When It Pays To Buy From The Same Insurer – When It Doesn’t

Buying your health, auto, home or life insurance policy from the same insurer who provides your other insurance policies will get you a discount in premium. This is called a multi-policy discount. That said, it may not serve your best interest to do this as you might be better off if you buy each of your policies from different insurers. I explain this further…

Let’s assume that a certain profile has the following rates from three different insurers…

Insurer A…

Auto insurance: $2,492

Home insurance: $1,432

Health insurance: $2,213

Insurer B…

Auto insurance: $1,483

Home insurance: $2,162

Health insurance: $2,813

Insurer C…

Auto insurance: $3,670

Home insurance: $2,102

Health insurance: $1,594

As is now obvious, the insurer who offered the best quote for auto insurance did not have the best for any other insurance policy. If we assume that he buys the three policies from Insurer B and gets a 10% multi-policy discount his total would be…

$1,483 + $2,162 + $2,813 = $6,458

$6,458 – (10% of $6,458) = $5,812.20

However, if he buys from insurers who offer him the lowest rates for each respective policy his total insurance spend will be…

$1,432 + $1,483 + $1,594 = $4,509

So even though he’ll get a multi-policy discount if he buys all his policies from one insurer, he’ll not save as much as he did by buying from different insurers.

A difference as high as $1,303.20 isn’t one that should be passed off.

So how do you know which would be best in your case? Here’s how to find out…

Get and obtain quotes for your different insurance policies from different reputable quotes sites. Calculate what you’ll get as multi-policy discounts and compare it with what you’ll pay if you buy from different insurers.

Here are my favorite pages for health insurance quotes…

InsureMe Health Insurance Quotes

Health Insurance Quotes

Publishers can get unique versions of my articles by following any of the links above. Click on “To Use My Articles” when you get to my site.

Chimezirim Odimba writes on insurance.

How Your Insurance Rates and Premiums Affect Your Insurance Coverage

Insurance rates are used to determine the premium that you will pay for any insurance cover. Bear in mind that the premium is not the only factor you need to evaluate when considering an insurance policy. The quality of the cover and the claims record are equally important, and very often, even more important than the insurance rates.

Insurance rates are based on the level of risk that an insurer assesses and the value it places on covering the cost of paying out claims for that risk. It is vital for both the insurer and insured that this is done properly. The insurance company pays claims from the premiums that are collected and these must be sufficient to cover the total cost of any claims. If the claims exceed the premiums charged then claims will not be able to be paid which is bad news if you are the one making a claim.

Car insurance for instance, uses a variety of factors to determine the risk and therefore the insurance rate and premium. Fast cars present a much higher risk than slower ones, the age of the driver is relevant as is their claims history – bad drivers tend to have more accidents than the good ones which is why your premiums increase if you do have a prang.

Life insurance rates are based upon a combination of age, sex, and lifestyle. The older you are the more likely you are to die in any given period when compared to someone younger. Men die before women as a general rule, while if you engage in high risk activities such as smoking, this too will increase your probability of dying sooner and therefore while the insurance policy is in force. The insurance company will therefore charge a higher premium as appropriate under the circumstances.

When you are applying for insurance, the provider will seek to assess the risk that it is being exposed to. It is vital that you are completely honest with any questions that an insurance company asks or you run the risk of the insurance company refusing to pay the insurance out in the event of a claim.

In some instances, the risk to the insurance company is viewed as being so great that they will not quote an insurance rate at all. Sometimes the risk is limited to a specific set of circumstances or activity that is incidental to the need for insurance protection. A good example is where a life insurance policy will cover you but the insurance company excludes your habit of jumping out of planes because you like skydiving. You must make sure that you understand such exclusions before you agree to the policy conditions to avoid invalidating the insurance when you need it.

Remember that insurance rates determine premiums and so how much you will be charged. This does not mean that a cheap premium is the best deal. Cheap premiums may mean inferior insurance cover or conceal a poor claims payout record. Ask yourself how you would feel if you paid a cheap premium only to find that your car was not in fact insured for a particular type of accident? Expect to pay for good quality cover, but the insurance market is extremely competitive so it pays to shop around too.

Keep in mind that insurance rates are only the subjective assessment of the financial value an insurance company places on the risk it faces with taking you on as an insured customer. Different companies may assess this risk differently and apply a different price to that risk depending on their own financial circumstances. This in turn means that the most expensive insurance premiums do not guarantee the best quality cover and service, so again, it pays to shop around and make sure you compare like with like.

Looking for information on health insurance policies? If you are looking for advice on life insurance or insurance rates, visit us now. Completely-Insurance.com is a goldmine for information on everything related to insurance rates.

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