I’ve had Allstate Insurance (ALL: chart, web, Y!) covering my rental property for the last 4 years.  However, last Fall, they sent me a notice that my premiums would go up 52% this year without any explanation whatsoever.

Being the capitalist I am, I understand costs go up over time.  But not 52% at once.

I called for an explanation, and after cutting through the bull, and being passed around to three different people as I worked my way up the ladder, I had a district manager tell me that rates went up on landlord policies due to an increase in fraudulent claims over the past year.

That’s bull!

For one, I’ve never filed a claim, and never had a reason to.  Furthermore, if the company has a problem with fraudulent claims, that’s their problem, not mine.

So I’m doing what every good capitalist would do and exercising my options through my wallet.

Allstate was insuring my single little rental for $950 per year.  Just the structure, mind you, not the contents (that’s what renters insurance is for).  The increase for 2009 brought the annual premium to $1,460 with no increase in coverage.

As a comparison, I insure my personal home with a market value over $150,000 more than my rental, all my personal belongings, AND three vehicles for under the new premium to insure just my rental house.

That just doesn’t smell right.

My new policy is with USAA, whom I carry that home and auto insurance with, and they will insure the rental for the replacement cost, not the value; there’s a big difference.  All the while, USAA’s premium is cheaper than Allstates best quote, even after I assured them I’d not do business with their company unless they offered me something more reasonable.

Allstate’s new premium is based on the market value of the home, while USAA’s premium is based upon rebuilding the same home on the same piece of property with today’s dollars.  So the coverage is for nearly $200,000 more than Allstate would provide.

I’m not buying Allstate’s excuses for a drastic 52% premium increase.  Allstate reported a $1.3 billion net loss, or $2.11 per share, for Q4 of 2008 while expectations were for the company to make $1.35 per share.

In all, I seriously doubt that Allstate needed to raise my premium by 52% due to fraudulent claims.  I suspect they had to raise the premium because they’re not making any money due to poor performance of their own investments.

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Insurance, Real Estate Allstate, Insurance, Rental Property, USAA

Last Friday I had to meet with a benefits adviser from my company; we are switching benefits providers, and there was “some important information that had to be documented, such as beneficiary elections, etc”.

It turned out it was just an opportunity for the provider to try and sell their benefits one on one.

To be honest, I was really turned off by the benefits, or more specifically the number of benefits I was offered. Not that we don’t have enough benefits, that’s not the case at all. There were just too many benefit options above and beyond the standard health, vision, dental, and life insurance.

Among the others:

Voluntary short term disability
This was a strange one. I could elect to buy an additional policy to cover any time not covered by the primary short term disability policy. For just $2.50 out of each paycheck, I could extend the policy by six months. Note that this is not a part of the primary policy, this is a follow on policy. For just $4 more out of every paycheck, I could add my wife to this as well.

Voluntary long term disability
Naturally, the period of time not covered by the short term policy, or the “voluntary” short term policy, OR the primary long term policy. For just $1.50 more, you can extend the primary long term disability policy. Oh, and if you want to add your wife to this policy, it’s just $3.75 more out of every paycheck.

Cancer and Heart Attack Insurance
OK, so sign up for this one, and if you ever become diagnosed with cancer (and one in three men will!) we’ll pay you $5,000 once the official diagnosis is made. You don’t even need to apply the money towards treatment. You could even apply the money towards funeral costs should you end up dying from the cancer. Additionally, if you ever have a heart attack, kidney failure, or other seemingly fatal diagnosis, we’ll pay you an additional $5,000! All this for only $4.95 per paycheck; add your wife and it’s only $10.25.

Oh, and by the way, if you die and the autopsy reveals that you died of a heart attack, we’ll send the check to your beneficiary.

You can increase those numbers to $10,000 (or any other amount for that matter) if you want, but it will cost you!

Deductible policy
This is like a rider for your health insurance. You pay an additional $2.95 per paycheck and this policy will cover your co-pay, prosthetics, x-rays, cat scans, etc. Add your wife for only $3.95 per paycheck.

GIVE ME A BREAK!

It’s very difficult to turn down insurance. After all, it’s your health we’re talking about here! I started thinking about it pretty hard, so hard in fact that I almost started feeling guilty if it turned down the policy.

The gears in my head were turning so fast my hair felt hot. I added up all the additional premiums that would be subtracted from my paycheck, and they totaled somewhere north of $30 per pay period (twice a month).

During the entire spiel, the representative threw in quips that would help fuel my guilt if I turned down the policy. “You know, for just $2 per paycheck you could alleviate whatever additional bills may be associated with little Johnny’s incurable cancer treatment in 10 years…” Who could say no to that? I CAN!

After all, isn’t this what health insurance is for in the first place?

I felt a bit insulted that the rep would come in and try to sell me stuff I don’t need, and in the process make me feel guilty about turning it down.

Part of my aggravation relates to my general observation of the insurance industry. They love to take your money, but they really don’t want to pay out when you file a legitimate claim. They’ll find any excuse and loop hole to deny your claim, and then you have to spend even more money, time and aggravation to fight the fact that they’re not upholding their end of the bargain.

I can just see it now:

“Dear Grant, we’ve received your claim for the nearly fatal heart attack you suffered. However, since your heart attack occurred while you were sitting in a lazy boy watching football and eating Cheezy Puffs with high levels of trans-fats, we can not fulfill your claim at this time. Better luck on your next heart attack!”

What say you? Is there such a thing as having too much insurance?

Health and Fitness, Insurance benefits, Insurance, over insured