Homeowner's Insurance Increases Not Always Appropriate

Taking care of your finances requires constant diligence and attention.  The items we automatically renew without much if any review, need to be reviewed.   I'm not suggesting that you switch companies for a lower rate every time your service contract is up for renewal.  I am suggestion that you take just a few minutes and review the items before paying the renewal.

I think of it as at least giving my renewals the Smell Test.  To be a good Smell Tester, you have to pay attention to general changes in your life, the economy, and have a sense of what is a reasonable range of increase for whatever service contract you are renewing.

My most recent example is my homeowner's insurance policy.  I have had a great relationship with my insurance company and the rates have always been within reason of competitors and worth the value for me.  However, as I opened my annual renewal for this year, the amount seemed more than 20% higher than last year.  The quick Smell Test said, that doesn't seem right, so I laid it aside to review it later.  The problem with that is, later comes later than the cancellation of the policy if I am not careful.

Now that it's later, and I need to pay to avoid cancellation, I have no time to go shopping and I can easily just resign myself to paying the increased rate.   But 20% higher is still nagging me so I break down and call the agent.  Actually, I break down and call the agent after being unable to login to my account online.  When you only login once a year, it can be hard to remember your ID and password.

Fortunately, my phone call paid off.  I called to pay my bill and then, almost as an afterthought asked why it increased so much.  The agent pulled up the account and indeed it had gone up significantly, but he calculated only a 15% increase.  Apparently the policy increased last year and I just paid it without questioning the 15% increase last year.

I can see an increase of 2 to 4 percent, but I need to have some justification for any more increase since the economy is not recovering significantly and the CPI or cost of living for this area is not really increasing by more than that range.  So that is my range of reasonableness.

As the agent researched and asked questions I answered years ago when I bought my house there seem to be a serious lack of information on my policy.  First of all, if I had a wired in alarm system and an internal sprinkler fire system when I bought the house, chances are I still have those items installed now.  When was the last time you heard someone ripped out the alarm system wiring or the fire sprinkler system in their home?  Apparently,  the insurance company is not so sure that is a rare thing to do.

In addition to this missing information, the increase this year was justified by the insurance company due to the increased cost of roof replacement in my area.  Due to wind, storms, heat and natural occurrences, this happens often in my part of the country.  However  I don't have to pay to replace my roof.  Hmmmm.

My policy is for a condominium and not a single family home.  In a condominium, the roof is owned jointly with your HOA members and the HOA fees are set aside to pay for roof repair and replacement.  Hmmmm, again.

My agent very quickly realized the explanation was not lining up and offered to research further my account and call back with an adjusted rate.  In the end,  I not only got a lower rate since I was not paying for things I did not need to buy, but I also got a refund for the same items that escaped my attention last year.

Total Savings for diligence:   $ 123.42

Satisfaction and peace:  Grateful to God for His leading and prompting to call and inquire.


Warning:  Review all policy renewals!
For auto, home, health and all insurance policies, you should review the renewals for any increases every period they renew.  Generally, most policies are given an annual rate that you may pay monthly, quarterly or annually.

Reviewing renewals then, is done once a year when the rate changes and not with each payment.

How to: 
   1.  Keep a copy of the policy and the invoice in a file.  [see Record Keeping notes].
   2.  Compare this renewal invoice with the prior one - whether it is for a month or a year or other period.
   3.  Calculate the percentage of increase in the invoice amount.
   4.  Compare the percentage increase to the percentage increase in your annual salary.
   5.  Call the agent and ask for an explanation of the increase so you understand what changed.
   6.  If you are unsure the explanation is sufficient or do not understand why the rate changed,
         consider calling someone you trust to review it with you again or call a competitor for
         a comparative quote before renewing your policy.
    7.  Pay your policy on time or switch to a new policy before the insurance cancellation to
          avoid creating a period of being uninsured or causing in some cases an increase for
          pre-existing conditions as in health insurance.

Additional Cautions:

     *   Review insurance renewals as soon as you get your bill in order to give yourself time
               to research any increases or changes you may need to make.
     *   Don't assume the renewal is an error, just do your due diligence and make sure you
               know what you are paying for.

     *  Keep a good working relationship that is open, honest and mutually respectful to ensure that
               you are working together with your best interest in mind.
     *  You are your own advocate, not your agent.  Your agent provides a service as an expert in their
               field.


