Often when rates go up, or clients are being non-renewed, someone will say to us, “I was talking to my neighbor, and they are paying much less than I am.” This is usually followed up with, “and we have the same house, car, motorcycle, etc.” While trying to be as helpful as possible, we ask questions about the “neighbors” policy, only to be greeted with the response of, “I’m not sure, that’s what they told me. I haven’t seen their policy”. What’s worst, is when the client then says, “but it’s the same thing I have”.
The kissing cousin of the above statement is “I called XYZ insurance company, and they gave me a quote that is identical to what I have now and it’s saving me XYZ amount of money”. Again, as we ask questions, very rarely can the person tell us anything about the “identical policy”. When we ask to see the policy to make sure everything is in fact correct, we are usually greeted with “I don’t have it, they just told me it was identical to what I currently have.”
Much like a social security number identifies an individual, an insurance policy represents hundreds of unique factors that culminate to insure a specific risk for a specific rate. No two policies are alike. Depending on the policy type there can be over 550 different rating factors that go in to one person’s rates. So, if we look at home insurance, things such as age of roof, roof material, roof shape, construction type, claims history, insurance score (FL is a fair credit reporting state), length of continuous coverage, monitored alarm, replacement or actual cash value, the carrier’s exposure in that area, coverages, deductibles, claim propensity in an area, replacement cost estimators, etc, go into the final rate. If we look at auto Insurance, it has just as many, if not more rating factors. Things like the year, make, model of vehicles, vehicle safety factors, engine size, 2-wheel drive or 4-wheel drive, household members of driving age, average age of drivers, garaging zip code, mileage, insurance score, past claims history, years of continuous coverage, length of vehicle ownership, coverage choices, deductibles, homeowner or renter, other supporting policies, prior tickets, accidents, etc.
In closing, insurance is no different than anything else in life. As the saying goes, “you get what you pay for”. Vice versa, there is never a problem with insurance until you go to file a claim. Looking for better options is expected but you need to be careful. Work with a licensed agent that can clearly articulate policy and coverage similarities and differences. The comparison trap is a dangerous game and there are numerous policyholders that have the scars to prove it.
If you need help with policy options, please let us know so we can set an appointment to research and review your insurance protection.
