Top 5 Reasons to Ditch Your Insurer

After following the fall-out from Katrina and the performance of a number of insurers in relation to their claims pay-outs, it seemed to me that we should all be reviewing our insurance carriers very carefully.

How do you know when you should ditch your current insurer and find another? It doesn't matter whether you are buying car insurance, home insurance, life insurance, long-term care insurance or any other form of insurance; you should pay attention to the following 5 things:

1. Your insurer's claims history. If you live in the US, you can easily check complaints regarding your insurer (and their claims performance) through your state's Department of Insurance. If an insurer shows a tendency to try to find highly technical legal arguments to deny claims, or automatically denies before taking any other action, you have a problem insurer.

2. Bad "word of mouth". If you are hearing bad things about an insurer at the office or in your neighbourhood, take it seriously. Often the word on the street catches a problem with an insurer and its performance with customers, long before any news source will pick it up.

3. Did your insurer recently go public? Once an insurer is publicly traded, they often begin to focus on "retaining premium". In common english, this means they will do whatever they can to avoid paying claims. The pressure to make more profits as a public company is incredible. In general, I think you do better with a privately-held insurer who doesn't have the scrutiny of the open market and the endless push by investors to increase shareholder value every year and every quarter.

4. Has your insurer's financial rating dropped recently? This is another bad sign that an insurer is going to have to either raise premiums substantially or work harder to avoid claims. A periodic check of your insurer on A.M. Best or one of the other financial rating companies can be a good strategy.

5. Are you having problems getting a customer service rep on the phone? Even to change your address? Is the person snarly when you do get them? Insurers who forget that they don't have cash flow except for people who trust them enough to buy their services often start to short-change many customer service functions.

Insurance is a strange product; you are buying a service that will pay you money if you have a valid claim. At issue is validity; once you need more from your insurer than that lovely certificate of insurance, your insurer may start to look at you differently. You go from a "good" client (because you didn't need anything) to a "bad" client because you are a liability. At least, that's what happens with a bad insurer. A good insurer knows that one claim does not mean that you've suddenly turned into a high risk customer, and they will treat you with fairness even while they check out your claim.

Need to ditch your insurer? Start out with a few quotes from some of the sponsors of our site. They will be more than happy to help you.

Monique L. Attinger
2 comments
Posted by editor@insuranceguide101.com on March 9,2007 at 1:33 PM
It's critical to know if your insurer is financially stable. After all, you want your claim paid! A.M. Best is one of the respected financial companies that rank insurers on their financial stability.

So, if you are going to ditch your insurer, don't just check for the lowest premium. Look for a combination of good premium, good customer service and good financial rating.
Posted by Stuart on March 8,2007 at 11:25 AM
I hate the fact I have to pay any insurance on anything, but there's always that "What if?" hanging over my head. Thanks for the A.M. Best tip, I will be looking into that one.
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