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Why You Shouldn’t Shop For Insurance On Price Alone

Price is an important factor when shopping for insurance, however, it shouldn't be the only one. Here's how to shop for insurance to get best value.

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Insurance can be a significant monthly expense for most home and vehicle owners. It’s common for people to look for the cheapest possible insurance premium to minimize this monthly cost. But price doesn’t tell the whole story. Choosing the least expensive insurance could mean reduced coverage that could land you in a financial mess. Even choosing the most expensive policy might not give you all the coverage you need. Basing your insurance on price neglects a number of important factors that make up an insurance policy and it's no guarantee that you'll be getting the best value when you shop for insurance.

Why shouldn’t you shop for insurance on price alone? What do you need to consider when comparing home insurance or auto insurance?

8 Reasons to Consider More Than Just Price When Shopping For Insurance

1. You might not get the right amount of coverage.

Price does not directly correlate to coverage. You need to consider how much and what types of coverage you’ll need to be fully protected. Some questions you'll want to consider that have nothing to do with price are:

  • What is the limit of your policy?
  • Do you have enough liability insurance?
  • Do you have enough contents coverage to protect the assets in your home?
  • Are you protected against natural disasters that are common in your area?

You want to ask all of these types of questions and receive full details about your coverage. Don’t mistake price to mean coverage.

Keep in mind that insurance is there to protect you from risk. You want to consider worst-case scenarios and purchase the appropriate amount of coverage to protect against those circumstances. For example, would you have enough money in the bank to cover the total replacement of your car if it was stolen? If not, you would need enough coverage to replace the value of your car. If you have that money in the bank, you might be able to purchase a reduced comprehensive coverage on your automobile. 

Talk with an insurance agent, like one of our insurance advisors, to discuss how much coverage you need to fully protect your home, car, or other assets. You can reach our advisors at (844) 300-3364.

2. You may need additional coverage.

A lot of insurance companies will give you a quote for their “basic” coverage. If you don’t look at the coverage details, this quote could be for the bare minimum amount of coverage.

After selecting their basic insurance, the insurer will then convince you to buy supplemental insurance to get up to full coverage. These additional policies can rack up a premium bill, and you could end up paying more in supplemental coverage than even the original quote itself.

Before shopping for insurance, make sure you know exactly how much coverage you’ll need. Compare quotes based on that same coverage amount in order to really understand the price differences between the different insurance companies you shop.

3. Cost can be dependent upon risk and lifestyle.

The premium you’re quoted can be entirely variable. You and your friend might request a quote for the same coverage from the same insurance company, and you could receive different premium quotes. Or you could request a quote for the same limits from two differnet insurance companies and receive two very different quotes. This is because insurance is often dependent upon more than just coverage. It also depends on certain factors, like risk and lifestyle, as well as the different ways insurers weigh rating factors.

For example, your auto insurance might be higher if you drive on the highway to get to work everyday. This puts you at a greater risk of an accident than someone who bikes only one mile on local roads. It also puts more miles and wear on the car, meaning you’ll have a higher risk of repair or replacement.

4. Your premium depends on your deductible.

A low premium cost looks great… until you go to make a claim and find out you have a high deductible. A high deductible means that if you get into an accident, you’ll pay a significant portion (if not all) of the damages or liability out of pocket.

For example, you pay $20 per month for your auto insurance. But your deductible is $2,000. If your car gets totaled, your insurance company won’t step in to pay for a replacement until after you’ve shelled $2,000 out of pocket. A higher monthly premium at $30, though, might mean that your deductible is $1,000. This could mean a significantly reduced financial burden in the case of an incident.

Read related: Should I Have A $500 or $1000 Auto Insurance Deductible?
Should You Have A $100 or $500 Renters Insurance Deductible?
Should I Have A $1,000 Deductible On My Homeowners Insurance?

5. You can get discounts on the price.

The price you see in a comparison quote may not always include the additional discounts that insurer may offer. For example, implementing safety features in your house can reduce homeowners insurance premiums. There are also a number of ways to discount your auto insurance premium, including defensive driving courses and safe driving records.

Bundling can also help reduce price while ensuring the greatest coverage for your home and vehicles.

Talk with an insurance advisor at (844) 300-3364 about how potential discounts would impact your insurance quotes based on discount, insurance company, and current quote. 

6. Price doesn’t indicate financial stability.

A low premium cost could be a red flag. It could mean that the company is not legitimate or not financially secure. You want to ensure that they have the cash to pay you out quickly in the case of a claim.

If there’s a “waiting list,” you could wait months or years to get money you’re owed in a claim. This could create a serious financial issue if you need to fix your home or car quickly and need the insurance money to do so.

You want a reliable, credible company who can and will pay you out in the case of a claim. You can check financial health of an insurance company with A.M. Best Company. Your InsuraMatch advisor will also ensure you only purchase insurance from companies with creditworthiness and high customer service.

7. Companies have different offerings.

Price and coverage are the basics of insurance—but you also want to choose based on the insurance company. What kind of customer service do they offer? What does their communication look like? What do customer testimonials and complaints say about them?

You’ll also want to consider that some insurers have coverage specialties. For example, a boutique auto insurance firm might handle drivers with tarnished records or families with drivers under age 25.

8. It’s easy to shop around.

You don’t have to go with the lowest price just because it’s the lowest. With online technologies and independent insurance agents like InsuraMatch, it’s easier than ever to compare insurance quotes.


Call one of our expert insurance advisors today at (844) 300-3364 to compare quotes and save without compromising your coverage.

Not by the phone? Schedule a call or request a quote online:

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Categories: Auto, Home