“Harrell Insurance, this is Andrew speaking. How may I help you?”
...This is how every phone call into my agency starts. Unfortunately, more often than not, the answer to that question is, “I need the cheapest quote I can get.”
Price has always played a role in a consumer's decision to purchase insurance, but more and more it is becoming the sole variable in why people choose the agent and/or company that they insure their assets with. I would say that a vast majority of people that I insure today would've purchased the lowest liability limits available to keep their premium down if I didn't educate them on how it can affect them. Even some clients with substantial assets are tempted to cut their coverage to save a few dollars. I get it, it's even tempting for me, an insurance agent, because I am “frugal” as I like to call it! First I'd like to address why this is dangerous, and then I'd like to maybe point a finger or two at who is to blame.
“I only want what the state requires!”
I've heard this one plenty of times. People will request that their coverages match the state minimums, which allows a driver to register his/her vehicle, but does not protect the driver or anyone he/she might harm as a result of an accident.
What people don't realize is that what the state requires is only legal if you don't get into an at-fault accident. If you purchase the state minimum in Florida, you are purchasing auto insurance without Bodily Injury liability coverage. This coverage is what pays for injuries sustained to people in the other vehicle when you are at fault and they are injured. While that doesn't sound like it should be a priority, it should be, and here is why! If you were to injure someone in an accident that is your fault, and you don't have Bodily Injury coverage, the state can take your license until you pay that person's medical bills, or, in a best-case scenario, the state will require you to carry an SR22 designation on your license requiring you to have insurance for 3 years with no lapse. And yes, the SR22 is more expensive than a standard type of auto policy. When I tell people about what the lack of Bodily Injury coverage can result in, they usually elect to purchase it.
That's the biggest downside of not having BI coverage, but there is more! Did you know that if you don't carry BI on your policy, most insurance companies don't give you a prior insurance discount, or give you a very tiny discount, when you get a quote with them? The prior insurance discount is tiered with most companies, too, so the more BI coverage you have, the bigger the prior insurance discount you'll get!
In the long run, not having BI, or even having lower limits on BI, can and most likely will end up costing you more! These issues I have mentioned don't even address the legal issues you can run into in the event you have minimal or lower coverage and you have a substantial amount of assets. We can save that for another blog at another time.
“I just love that little talking pig, he is so cute and funny!”
Look, all of us in the industry have accepted the truth: Insurance is not sexy, it never has been, and it never will be. But this is why companies come up with humorous characters and catchy jingles. They'll pay an obscene amount of money on advertising to get you to remember them when your auto insurance is renewing, or if your homeowners insurance rate goes up a couple hundred dollars at renewal. These same companies spend millions of dollars on market research to discover what will catch the attention of their target audiences, and they've obviously found that, “Get a quote in 15 minutes”, or “Average savings of $400 a year”, are the types of messages that drive consumers' time and money.
This has been the story in traditional sales for a long time, but historically, it didn't spill into insurance. Purchasing insurance used to be about being protected and having an agent/company you can trust, and a company that will be there when you most need them. But insurance companies are businesses, and the market is competitive, so if consumers want fast and cheap insurance, they will give it to them... But at what cost? Ultimately, the consumers, the agents, and the companies all bear the responsibility of the Fast & Cheap car insurance movement. We need to get back to focusing on how to protect people's assets the best we can at an affordable price by first addressing an individual's needs, and then talking dollars.
I know that most people who have assets to lose acquired most of those assets by being frugal or trying to cut costs here and there. Cost is obviously vital! If you can't afford an insurance policy with the coverage you feel like you need, it does you no good to purchase the insurance just to lose it later because you can't make the payments. That's where a good agent comes in. Not just an independent agent, but a local agent. Most local agents will have a relationship with their clients; they'll know their situation and where they are coming from. That's important!
Not only that, but a good local agent will fight for you if your company denies a claim or adds a fee on a late payment that wasn't your fault... Situations like that. I know this because I have fought for my clients many times – some I have won and others I have not – but at least my clients have had an advocate trying to resolve issues for them. If you don't have a local agent, guess who has to do the fighting? You! When you don't have an independent agent, that means your agent works directly for the same company that is trying to deny your claim or charge you for something that you don't feel is valid. From there you will have to hire an attorney to try to get your issues resolved, which will take up more time and even more money.
Sometimes being frugal about important matters can catch up to you. So can rushing into a decision without fully understanding what you are signing up for. Skipping an oil change here and there can end up costing you $6,000 for a new motor. All that trouble just to save $50 once or twice a year! It's not worth it.
Don't give into the hype. Let a local, independent agent do all the work for you. We can shop your policy with several companies and find you a rate that you can afford with coverage that we hope you will never have to use. It is possible to find a great local agent who can cater to your specific needs at a reasonable price. We hope you'll call us, but even if you choose another agent, try not to base this important purchasing decision on price alone.