Trade Secrets Of An Insurance Agent: 8 Things Insurance Companies Don't Want You To Know

In June 2006 I took a call center job that I thought would be just like all the rest: take some calls, placate some customers, sell people some things that they probably could do without. You know, the usual. But one week in, it became clear -- there was nothing usual about working in a call center of a major insurer. Especially this one.

It was less than a year since Katrina and we were still taking a hit. Apparently, that happens when you're one of the largest insurers in an area that's in the eye of a natural disaster. What was a bad time for Louisiana -- and our company for that matter -- turned out to be a blessing for me. It gave me a crash course that could end up saving me hundreds of dollars and a whole lot of time.

Here's some things I've learned that you should know:

1. All insurance works the same.

It doesn't matter if you're talking about life insurance, health insurance, homeowner's insurance or auto insurance. All of it works under the same principle. It's a co-op. Every "member" pays in with the hope that they'll never need it. But if they do ever need it, the funds are there.

2. Most insurance agents have no idea how the claims process works.

Agents are sales people. They generally know only what it takes to sell you the policy. In most insurance companies, the claim adjusters are the ones responsible for handling the interpretation and implementation of the terms of the policy. Most agents do good to be able to explain what the basic terms mean. It's shocking how many agents can't explain what "liability" or "uninsured motorist" coverage means. After all, in most states it only takes one course to be licensed for each type of insurance you sell. And that one course is usually fairly short. For instance, in North Carolina 20 hours will get you a license to sell any line of insurance.

I remember a year into my tenure that we went through what the company termed "re-tooling." It was supposed to be a refresher course. The trainer was going over an example of how underinsured motorist coverage is applied. She'd just finished when an astonished voice rose up from the back of the room. "When did they start doing that?" I could tell from the look on her face that they never started doing that. That's the way it had always been. But the kicker was -- the guy who asked the question had been working for the company for seven years!

3. The name really does matter.

I usually don't put much stock in brand names. However when it comes to insurance, I now advocate selecting one if you can. Even if they never tell you and there's not an official discount, most larger insurance providers will give a better rate to defectors from certain competitors. Caution: Before you run out to get a quote, check your policy. Not all State Farm, Allstate, Progressive, or Geico policies are created equal. Find out which company name your provider wrote your policy under. That's the only way to get an accurate idea of the price to switch.

Speaking of switch: Having a well-established carrier can also help make switching less painful. Most established carriers participate in databases that will give the new insurer what they need (i.e. length of prior insurance, number/type of prior claims, etc.). If the new insurer can't get it from the database, you will have to provide it if they need it or pay a higher rate. (If you do need to provide it, don't panic. There is a way to get proof with minimal bloodshed.)

4. Worry about incidents, not points.

Points are a license thing. And really, in most states, has little to do with insurance. I've taken countless calls from people saying, "They told me there wouldn't be any points on my license so my insurance rates wouldn't go up." I'm still unclear about who they are. But, it's clear they lied. Or maybe their information is outdated. These days risk is determined primarily by the number of things that have happen. You know, the number of accidents, tickets or claims.

5. Don't carry the state minimums.

Every state has its own insurance requirements for automobile owners. But here's the thing: If you do only what they require, you will more than likely not have enough coverage to help you if you cause a serious accident. Think of it this way, when Tiger Woods crashed last year, it was estimated that he caused about $3,200 in property damage and all he hit was a fire hydrant. If he'd hit, say, a fire hydrant and another Cadillac, and was only carry the $10,000 minimum that the state of Florida requires, he'd be screwed (or at least a few thousand dollars poorer because he'd have to pay for the damage himself). Besides, raising the liability limits on your policy usually doesn't cost that much more. Plus if you carry the higher limits long enough, you'll probably find that it actually becomes cheaper than carrying the minimums.

6. Pay off the mortgage. Keep the insurance.

OK, this should be commonsense. But it amazes me the number of calls I've taken from homeowners who have no mortgage on their home and are carrying no insurance. Normally, they're only calling about it because they've decided to take out home equity loans and the lender is requiring it. Here's the thing: Most insurance companies don't like issuing insurance on homes that aren't currently insured. They have trust issues. They tend to wonder: Is this person planning a house fire?

7. Don't call the claims department with 'what ifs.'

So, you heard a horror story on the news and you want to find out if you're covered? Great. There's an easy way to do that. READ YOUR POLICY. If you can't find it, call the customer service department and get them to send you a copy. It sounds mean, but it will save you money. The people in claims are trained to document EVERYTHING. That's why they won't talk to you if you are not a current customer. If you call, they will most likely enter it as a "zero" claim. This just means a claim where nothing was paid. Get enough of them and your rate could shift.

