The year's end is a good time to assess your financial status, gauge your net worth and set financial goals for the coming year. A part of that assessment should be a look at your insurance coverage, says Brent W. Webster, market conduct examiner with the Utah State Insurance Department. You need to be sure that your insurance coverage is adequate to meet your needs and changes in your status.
To help consumers who are shopping for insurance, Senate Bill 10, passed by the 1990 Utah State Legislature, requires the Utah Insurance Department to publish annually a premium comparison of the top 20 writers by premium volume of homeowners and auto insurance in Utah. Other companies that request inclusion may also be listed.Being included on this list is not a "recommendation" by the Insurance Department, says Webster, and you may not want to limit your shopping to these companies.
Homeowner premiums can vary according to the age of your home and its location and condition. And your premiums will vary with any credits or discounts you receive. Auto premiums will vary according to the type, cost and age of your vehicle, where the vehicle is located, who is driving the vehicle, the driver's age, sex and driving record and several other factors. Here, too, you may get credits or discounts depending on options you choose.
The charts on this page (see microfilm) show premium comparisons.
The homeowners table assumes that the home is located in a protection class of one through six (this would include cities of a size such as Logan, Bountiful, Vernal, Price, St. George or larger). The building contents coverage would be that provided by a Homeowners Form 3 with a $100 deductible. The personal liability limit is $100,000. No discounts or special coverages are included.
The auto table assumes that the driver has a clean driving record and drives the vehicle less than three miles per day, on average. The vehicle is a 3-year-old standard auto and is garaged in Salt Lake County. No discounts such as multicar or special coverage such as towing or rental reimbursement are included. (If you live in a county other than Salt Lake County, you will probably pay less for your auto insurance. The number of autos in the area, traffic congestion and average number of accidents in a particular location play an important role in premium rates.)
The coverage quoted provides for the following limits of insurance and deductibles - bodily injury: $20,000 per person, $40,000 per accident; property damage: $10,000 per accident; uninsured motorist: $20,000 per person, $40,000 per accident; personal injury protection: basic benefits; comprehensive: $50 deductible; collision: $250 deductible.
Loss and Expense Ratios: In general terms, the Loss Ratio is losses paid compared to premiums earned. The Expense Ratio is administrative expenses compared to premiums earned. The Combined Loss and Expense ratio is losses paid combined with administrative expenses compared to premiums earned. If the Combined Loss and Expense Ratio is more than 100 percent, it means the company has paid out more of claims and expenses than it collected in premiums. For example, a ratio of 115 percent means the company paid out $1.15 for every $1 received in premiums.
However, notes Webster, these ratios are not really a true picture of the company's overall financial status because they are only for that one line of insurance and also don't include the company's investment income.
Complaint Ratio: The Insurance Department receives complaints from consumers on various types of insurance matters. The Department reviews each complaint to determine if it is valid and then tries to resolve the problem. It keeps a log of all valid complaints and has calculated ratio for each insurance company by comparing the number of valid complaint files closed for every $100,000 premium each company wrote in Utah for the year 1989.
The most prevalent complaints received by the department have to do with the company not paying the claim the way the consumer thinks it should, says Webster.
Complaint ratios in Utah seem to be lower than in many other states, he says. They are generally insignificant. A figure of .750, for example, means the company received three-fourths of a complaint for every $100,000 dollars of premiums.
"That doesn't mean we don't have companies in Utah that get a lot of complaints, but they are not among the top 20," says Webster. "I wouldn't base any drastic decisions on these complaint ratios."
The most important value the charts have, he says, is to show that there is competition in the marketplace. They are a good reminder for consumers to shop around to find the insurance that best fits their needs.
And, he says, they should be a reminder that insurance decisions should not be based solely on premium cost. Other factors should be considered as well, such as the service of the company and agent, the financial stability of the company and whether claims are paid in a fair and timely manner.
For copies of the comparison tables or for more information about insurance industry in Utah, contact the Utah Insurance Department, (801) 538-3800.