Summary:
1) You can’t save 15% in 15 minutes – maybe 15 hours though?
2) Forget about saving, you’re lucky if you can even get an online quote.
3) The disparity in website sophistication across companies is shocking.
Christmas Shopping For Insurance!
Why am I shopping for homeowner’s coverage? Did I need something to write about? No, though it’s a side benefit I guess. Was I going to wrap a bow around the policy and put it under the tree like one of those dumb car commercials? No, that would probably be worse than gifting a Peloton. The reason for shopping is I have had extraordinary price increases on my coverage year after year.
So I must have had a lot of claims, right? Nope, not a one. Well, I probably live in Florida or Texas? Nope, I’m in the middle of the country with some very remote tornado risk, but largely attritional summer storms or perhaps frozen pipes in the winter.
I’m not going to name names yet, but you wouldn’t need too many guesses to figure out which HNW carrier I have. Here is a chart of my rate over the eight years I’ve been with that carrier, represented as an index rather than my actual premium.
| Year | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
| Indexed Price | 1.00 | 1.42 | 1.54 | 1.56 | 2.17 | 2.41 | 2.54 | 2.80 | 3.51 |
Yes, my rate went up 250% in eight years!!! That’s a 17% CAGR and is net of me a) reducing contents limit over time to lower premium and b) the carrier adding a wind deductible that should have reduced my premium.
Again, I had no claims. I am also forced to insure my house for nearly 3x the true replacement cost (more on that later). The original replacement value was set at almost twice my contract to build the house and they have put in “inflation” adjustments each year that have raised that 50% over the eight years.
The problem with that approach is the cost of new construction in my town is unchanged over the period. So either there was no inflation in materials or the homebuilders are taking smaller margins. I’m not sure which it is, but there is no market justification for the ever increasing replacement value.
The Shopping Exercise
I have done some cursory shopping exercises in the past, but they quickly hit dead ends as the standard market carriers have trouble quoting me and the other HNW carriers amazingly insist on the same insane replacement cost for my home.
However, after another 25% hike this year for no reason, I’m finally done with begrudgingly paying the renewal. I decided to shop direct with the prominent standard market carriers, some online agencies, and also a HNW independent agent.
To cut to the chase, the results are presented below. They are not all apples to apples in coverage which I will explain in the later commentary. Most defaulted to $1000 deductible and $300K liability. I have higher amounts for both today, but most carriers didn’t let you choose a different amount (more on this later too). Again, I am using indexed rather than actual prices with the index tied to the lowest quote.
| Carrier | Indexed Price | Indexed Assessment |
| Progressive (Homesite) | 1.00 | 1.00 |
| Progressive (ASI) | 1.67 | 1.78 |
| Liberty | 1.83 | 1.25 |
| Allstate (mail) | 0.69/1.78* | 1.31 |
| Allstate (agent) | 1.18 | 1.53 |
| Allstate (direct) | N/A | N/A |
| Travelers | 1.12 | 1.53 |
| AMICA | 2.92 | 1.68 |
| Cincinnati | 1.48 | 1.93 |
| PURE | 1.77 | 1.93 |
| USAA | 1.17 | 1.64 |
| Chubb | 1.86 | 2.40 |
| State Farm | N/A | N/A |
| Hippo | N/A | N/A |
| * See comments below |
So, on the surface, Progressive is the lowest quote but they also underinsure the home. Allstate and Travelers are next, but they both come with caveats I will explain below.
Company Commentary
OK, this is the fun part. Here I will go through how every single company failed to meet my basic expectations of a) a reasonable quote at acceptable coverage levels b) a user experience that left me confident the quote was bindable, and c) a process that could take me from starting my quote to binding my policy in under an hour.
Progressive
This was a very interesting case. It was one of the easier ones to get a quote from, but I’m not sure that I believe the quote is bindable. At first, it gave a lowball quote from Homesite (a partner it fronts for) using the actual contractual cost to build my home, which arguably would leave me underinsured.
When I clicked to see more options, it gave me a quote from Progressive Home which was based on a significantly higher assessed value. This raises the question of what the underwriting quality is at these partner underwriters. I can’t imagine Homesite would actually insure me at that value, which means the “real” quote would likely be far higher.
There was no ability to change coverage limits. I had to take the $1K deductible and the $300K liability.
Liberty Mutual
Liberty had the second lowest assessed value but had one of the higher quotes. They did have an option to change the deductible to 1% which would have lowered the premium to 1.22x of the Homesite quote.
Allstate
This one was quite interesting! After I completed entering all my information, it wouldn’t quote and I couldn’t figure out why. Then, I see a warning that the square footage on my home must be below 4500 sq ft. It didn’t tell me this when it first pulled the information in from public records. Instead, it waited until the end to tell me there was a problem. So, I couldn’t get a quote from the website.
But, guess what…hours later I get an emailed quote. I’m guessing one of the other websites I used sold a lead to Allstate. That agent seemed able to get around the square footage issue. How? I don’t know, but keep reading and you’ll see agents quoting what the online option refused to wasn’t an anomaly!
The agent quote had a reasonable assessed value and a compelling premium, even at a $1K deductible.
But, better yet, a couple days later, I get something in the mail from yet another Allstate agent, and guess what??? This quote is 40% lower than the other agent!!! It did have a lower dwelling amount but it offered more liability and contents coverage.
So did I take this quote? No, cause guess what happened? I knew the quote couldn’t be real, but I thought for diligence I should call and find out. Astonishingly, the real quote was 150% higher than what they sent me in the mail. How does this happen??? Should I really believe it was an innocent mistake or rather something that rhymes with “wait and snitch”?
