F#$%k Flo: Shopping for Insurance

When The Curmudgeon’s auto insurance renewal package arrived and the proposed annual premium started with the number “2” he realized it was probably time to shop around and see if he might find a better deal.

And what he found, and learned, opened his eyes.

The Curmudgeon’s auto and home insurer since his third month or so living in New Jersey has been Liberty Mutual. As insurance companies go, Liberty Mutual is very customer-friendly: readily available staff, amenities like emergency road service and publications, and installment plans, which some companies don’t offer at all. The Curmudgeon counted himself a satisfied customer.

He stumbled upon Liberty Mutual accidentally. When he moved from Philadelphia to New Jersey he assumed his auto insurance would cost less since insurance for Philadelphians is notoriously expensive. He was surprised, then, to find that his premiums increased rather than decreased when he crossed the river. He also got the sense that whomever he spoke to with his previous insurer (AIG, he thinks) didn’t quite understand the concept of a condominium and that he might not have the insurance he really needed to protect his home.

This subject arose about a month after The Curmudgeon moved to New Jersey, at a family Christmas party. Those gatherings were unusual: The Curmudgeon’s brother is Jewish and his (now-ex) sister in-law is Catholic and the families spent all of their holidays together, but at the Christmas gatherings there were lots of stray Jews around. You know the type: they don’t bowl, eat Chinese food, or go to the movies, so they have nothing to do that day. As a result, the parties could have as many as two or three Jews for every Catholic (nary a Protestant in sight as far as The Curmudgeon could ever tell). The Curmudgeon always made a point of wearing a red shirt at such gatherings – not that The Curmudgeon ever needs a reason to wear red – to show his conviviality in an outward way that his naturally dour demeanor usually fails to reflect. Anyhow, when he mentioned his insurance dilemma several people at once told him to call a certain agent at Liberty Mutual and to mention that he’s “with the federation.” “The federation” is short for “the Jewish federation,” a local group that apparently had a discount relationship with Liberty Mutual. The Curmudgeon made the call, sat down with the (Italian/Catholic) agent, and saved nearly $1000 on his auto insurance and verified that his previous insurer had, in fact, failed to interpret condo needs appropriately. The new agent fixed that as well.

And so The Curmudgeon lived, a happy Liberty Mutual customer, until his renewal policy arrived with the annual premium that began with the number “2” and inspired him to do a little shopping to find out if he really needed to pay twice as much for auto insurance as he had a dozen years earlier.

Shopping for insurance is certainly a lot easier than it once was. Now, you do a lot of the work online and avoid talking to unctuous, aggressive sales people, and since The Curmudgeon has bought cars online, he was certainly comfortable shopping for insurance online.

But first he had to figure out if he had the right amount of coverage, so he turned to his brother, who works in the insurance industry. The Curmudgeonly Brother reviewed the current policies and gave them a thumbs up, freeing his brother to do his shopping, knowing first, that he had the right amount of coverage, and second, that he could get genuine apples-to-apples comparisons of premiums from different insurers.

floOf course The Curmudgeon started with Flo. You’ve all seen her: the ubiquitous and increasingly annoying in a running-out-of-ways-to-say-the-same-thing-yet-again Progressive shill dressed in white. Working through Progressive was an interesting experience because Progressive does sales backwards: while almost everyone who’s trying to sell you something is trying to sell you more of whatever you’re buying, Progressive is very happy to sell you less. Maybe even eager to sell you less. That’s what “name your own price” is all about: if you think what Progressive is selling costs too much, ask the same questions again and it’ll give you a lower price.

How? By selling you less insurance. Of course, if you’re asking for a certain amount of coverage and someone proposes selling it to you for less that may seem like a good thing, but it’s not: you’re voluntarily under-insuring yourself.

And that’s not good.

The Curmudgeon kept going to Progressive and got a bunch of quotes, all of them different, but when he insisted on getting what he wanted, as opposed to what Progressive wanted so it could sell it for less, he was quoted $748 a year for auto insurance.

Which was less than half of the $2000 Liberty Mutual wanted from him.

A pretty sweet deal.

