Is cheaper REALLY better?
Let’s talk about why cheaper is not better with auto and/or homeowner’s insurance.
First up, auto
There are many coverages in an auto policy that we could just keep lowering to get a cheaper price. Deductibles, coverages, glass, rental coverage you name it.
Unfortunately, what ends up happening is when you have a claim (especially a liability claim) and you have state minimums, state minimum in New York is $25,000/$50,000 and $10,000 of property damage. Once these limits are reached in a lawsuit, the carrier stops paying and you as a policy holder are on the hook for the rest of it. To increase your liability limits is relatively inexpensive. It increases at a decreasing rate. So when we have people come to our office looking for the cheapest price, we have a certain way we quote, we do not quote below certain standards because it’s more important to protect you then to have the cheapest price.
This is exactly why you have to be very careful when you are getting insurance. Sure, you can go online and find the cheapest policy and technically you have insurance. But what does that really cover? If you are not covered if s claim happens, what’s the point? You will end up paying much more out of pocket in the long run.
Now for homeowners
On a homeowner’s policy the coverages are even more important. One of the coverages in the homeowner’s policy is the actual value of the home itself. What we’re looking for is full replacement cost. What that means is if the home burns to the ground, the full replacement cost is enough money for insurance to pay to rebuild the home.
Unfortunately, we dealt with this scenario not too long ago for someone who we do not insure, but was looking for assistance. Their home was severely underinsured, by a couple hundred thousand dollars. They are going to get an extremely low payout, still have to pay off their mortgage and will not be able to rebuild their home because their Coverage A (value of the home) was not increased substantially over the last couple of years. One of the things that’s going on in the market right now due to our supply chain issues, inflation and just general slowdown of the economy, is the cost of materials and labor is going up. The value of your home three years ago is probably much lower than what it is currently, which means many of these homes are currently under insured. So please check with your insurance agent to make sure there’s coverages are correct. And again, that coverage is cost of materials, cost of labor.
This is not market value, it is not tax assessment value. We use a different value for that assessment, which is why it is important to discuss your home with your agent, and not depend on online forms and online quoting.
Cheaper car insurance may seem like a good deal, but it often comes with significant risks and limitations. To ensure that you’re adequately covered, it’s essential to invest in a policy that provides comprehensive coverage, good customer service, and reasonable deductibles. By doing so, you can enjoy greater peace of mind knowing that you’re protected in case of an accident.
