratings are thorough examinations of the way a company does business. They show whether the company is meeting its obligations. These ratings show whether a company is performing to its potential. Both long-term and short-term credit ratings are discussed.

There is also a section of the home owner insurance company rating that shows the outlook of the issuer credit rating. Like the financial strength outlook, it covers one to three years.

Debt ratings cover the long-term debts and the short-term debts as well. If a company will be able to pay their debts, they get a good rating. If now, they will get a poor rating. It is as simple as that.

Companies that provide ratings are quick to point out that they guarantee nothing. Just because a company has an excellent rating, there is no absolute proof that the company will remain strong. The ratings are researched well, but they are only to be used as a guideline.

A good home owner insurance company rating is important any company who has one. If you want to go with an insurance company you can count on, seeing the ratings helps. You can feel more at ease if you know that the company has been rated as excellent by an independent party.

The insurance companies will always reward you for driving less. If you rarely put wheels on the road, the chances of a claim are small and all your premium will be “profit to the insurer. So how does this work? In theory, it could not be more simple. The insurance company looks at who you are, when you drive and where you drive in deciding how much of a risk you represent. If you live 50 miles from your work and have a daily commute along a busy Interstate, the chances of an accident are high. But if you live on a bus route to work and only use your vehicle for odd journeys at off-peak times, the chances of an accident are small. When you answer the questionnaire, you will see questions covering these possibilities. Remember, if you get caught out in dishonest answers, the insurer will cancel your policy and leave you without any coverage.

The first question is where you live. Although some states like California have outlawed setting rates according to your zip code, the majority of companies focus on your home address. If there’s a high accident or theft rate among people living in your area, you will all pay a higher premium. The only choice, if you can afford it, is to live some place where the crime and accidents rates are lower. You look for the middle ground between the worst inner city crime hot spot and a house on the prairie where you never see another vehicle from one day’s end to the next. All the discounts favor drivers who only drive off-peak during the day, and restrict their annual mileage. No more late night and early morning driving when the majority of other drivers may be tired or affected by alcohol and/or drugs. This raises the question of monitoring. It’s easy to answer the questionnaire and claim the maximum discounts. But the trend among insurers is to ask people to drop their vehicle in for a regular inspection of the recorded mileage. The maximum discounts are given to the drivers who agree to devices being installed which collect all the data on driving and transmit it to the insurers. These devices have a GPS element that records where you drive, the time and, in some cases, some measurement of the quality of your driving, e.g. how often you brake. The reward for accepting this invasion of your privacy can be discounts of up to 25% on top of the usual discounts. Obviously, it’s not a good idea to use your own vehicle to rob a bank since the insurance company will know you were there.

This set of discounts is somewhat frustrating. In the larger cities with well-developed public transport, it’s usually not too much trouble to get where you want on time without using your own vehicle. Assuming your vehicle is safely in a garage to reduce the risk of theft, you should break even or better, i.e. what you save on the insurance pays for your use of buses and trains. But the most of the US has poor public transport, so there’s little choice. Remember the car insurance quotes are not the final word. Call the company, explain your circumstances and discuss how you might qualify for discounts. In discussion, you often discover options not included in the website. So, treat the car insurance quotes as the opening offer and start negotiating. Investing a little time often saves you money.

The main thing to understand about discounts is the thinking behind them. The insurance companies want to encourage you to act in ways that favor them. If you are contrary and do the opposite, you will probably cost them money so your premium rates will be higher. Let’s take a few examples and see how it works. Obviously the point of insurance is that, if you have one of those unfortunate accidents or someone steals your vehicle, you get to claim money from the insurance company. From the insurer’s point of view, this is bad news. It wants to be able to treat all your cash as profit. The more it has to pay out, the more it should raise premiums. Except, at some point, you throw up your hands and say, “We’re not going to pay that.” So a balance has to be struck. The insurer wants all the safe drivers like you, and aims to discourage all the drivers with bad records – they are the ones who get the really big premium hikes. Although loyalty bonuses go some way in the right direction, there are more ways in which the insurer can save money. It all starts with the make and model of vehicle you are driving.

