Episode 47 – Tips for choosing the best auto and home insurance
Episode transcript:
[music intro]
Jenny
Welcome back to Fund Your Future with DRS. Today we’re covering a topic that can have small and big impacts on your budget: insurance. We’ve had several episodes regarding medical insurance, but today we’re going to focus on the other two big ones auto insurance and home and renter’s insurance. And fortunately for us, the Office of the Insurance Commissioner, or OIC for short, recently started a podcast all about insurance called OIC Answers on Insurance.
So, we’ve reached out to their team to welcome a guest onto our show. So, we’re happy to welcome Amy from OIC, who works in the Consumer Advocacy Division, to answer some of our burning insurance questions. Welcome, Amy.
Amy
Thank you. I’m glad to be here.
Seth
Amy, thanks. Thanks for joining us. This episode idea actually came from one of our listeners who said, you know, insurance is a big part of their budget and wanted to have some more conversations about this. So just in research for this episode, I did some quick internet searching, around renter’s insurance and home insurance in the state of Washington and found that renter’s insurance is somewhere around maybe $15 a month, and homeowner’s insurance might be somewhere around $100 a month.
And I’m assuming that those amounts can vary widely depending on where you live and what sort of residents you’re insuring. So, what are the different types of policies a person would consider for their residence? And what are the sort of things that are usually covered by insurance? And what are the sort of things that are not covered by insurance?
Amy
Sure. Yeah. Happy to talk about that. You’re pretty close on the costs. It really does depend upon, where your home is located. If we’re talking about homeowner’s insurance and, the value of your home, the construction of your home, there’s so much that goes into, determining how much you’re going to pay for your insurance premium.
So, with a homeowner’s policy, your home is covered. And most insurance companies like your Allstate State Farm Farmers Insurance, those companies have what’s called package policies. And they include the dwelling, other structures, your contents, your liability, your loss of use. So, if you had a fire say and you had to live somewhere else for a period while it was being rebuilt, that’s the loss of use.
And then it has also, medical coverage. And that’s a package. And it all encompasses those different sections that you might need. There are always exclusions and provisions within the policy that could change that. So, for instance, if you have jewelry or guns or furs or money, those things actually have to be scheduled on your policy. They’re not automatically covered to the limit under your policy.
There are, what we call special limits for those types of things. Earthquakes not covered under a regular homeowner policy. That’s something you’d have to add. Floods not covered under flood like from a river, is not covered under those policies. Landslides, those kind of, catastrophic things aren’t covered under a standard homeowner policy. And with the renter’s policy, it’s the same thing minus the dwelling.
Everything else is covered. Your contents, your liability, your, guest medical and that loss of use as well. I recommend folks get renter’s insurance. It’s a really reasonable investment, and people just don’t realize that they have contents. I’ve had so many people say, “well, I don’t have $10,000 worth of things.” You probably do just in your living room.
Jenny
Yeah. So, renter’s insurance can cover those things like if your couch gets destroyed or you know obviously if something like the refrigerator breaks you could charge that to your landlord. But renter’s insurance is a good thing for covering your furniture and like you said, your personal belongings. Right?
Amy
Right. And it and it also follows you. So, any kind of insurance you have follows you. So, say you’re on vacation. 10% of your coverage for your renters or your homeowner, for your contents is covered while you’re away from your home, on vacation, or if you have it in storage, if you have items in a like a storage unit, 10% of that coverage for contents for home or renters is covered as well.
So, there’s actually a lot of things that people don’t really think about. Usually not until they need it, is when they think about it.
Jenny
That’s awesome. But I wanted to ask about bundling as well. A lot of these insurance companies have these commercials where they talk about bundling, but that’s kind of what you were mentioning there. It was those package deals.
Amy
The bundling is it’s a really good thing if you include more than one type of insurance policy in the same insurance company. Most if not all companies will give you a discount. So, if you have your home and auto in the same insurance company, then you get a discount on your home and your auto. It’s called multiple policy discount.
