I might should have saved this article for the month of October, but with the beginning of the New Year, we are seeing an uptick in the number of “Ghost Quotes” and “Ghost Advertisements”. Clients are calling in asking if these proposals are real and viable options. So, I thought now would be the perfect time to address these mysterious quotes that magically pop up in our mailboxes and email inboxes, just as our policies are about to renew.
Most ghost quotes/advertisements are specific to home insurance. However, we do see them from time to time in auto market as well. Home insurance is easier to quote, because most agencies can get a general idea as to when the home insurance will renew, based on when you purchased the home. Auto insurance is a little trickier because, the purchase date of your vehicles is not public knowledge. One of my favorite auto “ghost” advertisements is a carrier that states they can provide you with not only their rates but the rates for other carriers as well. This is a bit of a misleading statement. A carrier’s rates are the only competitive advantage that they have in the marketplace, so why would they freely share that with their competitor? The carrier would literally have to be using each insurance company’s rating system to get an accurate quote. No insurance carrier is going to give its competitors access to their rating system, to provide random quotes. Nope, the idea behind this “ghost advertisement” is to give some preliminary information simply get you to call. Thats it.
For those that have been around for a while, you may remember this “tactic” being made famous by phone companies in the late 90”s early 2000’s. They would advertise that if you switched you could save up to $460.00 on your phone bill. People started to figure out that if they switched their phone service every month, in about 3 months they would get it for free. Unfortunately, everyone figured out that’s not how business works. This same concept has bled over into the insurance industry.
Ghost quotes, and ghost advertisements often come in the form of “hard mailers” and/or emails from third party vendors you may be associated with, such as lenders. With the referring partner getting some type of compensation for the referral. You can usually tell the hard mailer “ghost quote”, as they never list the carrier that they are quoting you with. In addition, the coverages are usually “artificially lowered” to reduce the premium. Agents can alter the insurance replacement cost estimators during the quoting process, which in turn reduces the premium. You will also notice that there is never a list of discounts and/or exclusions. This is because the quotes have the maximum discounts applied whether they are applicable or not. These same quotes also have the maximum exclusions applied as well to reduce the cost you see on the quote. For instance, often we see “ghost quotes” with Actual Cash Value applied to an insured’s Personal Property. An insured has no idea that the “Ghost Quote” has this reduced coverage applied, they just simply look at the premium quoted.
Another side note worth mentioning, many times, Florida based home insurance carriers will save their “Wind/hurricane Capacity” for agents who reside in Florida. This is because they know that they can only take on so much Hurricane/Wind exposure in Florida and try to reserve that exposure for the agents that reside here. I have even seen this done on a county-by-county basis in South Florida. This is important because, often times insurance carriers will give out of state agencies contracts to write their products in Florida. However, it maybe a lessor product or a product that does not include hurricane and/or wind coverage. Again, this is due to the carriers trying to reserve their capacity for agents that live and work in Florida.
Insurance doesn’t have to be scary, but it does have to be done right. If you receive a “ghost quote” proposal in the mail; please understand that is nowhere near the final result and potentially may not even be an option for you in the end. Especially, since insurance contracts are legally binding documents in the state of Florida.
