Why Finding Cheap Insurance, Home and Auto, is Cheap!

bigstock-Risk-Management-6122150Why Finding Cheap Home and Auto Insurance is Cheap!

You might have Googled some variation of “cheap insurance” in the past:

  • Cheap Auto Insurance in my area…
  • Who has the cheapest homeowners insurance in North Carolina?
  • Low cost home and auto insurance…
  • Who has the lowest cost home and auto insurance in North Carolina?

The results returned to you likely began with a lengthy list of Google Ads targeted at the above key words. With a witty smirk, and being the savvy web browser you are, you skipped those ads. Next, you found the first real company website or blog that answered your question. Then, after utilizing the back arrow, every insurance company you recognize appears in the search results on the first page.

So what should you conclude… Everyone, and I mean EVERYONE is advertising the lowest rates! And they all say they can save you money by switching.

Ok, so what? Insurance is Expensive, and I want Cheap Insurance!

Of course you do… However, let’s shed some light on the misconception that we should be seeking cheap insurance.

The root of the problem is consumers’ belief in what they hear in advertisements. Think about how many times you hear or see a message about insurance. I’ve read, you are likely to encounter several dozen images, sound bits, commercials, and billboards in a single day. Marketers are planting in your mind that you deserve the lowest rate in town, and “our company” can give that to you.

I submit a simple fact to you… we can’t all have the lowest rate. It’s simply impossible. Every person’s situation is different. Just because you and your neighbor have the same 2016 Honda Accord doesn’t mean you will pay the same to insure it. Where you live, your driving record, and to an extent, your credit score, will all have an impact on your rate. (More on this topic in a later post)

With that in mind your goal then is simple, you should have the best insurance coverage you can afford.

So, next time you are at a backyard BBQ talking about who pays what for home and auto insurance, you will be able to proudly state your success as an educated consumer, rather than be “Mr. One-upper” with the lowest insurance rate. I also hope we erase the phrase cheap insurance from your mind altogether and provide you with a better process to follow when shopping for insurance policies.

I’m Listening…

You see: The green lizards, good hands, and store clerks, (think: most any company that advertises insurance on Monday Night Football) all want you to believe that insurance rates are just like airline ticket prices. You need to get from point A to point B in the fastest and cheapest way possible. Their goal is to take your information, show you pricing, and collect payment in 20 minutes or less.

These companies will spend millions of dollars building your trust in talking animals and large personalities. They want you to believe that home and auto insurance is a commodity (think: gasoline, corn, silver, gold, and cattle) and if they shave a few pennies off the price and hold up a big flashing sign, you will buy from them.

Here is the problem, insurance coverages are NOT all created equal.

The other, larger problem… You already know every policy is different, but you still buy on price alone!

OK, You Have My Attention.

Let’s paint a picture. Assuming you have had insurance of some type in the past, you’ve likely received your policy in the mail and took one of the following actions;

1) Opened it, flipped through it and threw it back on the kitchen table, then in 3 days filed it away thinking “I’ll read this if I ever need it.”

2) Leave it unopened on the kitchen table and then filed it away two weeks later saying “I’ll read this if I need to file a claim.”

Sound familiar?

Fast-forward 7 years. One evening, someone who is driving illegally without insurance is playing Pokémon Go behind the wheel (I don’t play but check out the link if you curious on how it works). He smashes into your new $50,000 SUV. Now a sobering fact, you only carry the state minimum limits for “uninsured drivers” because it made your policy.. sigh… CHEAPER. Again, the person who hit you doesn’t have insurance, so your company tells you that you only have $25,000 per accident for this type of situation.

So you’re furious, and hire an attorney to try and argue it’s the insurance company’s fault that you only received half the value of your vehicle. After all, you have been paying this company for 7 years and never had any problems! Many weeks and court fees later, you settle on an additional $5,000 from the insurance company. Still, you end up with a $20,000 bill to replace your vehicle. After all that is behind you, a standard issue envelope comes in the mail with a letter from the insurance company. It reads, “We thank you for being a loyal customer and wish to advise you that we are not renewing your policy”. Before your head hits the pillow, you have burned up your keyboard, pulled up Google, and found your next favorite and more trusted talking animal.

