Here’s a question that I get quite often: I keep seeing ads that say I can save on insurance by switching…should I be shopping for cheaper insurance?

As an independent agent I shop your case across quality insurance companies to find you the right insurance at the right price. Some companies out there compete solely on price so there might be some cheaper insurance out there at the same limits. But as I’ve talked about in previous newsletters, coverage terms, contract terms and claims paying processes are different between companies. To offer you that low rate an insurance company might make you schedule possessions up front then fight you tooth and nail in a claim. You might get an economy compact rental car, be forced to use non-OEM car parts or the lowest cost contractor materials for your home, or perhaps find a gray area isn’t covered for liability.

Claims are relatively rare so most customers don’t compare insurance companies on that basis. As a result, mass market insurance companies advertise to build up their brands, that’s why some insurance advertising is so silly. They hope customers will equate “heard-of” with good. They also advertise the “perception” of price.

Regarding the perception of price… insurance companies that compete on price do not say you can save by switching. Instead they say “the people who switched to us saved an average of $300” and hope from that you will assume you can save by switching. But all the people who got quotes and didn’t switch aren’t included. There could have been just very few switchers or there could have been more switching out than switching in. And it’s not clear if the switched coverage was identical!

Buying insurance is a little like buying a fire extinguisher. You shouldn’t buy a cheap plastic one because the likelihood of a fire is low. Of course, insurance is more complicated, and that’s why you have me. I use all my experience to recommend what I would do for myself if I were in your situation.

Feel free to email me any insurance question you would like addressed in a future newsletter. And make it a great day