So forget 15 minutes and we’ll save you 15%…try 15 Allstate agents and who knows how much you’ll save!!!
Travelers
The Travelers process was nearly as curious as Allstate’s. After entering all my information, they also wouldn’t quote me saying the home value was too high. However, one of the online agencies was happy to recommend Travelers to me and at nearly the same terms as Allstate.
The funny thing is when I called to follow up on the quote they told me that quote wasn’t valid because it used $100K liability. Then, they took it to $300K and raised the price a bit. Then, at the end of the process, the agent tells me, sorry Travelers is requiring this to be reviewed by an underwriter.
Great! So you wasted all my time to then not quote me at the end. Wonderful service. I won’t mention the name, but it’s an “insuretech” agency that has a healthy valuation!
State Farm
What a pain in the neck! They had incredibly thorough questions. Wanted to know every single detail about every room in the house. Their process was far more detailed than even the HNW carriers. And after spending close to 45 minutes on it, you can probably guess what came next…we can’t quote you. Why didn’t you tell me that as soon as I finished the screen where I told you the value and the square footage??? Awful.
Hippo
This was hilarious! For a supposedly “smarter” home insurer, when they presented me the scraped info on my home, they got the square footage right (nearly everyone was able to do that), but told me my home was built in 1949!!! Only off by about 60 years, nice job!
That ought to tell you everything you need to know about insuretech. Oh, and of course, they couldn’t quote me.
AMICA
I used AMICA once upon a time and they sent me a mailer that they wanted me back so I asked for a quote…and it was by far the most expensive. Next…
The next set of quotes are with a $10K deductible and $1M of liability compared to the $1K and $300K mentioned earlier. These were all done through agents rather than direct.
Cincinnati Insurance
They were the most competitive of the HNW carriers and even beat out some of the crazy quotes of the standard carriers. Offers robust coverage with some ability to customize so a strong contender.
PURE
I’ve found this in prior shopping exercises as well that PURE tends to come in just below Chubb which I’m not sure creates enough incentive to switch now that there are more new entrants.
Chubb
The biggest problem with Chubb is the inflated assessment value which leads to them being overpriced.
USAA
They were able to meet most of the coverage terms of the HNW carriers with a price more similar to the standards. Clearly, a better option than the standards and can debate the trade off on some of the extra coverages vs. rate and track record against the HNWs.
Shopping Summary
1) Online shopping for homeowners is close to useless.
2) Shopping through an agent takes forever.
3) Be suspicious of any initial quote.
4) Comparing quotes is difficult because of different default coverages.
5) Hippo is not the answer.
What Did I Learn?
Now, that the data dump is over, let’s get to the important stuff. Why is getting a homeowner’s quote so painful and how do we fix it?
Online engines are completely inflexible. You answer some questions and you get a quote. They often don’t tell you even basic coverage information beyond the deductible.
There is no ability to customize coverage. Occasionally, you are allowed to change your deductible. I couldn’t find anyone who would let me customize contents or liability.
Nobody even asked me about my contents! Yet, what is the most likely source of claim outside extreme weather? Why do I get asked if I have a security system but not what the thief might take??? It’s like asking someone in Florida if they have storm shutters without asking how much the house is worth.
Most contents and other structures covers are defaulted to a percentage of the dwelling which is a wholly inadequate way to do it. For many people, the right amount of other structures might be $0! Contents defaults vary wildly from company to company with most at 75% or 50%, but others can be much higher or lower.
Then, we get to wind and hail. I remember the good old days when a wind exclusion applied to named storms only. When was that, five years ago??? Now, 1 or 2% wind and hail deductibles are the norm, so a typical thunderstorm with some high wind gusts is outside your standard deductible.
When you get to 2% on a high value home, that means you are basically self insured against most storms. Given the difficulty in finding adequate flood coverage, that means I am self insuring my two biggest concerns. Is the industry really meeting the needs of customers???
Speaking of flood, none of the standards asked me any questions about my sump pumps, water shut off system, generator, or any other mitigation tactics, which brings me to the next topic.
Underwrite the Customer, Not the Structure
Obviously, you have to underwrite the structure too, but home underwriting reminds me of auto underwriting pre-credit. Just underwriting the physical asset is like pricing my auto insurance solely on the make and model of my car.
Individuals can do a lot to mitigate the risk. It’s pretty funny how everyone asks if you have a security system, but nobody asks how often you turn it on! Like I said, nobody asks about my sump pumps or whether they have battery backups. Nobody asks how many trees I have within 20 feet of my house (none, I removed them all after a close call).
Nobody asks if I have a fire pit in the yard (nope, but many of the neighbors do). Nobody asks if I service fire risks like the chimney or the laundry vents. Nobody asks how old the furnace is or is there gasoline in the garage for the snow blower or do I have any dangerous or expensive hobbies. But, hey, at least we ask about dog bites!
How Do We Fix It?
It’s going to take a lot of work! My list of recommendations:
Ask relevant questions…
…while also shortening the quote process (< 15 minutes)
…through better pre-fill of information
Give me the same answer every time (= no “forum shopping“)…
…and show me a bindable quote (= adequate cover and no low ball dwelling)
Allow more coverage options
More simple language definitions of coverage exclusions
The entire shopping exercise probably took me about 20 hours. Nobody wants to spend that much time on insurance. There is a real growth opportunity for a carrier who can figure out how to make this a faster, simpler, and more accurate process.