This story should be proof for the rest of you who don’t regularly compare prices on things.  Never assume that you’re getting the best rate.

Our car insurance had been with State Farm.  I have been a customer of theirs for close to a decade.  As of August (when the home owners insurance renews) I will no longer be a customer.  Why?  Because, what I found in my checking is that they were tied for most expensive auto insurance.  And the home owners wasn’t much better.  Of course, your results may vary and the insurance company for us isn’t necessarily going to be the company for you.  I know that when I originally signed up with State Farm, it was because the price comparison tool at Progressives website pointed to them as being the cheapest.

I find it ironic that the insurance company that we’re moving to is Progressive.  We’ll be moving our Home Owners policy to someone else.  Progressive was almost exactly 50% cheaper than State Farm.  50%!!!  In fact, the total for 6 months for all three vehicles that we insure was just barely more than it was for just one of them at State Farm.  That’s pretty incredible.  A bit of trivium; our new ins. agent mentioned that he’s moved 11 clients from State Farm to Progressive in the last month or so, and that about 6 Progressive clients have moved to State Farm.  I mention that to concrete the idea that the right insurance company for one person isn’t necessarily the right insurance company for another.  With all the variables that they take into account, it’s hard to say which will be better unless you do some shopping.

Another interesting note from the adventure.  Previously, I went to a State Farm agent and got my insurance.  This time, I went to an insurance agency.  They’re independent for the most part and have access to several insurance companies to quote from.  That makes it much easier to shop around, as they will do most of the footwork for you.  All you’ve got to do is check any companies that you’d like quotes from that the agency doesn’t have a relationship with. In our case, Allstate was probably the biggest one that the agency didn’t have to quote from.  I used Allstate’s online quote tool and found it to be on par with State Farm.

So, lesson learned.  Shopping around is good.  It can help you find the best deal when you’re buying just about anything.  But, if you’re buying a service, remember to shop around periodically and compare the service that used to be the best deal to make sure it still is.  You just might do like we did and save 50%.

Check Your Car Insurance is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

Now, let’s look at insurance companies.  We, as the insured, pay the insurance company our premiums in return for insurance against some sort of event.  With health insurance it’s against some sort of health event.  With car insurance, it’s against some sort of accident.  In any case, it’s a payment.  Or a return on the premium.  Very seldom will you actually come out with your entire investment.  What would happen if the premium payers dried up?  It would get more difficult for the insurance companies to pay any claims.

Where the key difference lies is that if you stop paying your premiums, they stop paying any claims for you.  Also, as a premium payer, you never really expect your money back unless you have a claim.  You’re paying for the “in case”, if it were to happen.  In a Ponzi, you’re investing your money specifically for the return.  You’re not going to stop investing as long as the returns are stable.  And a Ponzi only really dies when the new investors stop coming.  If new insured stopped coming to the insurance company, they would still have their current insured to collect premiums from.

So, no.  Insurance companies are not Ponzi Schemes.  But, it sure feels that way sometimes.

Photo Credit: Showmeone @ Flickr

Are Insurance Companies Just Big Ponzi Schemes? is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

I don’t know about you, but I don’t intend to read a 2000 page document.  Especially since I have little to no chance of understanding about 90% of the legal language involved.  So, it was nice to find this Health Care Reform graphic.  It’s got a nice timeline of the important dates and the important changes that happen on each date.

Health Care Reform Details Graphic is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

My biggest concern is the cost of health insurance.  My company covers a significant portion of our health insurance, but if rates rise, they very well could pass that expense on to us.  If that happened, I don’t know if we could afford it.

Many people are lauding this bill and saying how great it is that people can’t be denied because of pre-existing conditions and that there is no more cap on payouts.  Yes and no.  Yes, I think there should be something available to even those with pre-existing conditions.  But there already was!  Now, the insurance agencies are going to be forced to cover them just the same as their low risk customers.  I don’t have any solid numbers, but my math says that will make my rates go up.

Does anyone else understand any of that differently?

Will Health Insurance Rates Rise Now? is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

The most obvious place where this could be true is with insurance.  I’ve been with my insurance company for about 10 years.  When I first purchased the insurance, I did a fair amount of shopping around and comparing and bought the insurance that was the best fit.  Since then, many things have changed.  I got married.  We’ve had two children.  We bought a house.  We both turned 25 several years ago.  All of these things could easily cause some drastic changes that really warrant a new comparison.  But, we never did that.  It’s time we did.  Over the next few weeks, I’ll be doing a bit of shopping around for better insurance rates and coverages.  In particular, our home owners insurance seems much higher than it should be.

