Price Is not the Only Reason to Choose an Insurance Policy

We have all seen the insurance ads on TV or online. Often, the ad tagline promises savings of 15% or more if you switch. If you really think about it, how can all these companies offer a 15% or greater savings? Couldn’t you keep switching until your premiums were almost zero? Well, not really. Sure, sometimes you can save a few dollars by switching, but there is a lot more to consider.

Many times, a lower rate comes with some unadvertised risks. One such risk could be a high deductible. The deductible is the part of the claim that you pay. Let us say your current home insurance policy has a $1,000 deductible but another policy with a lower premium has a $2,000 deductible. If you do have a claim, you will have to pay that extra $1,000 out of pocket.

Higher deductibles can also prevent smaller claims, making the coverage you have useless in some cases. Deductibles play a valuable role in keeping rates lower for everyone and preventing frivolous claims, but a deductible that’s too high can prevent you from getting your car fixed, or your home fixed, or… you get the idea.

It is also important to compare coverages. Let’s say you’re looking at a home policy. Maybe a lower rate requires that you accept actual cash value coverage for your belongings. If your existing policy offers replacement value coverage, you may be giving up thousands of dollars in coverage if you do have a claim with the lower-cost policy. The way the policy is structured can make a difference in rates but it can also change your coverage. Cheaper may not be better.

Claims service and financial strength are also strong considerations. Let’s face it. Complaining about the cost of insurance has become an informal national pastime, but when we do have a claim, there is not anyone who is not glad they have coverage. Claim service matters, as does the financial strength of your insurance company. It is important to know that your insurer can handle your loss promptly — and that they will not run out of money to pay claims if there is a widespread event, like a storm.

Often, the best way to save money on your insurance is to go over your coverage with your agent or broker. There may be extra discounts available for safety courses or safety devices, for example. You may even find that you have more coverage than you need in some areas — but not enough in other areas. Insurance needs differ from one household to the next and life keeps changing, meaning your insurance coverage should probably change as well. Just reach out to your agent or broker to schedule a review. Maybe there’s money to be saved — but more importantly, you will know your coverage is focused where your family needs it most.