School of Life Lesson #1: Insurance, how am I supposed to buy good insurance?

I recently got burned really badly by a homeowner’s insurance company, Esurance. Esurance did not approve my legitimate roof claim following a bad wind and rain storm. Additionally, the claims adjuster ignored my requests for follow-up, and phone calls from a lawyer who is also an adjuster.

No one from Esurance actually came to my house, it was all contracted out. Moreover, I was more familiar with Ohio laws (as a layman) and shared the appropriate Administrative Code to support my claim, but Esurance still denied my claim.

The real kicker was my neighbor had the same exact claim from the same storm and their insurance company approved them immediately without any issue.

I cannot express how frustrating and maddening it was to deal with Esurance over the course of two months. I was not being taken care of in any sense.

Esurance essentially took my money and laughed in my face. No one was advocating for me and I never spoke to an agent. It was disappointing at every turn and I have since dropped Esurance.

As is the mission of this blog, learn from my mistakes.

The silver-lining is I found an insurance agent who could help me find better insurance, better coverage, and all at a lower rate! Win-win-win!

Terry Bedell from Hastings Bedell Insurance Agency was incredibly helpful and informative when I felt like I asking really dumb questions, but I just don’t know about these things! I must have missed the class on buying insurance in high school and college. Where are you supposed to learn this stuff?!

Well, I have made Terry my Professor of Insurance in this blog series on the School of Life. Class is in session.

(Note, this is NOT a sponsored blog.  I genuinely asked for Terry Bedell’s opinion to help you and other readers when it comes to learning about insurance.  There is no additional benefit to myself or the blog.)

  1. What would you tell a young person or couple buying their first home or car about insurance?

Insurance is often treated as a necessary evil. Finding a good agent who can best advise you will make it less painful and help you save money in the long run.

Insurance is a necessary component of protecting some of your most valuable assets, also if you have a loan on your car or mortgage, insurance is required.

I suggest you approach insurance as another tool in your arsenal in helping you navigate life. Make insurance work to your advantage.

  1. What is the biggest mistake people make when purchasing insurance?

The biggest mistake people make in purchasing insurance is shopping by price only. Going the direct purchase route through the internet certainly cuts out the middleman but also cuts a valuable source of advice (via the agent) when it comes to protecting you and your assets. Insurance can be a complicated matter and not understanding it can leave you financially exposed in areas that never occur to you because you don’t know any better.

  1. What’s the difference between an insurance agent and adjuster? What role do they have and who should I contact when I have a problem?

An insurance agent is the person you purchase the insurance policy from. The agent also advises you on what coverage to buy and at what limits. The agent is the main contact you have with your insurance company throughout the life of the policy with the particular company.

An insurance adjuster is the company representative who handles a claim for the company. The claims adjuster will assess the damage to your home or car and arrive at a settlement according to your policy and coverages.

Contact your agent when you have a claim to present to the company, i.e. auto accident, kitchen fire. The claims adjuster will contact you to arrange repairs and payment after the agent presents the claim to the company for settlement.

  1. What should someone look for when purchasing insurance?

First, look for a trusted agent. Get a referral from a friend or family member for someone who will look out for your interests.

Look for an established agency who represents quality companies. Independent agents represent more than one company and can best match up your insurance requirements with the best company. A “captive” agent represents only one company, i.e. State Farm, Allstate, Nationwide. Captive agents will not have the flexibility of an independent agent (note: Terry is an independent agent).

Make sure the company the agent places you with is a reputable company. Larger insurance companies aren’t always better. There are many smaller valuable insurance carriers too because the smaller companies do not spend money on a lot of advertising. Therefore, they can offer excellent products and service.

  1. How do you know if you are getting the right/good insurance?

Unfortunately, too many people find out how poor their coverage is after it’s too late, after a major loss. The only way to prevent this situation is to have a frank conversation with your agent and ask a lot of questions. A good agent is willing to spend time with you in person or on the phone answering questions and ASKING questions about your situation.

Your agent should call you occasionally to review your coverage to get updated on your situation and review your coverage. This prevents the surprises when there is a loss. Spending time in discussion with your agent will yield better and more complete coverage.

  1. Why is there such a wide range of prices when getting quotes from different insurance companies?

Different companies use different criteria for rates they file and set with the state insurance departments in the states they are licensed to sell insurance. What one company measures in calculating rates may not be as important to another company. One company may not like the fact that you carry a first AND second mortgage on a home when it may not make a difference to another company. This difference in underwriting criteria will make one rate higher than another.

One auto insurer may have a different experience with certain age groups (e.g. younger drivers), but another company could not. This would account for different quoted rates from two different companies.

Companies today use a myriad of underwriting criteria to set their rates. These criteria are what account a wide range of prices.

  1. Can you be over-insured? How do you strike a balance?

You can be over-insured. The best way to avoid this is to have a good conversation with your agent to assure he/she knows what you have at risk to protect.

Today, I see the big risk is how most people are underinsured on their home and their liability.

What is liability? Liability protects you in the case you are responsible for someone else’s property damage or bodily injury. Liability claims stem from auto accidents and incidents occurring on your home premises.

When your agent understands what you have at risk, he/she can suggest a reasonable amount of coverage.

  1. How is someone buying insurance for the first time supposed to know what to do or who to ask for advice? Who should guide you through the insurance buying process and how do you know they have your best interests at heart and they are not just trying to oversell and make more money off of you?

Granted, the insurance buying process can be confusing, particularly for a first-time homeowner.

Again, a trusted, knowledgeable agent fits the bill here. Find an agent through referral from a friend or family member. If you get the sense they can be trusted and are willing to spend time with you to answer ALL your questions adequately, more than likely they have your best interest in mind.

  1. Is there anything else you would like to share?

Yes! Everyone, especially young people should maintain a good credit history because the higher your credit score, the more affordable your insurance will be.

Companies today correlate poor credit with poor risk and vice-versa. Data shows a very high correlation between good credit and good risk. Statistics show people with poor credit are more likely to file claims in the future. It’s a responsibility issue. The more responsible you are, the less likely you are to have an accident and the more likely you will keep your property in good order.

Please consider this blog post my friendly referral for a good insurance agent, Terry Bedell from Hastings Bedell Insurance Agency. He’s been wonderful to work with, and suffered through my endless questions!

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