Well, to put it bluntly– yes. Yes, your rates are probably going to go up after an accident. I know — you don’t want to hear that, but it’s true. Anyone who tells you differently is either afraid to tell you the truth, or doesn’t know what they’re talking about.
To understand why rates go up after an accident or claim, you first need to have at least a general understanding of how insurance companies determine their rates to begin with. Trust me, it’s not as cut and dry as you think.
Just like any other bill that’s ever been passed by any president, Democrat or Republican, the Affordable Care Act, also known as “Obamacare” has it’s good parts and it’s bad parts. Almost every time I do a Medicare 101 program, one of the most commonly asked questions is, “How does Obamacare affect Medicare?”
This is obviously a very hot topic as it relates to Medicare eligible seniors, and with the new health insurance market places taking effect on October 1st, I thought I would take some time here and go over exactly what impact “Obamacare” has on Medicare. There is a lot in this bill, but for now, I’m going to focus on the components that should show the biggest cost savings in Medicare.
The first thing you need to understand is that Medicare is not a part of the new health insurance marketplaces. The marketplaces are for individual coverage, not Medicare, or Medicare Advantage.
Despite rumors and speculation that Medicare will be destroyed or gutted by “Obamacare”, it will actually improve Original Medicare, and prolong the life of the Medicare Trust Fund which has most recently been reported by several outlets to have been extended to 2029 with the recent improvements which have already begun to lower the costs.
Several things in this bill make these improvements possible. Let’s take a look.
Independent insurance agents have the best products and the best customer service — period.
Independent agents have access to a wide range of products and insurance carriers. This means they can find a solution that fits the needs of their clients in an unbiased fashion. You see, not every insurance professional does business this way.
If you were going to purchase a new truck, say it was a Ford in this example. You walk into the Ford dealership and are immediately approached by a salesman. You walk over to a truck you like and then start discussing the exact specifications you’re looking for in that truck. You know you want an extra cab and something that is 4×4. You also want your new truck to be dark blue, with a sprayed in bed protector and fog lamps.
When it comes down to talking about price, do you think that the Ford salesman would tell you that right down the street there was a Dodge dealer who had a truck that matched your exact specifications, but for $4,000 less? Of course not. Why? Because that salesman’s job is to sell Fords and Fords only. Of course he is going to try and position the Ford as if it was the best truck on planet earth.
The same can be said for insurance agents. When you speak to a AAA, State Farm, Allstate, Geico, etc., sure you are talking to a licensed insurance professional, but, who you’re really talking to is an employee of their respective company. An employee whose job it is to only sell it’s company’s products.
If you’re not a savvy insurance shopper, you may not even realize that you are not getting unbiased, objective advice when talking to one of these employees. That is a problem.
You see, there are three main categories of insurance professionals. Let’s take a look.
Imagine for a moment your family without you. Would they be able to pay their bills comfortably, or would they be scrounging around, struggling? I’m asking the question because a common theme I’m starting to see when meeting with clients is how they severely under-value life insurance.
This is not a sales pitch folks. Those of you with a mortgage, spouse, and/or children, or anyone who depends on you financially, I’m speaking to you here– you need life insurance. Period.
I’ve literally had people say to me, ” I won’t need any money if I’m dead and I’m not here to make my spouse rich if I die”
People have said those exact words to me and it’s absolutely ridiculous! Are you serious? This is your family we’re talking about! Your children! Dealing with the death of a family member/spouse is hard enough in and of itself, now imagine the stress of having to deal with financial hardship on top of that.
One of the biggest points of emphasis when meeting with my clients (and hosting educational programs) is explaining to them what the differences are between Original Medicare and Medicare Advantage.
When someone first becomes eligible for Medicare, they have a choice–they can either stay in Original Medicare (which you’re enrolled in by default), or instead, they can get their Medicare benefits from a Medicare Advantage plan.
One of the reasons it’s so confusing to people is that Medicare Advantage is referred to as “Part C” of Medicare, so people tend to think it’s something they have, or need to purchase along with their other Medicare benefits.
Let me set the record straight though:
I’m pretty confident that if you asked anyone who has ever owned a rental property you would get an overwhelming response that it’s not as lucrative or easy as they thought it would be. In fact, owning a rental property can be a major pain, and end up costing you a ton of money!
I certainly don’t mean to be a “Debbie Downer”, and I know that if it’s done right it can be lucrative, but from an insurance agent’s perspective, I don’t see a lot of people doing it right.
So you’re probably thinking, “Well Chris, you are an insurance agent. What do you know about real estate or rental properties? Why should I take advice from you?”
I’m not a real estate agent, and I don’t own a rental property. However, several of my friends/family/clients/co-workers own rentals, and because I insure a bunch of their properties, I’ve had a first hand account of the process, and I’ve learned what to do, and what not to do.
Homeowners and auto insurance rates are determined in many different ways. The process is not nearly as cut and dry as many people tend to believe. In fact, it’s a rather complicated algorithm of sorts that can be effected by many different variables.
My experience in the industry is that most people are misinformed and really don’t understand why their rates are what they are, especially if they increase, so this post will hopefully set the record straight for you.
Ready to dig in?