Buy the insurance you need, at a fair price; Value: Shop around for price, of course, but also for a quality policy.; DOLLARS & SENSE


The agitation felt when shopping for auto or homeowners' insurance can be eased by following a basic rule of thumb -- determine precisely what coverage you are seeking, and then shop around. Consumers who don't do their research may pay higher premiums or end up underinsured, the experts say.

"When shopping for insurance, it's not always good to just look for the lower price. It's important to shop for quality," says Sheila Stevens, an insurance agent for 12 years who opened her own agency, SIS Insurance Agency, two years ago in Baltimore County.

"People will shop long and hard to save $30 or $50 on a television or stereo," says Bob Becker, associate commissioner for property and casualty at the Maryland Insurance Administration.

"While it may be more fun to shop for a television or stereo, the savings will be greater if the same level of effort is put into shopping for insurance," Becker says.

The Internet has proved to be an effective way to shop for reasonable insurance rates, says Dan Zielinski, a spokesman at the American Insurance Association, a Washington-based trade group that represents 300 property and casualty insurers.

"Like every other industry out there, we're looking at the Internet as another distribution source," he says. "The proliferation of insurance information on the Internet helps create more educated consumers who buy the right product for their needs."

But Zielinski cautions that purchasing insurance online may be a little difficult. "Insurance isn't like buying a chair," he notes. "It's not a hard product that consumers can hold in their hand. It's a contract."

Consumers must be prepared to make an informed decision once a price sounds right, says Joy Hatchette, associate commissioner of consumer complaints for the state insurance administration.

"It's important for consumers to have a basic understanding of what their needs are and what they are shopping for," Hatchette says.

Automobile rates are affected by a consumer's age, address and marital status, as well as the type of car being insured and the driver's record. To save money, consumers could inquire about discounts that may be available for having a good driving record, or multiple policies with the company, or safety features such as air bags, anti-lock brakes and security systems.

Each state has coverage guidelines for auto insurance shoppers. Maryland requires minimal coverage of "20/40/15," or $20,000 liability for bodily injury per person, $40,000 per accident and $15,000 for property damage, and personal injury protection equaling the same amounts.

On Friday, the required property damage liability coverage increased from $10,000 to $15,000.

"The legislature viewed the $10,000 amount as outmoded and that it needed to be increased," says Becker, of the insurance administration.

"Automobiles these days are expensive and $10,000 will not pay for their value," he says. "Neither will $15,000, but it's closer."

With that in mind, consumers should consider purchasing more than the basic coverage, Becker says.

"In case of a major accident, if that's all you have, your insurance coverage will only cover your personal assets up to their limits," he says. "At that point, your personal assets would be exposed."

Underinsuring is also a danger when consumers shop for a homeowner's policy, says Stevens, of SIS Insurance Agency. Unlike the situation with auto insurance, Maryland law does not dictate that a homeowner must have insurance, let alone how much.

However, financial lenders typically make having insurance that at least covers the cost to replace the structure a condition for receiving a mortgage, Stevens says.

"Buying homeowner's insurance to cover the dwelling, liability and personal property is considered basic coverage," she says.

But purchasing additional coverage -- for pipes, drain and sewer mishaps, or expensive jewelry, or especially a home business -- would cost "extra money, but it's worth it," she says.

Before signing up with an insurance company, consumers may want to call the Maryland Insurance Administration to check the company's licensing status. A consumer can also file a Freedom of Information Act request to find what complaints have been filed against the company, if any.

Consumers unhappy with an insurance company can also call the commission to file a complaint, says Commissioner Hatchette. Her office processes about 1,000 complaints a month. The most common concerns are an insurance company's failure to pay a claim and cancellations of policies, she says.

The state insurance administration can be reached at 1-800-492-6116.

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