One of the most common calls we get from insureds starts something like this:
"I was talking to my neighbor and he said his insurance only costs (insert ridiculously low premium here)..."
And honestly? We get it.
It seems reasonable to assume that if you live on the same street, in similar homes, and drive similar vehicles, your insurance rates should be pretty close, too! But if you’ve ever made that assumption, you’ve probably been disappointed. I hate disappointment, don't you?
Insurance itself is a fairly simple concept. The science behind rating it, however, is anything but simple.
To illustrate the point, let’s look at two completely fictional neighbors based on absolutely no one in particular.
Both Neighbor 1 and Neighbor 2 own homes that are approximately 2,500 square feet and were built about 30 years ago. They each own two vehicles under 10 years old, both carrying full coverage.
Neighbor 1 (Lower Premium)
What he disclosed to Carey Insurance Group:
- He replaced his roof in the spring.
- He has centrally monitored fire and burglary alarm systems.
- He told his agent he was a member of AARP and AAA, and that his alumni association offered insurance discounts through some carriers.
- He selected paperless billing and email correspondence over US Mail.
- He agreed to participate in a driving-monitoring program for additional savings.
- He opted into an electrical monitoring device that can detect issues that commonly lead to house fires.
- He and his wife both completed the free Defensive Driving course offered through Carey Insurance Group.
- He signed up for Auto-Pay.
What he did not disclose:
- His 16-year-old daughter regularly drives the family vehicles but is not listed on the policy.
- He owns a dog belonging to a breed with a high bite risk.
Neighbor 1 did a lot of things right. He took advantage of nearly every discount available to him. When he replaced his roof and installed alarm systems, he let us know. He completed the Defensive Driving course and listened carefully while his agent asked questions about memberships and affiliations that could qualify him for additional savings.
But what he didn't tell us could potentially cost him far more than a few dollars in premium.
Adding a youthful driver to a policy can significantly impact insurance costs. Teen drivers simply have less experience behind the wheel, and let's be honest—their decision-making skills can be... questionable at best.
If a teenager lives in the household and regularly drives family vehicles without being listed on the policy, some insurance companies may deny coverage for claims involving that driver.
The same issue exists with the family dog. Certain dog breeds may be excluded or limited under some homeowner policies. If the insured never mentions the dog, he may assume he has coverage for a liability claim when, in reality, he may not.
Neighbor 2 (Higher Premium)
Neighbor 2 rushed through the quoting process and provided only the information he thought was necessary when his policy was written.
- He couldn’t remember when his roof had been replaced, so the insurance company was left to assume it was original to the home. Since roof age plays a significant role in homeowner rates, that assumption mattered.
- He properly disclosed his 17-year-old son as a driver, but never had him complete a Defensive Driving course or submit report cards for available good student discounts, even though he was consistently an honor roll student.
- He declined paperless statements.
- He turned down a home monitoring device that could have qualified him for additional savings.
- When his agent asked questions about clubs, memberships, and civic organizations, he didn’t have time to go through them.
- He and his spouse both had traffic violations within the last three years.
- He declined auto-pay and was late on monthly payments twice, resulting not only in late fees, but potentially a higher renewal premium due to poor payment history.
- He also declined to provide his Social Security number for a soft credit inquiry. Even though his credit score was over 800, the carrier couldn't apply any credit-based discounts available to him.
Neighbor 2 actually did one very important thing correctly: he was honest. His risks were properly disclosed, which means that in the event of a loss, he is much more likely to have the protection he expects. But honesty alone doesn't guarantee the best premium. Because he rushed through the process and skipped opportunities to provide additional information, he may have left hundreds (possibly even thousands) of dollars in available discounts on the table.
The takeaway? Spending a little extra time reviewing your policy with your agent can make a huge difference. Insurance isn't just about finding the cheapest price. It's about making sure your coverage is accurate, your discounts are maximized, and your family and assets are properly protected.