Like many people out there I had not given our home and automobile insurance coverage a second thought. When I bought my first car I used a one of the local insurance brokerage that has a good reputation in town. Each year the policy would be renewed and I never looked for a better deal as I blindly and happily continued to “buy local” so to speak. When I bought my first house I called up the brokerage and had them cover my home insurance and I was happy to hear I got a discount on both the home and car insurance due to using the same company for coverage. My broker assured me that this was the best deal I could get and I believed the broker.
How wrong and silly was I. Naive even.
Our New Insurance – Background
In the summer of 2010 we were moving to a new house and were buying one of the new Subaru Outbacks. I needed to make changes to our policies so once again I called up the broker to start the process of opening new policies on the new car and home and closing the old policies. Once again I was assured that Aviva (previously) Pilot was my best option. The first topic of discussion was our new car insurance. I was roughly quoted about $120 per month. Being a new car it seemed to make sense that I had been paying about $90 a month on our 8 year old car. The conversation then moved to our new house. This is where I learned a VERY valuable lesson. If they don’t ask, don’t tell! Why is this? We bought a 100 year old house that has a boiler furnace and the old style metal radiators. The pipes in the basement that carry the hot water are insulated with well wrapped asbestos (which when well wrapped and left undisturbed is harmless). Silly me, I told the local insurance brokerage this. She said she had to contact Aviva and would get back to me. Our home inspector had stated he saw no issue with the condition of the pipe wrapping so I wasn’t too concerned. A few days later the broker called me and told me that I could get coverage (for $108 a month) but I had to have the asbestos wrapping removed in 60 days or my insurance would be revoked. I was floored not to mentioned annoyed and perturbed at the thought I would need to shell out about $8000 to safely remove the wrappings.
Local Insurance Brokerage Provider Assessment
This is when I decided to assess our insurance provider. The thought came to me that this brokerage must make money to survive. Were our monthly payments keeping them afloat? Most assuredly. I decided that I wasn’t overly happy with our new broker (the initial fellow was promoted and no longer managing our file) who worked part time and was very surly in her communications. So the time was right to hunt for the best rate. The first thing I realized is that I don’t need to pay for someone to be available for face-to-face discussions. I would always call or email the broker, so why pay their building lease and office costs too? I went over to the redflagdeals.com forums and discovered an insurance brokerage called TD Insurance Meloche Monnex which was getting great reviews for the cost of their insurance and their service. So I gave them a call. The rep was pleasant and worked to find us a good rate which included a discount for having both home and auto insurance through them. I’m glad we don’t have to worry about long term insurance care. Check out the difference in price using an online/call centre service versus the local option.
| Local Brokerage | home | 108 |
| car | 120 | |
| Monthly | 228 | |
| Yearly Total | 2736 | |
| TD Insurance | home | 67 |
| car | 94 | |
| Monthly | 161 | |
| Yearly Total | 1932 | |
| Monthly Difference | 67 | |
| Yearly Difference | 804 |
Wow! $804 a year?!? 29.4%. That is a significant savings.
I am now referring my family and friends to this TD service. My Dad made the switch and is reporting that their monthly insurance premiums (house, cars) were reduced from $331 to $208 or $1476 annually – a 37.1% saving (they have 2 vehicles). He is ecstatic and I am happy to have helped. I will tell my Mom about this soon as well. As our parents near retirement age and lower income they can use as much savings that they can discover and we’re happy to make them aware of our frugal discoveries which includes avoiding insurance broker fees. Some may ask whether or not abandoning our local brokerage is in line with our financial and lifestyle philosophy. We always prefer to buy local, when it makes financial sense. In this case, the local insurance brokerage option is not sustainable for managing money in our personal finances.
I cannot complain about our insurance provider. We pay $75 for 2 cars a month. One car full liability protection and the other one has very limited (minimal). We pay $16 a month for our condo insurance with the same provider. Overall, I am happy. So far…
Nice Aloysa! My guess is that people in the U.S. get better rates than we do up here. Seems that way for everything (see my post on saving over $9000 on our car purchase!)
Thanks for sharing! I am going to check out TD. For the past 3 years, I have been comparing different insurance for our house based on the advertisement some companies do or based on where my car is insured but every single time, the new places I look at are higher than my current place.
I have sort of stayed away from the banks since their mortgage insurance wasn’t really worth it and I assumed their other business were just the same kind of grab but I will certainly look into it now.
My rule of thumb, always review and compare. I use Google Calendar with many reminders to follow through on those rules at the appropriate time.
Great idea on using google calendar.
I discovered this TD affiliate via RFD and the posters on that forum usually find the best deals!
I agree 100% on mortgage insurance – not worth it, stick to term life.
I’ve given this topic some thought as well. I recently purchased a condominium (back in August of this year) and was trying to decide whether or not I should purchase home owner’s insurance from a local agency or directly from the insurance company. I ultimately decided to purchase from the local agency because the prices were approximately the same.
Really? Good on ya for finding comparable prices from a local service. We would ALWAYS buy local when it makes sense, but we’re about sustainable PF as well and paying that much more to support the local business to be a middle man just didn’t make sense for this particular service.
Definitely! I think that’s a good way to be!
We don’t tend to use insurance brokers in Australia, except for the old school life insurance salesmen, who have now morphed into financial planners. Most general insurance, such as house or car, is sold direct – usually through the internet. I sometimes wonder whether I could get a better deal wrapping up all our insurance products through a broker.
Hi Jim
Canada must be behind, but as you can gather from the post I question the need entirely.
I did find that the internet company I used gave us discounts for moving both our home and auto insurance to them (in addition to being cheaper for either insurance type).
Your post is featured in this week’s Cavalcade of Risk:
http://www.mypersonalfinancejourney.com/2011/03/cavalcade-of-risk-127-riskiest-jobs.html
Please tell your readers.
Thank you!
I can’t help but comment on this as I’m an insurance underwriter… we call this a material fact. By not declaring it, should a claim ever arise, you run the risk of not getting anything paid out. Sometimes, our investigations take a few years. If you lie about it and the company finds out, you run the risk of jail time. Hope you consider that before you continue to advise people not to “declare” things.
I applied for my new car insurance @ TD, they are offering best rates so far compare to others being a new driver in Canada. But things that are irking me is that they take 7-8 days to take a decision if I can get the insurance or not which is really confusing.
any thoughts why?
No idea Gaurav. We used an insurance broker that only dealt with insurance. I don’t understand the inner workings of insurance approvals.