State Farm Minimum $2K Deductible?

[Aram Fingal]

I just picked up a new client yesterday on a referral from a mortgage person. They were referred to me because their State Farm agent told them that new home policies (they're first time home buyers so only had auto with SF) have a minimum deductible of $2,000.

Can anyone verify this? Are they actually doing that or is this agent pulling some kind of a fast one? Maybe to keep his loss ratio down, or to just get the sale by lowering the price?

The client was really unhappy with the deductible which is why they're going to buy from me. I can get them about the same rate with a $500 deductible. I'm just really curious to find out if this is an actual thing SF is doing or if the agent was fibbing.

WA State in case that makes a difference.

 

[bobson]

I just picked up a new client yesterday on a referral from a mortgage person. They were referred to me because their State Farm agent told them that new home policies (they're first time home buyers so only had auto with SF) have a minimum deductible of $2,000.

Can anyone verify this? Are they actually doing that or is this agent pulling some kind of a fast one? Maybe to keep his loss ratio down, or to just get the sale by lowering the price?

The client was really unhappy with the deductible which is why they're going to buy from me. I can get them about the same rate with a $500 deductible. I'm just really curious to find out if this is an actual thing SF is doing or if the agent was fibbing.

WA State in case that makes a difference.

I don't know about State Farm but I do know I haven't sold a $500 deductible in a long time.

 

[HoosierLife]

When I bought my house 3 years ago they said $1000 was as low as they could go.

 

[CaptiveGuy]

I just picked up a new client yesterday on a referral from a mortgage person. They were referred to me because their State Farm agent told them that new home policies (they're first time home buyers so only had auto with SF) have a minimum deductible of $2,000.

Can anyone verify this? Are they actually doing that or is this agent pulling some kind of a fast one? Maybe to keep his loss ratio down, or to just get the sale by lowering the price?

The client was really unhappy with the deductible which is why they're going to buy from me. I can get them about the same rate with a $500 deductible. I'm just really curious to find out if this is an actual thing SF is doing or if the agent was fibbing.

WA State in case that makes a difference.

I think it varies by state, in MD monoline State Farm issues home policies with a $2000 deductible or 1% wind/hail. The package customers can get a $1000 deductible but even long term customers are getting their deductibles increased to $1000.

Personally, I suggest a $1000 deductible to all of my clients. I don't trust anyone insisting on a $250 or $500 home deductible.

 

[Sales71]

I think they went away from flat deductible to % of coverage A. The minimum I have seen is 1/2% of coverage A so if A is 200,000 so the Minimum ded would be $1000

 

[Aram Fingal]

Well, it wasn't a monoline home as they had their auto with them. Maybe the agent made a mistake in that regard.

A $500 deductible in WA is still pretty much the standard, because our home rates are still pretty good here. The difference between a $500 and a $1000 deductible can be as little as $50 per year or less, so a lot of people still go for the $500. I usually talk to people about the $1k but until the rates go up I don't think it will become the standard. That's why I was surprised that State Farm was telling her she had to take a $2k deductible. I vary rarely sell a policy with a deductible that high because the difference between a $1k and a $2k deductible is usually something like $20 per year.

 

[AIRECS]

I see a lot of companies going to a % because the customer doesn't know what it's a percentage of. I've had at least 10 cases where I ask the customer if they knew what the 1 or 2 % meant on the deductible and they all had no idea. Their response was "it was cheaper and I had no idea that my 150,000 house at 2% coverage A meant 3000 deductible". People have no idea what it means and all they see is a cheaper price. The insurance companies are able to hide a higher deductible this way!

 

[DawnPatrol]

State Farm in most states is soon to require a 1/2% to a 1% deductible on all new business depending upon the Coverage A Limit
Existing on-board business will have that on renewal also, but with a "buy-back" option to the old deductible
For me I try to sell a $2000 deductible on most cases....

 

[hesse]

State Farm in most states is soon to require a 1/2% to a 1% deductible on all new business depending upon the Coverage A Limit
Existing on-board business will have that on renewal also, but with a "buy-back" option to the old deductible
For me I try to sell a $2000 deductible on most cases....

Where are you located? I told my preferred carrier to always stick with a $ amount not a % and for the time they are good

 

[Aram Fingal]

State Farm in most states is soon to require a 1/2% to a 1% deductible on all new business depending upon the Coverage A Limit
Existing on-board business will have that on renewal also, but with a "buy-back" option to the old deductible
For me I try to sell a $2000 deductible on most cases....

I can see that working in a lot of places, but here in WA most home policies are still in the sub $1k price range. So going from a $500 to $1k deductible will save you about $100 a year, definitely worth it although it's less saving than that in a lot of cases. But going from a $1k to $2k deductible will usually save only like $20 per year, not worth it in my opinion. So I'm surprised they're going to implement that here if that's what's going on.