Should I spend more on home insurance for a better agent and better coverage?
March 4, 2011 11:30 AM   Subscribe

Home insurance: better coverage or cheaper coverage? State Farm and Allstate are cheaper, but an independent insurance agent says his (more expensive) coverage is much better. I'm wondering which company I should go with.

We're buying a house in Philadelphia for around $210k. Both Allstate and State Farm have offered coverage at between $240k and $280k. They're both charging in the neighborhood of $1600 for combined home and auto insurance. Allstate requires a 2% copay for tropical cyclones (which the independent agent doesn't like). Looks like State Farm covers this but has a 1% deductible. The independent agent is offering insurance through Erie for $2200, which he says is far better coverage (for example, there is apparently no ceiling on cost to rebuild).

I'm really at a loss at which coverage to choose. We're already with State Farm but haven't really been thrilled with our agent (although I'm aware we could switch). Allstate is basically an unknown. I talked with the independent agent for over an hour a few days ago. He's likable, really seems to know what he's talking about, and is very responsive and engaged. He insists that his coverage is the best even if it isn't the cheapest, and that his covers every possible cause of damage except for nuclear and war (and, of course, flooding) while other insurance companies only handle a set list of "perils". If it was only a matter of a hundred or two hundred bucks I would go with the independent agent in a heartbeat -- I like that the insurance company is local, and he sounds like he really cares about his customers. However, $800 is a big enough difference that I'm not convinced. Also, aren't State Farm and Allstate pretty decent home insurers? I've looked for reviews online but it's surprisingly hard to find good reviews.
posted by anonymous to Home & Garden (10 answers total) 7 users marked this as a favorite
I've worked for two different insurers in two different capacities--customer service and in-house counsel--and now do insurance defense work, so I'm pretty familiar with the industry. While it's going to be impossible to give a definitive answer without reading the actual policies here, it sounds like this guy is full of crap. Obviously this agent wants to sell you the more expensive policy. He gets 10-15% of the premium.

The vast majority of homeowner policies are all-risk, not named perils. State Farm and Allstate do a perfectly fine job, all things considered. Erie does too--my old employer competes with them--but they're a smaller carrier, and smaller carriers can't spread their risk quite as far and thus tend to have slightly higher rates. The claim that they're offering way, way better coverage seems pretty exaggerated, and even if it's true, may be irrelevant. The inclusion of a $5000 allowance to refill fire extinguishers or change your locks may be additional coverage, but it isn't something you're ever going to use.

Again, it's really going to be hard to know which policy is actually better without seeing the actual forms--which most agents are loath to provide--but I'm pretty suspicious. See if you can get a second opinion.
posted by valkyryn at 11:40 AM on March 4, 2011

Contact State Farm and Allstate again and ask them if their base policy is a Basic, Broad, or Special Form. If they Special, that's what the Erie guy is trying to sell you. If they say Basic or Broad, ask for a new quote that is Special.
posted by rainbaby at 11:45 AM on March 4, 2011

There are two different questions:
1. Which insurance companies are the best to buy from? That has to do with their financial reliability, ease in handling claims, and generally if they are helpful or jerk you around. I think Consumer Reports did a review of this - if they have one, it is worth paying for the on-line fee to check it out. There are also companies that specialize in rating insurance companies (Best, I think??)

2. What does their standard policy cover or not cover? We bought a high end home, the agent came back with plan which provided coverage for kidnapping (pretty useless) but also for the home electronics that run our lights and thermostat (much more useful). So, you would want to get a copy of what is covered by each policy and do a line by line comparison in terms of what items and what perils are covered.

State Farm and Allstate are both decent by criteria #1. Your agent's policy is probably much more comprehensive by criteria #2, but you have to decide if the additional coverage is worth the cost.
posted by metahawk at 11:47 AM on March 4, 2011

For what its worth I have had Allstate for both home and auto insurance for the past ten years. I have had to make a claim for both the home owners and vehicle policy within the last 2 years. Both claims were smooth and simple. For the home owners claim they didn't even come out too look at the damage, did not even require me to get multiple quotes. The auto claim was just about as simple pulled into one of there centers they looked at the damage and issued me a check right on the spot which ended up covering the repair in full even after my deductible (although that may be more of testament to the shop I used). I have not shopped around lately but I know when my wife was my girlfriend she had Geico for her auto insurance and switching to Allstate saved her about $200.00 per year. Out of all the companies I have to write a check to each month Allstate is pretty close to the top in terms of customer satisfaction.
posted by jmsta at 12:24 PM on March 4, 2011

How on earth can there be no ceiling on the cost to rebuild? These plans are priced at their maximum out of pocket, so this sounds like snake oil.

One question: Despite what you may have paid for the house, is $260K enough for you to rebuild?
posted by fusinski at 1:19 PM on March 4, 2011

This is totally anecdotal, but when my wife was going through a personal injury claim against Erie (for an auto accident) a couple of years ago, our attorney was very clear what he thought about Erie, and it wasn't good. All insurance companies are going to look for outs to avoid paying claims, but he felt that Erie was particularly aggressive at it, at the expense of the injured parties.

Is it possible that Erie, not having a significant in-house sales team, pays higher commissions than Allstate or State Farm?
posted by COD at 1:37 PM on March 4, 2011

Have had State Farm for years - they've paid promptly on claims, didn't jump my rates on car stuff after fender bender, adjuster went to bat for us to get us more than we were covered for when our chimney blew down. My understanding is that they haven't been so good in places like Florida post hurricanes but my experience in Michigan has been very good and my current agent is first rate.
posted by leslies at 1:50 PM on March 4, 2011 [1 favorite]

My State Farm experience has pretty much mirrored leslies' experience. Our agents (one retired and now we have a new one) have been responsive and prompt and every claim we've made has been paid.
posted by cooker girl at 2:33 PM on March 4, 2011

Salesman lie, more often out of ignorance about their products than outright attempts at deception. But with an insurance policy you need to be informed about the policy's ins and outs, and it doesn't sound like that agent is making things clear. I'd find a different agent. We've had State Farm for ages, without a claim, but our agent has been very helpful and took the time to explain everything as we went along. We've added things here and there and each time he's done a great job explaining it.
posted by wkearney99 at 5:17 PM on March 4, 2011

Echoing others re: State Farm. I've had auto and homeowner with them for about 15 years. I've only ever made one claim, after a fender bender. It was handled quickly, without hassle and my rates didn't go up.
posted by Short Attention Sp at 4:17 AM on March 5, 2011

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