Technology has given us many opportunities and access to many resources.  However, there are limits to what you want to attempt on the internet.  For example, if you were really sick, you would not seek treatment from a computer based process on the internet.  Even though you might be able to gain some insight to what illness you have, you would probably want a real doctor to to evaluate potentially serious problems.  You probably would not want to find answers to a serious legal problem and you certainly would not expect an internet based lawyer to defend you in court.  You would want to talk to a real lawyer.  The same goes for insurance.  You may be able to get some ideas about rates or even some general information about coverage, but do you trust your knowledge of the subject enough to gamble your family’s financial security by purchasing coverage on the internet?

Many insurance companies want consumers to believe that insurance is a one size fits all commodity, but the reality is everyone has different needs and different exposures.  Insurance contracts are very complex and convincing people that it is so simple that a “Caveman can do it”,  is disingenuous and dangerous to consumers.  I have spoken to many people who have left those one size fits all companies with horror stories about losses that were not covered.  The story is always the same:  The client purchased coverage on line or from a toll free number and received a great price.  However, the client did not know that they were sold a policy that did not have adequate limits or did not have the appropriate endorsements.  To a person, each one of them told me that they would have been happy to have paid a few dollars more to get a policy that actually covered their claims.

The latest trend is the “Pick Your Payment” sales tactic.  The reality is, when you pick your payment, you are actually picking your coverage.  Anyone can sell a cheap policy.  You won’t get much coverage, but it will be cheap.  I think that selling  insurance this way is a disservice to clients and it is misleading to most consumers.

There is a reason why most people prefer to do business with a professional agent.  Clients like to have these contracts explained to them and they like to know what their choices are when they are purchasing a policy.  No one wants to find out what their policy covers after they have suffered a loss.  Plus, if you do have a loss and you need help with a claim, would prefer to call an 800 number, go on line or talk to a professional agent who know you and your family.  By the way, that agent as a vested interest in maintaining a strong relationship with you.  Who do you think is going to help you the most? 

Remember, just because something is cheap does not mean it is better.  Chances are you don’t buy the cheapest car or go to the cheapest restaurant.  You probably don’t ask your doctor about his fees when you need help or question your lawyers fees when you are in trouble.  Price should be a factor, but in the end you need to feel good about the people you do business with.  When navigating the insurance industry you will benefit by having a real, professional, human agent available to answer your questions and to help you during your time of need.  Agents offer something that you will never find on the internet:  Compassion.  What is the value of compassion to you when you have suffered a loss?  How do you quantify the human element?  What is the value of peace of mind?

For most people insurance is a necessary evil like taxes.  However, during a tough economy having the right insurance can make the difference between financial solvency and financial disaster. Cutting back on your insurance policy can be disasterous.

I have seen many customers cut back their coverage in an effort to save a few bucks and it seems almost inevitible that as soon as they do they suffer a loss.  It’s like Murphey’s Law suddenly applies.  Perhaps it’s because the client becomes ultra aware of the additional exposure and increases their odds of suffering a loss.  Regardless of why it happens, it happens so frequently, that it is almost the rule rather than the exception. 

Rather than cutting your coverage, you should be looking at ways to enhance your coverage to get the best value  for your money.  Here are some ideas that you can use to increase the value of your policy and reduce your costs for premiums or potential losses:

1)  Increase your deductible.  You can put the deductible on a credit card and pay it off over time if you suffer a loss.  You could save $50 – $100 per car per year or more with this one change.  You could save another $100 on your homeowners insurance.  Put your savings into increasing the liability coverage.  If you are sued by someone you have injured you will be glad to have the additional coverage.  As a rule, you cannot have too much liability coverage.  People generally sue for $1 million or more.

2)  Purchase deductible waiver for total losses on your car insurance.  The cost is only a few dollars per month, but could save you an unexpected out of pocket expense.

3)  Make sure your car insurance has accident forgiveness.  Especially if you have a young driver in your home.  This can save you from unexpected increases in your premiums because of an accident.

4)  Make sure your home is insured to the right value.  Following a loss the insurance company will determine if the home was insured to 100% of it’s Replacement Cost.  If it falls below 80%, you will have to pay a significant amount of that loss out of pocket.  This is the co-insurance clause on your policy.  If you read it you will learn that it is the policyholder’s responsibility to insure the home to 100% of replacement value.  This could save you thousands of dollars following a loss and may only cost a few dollars per year.

5)  Make sure you have coverage for sewer and water back up.  Especially if you have a basement with a sump pump.  Water or sewage back up losses are always expensive.  The coverage is relatively inexpensive, but suffering a loss without the coverage will cost you thousands of dollars.  If your basement is finished the cost of the loss can escalate quickly.

6)  Make sure you have coverage for changes in local laws and ordinances.  Your homeowners insurance may not automatically cover you for these changes and you may have to pay out of pocket to bring your home up to current building codes.  Law & Ordinance coverage is usually less than $20 per year and it also provides coverage for demolition to un- damaged portions of your home so that the damaged portions can be rebuilt.

7)  Consider getting your Road Side Assistance from your insurer.  It is usually much less expensive than AAA and they offer similar benefits.  This could save you $100 a year.

8)  Consider getting your Identity Theft Insurance from your homeowners insurance company rather than buying it separately or buying it from your bank.  The insurance company uses a third party vendor that specializes in the protection and charges customers a fraction of the cost than if the coverage is purchased separately.
9)  Insure your car and home together.  The discounts with most insurers range from 10% to 25% and apply to both policies.  This one change can save you hundreds of dollars per year.

10)  Young drivers who are good students and maintain a “B” average or better get significant discounts on their car insurance.  This discount can be worth hundreds of dollars per year.

11)  Some homeowner insurance policies offer discounts for customer who are over age 50 and are married.  Check with your insurer, you could save an additional 10% or more.

12)  Loyalty counts with insurance companies.  If you are a long term policyholder you stand a much better chance of retaining your coverage if you suffer losses than a new customer.  Shopping for coverage after you have been cancelled is expensive.

13)  Research companies that you may be considering purchasing insurance from.  Many companies are experiencing financial difficulties because of the down turn in the economy.  To maintain cash flow, some of these companies are under cutting the market prices.  This is a short term strategy that will result in sharp increases in the long term.  Also, insurance companies are not backed by the federal government.  So, if your company goes belly up, you may have difficulty getting claims paid or even changing companies.

I hope these suggestions help you to become a better educated insurance consumer.  Finding value in an insurance policy does not always mean that your policy is the cheapest.  Remember the old saying that the oats are always cheaper once they have been through the horse!  You definitely get what you pay for with insurance.  All companies have to work with the same conditions in a given demographic and if one company is a lot cheaper than another, it is usually temporary.  Look for long term value and a relationship that you feel good about and a company that is financially strong.