Buying insurance online? So easy, even a caveman can do it? A better question… Why on earth would a caveman need insurance?
Insurance online: Can you afford it?
A previous article, on the death of customer service, focused on my own industry, insurance. And it’s easy to lament the death of service when in fact the issue is not that simple. Just offering automated ways of doing thing is not in itself a bad thing. After all, many people, myself included, welcome technological innovation to the way that we conduct our daily affairs. I like to transfer funds between bank accounts on my smart phone without having to visit a teller face-to-face to do it. Also, I like to use my computer when I book travel. To effectively weigh options used to require a travel agent but now the sites do a good job of comparing amenities, customer ratings and what not.
Insurance Online – Do Not Try This At Home
So it goes almost goes without saying that countless industries are changing in response to this trend. Among those, of course is the insurance industry. Customers can access their accounts online, get quotes and even buy car insurance online. However there is a significant difference between insurance and those industries that lend themselves more readily to automation and technology: Insurance is hard.
In a recent study, average consumers were quizzed on their knowledge of basic insurance coverages and facts. The average score was a paltry 26% correct answers. So it becomes clear that consumers don’t have the grasp of important insurance concepts that is necessary to properly cover themselves buying insurance online without the benefit of expert advice. This does not speak ill of the average Joe, like I said, insurance is hard. I have long since told my new trainees that it takes at least two years before they will truly have any idea as to how to do their job properly. While they scoff initially, to a person they later acknowledge how true that statement is after they have had substantial time on the job.
What You Don’t Know CAN Hurt You
For years now, decades actually, there has been prediction of doom for my job. Independent insurance agents have been said to be on their way out. At first it was the threat of captive agents (agents that represent only one company, State Farm, Farmers, Allstate), then it was direct writers (companies that employ NO agents, only call-center employees: AAA, GEICO Direct, Progressive Direct), today it’s the internet where customers can buy insurance online without the help of anybody. The problem with the latest ‘threat’ to the independent agent is that with internet sales, coverage comparisons and decisions are left strictly up to the insured without input from anybody with a whiff of experience. And having the wrong coverage can be catastrophic.
Unlike other industries that have migrated online, the downside to making an error when choosing the wrong coverage can be catastrophic. Choose the wrong limit of liability and you could lose everything you have so worked so hard for during your adult life. Your home, business, savings, retirement… All these things are at risk every time you get behind the wheel and drive to work, drop your kids off at school or simply run to the grocery store. What about Uninsured Motorist coverage? Well advised you will understand how inexpensive yet critical it is to carry as much coverage as you can. Otherwise, if you are run down by an idiot with no common sense and no insurance. Years of medical bills MAY be covered by your health insurance. What about permanent disability? Extensive therapy? Years of missed work? Assisted living accommodations for an extended rehabilitation? You think a few thousand dollars are going to be adequate compensation for a lifetime in a wheelchair?
Let’s even think smaller. After having an accident in your car, are you willing to pay for a rental out of your pocket, costing well over $1,000? Let’s say you’re covered for rental car by either your insurance or the other guy’s car insurance? Are you ready to drive a Ford Fiesta rather than the Chrysler 300 or Ford F-250 that you were driving when the accident happened? I mean if you wanted to settle for a Fiesta, you would have bought one, am I right? Would you be happy learning after the fact that you could be driving a BMW while your car is out and that option would only have run you an extra $3 on your monthly bill? Is $3 a month worth the difference between a luxury car and a clown car? I can promise you this, it is when you’re entering your 4th week in the Bozomobile.
15 Minutes Could
Save Cost You… Everything
And the worst part about it is that the savings promised by the direct, agentless companies are an illusion. A myth, second cousin to Harvey the Rabbit. You’ve heard the claim from just about every insurance ad out there: “Drivers who switched saved an average of” a millionity-billionity dollars. Let me let you in on a little secret, those direct companies cost MORE. They are LESS efficient, their customers have more and bigger claims. If that’s the case, how can they make such promises? First, they’re not promises, they’re boasts, they’re spin. Did Coca-Cola run an ad saying “New Coke sucks”? No, of course not. But they measure how much less people paid when they bought from them, savings often because the consumers bought less coverage. (Not to mention that they don’t measure all the people that would have paid MORE if they had switched.)
Thank Goodness I Thought I Had Insurance
Without going on too long I would be remiss if I didn’t mention how the problem is even worse when it comes to homeowners insurance. See, home insurance is much more complex than auto insurance. There are crucial provisions in homeowners polices that will quite literally make the difference whether your burnt up home gets rebuilt or not. Did you know that the vast majority of homeowners policies out there are missing a very inexpensive coverage that is often crucial to rebuilding your home? Ever see a house half-burned down that just sat there for years before being demolished and rebuilt? There’s one about a mile from my office where I am writing this, it burned 3 years ago and is not even close to being rebuilt. Yet, A client of mine had a fire just as severe, home was rebuilt inside a year. It’s not that these homes are necessarily uninsured, it’s that they didn’t have a coverage on them that typically runs about $30-50/year. Imagine that, all that money you pay for homeowners insurance every year and it quite possibly won’t even pay to rebuild your home.
Why Buy Insurance At All If You’re Not Covered?
So just remember, this ain’t rocket science, but it ain’t buying movie tickets online either. There is a level of expertise that a knowledgeable agent provides, real-world experience, superior local service, all with a usually better rate on an apples-to-apples basis. So, it makes sense, insure it right or don’t insure it at all. Otherwise you are simply paying all that money for the illusion of security while leaving yourself unprotected.
I don’t care what some crumpet-munching, tea-swilling lizard says.
PS: What is that homeowners coverage that most people don’t carry that is so important? If you don’t know what it is, you probably don’t have it. If you WANT to know what it is, call us for a quote on your home.
(Extra points if you picked up on my Shawshank Redemption homage…)