The key to comparison shopping is to know what insurance coverages you need before you start and then to find out how much those
coverages will cost from a number of insurers. Comparison shopping will take time but will save you money. Different companies charge
different rates for the same or similar coverage.
No one wants to pay more for their home insurance than they absolutely have to. The only way you can make certain you are not paying
too much is to shop around. Find out what different insurers charge for identical products and services. Remember, competition only
works if the consumer shops for coverage.
Information is available to consumers from a number of unbiased sources. These sources include public libraries, the Idaho Department
of Insurance, consumer groups, and consumer publications.
Because the insurance industry, like many other industries, has developed many words not commonly used by the average person,
consumers may need to find a good glossary or dictionary of insurance terms from the public library. Definitions are also available
by searching the internet.
When you begin to contact insurers, there are a few things you should know about how insurance companies market their products.
Most insurance companies and many agents advertise. Check the newspaper and yellow pages of the telephone directory for companies
and agents in your area. In addition, contact your neighbors, relatives, and friends for recommendations on insurance companies and
agents. Ask them about their experience regarding price and service. In particular, ask them what kind of claim service they have
received from the companies they recommend.
Consumers often rely on their insurance agent or company to tell them what kind of coverage they need. Insurance agents are paid on
a commission basis.
When shopping for home insurance, premium/price quotations are a useful tool for comparison of different companies’ products. When
asking for price quotations, it is crucial that you provide the same information to each agent or company.
To give you an accurate quote, the agent or company will usually request the following information:
- Description of your house (construction, age, square footage, etc.);
- Distance from the nearest fire division and fire hydrant;
- Security devices;
- Picture of your home;
- The Coverages and Limits you want.
You should understand that not all insurance companies use insurance agents to sell their product. Insurance companies generally
use one of three methods to market their product:
- direct marketing;
- independent agents; or
- exclusive agents.
The type of marketing method may be good or bad for a consumer, depending on the type of services offered. Therefore, consumers
should be aware of each of the three methods and may want to consider them in their purchase decision.
Direct marketers sell insurance through the internet, mail and by telephone. In some cases, consumers can save money with direct
marketers because these companies do not have to pay insurance agents commissions to sell their policies. Companies can pass along
some of these savings to the consumer. However, some consumers prefer to pay an additional premium for the opportunity to have a local
agent available to them.
If you decide to call agents for quotations, ask them how many companies they represent. Independent agents represent several
companies; therefore, you can get quotes for more than one company from one agent. This is considered an advantage by many consumers.
Some insurance companies sell coverage through agents that only represent their company. These companies call their agents an
exclusive agency force. Exclusive agents can only offer you coverage from the company they represent; therefore, you can only get a
quote from one company for each exclusive agent that you talk to.
Sometimes exclusive agents may work for a lower rate of commission than independent agents. This is because companies do not have
to give the agent an incentive to write their product over another company’s product. The lower commission structure, especially
commissions for renewal business, can represent significant cost savings to the insurance company and often a portion of that savings
is passed along to the consumer in lower premiums.
Once you have selected the insurance coverages you need and an insurance agent or company, there are steps you can take to get your
Before signing an application for any insurance coverage, call the Idaho Department of Insurance and verify that the company and the
agent you are dealing with are licensed in Idaho.
Every state has a safety net to protect insurance consumers from financial loss in the rare instance that a company becomes insolvent.
This safety net is called a “guaranty fund.” The guaranty funds are established by state law and are composed of licensed companies in
the state. They pay the claims of policyholders and other claimants of an insolvent company. The money to pay the claims against the
insurance company comes from assessments made against all of the licensed insurance companies that are members of the guaranty fund.
It is illegal for unlicensed insurers to sell insurance. Business cards are not proof of a licensed insurance agent or company. If
you do business with an unlicensed agent or company, you have no guarantee that the coverage you pay for will ever be honored. If you
purchase insurance from companies not legally doing business within your state, you will not be protected by the guaranty fund should
the company fail.
If you are contacted by an unlicensed agent or company, call the Idaho Department of Insurance immediately so that regulatory
action can be taken. By doing so, you may protect someone less knowledgeable than you from being victimized.
Be aware that a home insurance policy is a legal contract. It is written so that your rights and responsibilities, as well as
those of the insurance company, are clearly stated.
When you purchase home insurance, you will receive a policy. You should read that policy and make certain you understand its
contents. If you have questions about your insurance policy, contact your insurance agent or company for clarification. Keep your
policy in a safe place and know the name of your insurers. If you still have questions, call the Idaho Department of Insurance.
Need more info? Contact us at 208 334-4319 or email us .
Consumer Affairs Officers are available to answer your questions 8-5 M-F MST