I hope this is helpful information.  Leave a comment if you think I've left something out and help others as well. 

Lowering Bills can be Time Expensive

Today I finally succeeded at lowering my phone bill.  Hooray!!  Yes, I am celebrating - and wildly so.  This is quite an accomplishment and it has taken time and effort.

Technology is constantly changing.  To keep up will cost you time, but could save you money.  If you don't keep up, it could cost you both time and money.  A lot of money.  And sadly, you won't really notice, because we are consumers who buy new things and we are not use to getting rid of things we are not using.  We tend to just put them in storage or let them sit where they are until.... well, until we notice we didn't get rid of them I guess.

The bills for basic services for phone, internet and television - or rather 'media' continue to just soar every year.  Bundling is chaos as far as I am concerned.  I don't really want 300 television channels and I want internet connection with me - where I am - whether I am at home or not.  My gadgets go with me, my internet should too. 

All I really wanted to do was lower my home phone and internet bill since I rarely use them any more.  I had not planned on completely canceling them, just lowering their luxury items that I not only don't use any more,  I can't recall if I ever used them in the first place.   I traveled with my job for a couple of years, so I had added internet Wi-Fi on the go at hotspots.  This was before mobile broadband and the wide availability of free Wi-Fi at Panera Bread and McDonald's.  I wonder if I could just buy a membership at McDonald's for Premier service that would include unlimited, private wi-fi, and 1 $1 drink a week.  After all, as McDonald's knows, it's about distribution.  The phone company still thinks it's about bundling services.  Even at McDonald's, I order a la carte.

Let's get back to the phone bill.  After 5 phone calls, 3 of which I was put on hold for over 1 hour each, I was able to remove the traveling Wi-Fi from my home phone.  After all, it's now included in your home internet service anyway according to their commercials.  If that's true, then why didn't they take it off my bill themselves?  That's a whole different issue I'd like to discuss later.

My phone bill with home phone, internet of 6mps speed, unlimited long distance, and television was costing me $169 a month.  I don't remember the last time I answered or made a call on my home phone service.  I watch very little television anymore.  I don't travel with my job to need the traveling Wi-Fi, where most airports were not accessible anyway. 

Removing unlimited long distance saved me $37 a month and I still maintained a basic phone service with no benefits.  That means I can still dial 911, I can still make local calls.  I can still answer if you call me.  However, I no longer have caller-ID, call forwarding, voicemail, or anything else they listed I had and never used before.  Caller-ID would be missed if I actually answered my home phone.  Since I don't, that just won't be a problem. 

Removing the traveling Wi-Fi, saved me $9.99 a month.  The total of $47 a month adds up very quickly.  The savings on the home phone, partially including a savings on the list of taxes on the unused services.  Again, that's another subject for us to discuss at another time.

At the time I purchased my home phone bundle, this was the best deal for my usage and local area.  However, with FIOS and U-Verse and mobile broadband, this is no longer the best deal.  I have more Wi-Fi gadgets, but all my wireless connectivity is tied to being at home.  That simply doesn't make sense anymore.  So I replaced traveling Wi-Fi with a T-Mobile mobile broadband for $33 a month.

That does not however reduce my savings to $17 a month.  You see, I added a smartphone a year ago and I was spending an extra $20 to $60 a month on my phone for data downloads to play Games with Friends.  Not a very smartphone.  They should call it a Funphone or a FriendPhone instead.  I will concede however, that I spent $33 a month to save $30 a month.  I gained the ability to use my mobile broadband for my phone data, iPad, Kindle Fire, Tablet PC, and share my connection with a friend.  I can connect up to 5 devices at once and there are no overage charges.  If I go over my usage amount, the speed does slow down, but I have not had that happen yet. 

Keys to success: 
1.  Review bundles, gadgets and technology once a year and adjust.
2.  If you get put on hold when you want to cancel a previous service, hold your ground.  You should not pay for what you do not use.  There are other companies out there to do business with.
3.  Don't bundle unless it's the best option for the price and the lifestyle.
4.  Family plan bundling is not always a savings.  It might just keep you locked in longer that you should be to a bad plan when things change. 

Money Management is ongoing every day, and you can be good at it.
Reduce the Debt.
Reduce expenses by reducing overpaying for unused services.