Loyalty or good rate home insurance? This is the question!

Once upon a time loyalty was rewarded universally. You are loyal to your employer and your employer looks after you; you are loyal to your bank and your bank responds with care and stability; and you are loyal to your family and sequential generations care for each other with respect and love.

How did it work? Well, sometimes it didn’t. I remember nearly thirty years ago my Dad refusing to change his bank despite my insistence he does. It was obvious to me that the bank is in trouble – all the signs were there in the news (and in the gossip on the street). Now, my Dad was not a stupid man and he was not exactly ignorant about money. He still refused to take his stash out claiming that his loyalty is his honour; changing banks would be disloyal and will rob him of his loyalty forever. I am pleased to say that my Dad kept his honour but lost most of his money!

Having witnessed this and having to help my parents financially for many years, I was determined that I’ll never make this choice: I like my honour but it hasn’t got much to do with a misguided loyalty to a tricky institution. My loyalty is to my family and friends, my honour is core of my being! My dealings with banks and other financial institutions, I thought, would be quite a different matter.

Looking back, I am not convinced that I have abided this insight; sometimes in life learning from and through other people is not enough and one has to make their own mistakes, experience their own failings. During the last couple of decades (since I have been in the UK) combining loyalty and financial dealings has been a truly mixed bag.

On the one hand, being loyal to our bank has been a blessing and we have never got anything but support, sound advice and encouragement from the managers to whom our account has been assigned. When we found ourselves in a big financial mess three years ago, our bank manager suggested workable options to deal with it; our bank lent us the money to consolidate and thanks to that today we can ‘see the finish line’. In other words, our loyalty to our bank has paid off and the last thing I think we will be doing is upping and moving for £100 cash bonus.

Our experience with insurance – any kind of insurance – has been entirely different. I can still see three years ago, the shock of what I believed to be financial ruin still etched on my face, holding our financial statement in one hand and working my computer key-board with the other. Gradually, desperation changed to incomprehension and incomprehension into angst! I just couldn’t believe it!

Our bank statement said that between us we have been paying £300 ($485) per month on life insurance for fifteen years and this offered insufficient cover. My computer screen said that if we change the provider we can get twice the cover for less than one third of this (£79/$128 between us) – and, of course, we were fifteen years older! Our bank statement said that we were paying well over £1000 ($1600) per year on home insurance; my screen said that with another insurer we can get the same level of cover for one third of this.

To add insult to injury, both insurance providers told us that they can match the much lower quotes that we got from other insurers. Now, we may not be very fast learners but the message was very clear: where insurance is concerned, particularly home insurance, loyalty doesn’t pay; you either stay with the same insurer or you get a good rate of insurance.

Why am I telling you all this instead of spreading some Christmas cheer around? Because for us it is time to start looking at home insurance quotes again: our house insurance is due for renewal in early January. Having smartened up, for the last three years we follow a ritual of kind. First, John spends a bit of time collecting and comparing quotes before the renewal is due. Then he talks to our current insurer and if they match the lowest quote we stay; if not, we move. As easy as that! No regret, no looking back.

As to loyalty and honour, my Dad was right: these are extremely important and I do hold them in the highest value. There are areas of my life where these rule and insurance is not one of them!

Where do you stand on loyalty and managing your finances?

21 thoughts on “Loyalty or good rate home insurance? This is the question!”

  1. Loyalty is a terrific trait to have. But as far as my money is concerned, my bank, insurance company or whatever is just another service. If I found a better deal on cable TV or my cell phone I wouldn’t hesitate to make the switch and the same goes for my bank and insurance. 

    I shop around about once a year to see if I can get a better deal on auto insurance, and when my old bank sent me a letter saying they were going to start charging a $10 monthly fee on my account, I left them and went somewhere that didn’t with honor intact  🙂

    1. The Furst Million is the Hardest: My point exactly: loyalty od great but money is money. Btw, our bank offering us really good conditions made this loyalty stuff really easy (and money continued to be money :)).

