While it’s far easier to simply renew an insurance policy year after to year rather than shop around for a new provider, it should go without saying that inertia can be costly.
Most industry experts suggest obtaining quotes from competitors every six months to one year, because the reality is that many insurance companies change their rates regularly and doing a little bit of research can save you quite a bit of money.
Cutting costs however, isn’t the only reason to leave one insurance company behind for another. We asked insurance industry experts to share some of the top signs it may be time to part ways with your insurance provider, whether it’s life insurance, home insurance, car insurance, or any other type of policy. Here are some reasons to cut ties.
1. Sudden Rate Increases
Unexpected and unjustified rate spikes should be a big red flag signaling it’s time to find a new provider, says Jonathan Fritz, who has more than a decade of experience working with property and casualty insurance and co-founded the site NoExam.com.
“It could be that the insurance company has recalculated their risk profiles and you have been grouped into a higher risk classification,” said Fritz. “At this point, it’s a good idea to start shopping around for the same coverage amounts with different providers.”
It’s expected that insurance rates will increase between 2% to 5% each year with inflation, explained Fritz. When price hikes approach 10% or more, however, it’s time to move on.
2. You’ve Got Renters Insurance, and You Just Bought a Home
Making the leap from being an apartment dweller to owning your own home is a major life change, one that may require finding a new, more appropriate insurance company.
“When you own a home, you need to protect both the physical structure and what’s inside, whereas renters only need to worry about protecting what’s inside, as the landlord has to cover building itself,” explains Fabio Fashi, property and casualty team lead at Policygenius. “If your carrier specializes in renters insurance and you buy a home, look into carriers with homeowners insurance coverage.”
3. Unfair Claim Denials
The essential promise of any insurance company is to be there when you need them, says Kathryn Casna, an insurance specialist from TermLife2Go.com. If the company is not living up to its end of the bargain, shop around.
“It’s what you’re paying for, so kick the insurance company to the curb if it’s not fulfilling its promise to you,” said Casna.
John Espenschied, and agency principal and owner with Insurance Brokers Group, offers similar advice, adding that if your company’s claims department can’t explain why a loss isn’t covered by your policy, it’s time to take your business elsewhere.
“There’s nothing more frustrating after having a loss than to find out it’s not covered by your insurance,” said Espenschied.
4. Increased Complaints from Consumers
A sudden spike in complaints about the insurance company, specifically related to how it handles claims, may also mean you may want to find a policy elsewhere.
“Are customers leaving bad reviews online about your insurance provider?” says Fritz. “It may be a good idea to check and see if people are having problems. A few good places to check are the Better Business Bureau (BBB) and Consumer Affairs. If bad reviews are flying in, it may be time to shop around.”
5. Your Insurer Isn’t Keeping Up With the Times
The insurance industry isn’t known for being particularly innovative, says Casna, especially life insurers.
“Some companies are better than others, but if your company doesn’t have a user-friendly app, lacks online claims options, or still asks you to fax documents, it may be time to drop that dinosaur,” said Casna.
A 2018 J.D. Power study found that insurance companies by and large are falling short on digital customer engagement. However, a few leaders are already establishing best practices in this space. In particular, Allstate was ranked well for the digital shopping experience it offers consumers, according to the study, offering ease of navigation, availability of key information and clarity of information.
GEICO, meanwhile, sets the bar for digital service experience, according to J.D. Power. The company outranked all of the competition thanks to strong performance in all five of the study’s key barometers – ease of navigation; appearance; availability of key information; range of services; and clarity of information.
6. You Don’t Understand Your Coverage
Most consumer-oriented policies are fairly straightforward, and it’s an insurance company’s job to help you understand any part of the coverage that may be confusing, says Quinten Lovejoy, an insurance risk advisor with Crane Agency.
“Helping a client understand what they’re buying should not be beyond the reach of a competent insurance professional. If the company is not able to help walk you through a policy’s various provisions and clauses, look for a company that is willing to do so,” says Lovejoy.
In addition, consumers should always carefully examine policies that seem “too good to be true,” added Lovejoy, and be wary of an insurance product that seems “out of the ordinary” in terms of promises made juxtaposed to the price quoted.
“Whether it’s base limits within a policy, deductibles, claims handling, exclusions, or other factors, consumers may be surprised at the time they least need surprises,” said Lovejoy.
7. Poor Customer Service
This is fairly straightforward: If your insurance company makes communication challenging, they don’t deserve your business.
“In this day and age, communication…should be the least of your concerns,” said Lovejoy. “If you’re waiting more than 24 to 48 hours for a return call, email, or text message, it might be time to find (a company that) is willing and able to provide timely responses to your questions or concerns.”
8. Financial Vulnerability
It’s a good idea to keep an eye on your insurance company’s financial strength ratings via industry reports like A.M. Best, Moody’s, Fitch, and Standard and Poor’s.
Espenschied suggests finding an A-rated insurance company in order to be sure you’re dealing with a quality provider on firm financial footing.
A company with this rating is generally one that performs at the top of its industry in terms of creditworthiness and financial profile when compared to competitors. Ratings range from A to D, with D being the worst.
“The reason you buy insurance is for the unexpected losses and you want to know your company is going to be there in a time of need,” said Espenschied.
9. It’s Not You, It’s Me
Sometimes the need to shift from one provider to another is about you, and not the insurance company, noted Casna.
Insurers offer pricing and coverage options based on the particulars of your situation, Casna explained. “So, if something big changes in your life such as you buy a home, start a family, develop a health condition, or retire, then it’s time to shop around,” she said.
Similarly, if you move to a new state, the insurance company with the best coverage for you could change, added Fashi, of Policygenius.
“This applies to all types of insurance, like homeowners or auto insurance,” said Fashi. “For example, the best homeowners insurance company in Colorado could be much different than the best one in Georgia, as they specialize in different coverage types for different environments.”
Mia Taylor is an award-winning journalist with more than two decades of experience. She has worked for some of the nation’s best-known news organizations, including the Atlanta Journal-Constitution and the San Diego Union-Tribune.