Auto and Home Insurance secrets, the things your Agent wont tell you.

In spending some time a few years back working in the Auto and Home Insurance Industry there are a lot of things I learned. Now most of these things I'm sure I would have never knew as many of you probably don't know had I not been inside. First lets focus on a few things about Insurance in general.

Insurance for either Auto's or Home's is as many already know different from state to state. Some of what goes into how each company figures rates for a state are but not limited to the following.

• Population
• Crime rate
• Weather conditions
• Previous Claims
• State speed limits
• Economy
• Credit rating

Now these are some of the major reasons there are others used per company but in general most look at these things. That is why often times you may see your rates jump even though you've had no claims or accidents. In fact this is one of the most and hardest things I had to explain to customers. A few things you can watch for to understand if a rate jump may be coming involves these things.

For example say you notice the area you live in is suddenly growing in population. Obviously with more people the chances of accidents or higher crime exist along with home values and such. Another example would be if you recently had bad weather be it floods, tornadoes, fires, hurricanes and ice storms to name a few. Also a simple thing like your state increasing interstate speeds could cause a jump in your rates.

Now the reason for this is the basic principal of risk and the money paid out. Even though most of these our no fault of your own the companies are only looking at the bottom line. If they may have or do have to pay a lot of claims they need to recoup the loss-ed profits. Speaking of profits that is the keyword you need to remember when you think of your Insurance. Bottom line Insurance is a Business they're not just helping you out like any Business they want to make lots of money.

Now lets look at Auto Insurance specifics. Some of the things that effect your rates are but not limited to these things.

• Age
• Sex
• Marital status
• Area ( city, rural etc,)
• Vehicle type
• Prior driving history
• Credit score ( Studies show people with lower credit more likely to file claims)

Now while most of these things you probably understand somewhat how they effect your rates I will go further into detail with a few examples on things you may not know.

Lets look at age while you know obviously if your say an 18 year old boy or have one this is the highest rate group. But here's a few more things that are looked at. The vehicle, but this is where you have to watch out. This in a lot of cases doesn't just apply the vehicle the 18 year old is driving or owns. For instance you probably figure if you put an 18 year old boy in a New Mustang well you just better have a deep pocket or he better have a job. But what you don't know is that most Insurance companies simply rate the 18 year old male on the highest risk vehicle on your policy.

So say you buy your son a older model, lower value, less horsepower vehicle and you add it to your existing policy on which you have the brand new Mustang. Most companies require their agents or customer service reps, to place the kid on the highest risk vehicle and some simply have their computer systems set up to default this way. And even if you figure this out and tell them the son doesn't drive your vehicle they wont change it.

This is because they use what we could call the last vehicle in the driveway theory. That being if the Mustang is parked behind the sons car and say your taking a nap and he wants to make a quick run to the store. He is either just going to take the Mustang or will at the least have to back it out of the driveway.

An actual true incident I dealt with once involved this only it was the sons friend who was moving the vehicle and bl-am! He backed into a passing car the company in turn actually added this person to the woman's policy from the information on the police report. And I had to tell her she had to send in proof the kid was on someone Else's insurance not just that he didn't live with her. Needless to say that wasn't a pleasant conversation ( and for the record my mother and father were married when I was born) yeah a little name calling occurred.

So here's a little tip if you have this type of situation. Get a few quotes for a policy for just the son on just his older vehicle. Now I say quotes because even though your rates may be good from your company it doesn't mean their not higher for different risk levels. But and this is where it gets a little tricky when you then do the comparison quote with your company there is a good chance if he's not that they are going to add him to the policy. So be prepared if you get a better deal to send in a copy of his proof of Insurance from the other Company. That is the only way if they put him on yours to get him removed.

Another suggestion has to do with just being a smart shopper. For instance say even though you shopped for the best rates for some reason your current company just raised your rates. If you have had no claims or other significant changes this will either be just a Statewide increase or possibly even a change in your credit report. They do pull new reports every so many years. In these cases you can sit and dispute it for hours and they aren't going to change it so before you start lowering coverages or raising deductibles shop around. Your company could have very well just had a higher than normal amount of claims that might not specific to other companies. In other words don't get stuck in a rut, trust me your Insurance company is only as loyal to you as risk and profit level permits. I have had to explain many do not renew letters because for whatever reason someone was deemed to high of a risk.

So like with any thing you purchase do the work and make sure your saving yourself the most money. Also never file a claim that is under your deductible if you don't have to.

From my experience Home Insurance is a little more straight forward as to what effects rates and as well some do's and don'ts.

For one it is pretty common that if you have a weather related devastation in your state you can pretty much expect your rates will go up at your next renewal. One uncommon connection that you might not think about is simple humidity. For example a few years back the state of Texas pretty much doubled for most Insurance companies because of a sudden increase in the amount of mould claims. In fact many companies actually rewrote the terms for specifics on what they would cover in as pertaining to mold damage.

One real important thing to understand about Home Insurance is flood coverage. While the wording in most policies concerning flooding can feel a little like trying to interpret the book of Revelations in the Bible. The simple way of explaining it is this, if the water came from the outside via flood rains, creek rising, etc, (say you had three days of rain and your basement floods) then a general Home Insurance policy doesn't cover it. If it comes from within via your plumbing a pipe breaks, a shutoff hose fails, your water heater was old, etc, then it is covered. One confusing exception to this is wind damage. For example say there's a rainstorm and it blows a tree over which breaks through your roof or a window which then lets rain in. This in most cases would be covered for the damage caused by the wind/tree plus the water that was let in and damaged carpets, floors and such. Other than that if your in a high flood area you will want to look at specific flood Insurance coverage.

Another basic thing to keep in mind that can effect Home Insurance is lapse of coverage. You should never let coverage lapse especially if you have a good rate. A lot of companies will just raise your rates or require a new inspection (which in turn will probably increase your rate) and even going to a new company will then require the inspection when there was a lapse.

A few other things to remember one being the major difference between Home and Auto Insurance. In most cases a claim on a Home Insurance policy is going to be a lot higher than as compared to one for most Automobiles. As in general most homes carry a much higher value and repair cost. With that being said keep in mind the same rule for Auto Insurance claims if it's under the deductible don't claim it if possible. I've have seen many cases where it only took one claim on a home policy to cause a non renewal decision. And again this has to do with the risk factor if they see you are going to claim every tree blown over in your yard you become a higher risk. And they have the right to not renew whoever they choose as long as they give notice.

So these are just some of the important things I can think of that you may not have known. As always though remember to shop around some times the long term customer discounts still wont give you the best rates. Hope this helps some of you in any way.