  2. I have no loyalty whatsoever. Well, if I do get good service, I call my current company and ask them to match the competitor’s package, or at least give me their new customer’s deal for another year. I have been doing that with my O2 broadband for three years and they oblige, but I’d change provider in a heartbeat if they wouldn’t, the normal package is really high. For banking I have used all the £100 offers and kept my old accounts just in case service wasn’t good at the new bank.

    1. @Pauline: Smart! However, I have reached a stage in life (and pre-occupation) where having many accounts becomes couterproductive and I am likely to ferget aboutn them :).

  3. I think all decisions should be based on making the best choice.  I recently switched homeowner’s insurance.  I approached it in a reasonable logical way.  I started with a list of the top insurance companies based on customer service rating.  I called the top three and asked for quotes.  I ended up with the top company and the lowest price.  Since I live in earthquake country, it was important to have full and good quality insurance for a reasonable price.  It was a win/win!

    1. @Krant: I have said this before, but I wish I could be so organised. In fact, if ti were not for John I’ll still be coasting and this knowing full well what the consequences are.

  4. We are loyal people, too, to a point.  Because we live in a rural area, it’s important to stay with local merchants as much as possible.  We have always bought our vehicles from the local dealerships and keep accounts in several local banks.  For insurance, we shop around, always staying local but with very competitive prices.  We only use out of twon services when what we need is just not available locally.  This method has worked well for us.

    1. @Cil: Hey, Cil, nice to see you back. Yes, the local aspect is probably important. I never thought about it since we live is a large city.

  5. We file a claim on our homeowners policy several years ago and shortly after we received the payment for the claim our insurance company increased our deductible.  We had been with the company for 20 years and had two vehicles and the house insured with them and had a good claims history. I am now shopping for a new insurance company!

    1. @Paul: Good luck funding a new company. I know how you feel – when we discovered how we were taken advantage off by our home insurance provider it was very hurtful; but ‘no one puts us in a corver’ any longer.

  6. Loyalty is fine but it has to work both ways.

    Unfortunately most companies seem to feel once they have you as a customer, they don’t have to try too hard to keep you as a customer. You’re just another number

    If you look at the companies and shops you keep going back to, it’s probably because they treat you or have treated you as more than just a number.

  7. Loyalty is highly rewarded in the job market.  But in the insurance sector, a policy holder cannot be loyal forever to the same company all his life.  He has to change his company whenever he is getting better offers.  In my opinion, this happens, in jobs also, we change jobs when we see the salary is not meeting our expectation.

    1. @Alex: You are right; there are very few jobs left where we stay because of loyalty and dedication. In most cases we will live when the situation is not good and/or we get an offer we can’t refuse.

  8. Checking out all these insurances, utility prices and bank charges is one of those things that always seems a bother. Then, when you finally get to it, guess what?

     It takes much less time than you thought!  It has certainly saved us a lot over the years and, every pound we don’t have to spend, we don’t have to earn.

    I always reckon it’s better in my pocket than in theirs. 

    1. @Pat: Hey, Pat, agree with everything you said except the part ablout the pound we don’t spend, we don’t have to earn. This is true but I have started to think that I’ll earn all I can – it is just that the pound I don’t spend I can invest :). Transformation or what!

  9. I have very little loyalty and I believe that’s common among my generation. I agree that I wouldn’t change banks for a $100 sign-up bonus, but I’d certainly switch banks if one offered me much more long-term incentives (such as PerkStreet’s cash back debit card compared to my local bank that doesn’t give me anything).
    I also have no relationship with my insurance company. I just shopped their rates last week in fact. While they’re a great company and provide a service, we pay them for that service.

    1. @WorkSaveLive: We get loads of perks from our bank; including free Airport launge visits which in my case (travelling loads) is a blessing.

  10. Luckily, FDIC insurance means that I never have to make the hard choice between loyalty and protecting my assets. I tend to see myself like your father. I don’t have much in this life besides my loyalty and honor. But if you burn me, then it’s all over. I once worked at an insurance company. I constantly brought them up when anybody was talking about car insurance. Then I was let go, and I have never said a good word about them since.

    1. @Edward: I am a bit more forgiving; but John’s ‘…good opinon once lost is lost forever’. You can see I’ve been watching Pride and Prejudice on the flight to Santiago :).

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