But there was a problem with Progressive: its online rate generator couldn’t handle condo insurance at all. Based on the questions it asked it was clear that any quote The Curmudgeon received would be wrong, and too high, because when you own a condo, your condo association takes care of the building exterior coverage you need when you have a house. Progressive’s numbers clearly weren’t reflecting this.

So The Curmudgeon wasn’t finished.

Next he turned to GEICO, his very first insurer when he left his parents’ plan about a hundred years ago. GEICO quoted him $784 a year for auto and $718 for homeowners. Another time it quoted him $920 for auto.

Now let’s take a brief detour into those all-inclusive web sites that supposedly send you quotes from a bunch of different insurers.

They don’t.

Simply put, The Curmudgeon filled in all of the boxes and hit “enter” with the expectation that he would hear from a dozen or so insurers all eager to take his money. Much to his surprise, he heard from just one: Allstate. The quote was a strange one, though: more than $1000 a month for auto, which was high, but only $362 a year for homeowners, which was good. Since he had a good quote from Progressive on auto and now had a good quote from Allstate on homeowners, he thought he might pair the two and contacted an Allstate broker by email and then by phone. The person who answered his call said she’d put him directly through to a broker, but after 15 minutes on hold The Curmudgeon hung up the phone and sent an email saying they wouldn’t be doing business. He then received an apologetic email from Allstate offering to set up a time to talk.

In the evening, The Curmudgeon insisted.

Day and time were set, by mutual agreement.

And now, months later, he STILL hasn’t heart from that agent. (Which sort of reminds The Curmudgeon of the computer he ordered from the old CompUSA chain around 1992. He came to the store, placed the order, and now, 24 years later, still hasn’t heard from them and no longer expects that call because the company went out of business – deservedly so, in light of this experience – in 2007.)

But since the homeowners price was a good one, he decided to find another Allstate agent, who offered the same price for homeowners but did a little better on auto.

So The Curmudgeon ran the Allstate quote by his brother, the insurance industry professional, whose email reply was clear and to the point: “I’m not a fan of Allstate. They do not have a good reputation in the industry. If another company comes close in premium, including costing more, I would go with them.”

So The Curmudgeon scratched Allstate off his list and, at his brother’s suggestion, tried Hartford, another past insurer of The Curmudgeon. Not a good move: $650 for homeowners and nearly $1500 for auto. Very, very high.

The Curmudgeon was now pretty sure he’d go with GEICO for both, but he had one more call to make: he wanted to share what he had learned with Liberty Mutual. His agent has long since retired but he called the old agent’s phone number and was directed to a broker: not one in that office, which is less than ten minutes from The Curmudgeon’s home, but a national call center. He spent some time with a broker there and received two quotes: a homeowners quote that was the same as the one he had received from Liberty Mutual by mail and a new quote for auto insurance of $876 a year: less than half of the $2000 quote he had received by mail.

Huh?

Why the enormous difference?

(Surely you knew there was going to be a point to this tale beyond simply telling a story. Well, it’s finally arrived.)

The Liberty Mutual representative explained that Liberty Mutual only re-prices existing auto insurance policies when customers specifically ask for that auto insurance to be re-priced. Otherwise, it just tacks on an increase and sends you a bill.

Say what?

That’s right: you’re a customer, you’ve been paying premiums for years, but unless you specifically call and ask to have your policy re-priced, the only way it can go is up.

And since The Curmudgeon asked? Cut by more than half.

Was he supposed to be happy? Was he supposed to be grateful?

He was neither. What he was, in fact, was one seriously pissed-off Curmudgeon, realizing that in addition to the immediate savings he would realize, he also has probably spent thousands of unnecessary dollars in the past decade because of Liberty Mutual’s arguably unethical practices.

Someone who is far wiser than The Curmudgeon, upon hearing this story, told him that this is known as “the loyalty penalty,” in which someone you patronize takes your business for granted and takes advantage of you.

So there’s a lesson for The Curmudgeon – and for you, too, if you wish to take it: don’t trust you insurer. Get fresh quotes every year or two.

As for The Curmudgeon, he has one more piece of business with Liberty Mutual: he’s writing to the New Jersey state insurance department to ask whether what Liberty Mutual does is legal.

He already knows it’s unethical.

Caveat emptor: let the buyer beware.

And oh, yes: F#$%k Flo.

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