The Cheapest Insurance May Not Be The Best Insurance
So you've been shopping for new car insurance, you've got your VIN's, License Numbers, Accident History, Driver Names, and first born child ready to get that quote, neatly organized onto your calling sheet. You flip open the phone book and start dilaing. We all want to save money, so you start calling the "low cost auto" "low down payment" ads and start getting some cheap quotes. Saving money is easy you are thinking and you are ready to buy... but what are you getting?
Being a veteran insurance buyer and agent, I like to keep up with the competition and shop my own policies for a better deal. The sad part is, most of the quotes I receive online are usually the state minimum requirements, or just slightly better than state minimum. You may be thinking, "well it's state minimum so that is good enough". In some cases, maybe, that is if you don't own any assets, or earn any income.
Let me explain what I am saying by telling a short story...
A client of mine for the last 5 years decided to begin shopping his coverage. Our policy had maximum liability limits with an umbrella. The total liability for any once occurence on his policy was $1.5 Million. That sounds like a lot of money, but take in mind, he owned a business, $500,000 home, new Mercedes, several investment accounts, college savings plans for the kids, and needed the protection. Between his home, cars, umbrella, and business insurance he was a $16,000 per year premium client, and life was good for both of us.
Well my client decided to shop, and the dreaded day came, the acord cancellation notice. I called my client and asked if they had received a good policy, and if they were happy ... they were, they didn't want to leave, but the economy was hurting the business and they were looking to save where ever they could. I asked him, "just out of curiosity, how much lower was the total package?" ... "the total was around 9,000". I couldn't touch it without underinsuring him, so I said if things change come on back.
Several months passed and I received a phone call from him. The call went something like ... "I wish I would have stayed with you ... I saved a bunch of money, but the savings is going to cost me dearly." My client had never had an accident before that point, but the Michigan ice storms can be a real bear. You see, my old client was driving a little too fast for conditions and when the young couple crossed in front of him, he couldn't stop.
After the courts and "1-800-sue-them-for-everything" style lawyer was done, he sold his home, his cars, his business, and cashed out his investment accounts. What I had insured for $1.5 Million was insured for the state minimum at the new agents office ... $20,000 per person, $40,000 per accident. The $1 Million dollar umbrella I had on him was a "uneeded expense" according to the other agent. In total the judgment rendered against my old client was for $1,485,753.00 ... his insurance policy kicked in $40,000.
So I ask of you, if you are shopping in person or online for cheaper insurance, take the time to understand what you are buying, and make sure it is adequate enough to cover you should you just happen to look away for a minute, or be a road that is a little too slippery. To him, the extra $600/month for insurance would have kept his home, his cars, the kids college education, and retirement ... what is more important to you?
