Financial Planning for Businesses

Should You Change Auto Insurance Carriers To Save A Few Bucks?

There’s a dark side to switching insurance companies. New paperwork, new premium payments, new automatic (ACH) withdrawals. Is any of it worth the hassle? Sometimes. Sometimes not. A few years ago, I found myself engaged in a conversation with someone about insurance. Yes. Insurance. People normally don’t yammer on about car insurance but this person did.

He loved his auto insurance guy. I think he even referred to him as his “insurance guy.” Not insurance agent. Not insurance professional. Insurance guy. These are official titles, you know? Anyway…

…when I brought up the idea of switching insurance carriers he basically poo-pooed the idea. I wasn’t selling him a new policy, mind you. I don’t sell property and casualty insurance. This person’s issue was that he didn’t care how much he was being charged. If his insurance guy didn’t work with this new insurance carrier, he wasn’t going to change anything.

It’s amazing to me that some people will stick it out and pay more for a service that is, essentially, the same regardless of where you go. Think about it for a moment. There’s not a huge difference between car insurance carriers. Some insurers have cute gimmicks like geckos,  or insanely happy-go-lucky gals with price guns, or cartoonish super-heroes saving the day with….car insurance quotes…

Crickets – *Chirp Chirp*

The thing is, all of these insurance carriers offer the same basic product. Some companies have slightly different coverage rates and names for how they insure your belongings, but the State regulates the insurance industry like nobody’s business. Insurers can’t offer some super competitive product that will drive all of the other carriers out of town. That would be deemed “unfair.” 

Of course, you might not be so loyal to your insurance guy. Maybe you just shop around for a good deal and never give it a second thought. You’ll get a bunch of quotes for car insurance, health insurance, life insurance, or what-have-you. People do actually do that (so I’ve heard). Maybe you should do that, but maybe you shouldn’t do that. Maybe you should analyze what you’re really getting from your insurance guy.

A new insurance carrier, and new insurance guy, might not be as good on the service side of things as your old carrier. The reason you buy insurance is because you’re insuring your valuables. Lots of people just buy insurance and forget about it until they need it. It’s nice to know that the process is simple, and your agent really does care enough to help you fill out a few forms.

What I’m trying to say is that sometimes a good deal isn’t really a good deal. It depends on value and price, not just price. In a sense, focusing on price alone is a fools game. I learned that the hard way. When I was young, I signed up for car insurance with a big-name insurance carrier. They wowed me with how much money I could save in a 15 minute phone call. Turns out that when I needed them most, they dragged their feet and they “lost” proof of coverage that I needed so I got to pay for damages out of my own pocket after faithfully paying premiums for several years. Lesson learned.

There’s nothing wrong with shopping around, but if your new insurance guy’s main focus is on cheap insurance, you might want to head for the door and find someone who understands the term “value.”

January 19th, 2012 | by David | No Comments

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