The Cost of Savings

Undoubtedly one of the first things to come up in conversation with a new prospect is their price. Personal lines or commercial lines, the price is always too high.

You’ve been trained to think this way, too. Its not your fault. A few clever marketing campaigns by some huge insurance companies have made us believe that we’re always paying too much, and the only thing that matters is the price.

While price is an indicator of whether you should look at other policies, it is far from the only factor you should consider and NOT a determining factor.

Here’s a few reasons:

1.??????Cutting cost often means cutting coverage. While that low premium may be pretty sexy when you sign on the dotted line, you may be disappointed come claims time. This is critical in the “secondary” coverages, where your endorsements are. Coverages like water damage, power outages, or industry specific endorsements are critical and frequently left out of the review. If you’re staring at a commercial insurance quote that is significantly cheaper than your current policy, that should be a RED light not a GREEN light.

2.??????Just because a policy satisfies your contract, doesn’t mean it’s the best solution. If you really want an electric vehicle you’re going to buy a Tesla not a hybrid, right? Same thing with insurance. I ran into this with a real estate broker client, who’s Errors & Omissions quote came back higher than they expected. This quote had all kinds of industry specific coverages and endorsements to protect them while at an open house, driving clients around, etc. It was a far superior policy and they went with it because it was the best option, even if it was pricier. This leads to my third and final point…

3.??????You expect it to cover more than it does. When your pipes freeze or Business Income claim doesn’t pay out, you’re going to be mad. After all you’re paying thousands of dollars for a policy that doesn’t come through when you need it. Your anger is understandable, but its not the insurance company’s fault. You signed a contract that obligates them to cover very specific scenarios only. In these scenarios the insurance company isn’t evil, your agent just didn’t do a very good job!

This is why I am so adamant about finding an experienced commercial insurance agent. Our value cannot be overstated, and the ramifications of a poorly written policy could be extremely costly.

If you are looking for a new insurance company/agent, I would be looking for someone who is confident enough in what they do to put the solution you need in front of you rather than the cheapest option. As an agent, its easy to bow to savings as it’s the path of least resistance. But a cut rate policy that leaves you hanging come claims time provides no value at all.

Don’t fall for that trap!