This week I went in for a routine dental visit to get my semi-annual cleaning and passed the checkup with flying colors. Today I saw the claim hit my dental benefits website and the disparity between the Fee Charged and the Fee Paid (that is the negotiated price the insurance company agreed to) was a lot larger than I ever expected. My out of pocket expense was a nice $0, as expected for my routine cleanings, and this was the first time I ever looked at my dental claim so I was surprised to see how much less the negotiated fee was compared to the fee charged. (% Diff was calculated as $ Diff divided by Fee Charged)

This was something my friend first pointed out to me whenever he had work done on his car after an accident, that the fee you would normally pay for service is generally higher than the fee you would pay if the insurance company pre-negotiated the fee, but I didn’t think the difference was this high. But, if nothing else, gives you ammunition (and a big of confidence) if you’ve ever considered negotiating fees with your doctor. If the insurance company can get a 48% discount, by haggling a little bit you should be able to knock off a little from the starting price.

The biggest surprise was the “Additional Intraoral Film” item. I accidentally swallowed when they took the first X-Ray so they had to take another X-Ray of my front teeth. To think that it would’ve been $21 to pay for it on my own and a mere $4 otherwise is pretty ridiculous, an 85% difference!

This is a double-whammy for anyone who want to self-insure themselves because not only do they have to pay out of pocket, they don’t pay insurance company negotiated rates, they pay rack rates (to use a hotel booking term). So, if you’re thinking about self-insuring, certainly keep that in mind (and the fact that you have much more leeway than you probably expect when it comes to negotiating the fee itself).

I had written a post in which I talked about some companies I love and one of them was GEICO, mostly because they were cheap, and bostonmichelle left the following comment:

You like Geico only because you’ve never had a claim or any other problem. Someone put in a fraudulent claim against me, and [Geico] just went ahead [and] paid them even after:

1. I submitted professional photos (at a claim shop) documenting the total lack of damage to my car.
2. I submitted my own photos of my car backed up against a truck of the exact same model of the claimant’s to show there was no way my little car could have damaged his huge truck’s back bumper, and
3. I spent 2 hours on the phone with various people there begging them to look at the photos and tell me how I possibly could have caused that damage.

So, they pay anyway, and my insurance record gets dinged cuz they did so. I had to pursue this case because there was NO WAY I was going to pay higher insurance because they are so stupid. After spending many hours talking with MANY stupid, lazy people at Geico, I finally get a guy whose wife had a fraudulent claim against her. HE got it and fixed my insurance record. It still showed they paid out, but I was now shown as “not at fault.”

Idiots. I’ve gotten the best deal and the best service of my life going through Costco (one of your other favorites). They use Ameriprise, which has been wonderful so far. Plus, you can pay your premiums with a credit card. I bet you could save even more money with them - plus you won’t risk your sanity, insurance record, or finances should you actually need to use your insurance.

I was pretty surprised to hear this mostly because insurance companies aren’t in the business of paying out a lot of money needlessly, they’re usually on the other extreme, looking for ways to get out of paying for something. So I asked for more details and bostonmichelle provided:

The claim they paid was about $450. It sure would have been cheaper to listen to their customer and not the claimant (they lost me as a client immediately, and I’ve been telling my story ever since), but I’m sure they had their reasons.

There was no police report since we both agreed at the time that there was no damage. I hit the guy while I was rolling from a standing stop - about 1 or 2 miles per hour. He had a dented bumper on his tall SUV, but my bumper (on my short little Sentra) was far too low to do that damage. I had hit his tow package hanging down below his bumper. We both agreed there was no damage. Neither of us had a camera in our cars.

He later sent me a quote for $700 or so from a repair shop. It listed his make & model, so I went to a dealer who let me park up right next to the back of the same model and take photos. I had clearly hit the tow package. If he had no tow package, the front of my car would have gone clear under his truck, which certainly might have damaged MY car -but not his.

I sent those pics in AND I went to Geico’s claim shop which put a measuring tape on the front of my car and took their own pics. There was absolutely no damage to my car at all. They sent those pics in. When I talked with the various Geico people, most didn’t have access to the pics. And, no one WITH access ever called me back.

The one guy who helped me knew what it was like to have a fraudulent claim. He didn’t see the photos either. He just had been through it himself and was sympathetic. I don’t know the insurance business, so I can’t answer your questions any more than that. You can post this email if you like. Anyone who wants to help share the pain of dealing with Geico on a claim is doing a good deed, that’s for sure.

By the way, I have NEVER had an accident - one that was my fault or someone else’s. And, I’m 36 and have my license for 20 years.

Again, I would get the hell out of there, if I were you. At least look into Costco’s service. I think you’ll be pleasantly surprised.