It’s a good thing sometimes you’ll find, though, that your auto is super high or your home is with that company and it doesn’t benefit you to bundle them. But I would always check to see if you can insure them together. And it doesn’t have to always be home and auto. It could be renters and auto, it could be home and umbrella, which we could talk about a little bit later if you’re interested.
That’s a liability coverage. If you injure or damage somebody’s property, that’s your liability. That’s an umbrella policy. So, it could be any — or a boat policy or an RV policy. As long as there’s multiple policies together, that’s a bundling. And each policy will experience a discount. And discounts are great today. Discounts are we need discounts.
Jenny
Yes. For sure.
Amy
I’m a coupon clipper. And it’s the same with insurance as far as I’m concerned.
Jenny
And then we can talk a little bit about auto insurance. That obviously depends on a lot of factors as well. Things like your age, your driving history, the type of vehicle that you’re driving. What are some factors to consider when shopping for auto insurance?
Amy
Yeah, and right now auto insurance is really high. We have a hotline through our agency. I work in the consumer advocacy department. So, I listen to a lot of consumer calls and concerns about things. And so auto insurance right now is a hot topic mainly because it’s expensive. Right? It’s really expensive today. I don’t know about you two, but I know when my rates came in, mine increased, it increased substantially.
And so, the one thing that I do say, especially with auto insurance is: shop around. You know, it’s a product. I think we forget that insurance is a product that we purchase, that we are the customers for. And so, I suggest folks shop around for their auto insurance. There’s a lot of factors that go into it.
If you have young drivers, you’re going to pay more money. If you have accidents or tickets on your records, you’re going to pay more money. And then the different insurance companies look for different things. So, there’s some companies that are really interested in insuring teachers, for instance. And so, they’re going to gear their policies towards those teachers to try and entice them to their program or to their policy.
And so, shopping is a good thing. Multiple vehicles on a policy is going to give you a discount. I know it’s kind of hard to believe sometimes if you have two vehicles, it might be cheaper than having one vehicle.
Jenny
That is shocking.
Amy
I don’t know how many times people say: “I’m going to take my vehicle off and I’m going to save money” and I’m like, “oh, you might lose the discount, don’t.” So, you know, those are things that I have an insurance agent that I use. I’m an insurance professional. I know more than my agent does. However, I have an agent because I want that middleman.
I want that person I can talk to and say, hey, my premium went up by $100 a month, shop my insurance. She goes out, does her thing, tries to find me a better policy, can or can’t. And then I get to make an educated decision about what I’m going to do then. And, you know, these are costs that they’re not set.
We can’t rely on, you know, it’s going to be $500 a month for, you know, or $100 a month or $200 a month. It changes for auto every six months. And then for your home, it can change annually.
Jenny
Yeah. So, you’re talking about an insurance agent who basically you have someone who works as sort of like a neutral party, and then they can go out and do the…sounds like the insurance shopping for you.
Amy
Absolutely. So, our office also licenses the insurance agents. They’re now called producers. But we license the insurance agents and there are some insurance agents that only work with one insurance company. And then there are some that work with multiple companies. I’m an insurance expert, but I still use an agent because I want to have that middleman. I want to have that person who’s looking out for me when I don’t have the time to look out for myself.
And so, my agent, she’s great. I text her in the middle of the night. I’m sure she’s like, “Amy, please stop,” but I do. If I remember something in the middle night, instead of trying to remember it tomorrow, I text my agent. And I’m able to have that kind of relationship where she can tell me, you know, this is what’s coming down the pike.
You might see a rate increase. I like to have an agent, they’re the middleman. I look at it this way. My insurance company is the big department store. My agent is the salesperson. And that’s who I’m talking to. And I suggested, there’s some agents that will charge a fee. I don’t use an agent that charges a fee.
Jenny
Because that was going to be my next question is, what is something like an insurance agent cost? Except in your example, they’re not actually working for the department store. They’re working for like multiple department stores, basically.
Amy
Yeah, exactly. So, the great thing about my agent, I want to say she represents between 15 and 20 companies. So, imagine you either going on the phone calling 15 or 20 companies to get quotes or online, I forget online because online then you get all these messages constantly. But online, you know, going to all these companies instead of doing that.
