Theoretically, it is because insurance companies are paying consumers losses.
Unfortunately, that isn't always the case. As discussed here, some
extra costs often push up insurance rates. Rarely are these expenditures
required and benefiting policyholders. Many other expenses incurred (i.e.,
slick television ads and lobbying state officials) do not significantly
add consumers value. Unfortunately, policyholders cannot select which
expenditures they will finance. Insurance is a take-it-or-leave-it proposal.
Policyholders can manage expenses by shopping. Each insurance carrier
has a different expense ratio, the dollar cost of all fees other than
the premium (revenue) ratio.
The percentages of loss and cost are grouped into a combined balance or
number of all losses and expenses divided by the overall premium. Lower
numbers are better: if a carrier has a combined ratio of less than 100,
that means they make a profit on their operations (known as profit underwriting).
A loss ratio above 100 indicates the carrier loses money on its operations.
The net loss cost plus costs are not entirely compensated by the premiums
it receives. Premiums are invested before they need to pay claims. This
investment gain will cover the company's underwriting losses. (This
is the standard for longer-tailed lines, such as workers' compensation,
where the final resolution of lawsuits can take years.)
Insurance firms operate to make profits. Due to a collection of losses
and costs, their actuaries conduct extensive statistical analysis to decide
what premium to charge. In the long run, they usually get it right more
frequently than they get it wrong, and insurance firms continue to work,
often for decades. It's good news. However, policyholders only want
to pay the premium they need to cover their losses and expenses. As a
consumer, you select which insurance carrier you want to do business with.
If you are sufficiently entrepreneurial, you can also compare various
carriers' cost ratios as part of your overall selection criteria.
Carriers with higher expense ratios can provide extra value worth paying
for - or not. As a customer, you can buy cover from which insurance providers.
You can't, however, pick which carrier senses you'll pay. High
insurance rates, driven in part by higher expenses, create opportunities
for nimble conventional insurers, reinsurers, technology companies, insurance
entrepreneurs, and non-traditional rivals. Using state-of-the-art technology,
process changes, and cost efficiencies can be gained to reduce insurer
costs. Beyond incremental changes, a new model could emerge to provide
a similar risk transfer degree (downside protection) without the waste
currently plaguing the insurance ecosystem.
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Are you covered if you hit a deer?
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At what age does car insurance get cheaper?
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At what ages does car insurance go down?
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Can a homeowners insurance claim be withdrawn?
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Can anyone drive my car if I have full coverage?
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Can Home Insurance raise rates after claim?
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Can I cancel insurance after a claim?
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Can I still sue after a settlement?
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Can I sue my mortgage company for not paying my insurance?
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Can insurance claims be reopened?
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Can someone sue you after insurance pays?
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Can you cancel an accident claim?
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Can you negotiate with insurance adjusters?
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Can you prove a hit and run?
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Can you reopen a case after settlement?
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Can you request a different claims adjuster?
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Can you sue for property damage in a car accident?
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Can your car be totaled from water damage?
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Can't get homeowners insurance because of claims?
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Do claims adjusters get bonuses?
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Do cops look for hit and run?
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Do I have to pay a deductible for a hit and run?
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Do I have to repair my home with an insurance check?
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Do I need limited property damage?
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Do insurance adjusters lie?
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Do insurance companies check past claims?
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Do you have to pay a deductible for a total loss?
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Do you need to call police if you hit a deer?
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Does a total loss affect credit?
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Does AAA cover hitting a deer?
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Does Allstate own Liberty Mutual?
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Does being retired affect car insurance?
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Does credit score affect car insurance?
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Does filing a home insurance claim hurt you?
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Does full coverage cover a hit and run?
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Does getting a ticket Raise your insurance?
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Does home insurance cover cracked walls?
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Does homeowners policy cover water damage?
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Does seller have to fix mold?
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Does State Farm cover spoiled food?
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Does State Farm settle before court?
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Does Triple A cover hit and run?
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Does your homeowners insurance go up after a claim?
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How are claims adjusters paid?
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How can I get more money on my home insurance claim?
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How can I lower my insurance after an accident?
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How can I maximize my water damage claim?
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How can you make your insurance cheaper?
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How can you tell if a car has water damage?
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How do cops find hit and run?
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How do I file a homeowners insurance claim with State Farm?
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How do I settle a property damage claim?
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How do I stop my car from hitting my house?
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How do I talk to a home insurance claims adjuster?
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How do insurance companies determine settlement amounts?
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How do you argue with an insurance adjuster?
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How do you haggle car insurance?
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How do you know if mold is in the walls?
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How does a property damage claim work?
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How does hit and run affect insurance?
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How expensive is mold removal?
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How fast does Liberty Mutual pay claims?
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How is a settlement paid out?
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How is property damage calculated?
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How long do you have to file a property damage claim?
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How long does a homeowners insurance claim stay on your record?
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How long does an insurance claim stay on your record?
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How long does an insurance company have to close a claim?
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How long does it take State Farm to pay a settlement?
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How long must providers retain copies of government insurance claims?
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How many claims does an adjuster handle?