Basically it sounds like the person she hit pulled a fast one on Geico and they fell for it, leaving bostonmichelle holding the bag. While you can’t do anything after the fact, this is why it’s crucial to keep a camera nearby (nice if you have a cell phone camera) to take pictures at the scene of the accident in order to have some sort of proof. Your word is nice but evidence is nicer.

All-State has been touting their accident forgiveness policy, going so far as to use President David Palmer as their spokesperson (24 rules!), but did you know a lot of companies offer this benefit? In fact, All-State’s accident forgiveness plan is only better than the competition if you have their more expensive levels of insurance (7-15% more expensive). With their standard policy, you get the same level of forgiveness as most other insurers - one forgiveness in the last five years.

Who else offers one free accident every five years? Basically every one else.

Here’s GEICO’s accident forgiveness policy:

Accident forgiveness eligibility — In most states, many customers who haven’t had an at-fault accident in the previous five years of being insured with GEICO may qualify for accident forgiveness. GEICO will not increase your premium as the result of your first at-fault accident after qualifying for this benefit. (source)

You’ll notice the “most states” part (which will appear in every insurer’s mention of accident forgiveness), that’s actually not a restriction made by Geico but one made by the state regulators themselves. Some states have regulations that change the rules regarding accident forgiveness but a lot of other insurers offer accident forgiveness for five years of insurance.

That’s one more reason, outside of potential loyalty discounts, why you might want to stick with one insurer instead of going with the cheapest option every few years.

Does anyone know if accident forgiveness is required by some state laws? I see mention of how the rules for accident forgiveness depend on state law but I couldn’t seem to find anything for Maryland when I searched.

On your typical renters or homeowners insurance policy, if someone comes into your house and steals your television, you’re covered. The insurance company will either give you money for the value of the television or give you its replacement value (purchase price minus depreciation) and while that is a headache to deal with, your television is covered. That isn’t the case for jewelry and so we’ve decided to get a jewelry rider on our homeowners insurance policy to protect the jewels that I’ve showered my betrothed with.

Erik interjects (from the comments below but they’re very important) and corrects me on the fact that jewelry is covered, the limit is just usually low such that a rider is necessary to fully insure them:

… there IS coverage for jewelry that is stolen. Usually, your policy puts a limit on certain categories of personal property like jewelry, guns, cash, business property, and other special items. Like on my policy, it covers jewelry up to $1000, but only in regards to a theft. God forbid, if you have a huge fire in your home and you had jewelry damaged, then it would be covered up to the full amount of your coverage C limit. Because this limit is so small for jewelry theft, that is why everyone should schedule their expensive jewelry onto their policy, but don’t go thinking that your jewelry isn’t covered at all on the policy.

I thought the appraisal process would be akin to the home appraisal process where the lender wanted their own appraiser doing the assessing. Not so with jewelry. See, with a home appraisal, the lender wants to know the value of the home with respect to the area that its in. They already know the stats (square footage, bedrooms, bathrooms, etc.) and they’re just getting them in context, which is a big part of the value of a home. With jewelry, they don’t know anything and they’re just looking for a certified jeweler to record the information because if a loss occurs, they will look to that appraisal document to assess a current value. What the jeweler appraises the jewelry for is unimportant, except to determine a ceiling really.

Another interesting note for those of you who are recently engaged and thinking about getting insurance, I was able to get the jewelry rider on my homeowners because my fiancée lives at the same address as I do. If she didn’t, it’s technically her property and she would have to get a rider on her policy (if she had one) or she would have to have to get personal property insurance and get it linked to my account.

I found out that you can get insurance without having the jewelry appraised but you can’t file a claim without the appraisal documents. So, this weekend we plan on finding a jeweler to do the appraisal, which will cost something around $50 or so I imagine (I’ve done no research on this except read this little post), and then we’ll get ourselves that rider.

Diamonds better be forever.

If you’re like me, every year you sign up for your health insurance plan through your employer and ever year you do little to check what that insurance actually covers. The only exception to this rule is when you change plans (usually because you changed employers) and then you might compare and contract, but otherwise it’s on autopilot. You probably do that because health insurance is boring, complicated, and your insurance will probably protect you. Therein lies what I enjoy the most about Fred Brock’s book, Health Care on Less Than You Think: it’s simplicity, conversational style, and an ease to read. So what is the book about? It covers basically every aspect of health insurance that you could possible imagine, including health savings accounts, saving on prescription drug medications, and even goes through the fine print of your insurance plan - all with an eye at saving you money and having it cost as little as possible.

