Insurance Premium, What, Why, and How

 Look at your Insurance Premium - I'm Sorry

I am writing this post after recently looking at my insurance premium(s) and just about going nuts!  After my employer decided to send us all a letter letting us know that due to increases cost (who would have guessed) that all of our co-payments would be increasing by $5.  Now I know $5 bucks doesn't seem like a lot but it got me looking at all my insurance.  In our case 2 cars, our house and life insurance for a family of four.

It had been a while since I took a look and while insurance is a necessity I was hoping to find a way to lower it. Well my total bill that is.  

Finding a local carrier and agent

After a few online quotes from the big boys in the insurance world I didn't feel like any of it was worth my time so I started researching some more regional or local companies providing coverage.  I first got the idea a couple of years ago when working for a home improvement company.  A large storm had come through a city I was working in and the damage claims for homeowners insurance was astronomical.  While it was hit or miss on getting timely honest service for some of the big players like State Farm, Allstate, and AAA.  The few customers who had a local or statewide only insurance company had much better luck.  They were quicker to respond as they didn't have 200 homes to see in the area.  They also seemed much easier to deal with in terms of estimating the real damage to peoples homes and taking input from the contractor.  Best of all they were happy with the insurance premiums they were paying and what it got them.

Why Insurance Premiums are lower from more local carriers

This starts with how premium quotes are arrived at.  A simple definition is that your payments to the insurance company are a transfer of risk from you to them in a covered event they pay the loss so you don't have to.  So that payment has to cover expected(projected) losses and all cost associated with providing the insurance.  Some of those cost are adjusters, employees, advertising etc... another one is a fair profit margin.  What I found was that many of the larger companies try to find ways to LOWER the amount they owe or make the payout as low as possible.  The local guys ended up paying more on average.  

While I am not a financial auditor or any expert by any means this is all just from practical experience.  My best guess is at least where I live is that the risk for the smaller carriers is lower and they don't try to get as much profit, they certainly don't advertise as much(if at all).  

Searching for a lower insurance premium?

Although none of the online quotes were any cheaper than I was paying now, I didn't give up.  Searching for a better premium payment became a manor of copying my current insurance docs and emailing them to some local agents using off name carriers.  The results were great for auto and home insurance.  Unfortunately for me since I had acquired some life insurance policies at birth for the children and quite early for me and my spouse I didn't realize any real savings there.

So go search out some state only carriers.  Try searching for "___state___ insurance company" or just call a couple independent insurance agents and find one that offers some insurances you haven't quite heard of.

WARNING - There are a handful of very small unstable insurance companies that probably aren't worth the risk, so do some research and make sure whoever you choose has a good history.