Sunday, October 27, 2013

Home, Auto and Umbrella Insurance

I am not a lawyer or insurance broker, and the following observations are based solely on my reading of each company's insurance contracts.  I may be wrong in my reading.  You are responsible for understanding your own policies.


I recently shopped for new insurance (home, auto and personal umbrella).  It's difficult to find discussions on how to go about it.  Here was my approach.

My list of priorities:
  1. Coverage
  2. Claims handling reputation
  3. Good customer service
  4. Price
With the exception of one or two sites (particularly the Jack Hungelmann stuff), it's mostly impossible to find discussions of coverage.  I read Jack's stuff.  He discusses the differences among umbrella policies, and he has some useful comparison charts.  Then, whenever I was seriously considering a policy, I asked the agent/broker to send me a sample policy.

For claims handling reputation, I relied mostly on the typical rating sources: JD Power, Consumer Reports, and my state's Insurance Commissioner's office (list of complaints for each company).  It's hard to know the importance of a high score, though.  This is a regulated economy where (I hope) it's not possible for a company to systematically defraud consumers without recourse.  What are the chances that I get in a situation where one company will make good, but another won't?  How likely is it that one company will underestimate a repair, and I won't be able to contest it with an independent appraiser?  (I don't know the answers to these questions!)  In any case, if you think I'm naive, then you should probably weigh this dimension more heavily than I did.

For customer service, I just based it on my experiences dealing with the company or the agent.  How hard was it for them to answer a concern about a policy exclusion and get a clear answer?  Could I get through to the company directly?  Was the agent's or broker's written assurance binding?  Did he or she know that umbrellas weren't identical (particularly when compared to home and auto)?  Did I feel like I was getting glad-handed?  All pretty subjective stuff, and your mileage may vary.

Price was fairly easy:  I got lots of quotes.  Even for the same underlying insurer, I sometimes got quotes from more than one broker since, bizarrely, they could differ.  A lot.  If you don't believe it, check out Checkbook.  They found the same thing.

I mostly compared the following companies:
  • Amica
  • State Farm
  • Metlife
  • Safeco
  • Pemco
  • Progressive
  • Allstate
There were some others that were instantly rejected (e.g. Erie and Auto-Owners don't write in WA state).



It's surprising how many differences there are between umbrella policies, more so than between auto and home policies.

Amica's home policy will cover structural damage arising from water seepage that occurs behind walls (e.g. leaking pipes), while Safeco's (and most others) will not.

Amica's and Metlife's umbrellas cover you for damage to someone else's property that was in your care; State Farm's does not (except for rental properties and watercraft).

Amica won't cover liability arising out of the rental of a "big" boat (longer than 26 ft or so, or with more than 50hp), unless you buy watercraft insurance.  Metlife will.

Progressive's umbrella provides no protection for online communications, which would seem to mean postings in forums, blogs, etc.

Amica's umbrella insures your household, anyone to whom you lend your cars, and anyone who has vicarious liability for your actions.  Allstate's umbrella, on the other hand, insures you, your spouse, and your relatives if they live in the house and they aren't over 25 (for auto liability, anyway).  So, Amica's umbrella covers a friend who borrows your car; Allstate's does not.

Here was my opinion of umbrella policies, based on their contract language:

Amica -- very inclusive, insured is broadly defined.
Metlife -- very inclusive, except that auto is following-form and insured is more tightly defined

State Farm -- pretty good, but insured is more tightly defined, no contractual liability, limited care/custody/control, questionable childcare coverage (i.e. nannies)
Pemco -- pretty good, no c/c/c, no contractual,
Safeco -- no care/custody/control for vacation rentals,

Progressive -- almost entirely an excess liability policy, with hardly any drop-down coverage.

Allstate -- very hard to read their new umbrella policy.  It's sort of a mix of stated and open perils.  It's somewhere between bad and good.  Definition of insured looks unusually tight.

Allstate and Progressive were basically knocked out of the running here.  Liability coverage was important enough that it wasn't worth saving bucks to get thin coverage.

Claims Handling:

Beyond just coverage, there is also the question of whether the insurance company will have a helpful or adversarial stance when you make a claim.  Some companies certainly have better reputations, particularly the mutuals (Amica, State Farm, Pemco, etc.).

The consensus ranking of these companies by claim handling (using JD Power, Consumer Reports, etc) would seem to go something like this:


State Farm

The Rest:

It's hard for me to defend these rankings.  I'm ranking them based on what I've read in reviews, in consumer polls, and based on the WA Insurance complaints website.  Certainly, Amica seems to be consistently recommended based on service.  Pemco also has its supporters, and it had, by far, the best WA State complaints rating of any company I surveyed (for several years running).  On the bottom side, there seem to be a significant number of complaints for some of the companies making up the Metlife brand.

Safeco was an interesting case.  They had average to better-than-average WA State complaint rating, but I thought I saw some bad online ratings.  When I look now, though, they actually seem pretty good.  Perhaps Safeco needs to move up.

Progressive is also complicated here.  Their claim handling reputation for auto is only mediocre, and they outsource their home coverage to a company called HomeSite.  HomeSite has some pretty dicey online reviews.  Had Progressive not already been knocked out, HomeSite would have done it here.

