[SARAFIL]

Also in the business (opposite side of the house as AF) and have lots of opinions here but will keep it to a few...

1) Water backup from sewers and drains is not covered on a standard home policy and you should consider adding it (the flood exclusion also excludes this unless you add it back). Most will offer it for a small fee.

2) Earthquake, flood, and sinkhole are generally excluded but can be added back in most areas. Up to you if it’s worth it in a lower risk area, might be worth asking for a quote if you want piece of mind.

3) Insurance is a “cost-plus” model and heavily regulated. While people think carriers make a killing by overcharging them, the average profit margin is pennies on the dollar (an unnamed “best in class” carrier that you’d all be familiar with regular cites to their investors that they target $0.04 profit per $1 of premium.). However insurance companies also generate additional profit from investments due to the lag between when you pay your premium and when they pay out claims on average across their book. (Ex. why Buffet loves insurance companies)

4) So why do I get such a huge range of prices? Lots of reasons. Carriers are trying to predict the future based on past data. They bucket customers into similar classes based on risk profiles (state, city, age, gender, claim history, driving record, credit profile..) Every carrier has different models for how they split up customer segments so you get grouped into different buckets. For this reason it pays to shop around. Some carriers are more likely to offer lower prices due to lower cost structure but it’s no guarantee they’ll be cheaper for you because another carrier might bucket you into a more preferred tier. Only way to know where you can get the best price is to shop around. And carriers also update models every few years, so the cheapest today might not be cheapest tomorrow.

5) Why is car insurance so expensive? Why are my rates going up if I have never had a claim? Auto insurance has had a tough run over the past 5 years. A huge spike in miles driven due to cheap gas and rising employment, increase in distracted driving, more expensive vehicle repairs (all those sensors), plus record number of motor vehicle fatalities. It’s a pool so when costs go up everyone pays more. But trust me that drivers with bad records (accidents or violations) are feeling it even more than “clean drivers”. Also keep in mind today’s “clean” drivers could still have an accident tomorrow so they still have to charge them more to account for rising cost of auto claims.