Insurance Company Bait-and-Switch
My home insurance company is trying to screw me and hope that I won’t notice! I thought I would share this fun experience with you so that you don’t fall prey to the same types of shady bait-and-switch type practices.
Insurance Company Bait-and-Switch – Background
If you will recall from a post I wrote about one year ago on my quest to save on car and home insurance, I switched from State Farm auto and home insurance to Progressive auto and home insurance. In the end, I was able to save about $475! I was super stoked about such a large savings. But, what is too good to be true?
Insurance Company Bait-and-Switch – Home Insurance
Progressive provides home insurance to me through a third party company named Homesite insurance. They seemed like a fine company to me at the time after a little digging around.
After all was said and done, we ended up paying $732 a year for our home insurance. This gave us coverage at the proper level for our home and all was well,
Insurance Company Bait-and-Switch – The Friendly Letter
Just a few days ago I received a rather large letter in the mail from Progressive. I thought it was junk mail and nearly threw it out, but I decided to give it a quick open just to confirm. It was a good idea not to toss it because the papers were the summary of the renewing home owners insurance policy.
Everything looked fine from what I could tell until I got to the third page. The total price to renew the policy is now $998. WTF?!?!?!? You are telling me that the price of the exact same home owner’s insurance policy has gone up $266 or 36%?!?!? What kind of madness is this?
Insurance Company Bait-and-Switch – The Call
So, I decided to call 1-800-PROGRESSIVE and get this little detail sorted out. Simply put, there is nothing they can do to lower my premium. I have to either “eat the increase” or shop around with another company. The person on the phone tried to tell me that there was a potential “increase in my area” due to an increased level of claims. Ummmmm – yeah right 🙂
Insurance Company Bait-and-Switch – Final Thoughts
For me, $266 is too much to leave on the table without trying to look for an alternative, cheaper insurer. It looks like I will mobilize to beat the insurance bushes again and look for a car and home insurance combination that will hopefully break even compared to what paid for the previous year. Why do insurance companies make us go through this bullshit every year? It seems like their costs would be lower overall if they just took care of their current customers. Am I wrong?
Seriously, $998 for a new price policy? That’s too costly! I’m glad that our home insurance still remains the same price for 2 years.
Clarisse @ Make Money Your Way recently posted…Tackling the Investors: How to start up
Clarisse,
Yes – I very pissed to see this – to say the least!
Yucch! We will be looking to switch our home insurance soon because no other insurers would touch us after a flood due to a torrential storm in our region from 2009. Many homes were affected. They say we have to wait 5 years, meanwhile our premiums went way up.
debt debs recently posted…Worth it Wednesday ~ Debt and the Single Girl
Debs,
That really stinks. I hope you have flood insurance to cover you going forward for this sort of thing. Good luck finding someone else 🙂 Have you tried Geico?
I’ve had increases in my homeowner’s insurance but that’s a HUGE jump!
Brock @cleverdude recently posted…What My GPS Watch Taught Me About Financial Accountability
Brock,
Yeah – he tried to explain it as an area adjustment factor… 36%?!?!? Give me a fricking break!
Ugh, that stinks. Sadly, it isn’t too surprising. They try to squeeze out as much as they can from customers. Hopefully you can find a better rate. My mother always checks her insurance statements every time they arrive, and she has noticed them trying to sneak in some subtle increases here and there. Like any other bill, you really need to keep an eye on it and call when something isn’t right!
Lauren recently posted…$2K in 2 Months: My Side Hustle Challenge!
Lauren,
You’re exactly right! That’s why I’ve held off on setting up all my bills on autopay. I expected them to lower the rate a little after I called, but they gave me the cold shoulder. Looks like it’s time to move on!
My sister is always telling me that her home owner’s insurance is constantly rising-for no reason at all. All of this factors into her bottom line when it comes to paying the mortgage.
Michelle recently posted…Round Up 34: 32 World Cup Recipes
Michelle,
I understand a normal 2%-4% increase each year because of inflation, but 36% is just insane 🙂 It really is bait-and-switch type of pricing.
Unbelievable! I hope you have luck finding another insurance company with a better price. I hate that companies like this expect you to take this kind of dishonesty lying down. I thank God we have the opportunity to choose amongst competitors.
Sher@KNSFinancial recently posted…Four Student Loan Debt Options You May Not Have Considered
Sher,
Yes, my business will definitely be going elsewhere. Last time I checked, Geico was the second best on rates, so I will go to them first to check out their prices.
That price increase is a joke. Sadly though, I think it is going to become the norm going forward. People are getting smart to shop around for insurance coverage, so many more companies will “eat” a low premium for a year then jack it up the next year. Most will probably just accept it and stay with them and not go through the hassle of switching again.
As much as I preach to my readers to find the lowest cost insurance, I am willing to pay more if the company is treating me right – in other words, not jacking up my rate every year.
Jon @ Money Smart Guides recently posted…Ready For Zero Review
Jon,
I think you are 100% correct. I made the switch initially and saved about $475/year for one or two hours of work. It is a shame that companies try this kind of BS, but I cannot say that I am surprised. Most companies will try just about whatever they can to make more money in the short term at the expense of long term (and customer service).
You see this marketing tactic in many ndustries: lower prices offered to new customers only. They take a loss on the first few months or a year in order to lower new customer acquisition costs. They expect a small percentage of people will game the approach and leave when the real pricing kicks in, and a larger percentage will stick around.
Credit cards try the same math when they offer zero interest balance transfers. Progressive uses data mining very heavily and probably knows the percentages cold.
Kevin H @ Growing Family Benefits recently posted…Term Life Insurance Sample Premium Rates
Kevin,
Yes – I’m pretty sure that’s what happened here. The only thing is, when calling around to the other companies, they are all substantially higher than last year. I wonder why…
Allstate gave me a homeowners quote of $547.90. Thinking this was a good price, I signed up because this was a good rate compared to other quotes I was getting. 2 weeks into my coverage they emailed me telling me that they need to verify my square footage. After verifying my square footage, I was assured that my rate would not go up. 2 days after that, I get an email that they need to add $138.44 to my premium because I have an attached garage. This is madness! I WILL NOT be buying Allstate insurance for a long time.
Allstate is basically making me bite the bullet because either they did not do their due diligence or because they think they can.
That is BS! I can’t believe they didn’t even use google streetview to perform some type of due diligence before giving you the quote.