Customer Service:

What is customer service, and do you care about it?  In my case, I wanted:

  • Someone who could correctly answer policy questions, fairly quickly
  • Someone who could make changes or additions to policies
  • Someone who spoke authoritatively for the company
  • Someone who knew how to handle/argue claims disputes

Unfortunately, independent insurance brokers, you're all pretty terrible at paying attention to the contracts themselves.  I'm kidding...I think.  I called about 10 different brokers to chat the chat, and there was only one of you (Kibble and Prentice) that could discuss the fact that umbrella coverages differed.  Even after hinting that, maybe, there were some slight differences.  OTOH, brokers are great at making changes.  You send them an email and walk away.

As to arguing claims disputes...who knows?  This is not easy information to find.  I did feel more comfortable with a big firm like K&B that does a lot of insurance business, and the agent there talked about a couple of instances of advocating for her clients.  In the end, though, I just assumed I was mostly on my own in all cases.

State Farm did...ok.  I dealt with 3-4 different offices over the past couple of years.  All were very professional, good at getting back to me, and had great customer service manners.  However, I had a very tough time getting a definitive answer to the simple question: "Does your umbrella policy cover me if I have a shared nanny at my house who is watching my kid and someone else's?"  A very tough time.  I was:

  • Told by Agent 1 that it does, after she contacted the StateFarm underwriting department (I assume).  She said they were worried about people who run a larger daycare out of their home.
  • Told by Agent 2 that it does not, after she contacted the StateFarm underwriting department (I assume).  She said that employer's liability would be required, but that they didn't offer it.  Later, she came back and said that in WA, worker's comp would be enough.
  • At some point, I decided to call StateFarm directly.  I think I called claims, or maybe underwriting, but I didn't get very far.

In case you're interested, here is the StateFarm umbrella language that concerned me:

[StateFarm excludes coverage for liability arising from...]
12. claim made or suit brought against any insured because of bodily injury or personal injury to any person who is in the care of any insured because of compensated child care services provided by or at the direction of: 
a. any insured;
b. an employee of any insured; or
c. any other person actually or apparently acting on behalf of any insured.

This exclusion does not apply to the part-time child care services provided by any insured who is 18 years of age or younger and the services are not provided on business property;
I didn't really test Pemco much.  I'd already excluded them by this point, I think.  The same with Allstate.

Amica's customer service was good.  They sometimes didn't get back to me right away, but their answers were clear.  And there was one other important point -- Amica's agents (and maybe Pemco's?) are direct employees of the company, and so I believe their email communications are more binding if there's a coverage dispute.  For instance, Amica told me (paraphrased) "yes, your nanny situation is fine, even though I understand there's some ambiguous language in the umbrella".  My understanding is that I could rely on this in a coverage dispute with Amica.  Whereas, although StateFarm Agent 1 told me that I was fine, she also readily admitted that her communications were not binding -- only the contract itself was binding.

In the cases of Metlife and Safeco, I mostly communicated through my agent.  My Safeco agent was very nice, but again he also had difficulty getting clear answers to coverage questions.  In the case of Metlife, I worked my way to claims or underwriting once, but it wasn't helpful in getting clear answers.


State Farm



Your price will depend on the price of your house, the deductibles chosen, amount of liability chosen, etc.  The prices I list below are important for their relative ranks.

In order of most to least expensive, here are my quotes from the companies that made it this far:
  • Amica ~$2,750 _post_ dividend (like $3400 before dividend?)
  • Pemco ~$2,550
  • State Farm ~2,500
  • Metlife ~$2,250
  • Safeco ~$2,000


Had Amica been (a lot) cheaper, I would have chosen them.  They were my favorite in all ways but price.  Their home insurance and umbrella insurance is price competitive, but their auto policies are incredibly expensive.

Pemco was a little too expensive, and its umbrella lacked a few things offered by Metlife (care, custody and control; contractual liability).  Had their umbrella been better, I would likely have chosen them.

State Farm had the same problem as Pemco -- an umbrella that was not as comprehensive as Metlife, though their claims handling reputation was better.  (State Farm also had another problem -- they required a $4,000 deductible for my home insurance because my roof was older than 10 years or 15 years or something.)

Safeco was cheap, cheap, cheap.  I started by being worried about their claims handling, especially all the stories after they were bought by Liberty Mutual.  However, the WA complaints site indicates they're pretty ok, really.  Their umbrella had a few irksome exclusions, like no coverage for damage done to rental properties.  Some of those VRBO vacation places are worth a lot more than my house.  My underlying home insurance would cover up to its limit if I burned one of those places down, but the umbrella would not kick in.  There was also another exclusion around bodily injury to someone employed by us.  That got me worrying about babysitters, although I hope they would have covered it.  Why take the chance, though, when there are other options?

So, I ended up choosing Metlife, based on cost and good umbrella coverage.  They have an umbrella with very few exclusions (although I'll note that the auto portion is following-form).  Metlife's reputation on claim handling is less stellar, and I'm mostly hoping that I have a low joint probability of both a claim _and_ a horror-story claims process.  That's the risk I guess I'm taking by not paying out the nose for Amica.  There's probably an argument that I should have just gone with Pemco (or State Farm if my roof were younger), but I didn't.

Curious to hear your experience or decision-making process.  Please let me know in the comments below!