(read full article…)

About a month ago I posted about how I was going to start getting quotes for homeowners and automobile insurance from various insurers to see if I could do better than what I was currently paying. Well… it’s a month later and I’ve only gotten one quote. And it’s a quote from a company that doesn’t even insure homes (at least on their website) but they do insure Segways!

Progressive Direct quoted me a svelte $308 per six months, a few dollars less than what Geico was offering, but that included a one time offer of $50 off my bill. Progressive is a pretty big name but had I known they only offered auto insurance I wouldn’t have wasted my time… next week I’m going to get a jump on these insurance quotes, then do an actual comparison with tables and maybe even a chart!

Loyal reader, Angry Dinosaur, decided at the start of this year to sign up for a Health Savings Account health plan instead of the standard HMO plan and as we reach the close of the year, he’s lived to tell about it and give his analysis and thoughts. I’ve always been intrigued by the idea behind the HSA because you can invest the funds in your account but neither my old or new employer offered it as a benefit so I’ve never done the analysis, so I’ll have to rely on the war stories of others.

At the beginning of this year, I chose to sign up for an Health Savings Account health plan (through my employer), rather than picking the standard HMO plan. Without getting into the minutiae of the options, the overall differences are listed below:

HMO Plan: Costs $1,740 per year, covers most things In-Network with a minimal co-pay.

HSA Plan: Costs $1,608 per year, links with a $2,650-deductible PPO plan. That $2,650 is not just the maximum per incident, it is the maximum that I would have to pay in a year.

The kicker to the HSA Plan is that in addition to allowing me to put tax-free dollars into the account, my employer will also help fund it to the tune of $750 per year. For awhile the account earns a paltry 1.5% APY, but all funds above $3000 can be invested in mutual funds or other investment vehicles. Comparing these options back in December, I was thinking, “Well I’m a healthy 24-year-old; I should get into an HSA early so that after a few years I will have a pile of cash to use on medical expenses.”

At least that was the plan. The plan was to take my employer’s free money and to hold it for a rainy day. The plan was NOT to be in the emergency room ten months later. Long story very short: I incurred some medical expenses. (I am perfectly okay now, thank you)

The bill came in around $2000, but because the provider was in my network, I was responsible for only about $1400. Needless to say, that $100 co-pay that I would have had under the other plan was looking pretty good.

There was still good news, though. For one thing, my HSA had about $560 of my employer’s dollars sitting in it, so that would come out of the $1,400. Also, I could deduct the remaining $840 from my taxes, amounting to a savings of approximately $250.

When I really started to look at the details of the HSA and compared the overall cost with what it would have been, it was surprisingly not that bad at all:

Under the HMO Plan: $1,740 annual fees + $100 co-pay = $1,840 for the entire year (assuming the next 2 months go smoothly)

Under the HSA/PPO Plan: $1,608 annual fees + $1,400 hospital bill - $750 employer contribution - $250 tax-savings on the balance of the hospital bill = $2,008 for the entire year

Wow! This was almost the worst-case-scenario for the HSA, and it only cost me an additional $168 dollars over what it would have.

While I was learning how the account works, I also learned some benefits to the HSA that I hadn’t even realized before: the money can be used not only for hospital and doctor visits, but also for things like prescriptions, glasses/contacts, dentist/orthodontist visits, and other expenses even though they are not covered by the PPO. And the account doesn’t have to be funded in order for me to get the tax benefits: I can pay for these things out-of-pocket, save the receipt, and then take a distribution from the account later.

Now that I realize the full benefit of the HSA, I am definitely going to keep the same plan for next year. Even though it cost me a little bit more this year than it would have, there is a much better chance in any given year that it will be cheaper than a standard HMO plan, especially now while I’m young.

Also, a little bit about loyal reader Angry Dinosaur, he is a friend of my fiancée’s from back in college and in the three years or so that I’ve known him, he’s gone to the emergency room at least twice. Once was when we spent a long Labor Day weekend in Canandaigua, NY when he took a boat anchor the face… he’s still pretty though. Thanks for the post A.

Money has a valuable little series called 25 Rules to Grow Rich By that I’ve been reading through and my only complaint is that each rule is devoted to its own page and that you can’t see all of them (or at least maybe a 1 - 5, 6 - 10, etc) on one page so you can pick which one you want to read. So, since I am such a proletariat, I’ve done just that (with links) below:

FYI, the category headings are my own, I take full responsibility for inaccuracies.

