Fifteen Minutes Saved Me…

…more than 15%. It was more like 20% and over $100. Apparently, I was a victim of “price optimization” by my former insurer and you may be too because it is becoming very prevalent in the insurance industry.

For about 30 years, my home and auto insurance had been with State Farm. When I lived in Gainesville and worked for the county in the late 70’s, one of the county commissioners was a State Farm agent. I was still renting then but I decided to take my auto insurance to him since I would see him at weekly commission meetings and be able to discuss any insurance issues I had.

When I moved to Tallahassee, I found a State Farm agent near where I lived and transferred my policy to him. When we bought the house in 1989, I brought him the homeowners insurance too since I would receive a “multi-line” discount.

Everything was fine until a few years ago when State Farm announced, after a rate dispute with the Insurance Commissioner, that it would stop providing homeowner insurance in Florida. The exit would be phased out over two years to allow folks to find new policies.

Although my policy was among the ones that would be kept until almost the end of the transition, I decided to find a new insurer as soon as possible rather than wait. I was concerned that other insurers would limit the number of new policies and I didn’t want to have to use a second-tier company that might not be able to pay a claim if a big hurricane hit. (The good news is that Tallahassee is an improbable destination for a hurricane due to typical steering currents, which tend to take hurricanes towards the panhandle and west to the other Gulf states.)

I found a new home owner policy with Cotton States for about what I was paying State Farm. I took my auto policies to Cotton State too. Before this, I had never bothered to check rates with other insurers whenever my polices came up for renewal. I figured I was getting a good rate as a result of various discounts (multi-line, claims, etc) and presumed one of those discounts was for “longevity.”

My proactive action appeared hasty when State Farm decided not to pull out of Florida home insurance after the Insurance Commissioner said that it would have to stop writing auto insurance as well. It was both or neither. State Farm remained in Florida but stopped accepting any new homeowner policies.

At the time, it didn’t matter to me. I was happy with Cotton States and wasn’t interested in returning to State Farm.

Then, after about two years, Cotton States announced that it was exiting Florida completely – no homeowner and no auto policies. And there wouldn’t be a transition period; when the policy ended (six months on auto and a year on home) there would be no renewals. So I had to find a new insurer… fast.

I sheepishly tried to go back to State Farm. They offered me auto policies but not homeowners. So I took that and ended up with one of the stronger “Florida only” home insurance companies but at a higher premium.

Over the next two or three years, I checked with State Farm each year about whether they were writing new homeowner policies. The answer was always “not this year; maybe next year.” Florida has not had a major hurricane for a number of years now but State Farm is still not writing any new homeowner policies.

So when my auto insurance came up for renewal, I decided to see if the Gecko was right. Maybe 15 minutes would save me 15% and that savings would offset the higher homeowner premium I was paying.

At the time, I did not know that GEICO was a Warren Buffet company. Nor did I know that it stood for Government Employees Insurance Company.  Or that last fall it edged out Allstate as the second largest auto insurer in the country, based on the value of direct premiums.  Otherwise, I might have checked it out earlier.

First, I went to the GEICO website for a quote. The quote seemed to save me over $100 (over $200 on annual basis if the rate doesn’t change significantly after six months ) but maybe I was missing something.

So I went to the local office, showed them my State Farm policy and asked if the online quote was in fact giving me at least the same coverage. There was a minor change in price but I was still saving quite a bit. So I signed up.

I like that emergency road service is included with their policies and there’s a toll free number to call when you need assistance.  With State Farm, there was a nominal charge for roadside assistance but I had to find a provider, pay for the cost and then submit paperwork to State Farm for reimbursement.

I didn’t even bother asking State Farm to match GEICO’s price. I don’t think I should have to take time to find a better price and then allow State Farm to match it. Because the message would be that they can charge me whatever they think I’ll pay until I complain.

But guess what? That appears to be exactly what many insurers are doing. I came across an article about this practice, which is called “price optimization.” If you’re a loyal customer who thinks your insurance company will reward you for that loyalty by giving you the best rate the first time, better read this.

If you haven’t done a rate comparison recently, you might want to. Because 15 minutes might save you…well, you know.

 

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7 responses to “Fifteen Minutes Saved Me…

  1. Insurance in Florida is a big mess, isn’t it? Louisiana too. I was with State Farm for 13 years, then I was late with a payment and they cancelled me, with no option to reinstate…that was right around the same time you speak of when they were phasing out homeowner’s policies. Now I keep getting letters from them asking me to come back for auto insurance. Well, that’s never gonna happen. I used to think that longevity thing counted and was afraid to switch, even if there was something cheaper. Now I have an independent agent, who says if they go up on the rates, we’ll just switch companies. You know, the hell with ’em.

    • Give ’em hell, FN!

      I don’t recall the “temp” commercial, so I’m going to see if it’s on Youtube.

      I’m wondering why GEICO is using a number of “reps” besides the Gecko, such as the pig and camel. I always thought the idea of a “mascot” is to impart a certain consistency, like Progressive does with Flo.

  2. P.S. My favorite gecko commercial is the one where he goes on vacation and they get a temp. I must have seen it a hundred times and it still makes me laugh.

  3. “He ate all my mints!”

  4. Marketing should have been my career…the reason they have more than one “mascot” is that at a certain point you reach saturation, and people no longer hear your message. It’s like driving by the same sign every day, and even if it changes, you’re no longer looking. Flo has definitely reached that point…people are sick of her. And Capital One with the Vikings. The exception is the Budweiser Clydesdales, and the reason it’s so enduring is that they only come out with a new ad once a year.

    • I’ve not seen the VIkings, which was when Alec Baldwin was spokesman, in a long time. Now it’s Samuel L. Jackson and he doesn’t need any “props.”

      Although I think it’s a weak argument, his “1.5% all the time and no categories, no sign-up, etc.” rant is much better than the Baldwin ads.

      What’s in YOUR wallet?

      Did you see this…?

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