The other thing that I really need to look into (and should have a while ago) is the mortgage on our house.  We managed to buy our house when rates were good.  We’ve since added a second mortgage that is about 25% of the original mortage’s size.  The rate on that is not as favorable.  (9% ish)  So, I need to look into whether refinancing the whole thing and rolling the two together might help us out with a lower overall rate and maybe even a lower payment.

That’s just the two things that came up recently.  I’m sure there are plenty of other things that need to be checked regularly that I and others do not.  What are the things that you check regularly to save money?

Adjustments to Make (Price Checking) is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

The business that my wife and her friends started continues to do well.  They received a very important certification from the state that will allow them to pick up another line of business and expand even further.  My wife continues to be the only one getting a regular paycheck from the company, but with this new certification, that will likely change very soon.  Luckily, the people that she’s working with are both very qualified for the business that they are in and have plenty of experience (my wife does to) so they don’t have much in the way of learning curves for the actual service that they provide.  Their biggest learning curve has been the actual running of the business.  They were smart and got a lawyer and an accountant right away though, so they’ve had excellent guidance along the way.

Also, I did receive a small raise this year which should help.  However, between the insurance and some increases in medical flex and childcare flex, my checks will likely be smaller than they were in 2009.  Most of that should come back through the flex accounts.  Tax free money for the win.  Especially on things like childcare that you’re going to spend money on anyways!

My Wife Quit Her Job: End of Year Update is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

Since my wife quit her job, we’ve been paying for Cobra health insurance to continue with the coverage that we had.  It was a bit of an increase since you pay for the company portion as well as what you would have normally paid, but we had already met our deductible and it pays 100% after that.  That full coverage bit helped us justify the extra couple of hundred that we had to pay each month.  But earlier this week, we got a letter from my wife’s former employer that informed us that the cost of the insurance would be going up and that beginning on the 1st of September we would have to pay that.

I probably don’t have to tell you that the increase puts an even deeper kink in our financial situation.  We may have to lose the 100% coverage in exchange for the plan that I get from work.  It’s only marginally cheaper than the original Cobra price, but even more so now that we’ve been hit with this increase.  The only part I haven’t worked out is if we would be better off keeping the Cobra coverage until the end of the year.  Any new deductible that we might have to meet may offset any extra premiums that we would have to pay.  Decisions, Decisions.

On a brighter note, the business that my wife and her friends started is still doing well.  She’s even expecting to get her first paycheck from the new company this month!  Certainly not a full paycheck, but getting closer.

My Wife Quit Her Job: The Hits Keep On Rolling is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

One of the subjects that came up in the process is the subject of home owners insurance.  As we discussed it, I mentioned what we were currently paying.  And then the discussion really started.  Turns out, our loan officer thinks that we are over paying by quite a bit.  By about 40% if the loan officer is even close to correct.  Ouch.

When we bought our house, the insurance was the last thing on my mind.  When the day came to sign all the paperwork, the loan officer that we were using at the time (not the same one we saw the other day) asked for the proof of insurance.  Which I did not have, because I had not gotten the insurance yet.  I didn’t see the purpose in insuring a house that I didn’t technically own yet.  I was wrong.  I couldn’t take ownership without proof of insurance.  Two very quick trips to the insurance agent that has our car insurance account later, I had my home owners insurance, and was able to sign the paperwork and take ownership.

In my haste, I took what I could get and what the agent suggested.  Because our house loan has an escrow account, I never really see the bill for the insurance.  It never really got brought up, and it just continued on it’s merry way.  I fell prey to a common personal financial mistake.  I didn’t shop around.  And I didn’t revisit my policies to check for pricing and coverage.

Committing that mistake may only be costing me a few hundred dollars a year.  I say only, because it could certainly be much worse.  Now, as we begin shopping for a new house, we’ll also be shopping for insurance.  Depending on what we find, we may be changing agents.  We may even change agents for the auto coverage as well since we’ll be shopping that around as well.  It doesn’t hurt to look, right?

I know I’m not the only one to ever fall victim to this error.  If you’d like to share your story, you can in the comments below.

Do You Shop Your Insurance? is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.