Home Ownership, Mortgages, and Debt


1. For return on investment, the best home renovation is to upgrade an old bathroom. Kitchens come in second. [link]
2. It’s worth refinancing your mortgage when you can cut your interest rate by at least one point. [link]
3. Spend no more than 2 1/2 times your income on a home. For a down payment, it’s best to come up with at least 20%. [link]
4. Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%. [link]
5. Never hire a roofer, driveway paver or chimney sweep who is going door to door. [link]

Retirement & Investments


6. All else being equal, the best place to invest is a 401(k). Once you’ve earned the full company match, max out a Roth IRA. Still have money to invest? Put more in your 401(k) or a traditional IRA. [link]
7. To figure out what percentage of your money should be in stocks, subtract your age from 120. [link]
8. Invest no more than 10% of your portfolio in your company stock - or any single company’s stock, for that matter. [link]
9. The most you should pay in annual fees for a mutual fund is 1% for a large-company stock fund, 1.3% for any other type of stock fund and 0.6% for a U.S. bond fund. [link]
10. Aim to build a retirement nest egg that is 25 times the annual investment income you need. [link]
11. If you don’t understand how an investment works, don’t buy it. [link]

Saving for Emergencies, College Education, Everything.

12. If you’re not saving 10% of your salary, you aren’t saving enough. [link]
13. Keep three months’ worth of living expenses in a bank savings account or a high-yield money-market fund for emergencies. If you have kids or rely on one income, make it six months’. [link]
14. Aim to accumulate enough money to pay for a third of your kids’ college costs. You can borrow the rest or use some of your income to help out when your child is in college. [link]

Insurance

15. You need enough life insurance to replace at least five years of your salary – as much as 10 years if you have several young children or significant debts. [link]
16. When you buy insurance, choose the highest deductible you can afford. It’s the easiest way to lower your premium. [link]

Credit

17. The best credit card is a no-fee rewards card that you pay in full every month. But if you carry a balance, high-interest rates will wipe out the benefits. [link]
18. The best way to improve your credit score is to pay bills on time and to borrow no more than 30% of your available credit. [link]
19. Anyone who calls or e-mails you asking for your Social Security number or information about your bank or credit card account is a scam artist. [link]

Buying Stuff

20. The best way to save money on a car is to buy a late-model used car and drive it until it’s junk. A car loses 30% of its value in the first year. [link]
21. Lease a new car or truck only if you plan to replace it within two or three years. [link]
22. Resist the urge to buy the latest computer or other gadget as soon as it comes out. Wait three months and the price will be lower. [link]
23. Buy airline tickets early because the cheapest fares are snapped up first. Most seats go on sale 11 months in advance. [link]
24. Don’t redeem frequent flier miles unless you can get more than a dollar’s worth of air fare or other stuff for every 100 miles you spend. [link]
25. When you shop for electronics, don’t pay for an extended warranty. One exception: It’s a laptop and the warranty is from the manufacturer. [link]

CK asked me, in my post about requesting auto and homeowner’s insurance quotes, what my logic was in not getting collision and comprehensive coverage and so I’ll share it with you all. First though, I want to admit that it’s a risky decision and that it’s not for everyone. I have a relatively new car that still has a higher percentage of value, compared to its saleable value, and so it’s very risky. Let me explain why I did it, plus a little background.

I purchased my first car, a 2000 Acura Integra, about three years ago for approximately $14,000 on eBay. In quoting car insurance I found that it would’ve cost me approximately ~$1500 per year to insure the vehicle (I was 23, single, and in a sporty car) with comprehensive and collision coverage ($1000 deductibles). By removing collision and comprehensive, that price fell to a mere $700 a year. (This is all based on memory, I don’t have my records anymore), a difference of $800 a year. Two years later the car was totaled when a woman in a Dodge Durango ran a red light and t-boned my car. So, if you were to reset the clock, I saved approximately $2,000 in insurance payments. So, in this case, the risk was “worth it” but that may not always be the case.

So why did I self insure instead of getting comprehensive and collision insurance?

(read full article…)

About a year ago I signed up for a homeowner’s insurance policy with Travelers because Geico, my auto insurance company, didn’t offer homeowner’s insurance. If you call Geico, they’ll refer you to Travelers because they have some kind of partnership. Well, a year ago I did just that: I called Geico, was referred to Travelers, received a quote, and signed the policy. The price of the policy, $56.75 per month, was in line with what my friends, who owned homes in the area, were paying so I didn’t comparison shop. Now, a year later, without the business of actually closing on the home, I’ve decided I need to revisit my policy to ensure that its complete and correct for my needs.

My home’s appraisal value at the time of the purchase was $299,999.00 and the policy is for replacement cost. Replacement cost differs from actual cash value in that in the event of something bad, I am paid out the cost it would be to replace something. Actual cash value would pay out the cost of the item minus depreciation, it’s the worse of the two but comes with a lower premium.

Here are the details of my policy:

(read full article…)