Risk assessment is done by the actuaries. These are the math wonks who collect details of every accident reported in the US. This is not just the data from claims on vehicle insurance. This is every incident reported to the police, attended by the firefighters or ambulance crews, or dealt with through claims on health insurance. Put all this together and the actuaries can tell you the probability of an accident in any make and model of vehicle, given its color, whether it was fitted with any additional features, who it was driven by, the time of day or night, whether the driver and passengers were badly injured, so on. Yes, it’s that detailed. Turning this around, if you drive a vehicle that’s statistically unlikely to be involved in an accident or stolen, your premium will be lower than average. Put a safe driver in a safe car and the chances of the insurer having to pay out are small and the profit is higher. Everyone is happy. So how do you find out which are the safest vehicles with the lowest premium rates? Well, you start with http://www.safercar.gov/, a site run by the National Highway Traffic Safety Administration. This allows you to get the safety ratings from all the tests carried out by the NHTSA. There’s a guide published at http://www.nhtsa.dot.gov/staticfiles/DOT/NHTSA/Vehicle%20Safety/Articles/Associated%20Files/2009_Insurance_Costs_Comparison.pdf which is also helpful. Finally, the Insurance Institute for Highway Safety publishes its own list of safe vehicles at http://www.iihs.org/ratings/

The safer the vehicle you drive, the greater the discount on the premium rate. So when you are filling out the questionnaire for those auto insurance quotes, aim to have a safe vehicle. If you vehicle is not safe and you cannot afford to change it, try to upgrade it by fitting safety features. Look at the questions asked in the questionnaire and talk to insurance agents to find out what features save the most money. Similarly, fit better locks and any systems making your vehicle more difficult to steal. Anything you can do to reduce the risk of a claim will be reflected in low rates in the auto insurance quotes you receive.

This article draws on a big court case in Indianapolis with AIG disputing a life policy worth $15 million. Under normal circumstances, insurers pay out whenever they receive the death certificate. They may privately grumble the claim has come earlier than expected, but their public face will offer sympathies for the loss and pay. Indeed, if any company gets a reputation as a bad payer, their business is likely to dry up fast. With PR and marketing being everything in persuading people to part with their money, insurers usually pay out without comment. Why so different in this case? Well, the first issue is the circumstances of the death. This was a confident older woman aged 74 and she was found fully-clothed, drowned in her bath. The homicide unit has investigated and, despite the fact her family said she always preferred to take a shower, it has ruled her death accidental. No matter that the world might find the circumstances “suspicious”, particularly because the holder of the life policy admitted to being the last one to see her alive, there is no ongoing investigation. This has left the insurance company to dispute the payment.

Four years ago, this active lady was a director responsible for marketing. The company and fellow director insured her life for $15 million. This is perfectly proper as a part of succession planning. It gives the company the cash to buy out the shares and cover losses while a replacement key person is found. Except there is some suspicion the appointment of this lady as a director was only done to justify getting the insurance coverage. The rules are reasonably straightforward.

If you go to a race track, you can bet which horses will win and place. You pay and if your luck (and skill) give you the right result, the bookmaker pays. You could ask the bookmaker whether it is possible to bet on the day, week, month or year someone will die. If such a bet was accepted, you would have a direct financial incentive to arrange for this stranger’s death at the appropriate time. To insure someone’s life requires you have some direct interest in the individual, usually as a relative or someone upon whom you depend. That is why this company insured a marketing director and not an office cleaner. That position fits into the expectation of the insurer and justifies the big pay out.

There are about one hundred cases pending before the courts around the US alleging that investors have been insuring the lives of strangers. Because this is the equivalent of wagering or betting, the insurers are refusing to pay. In many of these cases, there are paper justifications for the policies, e.g. to insure a borrower. It will be very interesting to see how these cases are resolved. As for the ordinary case, you can confidently get life insurance quotes for any member of your family or other relatives. If someone acts as a carer, this will justify a higher pay-out to cover the cost of a replacement. But, if you are potentially insuring someone not related to you and not acting in some protective role towards you, disclose this fact to the life insurance company before confirming the policy. Only by complete honesty at the outset can you protect everyone’s interests in the long run.