While many people see insurance as a necessary evil to address and move on from as quickly as possible, the fact is that not all insurance is created equal. You will have coverage (which may cover you correctly or may leave gaps in your coverage), you will definitely pay an insurance premium……but when you really see the difference is when it comes time to pay out a claim. Which is the entire reason you have insurance to begin with, right? Therefore….shouldn’t the financial strength and ability of that company to pay your claim really be your primary concern at the beginning of the insurance-choosing process? We think it should.
Here is an Insurance 101 nugget of learning. There are two main “markets” of insurance: standard markets and non-standard markets. A standard market (also called an admitted carrier) is an insurance provider that is backed by the Virginia Guarantee Association while a non-standard (also known as a non-admitted carrier) is not backed by the Virginia Guarantee Association. Why does this matter to you?
Well, living near the coast, we get multiple coastal storms per year (some are named hurricanes, some are tropical storms, some are heavy rain and wind…but we get them nevertheless). Many of these storms cause extensive damage to homes, businesses, automobiles and property. Then, factor in your claims that happen as a matter of just living life completely apart from claims that impact entire regions of the country. Now, imagine how many people file claims after storms. Probably a fair amount, right? So…what happens if the insurance company runs out of money to pay out the claims? You have paid your premiums so you expect that when you call your provider that you will get your claim paid. However, if you have a non-standard insurance provider….they are not backed by the Virginia Guarantee Association…meaning that there is no guaranteed financial backing that YOUR claim will get paid. That’s why it matters what provider you have. If you are with an admitted, or standard market provider, regardless of that company’s claim payout in a specific area…you are guaranteed to get your claim paid regardless of that specific company’s financial solvency. Pretty important, right?
Some voice the opinion that, “How often does that really happen? Do we really need to worry about claims payouts on such a large scale? It’s unlikely that a non-standard market would run out of money.” But the reality is that just isn’t true. And besides….do you really want to take that gamble if you have the option for a guaranteed payout? Why would anyone choose that? If you have paid for insurance for your home, auto or FLOOD policy….you want the claim paid.
Let’s take a look at just a few statistics:
- Hurricane Andrew hit Florida in August of 1992. This storm broke the expectations of insurance companies and communities in terms of the amount of damage that a single storm could produce. Insurance claims paid out $15.5 BILLION. Hurricane Andrew hit a large area, very intensely, causing massive damage…and insurers had massive claims payouts.
- Hurricane Katrina hit southeastern Louisiana and impacted a large portion of the East Coast. Katrina is noted as the worst insured loss event in the history of insurance anywhere in the world…and hurricane Rita followed just a few weeks after (http://www.insurancejournal.com/news/southcentral/2015/08/26/379650.htm). Hurricane Katrina resulted in an estimated $41 BILLION worth of payouts between all the states that were affected. There were more than $1.7 MILLION insurance claims filed from this hurricane. That’s a LOT of payouts.
Maybe it’s more common than some thought…..
So what do you, as subscriber of insurance need to do? Here are a few tips to make sure that YOUR home and family are covered:
1-) Be objective about price. Just because a company gives you a policy quote….that does NOT mean that it includes a tailored assessment of what YOU and YOUR family need. Looking at one quote with a higher premium and another with a lower premium and choosing the lower price merely for the sake of price is about as smart as thinking that spending a dollar on your Dollar Store jeans will be the same as paying a little more and buying a quality product from Levi. You can choose either one…but I don’t recommend the Dollar Store jeans if you have any intention of sitting down (aka: ever relying on using your insurance).
2-) Ask questions. Seriously, if your agent can’t answer your question or isn’t willing to go find the answer…you have the WRONG agent. They either don’t have the experience to know or they don’t care enough to go get the answer for you. Either way, that’s not the person you want when it’s claims time.
3-) Know who’s got your back (ing). Ask who the financial backing is for the carrier you are choosing. Ask if it is a standard or non-standard company. Ask what the rating is. Google the company. For example, Nationwide Insurance is a Fortune 100 company, is an admitted (standard market) carrier (and is therefore backed by the Virginia Guarantee Association).
At The Choice Insurance Agency, we work as a brokerage with access to an assortment of A-rated insurance markets. We will be happy to answer your questions and explain your coverages. We offer customized, tailored policies to meet YOUR needs and professional, licensed staff to help with your policy from start to finish. And, we are your local, personal source for service and follow up questions.
The Choice Insurance Agency. We’re on YOUR side. 757-416-5100 .
The Choice Insurance Agency’s mission is to help you get from where you are to where you want to be financially by planning, achieving your plan and protecting your plan from unexpected events. In the process, our goal is to deliver insurance services in a manner that exceeds your expectations. See what The Choice Insurance Agency can do for you today. Give us a call at 757-416-5100 to speak with one of the licensed, professional members of our team or request a contact here. The Choice Insurance Agency. We’re on YOUR side. 757-416-5100 .