Homeowners insurance is a very important part of the contract to purchase a home, or other real estate, for that matter.
Lenders require the borrower to acquire the fire hazard insurance before taking the title to the property as a protection against damages caused by a fire, severe storms, or other natural hazards.
It is very important for home buyers to shop for a homeowners insurance with the same diligence as when shopping for a mortgage and carefully compare the coverage, deductibles, and exclusions.
I wanted to share with you two quotes for auto insurance for one and the same car prepared for one and the same person that was issued by State Farm Insurance. The quotes truly are an eye opener and raise many questions. By the legal standards in this country those quotes cannot be called a fraud as every business is entitled to have a ”freedom” to develope their own business strategy as they see it fit. See below and judge for yourself.
I erased the name to protect the identity of the person involved.
Note that both quotes are for 1975 Volkswagen Beetle 2DR. Both quotes have $100, $500, and $200 deductibles.
However when you look closely at the LIMITS you can notice that one quote offers 250/500/100 Limits at a 6 months premium of $74.89 or $12.48 per month.
The second quote offers only 100/300/100 Limits at a 6 months premium of $73.42 or $12.24 per month.
This is ONLY $0.24 (24 cents) difference in pricing despite the huge difference in coverage due to lower limits.
250/500/100 LIMITS $12.48 per month
100/300/100 LIMITS $12.24 per month
It is extremely important to understand here that the federal law does NOT put the same burden of disclosure on insurance agents the way it puts on real estate agents. REALTORS are obligated by law to disclose virtually everything to their clients as well as obey Fair Housing Laws.
Because of Agency laws, REALTORS owe fiduciary duty to their clients, sellers and buyers - however insurance agents represent the insurance company and have the duty to protect the best interests of the insurance company, NOT the interests of a person who purchases the insurance.
Insurance agent is obligated and limited only by the business policy of the insurance company that he/she represents.
In other words, if State Farm has no requirement that obligates its agents to DISCLOSE various insurance options and the pricing, then all patrons who purchase an insurance from State Farm are at the mercy and good will of the agent…. If the agent chooses not to disclose that for $0.24 (24 cents) more the patron can double the coverage, that patron will never know….. AND if State Farm does have such a policy, why, in the spirit of fairness, not charge more equitable premiums?
Does it smell of open discrimination in a broad daylight? You bet. Does it provide an opportunity to discriminate? YES, again. Discrimination that is legalized under a business umbrella.
I am certain the same applies to the homeowners insurance.
Defence: due diligence. Shop and compare.
NOTE: The above comment represents the views and opinion of the owner of this blog, Vivianne Rutkowski, and is not a reflection of views of Keller Williams Realty. Each Keller Williams Realty office is independently owned and operated.
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