I have one agent who will do that for me. She’ll go to those 15 or 20 companies, shop my insurance, present me to those companies, and whether or not I can get that better rate. And I just prefer that. And I’ve done many times I’ve done my own online shopping and I still get emails from quotes I’ve done online from a year ago where they’re still, you know… and I’m not interested in that.
So, you can check on our website to make sure they’re licensed and who they represent. And, it’s just for me, it’s, a benefit that I will always use, even though I’m an insurance expert.
Jenny
Yeah. So that’s what I was going to ask. If someone is looking for an insurance agent like that. Could they find a resource on the OIC website?
Amy
Yeah. On our website we list all of the licensed agents and their status. So, you’ll see how long they’ve been licensed, who they represent, if they’ve had any complaints against them. It’s all public record.
And to tell you the truth, the way I suggest people get an agent is talk to your friends to see who they’re using. Word of mouth is the best advertising, and I want to know if my friend next door is happy with their agent, because we don’t know until we actually have that relationship. So, I talk to my friends. This agent I have, I actually worked with her when I was an agent 24 years ago, so I knew that I could rely on this person.
Jenny
That’s cool. I’m going to have to check that out now. I mean, I feel like I have pretty good rates with my insurance company, but you never know, right?
Amy
And that’s the thing. So that’s the other thing. You know, we stay with the company, we have loyalty to a company and we’re not quite sure, you know, if we feel like, okay, this is in my budget, I can do this. There’s nothing wrong with checking to make sure. What we’re in right now, it’s called a hard market.
It just means things are really difficult. It just is. But before that period, every time I shop my insurance, I found a cheaper rate. And for me, I like that. Like I said, I’m a coupon shopper. I want a cheaper rate.
Seth
So, you mentioned that you listen to a lot of phone calls that come in or review a lot of calls from Washington state residents about their insurance. And I’ve actually learned a lot from listening to the OIC podcast about what your office does and how it works. But I’m curious, what sort of pitfalls do people run into, when they’re working with their insurance companies?
Are there common mistakes that that people make, when filing a claim, or when making assumptions about their insurance? Yeah, just curious from your perspective.
Amy
Yes. So, I’ve been with the insurance commissioner’s office for 22 years, and I’ve been in this type of position. I’m a senior compliance analyst. And so, what I do is look into complaints against insurance companies. And I think really the greatest service I do is educating the public on their rights and what they can do to advocate for themselves.
I think it’s so important that we have knowledge, then we don’t feel so afraid to be able to advocate for ourselves. The complaints we get are rates. “The rates are going up. They’re too high. What do we do? Can they really increase my rates 70%?” Those. We also get: “I’ve canceled my policy and they haven’t sent me a refund.”
That’s something we try and help with to get those… to figure out what happened. Or a lot of folks will contact us and say, “I think my agent’s lying to me.” Okay, we have a division for that. Or it might be a misunderstanding because a lot of consumers can feel like the agent is the insurance company. And that’s not actually the case.
And so, then they feel like when something happens that they don’t like, that the agent’s doing it, rather than the insurance company. Non renewals, right now with wildfires going on in eastern Washington, there’s a lot of companies that are either not writing new homeowner policies or they’re non-renewing homeowner policies because of those wildfires. So, we talk a lot about that.
For me it’s super important to hear what’s going on in the market today because our office does review insurance companies to see what’s going on, make sure they’re doing the things they’re supposed to, but in real time, when somebody calls me and says, my insurance company did this, if it’s something that I think needs to be looked into, I’ll contact the company.
I’ll ask them what they did, why they did it, and make sure that they’re following the laws of our state. We have, RCW 48 is the insurance laws, and then the insurance rules are WAC, Washington Administrative Code, 284. And so those are the things that we look at to make sure insurance companies are doing the things they’re supposed to.
Seth
You mentioned umbrella insurance. And I think the person who brought the idea of doing an episode about insurance, I think that was part of kind of where their questions were coming up about how do I know if I’m under insured or over insured, kind of just as a human being. I don’t know if that’s the right way to say it, but it’s definitely something people think about when they think about their overall finances.
