Insurance agents are in the business of selling policies, and like any salesman, they must sell the "product." That means that they must find ways to make the policyholders of their insurance company happy. Sometimes this means twisting the policyholder in a particular direction. But if the agent can't do that, then he is not effective as an insurance agent.
An excellent example of twisting insurance is when the agent suggests to a client that they will lower the cost of their homeowner's insurance if they agree to pay a monthly fee to the agent. This sounds good to the client because they have a great deal of credit card debt and want to pay off that debt quickly. However, the client must also be aware that they are not going to get that discount from the agent unless the agent provides them with a coupon. The coupon is an offer that the agent has made. He knows that the discount will not apply if the client doesn't take it from him right away. If the client does go ahead and sign the coupon, the discount will then apply to the monthly payment.
Another example of insurance twisting is when agents try to convince you to take out a policy with them even though you have another insurance company that provides a better product. For example, agents sometimes claim that they are affiliated with the American Automobile Association when, in all truth, they are not. The point here is to make you think you need them because they are associated with a big insurance company. So, even if they don't provide you with the product you want, they are still making money for the company.
Other twisting insurance happens when an agent encourages a policyholder to take out more than one kind of policy with them. This is known as "loan-for-life." A loan-for-life policyholder pays a higher deductible in return for a higher monthly premium. The loan-for-life policyholder is stuck with paying the higher monthly premiums until the loan term has expired.
In addition to loaning-for-life policies, there are other examples of twisting insurance. A car insurance policy that includes a comprehensive and collision may consist of less rental car coverage than the actual collision and comprehensive benefits. The rates for these two kinds of coverage can be quite different, and thus the policyholder ends up paying more for the insurance. While car insurance may seem cheaper in the short term, this could cost the policyholder much more in the long run.
One example of insurance twisting comes when a customer moves from one location to another to secure better rates. Sometimes a person changes jobs and is not happy with their new location. They may need to find a unique position to continue receiving benefits until they find a new job. However, before they leave, they have already purchased a new car or another vehicle. Since they are changing careers, they no longer need life insurance policies that they would have had before they moved.
Car insurance is not the only type of twisting insurance coverage. Homeowner's insurance policies can also be turned to give people additional coverage. Often when homeowners purchase a home, they fail to mention something called a building coverage clause in their loan documentation. As the owner of the property, they are obligated to carry this coverage. While their mortgage company or realtor will often include it in their commission, they are free to have building coverage as an add-on to their homeowner insurance policy at their discretion.
When the insured tenant moves out of the house, they still have coverage even though they have not purchased a new policy. If they have a new insurance agent, they can request that their range is transferred to the new agent. They should note down the agent's name that they want to receive the transfer of coverage from on their insurance application. Then when they move, they can call the agent whose name appears on their insurance application and ask them if the range will transfer over. This is especially helpful for people who move often and do not wish to remember the names of all their agents just because they have moved several times.
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