What is not being advertised by insurance companies

If you own a mailbox, a radio, a t.v. or a computer you likely see an insurance company advertising one of two things; a “free” quote or some sort of a discount.  Reality is all quotes are free so that is a waste of advertising time.  The second reality is advertising discounts is really not helping anybody lower their rates for any more than an instant.  So, here is what you are not being told when it comes to lowering your rate;

1. Your personal history/statistics/characteristics can influence your rate as much as any discount.  Examples

Save $150 or save $600 which is better

Believe it or not saving $150 is, more times than not, better.   Yesterday I had a morning and an afternoon appointment. In the morning the person saved $600 by improving her auto and home coverage and switching companies.  In the afternoon a different woman was  ready to save $150 by making a similar switch.  So is one better?

Yes, I much prefer the $150.  I was able to improve coverage and lower this persons rate as well.  The difference here is her rate was really pretty competitive which I much prefer to see.  So despite all the commercials, letters and other advertisements bragging about saving $480 or more this just means you did not switch your insurance soon enough and likely missed a change in rates.  So in summary, review your policies every year to avoid a large shift.

Ignore the insurance commercials

Happily I managed to watch a fair amount of football over the last 4 days or so.  Sadly I was inundated with silly commercial after commercial from a handful of insurance companies.  Here are these huge companies with a massive audience, that they temporarily bought, yet they can only pander to your need for humor and entertainment.

As much as I appreciate Mr. Mayhem from a marketing perspective none of it is backed up by facts.  Stop saying “…this might not be covered.”  Most of the situations you present are very basic occurences and this is a futile attempt at creating fear.  At least put something in the fine print.

Do the math before your combine policies

Popular wisdom is to place your auto, home and umbrella with the same company.  While this may be true most of the time it is not true all of the time.  All companies have some form of multi-policy savings available.  Many times this savings combined with the convenience of one company makes this the practical thing to do.  But does it make financial sense.

Let’s say your multi-policy discount on your home insurance is worth $80.  Now you get an auto insurance quote that saves $300.  $300-$80 =$220 is it enough to split up your policies?  Your decision of course, but definitely worth considering.

Inside this envelope is a simple way…

that you could save $500 on car insurance.

This was written on the outside of a marketing piece by a large auto insurance provider.  Inside was a simple letter advising the reader to call.  Great marketing piece, simple, to the point, easy to read and includes a call to action.  The problem I have is calling a phone number and saving $500 on your auto insurance is not really a good thing.

The $639 tire and buying insurance

So somewhere in my travels to and from a new client one of my tires acquired a nail without my permission.  Now the tire needed replacing and there were children to pick up and another meeting to get to so my hand was forced.  There was a wonderful transaction with a very easy to deal with local merchant and 55 minutes later I had four new tires.  Could have done just the one but another needed replacing and the other two were not far behind.

Increasing your income without another job…

Yes, you actually can and the investment is only a couple of hours per year.  How do you do it?  Keep up with your annual reviews.

Dentist, Doctor, Attorney, Accountant, Insurance Broker, etc.  Yes in most instances there is a “preventative maintenance” feature to all of these.  Factually they all save you in the long run and when it comes to the accountant and insurance broker you should be able to profit from these meetings in the short term.

Commoditization of insurance is a good thing if;

As an agent you: 1. Have a lean business with good profitability.  This puts you in a better position to handle market or government based price changes. 2. Understand customers pay you not companies.  Your customers write the check then the company writes a check to you.  Without their money the companies do not get money and you do not get money.  Who is the most important in this equation? 3.  Have a strong “win win” relationship with your customers.  This will give you the benefit of the doubt in certain situations and will create a longer relationship.  Longer relationship will typically be more profitable.  If your customer is loyal and believes they are more of a partner in your business who cares if it is a commodity you aren’t!

The math of lower rates:

The reality is that most families have a choice of at least 10 if not 20 insurance companies that are willing to provide the insurance for their vehicles and home.  So let’s assume you come up with 15.  At least 80% of people will qualify for a rate with all companies, this may not  be a rate you like so let’s say 8 of them are higher than where you are now.  That leaves 7 companies with a rate comparable to yours, maybe a little higher maybe the same maybe lower.  Now what?

Time to expect more

In an age of commoditization, discounts, deals, etc. where does it all end?  How many pieces of mail do you or I have to get in a week wrapped around “discounts up to 40%…”  “give us 15 minutes to save 15%..”  and whatever other deal or program or money saving discount they can come up with.  How about this, insurance is a critical part to any financial plan.  There are so many quality companies available that someone needs to remind the consumer that THEY ARE IN CHARGE.  What is the best way to show this?  VOTE WITH YOUR DOLLARS!  Make your agent work a little.