And that’s what we talk about a lot in our podcast is kind of overall personal finance. And do I have enough insurance? Am I paying too much for insurance? Do I not have enough insurance? Like I’m just curious what your thoughts are on umbrella policies and how they work and why somebody might consider one or not.
Amy
Sure. So, the thing is we don’t give advice. So, I’m not a financial advisor. So, I’m not going to tell somebody you should do this, this and that. However, I would say that if you have the assets that should be protected in the event that something happens, that’s what an umbrella liability policy can do for you. So, when you have your homeowner’s insurance, you have that liability we talked about.
And that is if you damage somebody’s property, if you injure somebody, by mistake, your kid does something and damages somebody’s property, that’s all covered under your homeowner liability and then under your auto insurance; you’re an auto accident, you rear end somebody, you know, they get whiplash. That’s your liability. And so, with those two coverages, your home and your auto, it depends upon how much insurance coverage you are carrying.
But in order to have an umbrella which goes over the top of those two, you’d have to carry a certain limit of liability. It’s usually around $250,000 on each policy, your auto and your home. And then the umbrella is normally $1 million and they’re cheap. They’re just cheap. You know, most companies, you can get $1 million umbrella for $150 a year.
It depends. It depends upon your exposure. If you have kids that are driving bigger exposures, right? Might have more liability, more expensive umbrella. So, and those things are all taken into consideration if you have you know, RVs and you have All-Terrain vehicles and you have boats and you have rental houses and you have, you know, the more things you have, the more assets you have, the more you could lose, the more liability you might want.
And that’s when you think about whether or not you want an umbrella. I think an umbrella is a great thing. A lot of times folks mistake it for coverage for themselves, when in fact it is coverage for you, but it’s coverage to protect you against a lawsuit where you might lose your assets. It’s not something you can get because your house burned to the ground and you have $1 million umbrella. That’s not what it’s for. It’s for that liability where you’ve injured or damaged somebody, and now they might sue you to recover those damages or that injury.
Seth
In something beyond what my homeowner policy or my…
Amy
Exactly.
Seth
…or my auto policy would cover. Okay. That’s really helpful context.
Amy
Let me just say really quick. I have, in my time with the Insurance Commissioner’s Office, had many, many calls from folks and we think, “oh my gosh, $1 million, that’s a lot of money.” I just spoke to somebody who was in an accident and their injury is over $1 million. That’s just their injury, just their treatment, you know, LifeFlight, their hospital [bills].
That’s just their treatment. And so, if I damage somebody and, and I have my 250,000 liability on my auto and then I have my million umbrella, they’re still not made whole. Because that just paid their medical bills. It didn’t pay for their pain and suffering, their inability to live life the way they normally live life. So, it’s really not as great as it used to be I’d say. So, that’s why I don’t think it’s a bad thing. And I think it’s something that folks should consider.
Jenny
Yeah this is all really great information. And Amy, what do you wish is the one thing that people knew about insurance?
Amy
There’s a couple things, right? I like I was saying I really advocate for folks having knowledge. I can tell you that one thing with homeowner insurance is we pay into insurance, and we expect that when something happens, it’s going to be covered. And that’s not always the case because there’s some things that aren’t covered. And we just have to know that we have to look at our policies. You know?
Jenny
Like you said, earthquakes and floods are a big one. Floods from natural disasters.
Amy
Or if my hot water heater has been leaking for a month and I didn’t know it, it’s not covered. And a lot of folks don’t know that. And I’ve seen some instances where folks have had no coverage because they weren’t aware or something happened, and it’s just not covered under a homeowner policy. So, I wish folks had a better way of getting more information about how the policies work.
It’s not an easy thing. You know, insurance policies are legal language. They’re not, you know, black and white, A, B, C little kid can understand. And like I said, I’m guilty of it too. When I get that renewal, sometimes I look, sometimes I don’t. Sometimes I just look to see what the price is. But it’s so important that we review those things and we go to our agent when that agent emails you or text you or calls you and says, “let’s review,” review, do it.
