Beware of ‘Add-on’ Insurance
Atlanta Journal-Constitution—September 1st, 2010
Watch out for the high-pressure insurance sale.
You might not need the policy and if you do, you might be paying more than you need to.
If you’re buying a car, a home, furniture, electronics or travel — even if you are borrowing money — there is often someone trying to sell you “add-on” insurance for it.
But consumers often are paying inflated prices because of commissions that one consumer group calls kickbacks.
“When you’re not on the make for insurance and someone else is approaching you, then someone is approaching you because they are making a kickback,” said J. Robert Hunter, insurance director for the Consumer Federation of America, a nonprofit association of 300 groups. “That’s a red flag. Slow down. Research. Call a few other people.”
Hunter, a former Texas insurance commissioner and federal insurance administrator during the Ford and Carter administrations, said “reverse competition” is rampant in the add-on insurance business.
Insurance companies, he said, compete to give agents the biggest “kickbacks” to sell their policies, which drives up the price of the products, whether a car or a camera.
In some cases, Hunter said, “reverse competition can more than double the price of insurance.”
Which kinds of insurance might be unnecessary or so bloated with high commissions that they become too costly? The CFA and other groups list these: credit or debt cancellation insurance; title insurance; travel insurance and collision damage waivers for rental cars.
Read More: Atlanta Journal-Constitution
