Home Insurance ‘Loyalty Tax’: How Staying With Your Agent Is Draining Your Wallet

Once you find a product or service that meets your needs, it’s only natural to stick to it. Doing so, however, can cost you. While “loyalty tax” may affect many aspects of life, it’s particularly relevant in the home insurance industry. If you’ve been with the same insurer for years, you may be paying more than you need to. “I've heard homeowners proudly say they've been with the same insurance company for 20 or 30 years and have never filed a claim," says Jennifer Taylor, CEO of Claim Ready in Macon, GA. "They assume that loyalty means they're getting the best possible rate, but that isn't necessarily true."By understanding that being loyal could actually increase your home insurance premiums and that by comparing your options regularly, you can avoid overpaying for coverage and ensure it still meets your needs.Why auto-renewing can cost you Loyalty tax is a lot like renting a storage unit. “New customers may get an attractive introductory rate, while longtime customers see their rates increase over the years,” Taylor explains. The company knows those existing customers are accustomed to staying and may be less likely to shop around.Insurance can work similarly in some cases.“A ca...