I went to the Eastern Washington fires, the Medical Lake fires, it was the Gray fires and the Oregon fires. And I’ve never experienced this, not in my 22 years in regulation. Every single person I spoke to was under insured. Everyone, so 100% underinsured. And a lot of folks said, “I never spoke to my agent. I never did the reviews.”
I never increased my coverage even though I built a garage. I’m actually guilty of that myself. I built a garage and I didn’t tell my agent. And she came over one day and she’s like, “Amy, when did you get the garage?” Whoopsie. You know, that’s probably the biggest thing. Talk to your agent when they send you that renewal notice that says, let’s talk about your insurance. Do it. Talk about your insurance. Yeah. It’s your financial well-being.
Jenny
And it sounds like obviously the other piece is just to have an agent.
Seth
I mean, I really appreciate your honesty and that that those are things that you should know. And I think as you’ve been talking, one of the things that really struck me is insurance is something we interact with so infrequently. It’s hard to know and learn these lessons. I mean, these are things I think about, like, I check in maybe with my parents about because they had something like this, or you talked to a friend or a coworker who’s dealing with a flooded kitchen and learning about what the insurance process was that they went through.
Like those sorts of things are really good learning opportunities. And one of the reasons we wanted to have this episode is to at least get people thinking and talking about. I’ve already written down a list of notes of things I need to go talk to my agent about. Who, I just happened to select because he was a friend I went to high school with, and when I bought a house, I knew I needed to get home insurance.
And so, I contacted the one person I knew that could help me with the insurance and, like, that’s as much shopping around as I did. And I think being able to have these conversations and think about how are other people doing it and what can I learn from them on how I’m doing this as well?
And just, you know, like you said earlier, this is why we have this podcast is to try to encourage more of these types of conversations amongst people.
Jenny
Yeah. And it goes back to why it’s so wonderful that there is an Office of the Insurance Commissioner that people can go to for these particular resources. So, what is the web address for OIC?
Amy
Right. We have all kinds of resources on the web. We also have a live chat when we’re there Monday through Friday. And we have complaint form ask a question form. And it’s super easy. It’s insurance I-N-S-U-R-A-N-C-E dot W-A Washington dot G-O-V gov. So insurance.wa.gov.
And then we also have a toll-free hotline. It’s nationwide. So, we get lots of calls by mistake from other states. But it’s 1-800-562-6900. And the best thing I think about the hotline is you will always speak to somebody.
We have a great section in our consumer advocacy. We call them the crew section. They’re just super. And they, answer all the calls and then they transfer you to the experts. And so, you might call and you might speak to me on home and auto or business insurance, pet insurance, travel insurance, all the insurances.
Seth
That’s great. And I want to make one more plug for the OIC Answers podcast. It has been just a helpful way to learn about insurance in general. I really appreciate that your office is doing that. I’m sure wherever you find your podcast, wherever you’re listening to this podcast, you can go and find, the Office of the Insurance Commissioners’ podcast as well.
Jenny
Yes. So, it’s called OIC Answers on Insurance. And I was going to ask, is it specifically for people in Washington state or is it a general nationwide insurance podcast?
Amy
Yeah. So, the podcast is for Washington State. You can certainly get information for other states. The thing is every state’s laws are different. And so, it would be really general information if you were in another state. But it’s specific to Washington State.
Jenny
Perfect.
Seth
All right Amy, thanks for joining us.
Jenny
Yeah. Thank you so much for the information. I’m going to go have to shop around for an insurance.
Amy
Right. I know, and I might text my agent because I know actually my next renewal is coming up here pretty soon. So yeah. Thanks for having me I appreciate it. Yeah. Nice talking with you.
Jenny
Thank you.
[music outro]
Disclaimer
Thanks for listening. And now we’d love to hear from you. What topics would you like to hear about? What questions do you have for us? Send an email to drs.podcasts@drs.wa.gov that’s drs.podcasts@drs.wa.gov. The Department of Retirement Systems provides this podcast as a public service, but it’s neither a legal interpretation nor a statement of DRS policy.
References to any specific product or entity do not constitute an endorsement or recommendation. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by DRS employees are those of the employees and do not necessarily reflect the view of DRS or any of its officials.