8. Add your other half -- and your children.

For some reason, people are under the impression that it's the number of people on the policy that raises their rates. It's not. (Now if the people on your policy are bad drivers, that's another thing.) In fact, having your spouse on your policy could lower your rate. And, adding your children to your existing policy when they're licensed is cheaper than buying a separate policy for them. It also makes it cheaper for them to buy their own insurance when they get a car in their own name. It can also protect your rate in the event that they have an accident in your car. Most states required that spouses and any related people in the house that are licensed be listed on the policy. If they are not and they have an accident in your car, you could get hit with two surcharges: One for the accident and one because the insurance company didn't know there was another driver.

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October 11 2011 at 5:10 AM Report abuse -1 rate up rate down Reply

We rally need to get insurance education in our schools, as for the most part, these scenarios, stories, etc...are so unfounded, ignorant, and just plain crazy!

September 28 2011 at 12:12 PM Report abuse rate up rate down Reply

Doesn't ANYONE ever proofread for spelling and grammar?? Or are these articles shot out of a conveyor belt in a factory somewhere...?

September 27 2011 at 11:22 PM Report abuse rate up rate down Reply

My experiences with insurance companies, Nationwide, Farmers, and now State Farm have mostly been very negative and expensive in decending order. I had home insurance with Farmers for 30 years and felt screwed more and more for the last ten. I switched and confirmed my suspicions. I'm paying hundreds less now for broader coverage, go figure.

September 27 2011 at 8:35 PM Report abuse +2 rate up rate down Reply

Who wrote this article? Grammatical errors are plentiful. Go back to school and "LURN"how to 'RIGHT" !

September 27 2011 at 8:20 PM Report abuse rate up rate down Reply

I've had homeowner's insurance with State Farm since 1973. About 10 years ago, I called my agent after my dog ran through the cord on my brand new laptop, flipping it onto the floor and breaking it. I didn't think my policy would likely cover it, but because I'd just paid for it, I thought I'd ask. Of course, the answer was no. About two years later when I moved to a new home, they denied my policy because they said I'd had a claim. I told them I'd been with them for 30 years and had never had a claim, and eventually the agent got back to turned out that my call had indeed generated a "zero claim" that was noted on the record. pay for 30 years, you call with one question, and you're the bad customer who can't get another policy. I'm not impressed.

September 27 2011 at 7:55 PM Report abuse +3 rate up rate down Reply

I worked in claims and was amazed at how much the insurance companies have to pay out. We had an expression -" we insure for stupidity". Many of the claims we took were a result of just that. However, over the years the insurance companies have tended to insure less and collect more in premiums. Better off making sure you have good liability in case you cause damage, and a good all risk policy on your homeowners. Also make sure your car is insured for the loan amt if it is newer, and not over insured if it is older. Again, libility is of major concern if you cause damage.

September 27 2011 at 7:32 PM Report abuse +1 rate up rate down Reply

hello, some states require teenagers to be listed unless they have a policy of their own

September 27 2011 at 7:31 PM Report abuse rate up rate down Reply

This business about having all drivers listed is a crock. I had a Corvette and teenage sons. The Corvette was insured with the same company I had used for years, and my wife and I were the only listed drivers. Our other cars were insured by another company. The boys were FORBIDDEN to drive the Corvette, therefore the insurance company was never at risk. I was perfectly justified to withhold their names. Can you imagine what I would have paid for two teenage boys on a policy for a CORVETTE?

September 27 2011 at 6:44 PM Report abuse +1 rate up rate down Reply
1 reply to amosesjr's comment

Yeah Teenage boys NEVER "borrow" a car that they are not supposed to. And those same teenage boys wont crash into anyone during an unauthorized joy ride. But then, should this occur, I have a suspicion that the insurer would get a phone call from the father to file a claim for this same corvette, Just a hunch. I know one thing....if a teenage kid crashes into me in a corvette, Im gonna lie perfectly still until the ambulance arrives. So maybe its better to be insured.

September 27 2011 at 6:50 PM Report abuse +2 rate up rate down Reply
2 replies to fauxbay2's comment

AMEN! As a teenager, I was "forbidden" to do MANY things. I did them all. Wish my dad had owned a Corvette, that would have been awesome.

September 27 2011 at 7:10 PM Report abuse -2 rate up rate down

Note: In my state, personal injury is covered under MY Personal Injury Protection policy. If I were to be injured in an accident that was someone else's fault, my insurer must pay. Check it out before you just "lie perfectly still until the ambulance arrives".

September 27 2011 at 7:35 PM Report abuse +1 rate up rate down

We have had AAA for over 30 years and they have backed us 100 percent for any situation. Their underwriters are honest and knowledable. Recently our Repr in Capitola Ca informed me he thought I was under insured which I was. His comment, "I am really afraid for you with only this much coverage" so we raised the limits. The cost was minimal and it will only take one accident to find out. He said 20 percent of the drivers are not insured. So while many insurance companies look for loop holes in not paying out some are actually quite good.

September 27 2011 at 6:44 PM Report abuse +1 rate up rate down Reply
1 reply to Margaret's comment
Joy Woodworth

Margaret: thats the difference between having an agent advocating for you and an 800 call center

September 27 2011 at 7:48 PM Report abuse rate up rate down Reply

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