Here’s an interesting fact though – increasing your limits to appropriate levels would have only cost you an extra $15 a month, on the high end!

See the problem? You have NO IDEA what you bought. All you know is, you have to have it, the policy looks confusing and complicated, it was CHEAP, and you have “coverage”.

Now let me be as clear as possible, I’m not saying you should endlessly increase your coverage limits. If you did, you would be over insured. What I am saying is you need to better understand your insurance policies and what your options are BEFORE you buy anything.

Filling out a web form that spits out and compares the cheap insurance does not adequately account for all the complexities of your situation. Having someone who is trained and has developed an expertise in insurance coverages in your state will always be able to provide you with the best coverage at a price you can afford.

6 Step Process for Buying Home and Auto Insurance

As a rule, you should find someone who will help you BUY insurance rather than someone trying to SELL you cheap insurance. Let me repeat that, find a real professional who will help you BUY insurance rather than SELL you anything. Consider the following process:

  1. Gather your current policies together and read through the basic coverage parts

You may not entirely understand everything in your current policy and that’s OK. Be prepared to speak with a professional about the details of your home and vehicles, what you currently insure, and what you might need.

  1. Search for an independent insurance agent in your area

Google, “Independent Insurance Agents in my area.” You may also try and search for an insurance “broker” in your area. These agents and their offices will often be associated with an organization called “Trusted Choice” or IIABA. These agents don’t just work for one company, they have access to dozens of markets and can shop for the most competitive prices and coverages for their clients every day. This gives you an huge advantage. You will save time and money while someone else works on your behalf.

  1. Schedule a meeting, in person or over the phone, and be prepared to provide details

During this time, ask lots of questions about what companies will be shopped and how quickly you can expect a quote. BE HONEST! I cannot express this enough. If you’ve had an accident let us know. It will help speed up the process and give your agent the information he or she needs to find you’re the right company and policy. Companies are better in certain situations than others and your insurance broker knows this. Matching you with the right company is half the battle in finding your ideal insurance policy.

  1. Review your quotes with your agent

Be ready with one question “can you explain that to me?”

You may be the type person who places your trust more freely in the professional you hire to do a job. That’s fine, but you should still have a basic understanding about the major coverages you are buying. Also, spend adequate time discussing the company that is being suggested to you. How is their claims service? Do they have local adjusters in the area to respond quickly to a claim? Are they well prepared to handle a major weather event that could cause several claims to arise in your area? Are there any special coverages that are offered? How quickly will the company be able to adjust losses?

  1. Once you feel comfortable with the policies move forward

In a phrase, you are looking to work with a professional who has “the heart of a teacher”. Your agent should have your best interests in mind and be willing to answer any question they can. In general, they should be able to give you confidence that you are making the right decision. If at any point in the buying process you feel uncomfortable or pushed to buy something, walk away. You will have saved yourself money, time, and have taught a valuable lesson to the other party.

  1. Don’t wait until 4PM on the day your policy expires to get new quotes

Your agent will not be able to find you the best insurance coverages at a price you can afford if you do. Ultimately, you will go back into the very cycle you hoped to break. Give yourself adequate time to ensure you are getting what you need. The best outcome of following this process is you will not feel the need to shop insurance every 6 months.

If follow these 6 basic steps you will be more informed about insurance in general. Not to mention, you will have confidence in your provider and will remove the phrase cheap insurance from your vocabulary.

The old adage is always true “You get what you pay for.”

But how can I make sure that this professional really has my best interest in mind?

More on this question in another post, but remember, you’re looking for someone with the “heart of a teacher”. It’s true, there are bad eggs out there. Read reviews, talk with other clients of the agency you are planning to do business with and form the best consumer opinion you can. Quiz us until you feel comfortable working with us. The best agents will welcome this inquiry and help you buy the right insurance for you and your family.

Located in North Carolina? Get a full review of your insurance policies from a trusted independent insurance agent. Visit Callahan and Rice Insurance Group at callahanrice.com and give us a call at 910-484-9695 or toll free 1-877-484-0900. We stand ready to assist you with all of your personal and commercial insurance needs.

-Published by Landon T. Bentham 10/18/2016