Rosa and I recently received our renewal notice for our homeowner’s insurance policy. To our shock and surprise, the premium had increased by 20% for the second year in a row. We have been with our current insurer for 20 years and are happy with the service and coverage. They have satisfactorily settled two claims for hail damage to our roof. Nevertheless, we decided to shop our insurance business around and see if we could get a better deal.
We considered top companies only
When we checked competitors’ rates last year, we discovered that we had a great deal with our current carrier. But we know things can change, so we once again set about the tedious and time consuming task of getting quotes for home and auto insurance. We only sought quotes from the top national companies. If we discovered an opportunity to change insurers, we wanted to be certain we received good service.
Eureka! A better price
Initially, our results were the same as the previous year. Despite the back-to-back premium increases, our carrier still had the lowest rate. That’s when we decided to get a quote from an insurance company affiliated with an national association to which we belong. Thanks to the member discount, they were able to save us about $160 per year for our auto and homeowner’s insurance combined.
Even though the company that gave us the lower quote is a well-known insurer, I thoroughly investigated their reputation. It checked out, and we were confident that we would receive good service from our new insurance carrier. We were prepared to make a change, but before we turned our backs on our current insurer, we wanted to give the agent a chance to keep the business.
Negotiation results in a lower premium
We sat down with our agent in his office and presented him with the competitor’s quote. We told him we were happy with the service we had received from his company and were reluctant to end a 20-year relationship but we couldn’t afford the increase in premium. Was there anything he could do?Order True Prosperity: Your Guide to a Cash-Based Lifestyle at the special discount price of $6.00 per book. Free Shipping.
At first, he cautioned us that we might have received a teaser rate from the other insurer to get our business. Then he explained why his company had had to repeatedly increase rates. We listened then reiterated that we were prepared to move our business to the other company.
He checked his computer, then punched in some numbers on a ten-key calculator. He asked us if we had had a new roof installed in the last 5 years. We said we had. He asked if we could provide a copy of the invoice for the work. We said we would. He applied a discount for a new roof and lowered the premium by 20%. Suddenly, we were paying less than we had paid the year before. We wrote a check for the premium before we left his office.
Rosa and I got what we wanted: a reduction in premium and continued coverage by our existing carrier. We were successful for two reasons:
- We brought a written, credible offer from a reputable company for the same coverage.
- We were prepared to take our business to the other company.
What did we learn from this experience?
- We could negotiate a lower premium if we had some leverage. In this case, a written, credible quote from a competitor provided the leverage.
- It pays to make the effort to obtain quotes from competitors. In past years, when we had received an increase in premium, we had threatened to shop for a better rate. Our agent encouraged us to do so. He was confident we wouldn’t find a lower price, and except for last year, we never called his bluff and followed through to find one.
- We should take advantage of memberships and affiliations when seeking competitor quotes. We almost overlooked a member discount that gave us the leverage we needed to successfully negotiate or that would have provided a lower-cost alternative to insure our home.
- We should educate ourselves about additional discounts and press for them. We could have been receiving the discount for a new roof for the last four years if we had known about it.
Will our premium just go back up next year? I don’t know. We’ll have to wait and see. The point is, more things are negotiable than we often realize, even insurance premiums, but it takes leverage of some kind to effectively negotiate. This year we did the legwork and came up with a credible, competing offer, then used it to obtain a substantially lower premium.
K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based Lifestyle, Double-Dome Publications, 224 pages