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How many home insurance claims is too many?
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How many homeowners claims before State Farm drops you?
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How many insurance claims can you make?
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How much do progressive claims adjuster trainees make?
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How much does a ticket raise insurance?
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How much does AAA insurance go up after an accident?
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How much does insurance go up if you make a claim?
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How much does it cost to fix a flooded engine?
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How much does State Farm pay for pain and suffering?
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How much is AAA car insurance a month?
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How much is AAA car insurance a year?
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How much is Geico insurance a month?
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How much is property damage insurance?
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How much is the cheapest car insurance per month?
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How much property damage should I carry?
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How often does the average homeowner file a claim?
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Is AAA a good car insurance?
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Is AAA better than State Farm?
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Is AAA cheaper insurance?
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Is AAA cheaper than Allstate?
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Is AAA cheaper than Geico?
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Is AAA good home insurance?
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Is Allstate a good insurance?
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Is Allstate better than Geico?
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Is being a claims adjuster stressful?
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Is hitting a pole a hit and run?
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Is it bad to file a home insurance claim?
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Is it worth claiming on house insurance?
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Is it worth filing a home insurance claim?
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Is it worth going to court for a speeding ticket?
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Is it worth making a claim on home insurance?
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Is Liberty Mutual better than Geico?
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Is Liberty Mutual better than progressive?
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Is Liberty Mutual Insurance any good?
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Is mold damage covered by homeowners insurance?
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Is Progressive better than Geico?
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Is there a deductible for property damage?
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Is there a senior discount for AAA?
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Is Total Loss Good or bad?
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Is USAA better than Geico?
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Should car insurance decrease every year?
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Should I be worried about a crack in the wall?
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Should I tell my insurance company about a speeding ticket?
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Should I turn myself in for hit and run?
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Should you accept the first offer from an insurance company?
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Should you speed up when you hit a deer?
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What are factors that affect the cost of paying for car insurance?
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What are factors that affect the cost of paying for insurance?
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What are the 10 best insurance companies?
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What are the 4 types of claims?
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What are the best roadside assistance programs?
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What are the worst insurance companies?
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What cracks are bad in a house?
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What do claims adjusters look for?
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What do you say to a claims adjuster?
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What does a loss adjuster look for?
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What does AAA full coverage cover?
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What does full coverage consist of?
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What does it mean if your insurance claim is closed?
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What does it mean when an insurance claim is settled?
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What does making an insurance claim mean?
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What factors affect car insurance cost?
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What happens after insurance adjuster?
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What happens if my car is totaled and I still owe?
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What happens if someone drives into your house?
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What happens if water enters the engine?
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What happens if you crash into a building?
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What happens if you don't accept a settlement?
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What happens if you get water in your air intake?
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What happens when an engine gets wet?
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What happens when an insurance adjuster comes to your house?
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What happens when you get hit by a car with no insurance?
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What happens when you make a homeowners insurance claim?
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What if adjuster refuses to cooperate?
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What if insurance check is more than repairs?
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What if you don't agree with your home insurance adjuster?
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What insurance is better than Geico?
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What is a good settlement offer?
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What is included in property damage?
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What is it called when someone damages your property?
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What is Liberty Mutual known for?
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What is not covered under homeowners insurance?
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What is sudden and accidental water damage?
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What is the average insurance claim?
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What is the best car insurance for seniors?
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What is the best foundation full coverage?
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What is the best home insurance company?
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What is the cheapest AAA membership?
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What is the difference between water backup and water damage?
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What is the most common homeowners insurance claim?
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What is the most important type of car insurance you should have?
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What is the number 1 health insurance company?
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What is the number 1 insurance company?
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What kind of roof damage is covered by insurance?
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What makes a car insurance expensive?
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What makes a home uninsurable?
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What should I do if I hit a car?
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What should you not say to an insurance adjuster?
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What should you not say to your insurance after an accident?
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What state has the most insurance claims?
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What to do if water leaks through the ceiling?
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What type of insurance covers a hit and run?
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What Will insurance cover for water damage?
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When should you file a home insurance claim?
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Which age group pays the most for car insurance?
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Which insurance companies only ask for 3 years claims history?
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Which insurance company denies the most claims?
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Which insurance company is best at paying claims?
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Which is better Allstate or Liberty Mutual?
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Which is better State Farm or Allstate?
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Which is better State Farm or Liberty Mutual?
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Who are the top 3 insurance companies?
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Who has the cheapest car insurance for seniors?
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Who is cheaper than Geico?
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Who is the largest car insurance company?
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Who pays for damages in a no fault state?
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Who really has the cheapest car insurance?
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Why are some insurance companies more expensive?
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Why do insurance companies lowball?
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Why does home insurance go up after a claim?
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Why is AAA insurance so cheap?
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Why is Allstate so cheap?
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Why is Liberty Mutual so cheap?
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Why is my car insurance so high with a clean record?
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Why is progressive so cheap?
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Will a car run after being submerged in water?
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WILL HIT AND RUN increase my insurance?
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Will home insurance go up if I file a claim?
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Will insurance cover hitting a curb?
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