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Many groups have an affinity for insurance savings

If you belong to an organization, you might be able to save on your insurance.

Affinity groups such as alumni associations, warehouse clubs or trade associations employ the basic buying-in-bulk principle to insurance. The larger pool of policy seekers produced by these groups translates into a volume discount from many insurers.

That's how my husband and I saved about $500 on our annual auto policy and got more coverage to boot. The university from which my husband graduated struck a deal with a major company to provide coverage for former students.

Our experience is not unusual. Groups generally promise savings over individually purchased policies in the 10 percent to 20 percent range. Costco price club members, for example, are offered discount auto and home rates that the retailer says will "save them up to 20 percent" if they buy the American Express policies through their Costco memberships.

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Of course, there is a catch. Affinity groups aren't providing insurance for free. They do get a cut.

"They're not just doing it out of the goodness of their heart," says Tommy Dietz of Thomas J. Dietz, an independent insurance agency in Bedford Hills, N.Y. "They are getting a piece of the action."

So while you might get a better rate through an infinity program, that rate might not be the very best rate available. In fact, you may find that you could do better by dealing directly with the insurer. Call them up to find out, says Dietz, keeping in mind that you don't have the same clout as a large company or group. But it can't hurt to check.

Inexpensive, but impersonal
Buying as part of a pool of insurers also means you'll be getting no-frills insurance.

You no longer will have a local agent you can call when you have a problem. Instead, you'll be dealing via phone with a customer service representative, who may be thousands of miles from your home. So before you jump into the deep end of a large insurance pool, be sure you are ready to take charge of your insurance needs without a lot of hand-holding.

"You have to be a pretty savvy consumer to go that route," says Jim Armitage, principal of Arroyo Insurance Services Inc., South Pasadena, Calif. "They don't provide a lot of back-end servicing."

And the usual one-size-fits-all affinity insurance policy may not suit you.

In our case, the university offer helped cut our car coverage. But because we live in a rural, fire-prone area, we had to buy special homeowners insurance. Not every carrier offers it and we couldn't sign up via an affinity group.

Finding your niche
So how do you find an affinity group to shop for insurance? Chances are, they will find you.

If you're in the market for a policy or looking to compare, don't immediately throw out the inserts that come with statements or membership notices. Chances are an insurance offer will be among them.

You also can initiate the search yourself. Are you self-employed? A dentist? A retiree? It's a good bet you belong to at least one organization connected with your personal or professional situation: alumni associations, professional groups, credit unions, the Automobile Association of America. These and many other organizations offer insurance deals to their members.

Once you find your niche and associated insurance offers, remember that you still have to shop carefully. Just because a group partners with an insurer, that doesn't automatically make it the best coverage for you.

Check out any affinity policy as carefully as if you were shopping on your own, paying close attention to the policy's fine print. Also be sure to examine the viability of the carrier. A check of the company's rating with A.M. Best, which tracks insurers much like Standard & Poor's rates businesses, can tell you an insurer's standing in the industry.

By being a careful insurance shopper, you'll guarantee that the great group deal is in fact as good as it appears.

Jenny C. McCune is a contributing editor based in Montana.

-- Posted: Sept. 23, 2003

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