When most people think about insurance, they think about price first. Am I getting a good deal? Could I find a better deal? These are important pieces of the equation, but certainly NOT what should determine your acceptance or rejection of a quote.
You get what you pay for
This is true in many areas of life, and insurance is one of those where it holds true. Good coverage costs more than bad coverage. The trick is knowing what is “good” coverage and what isn’t.
Insurance is more expensive when it is a type of policy that pays out frequently. Lots of people get into accidents, so car insurance is more expensive than umbrella insurance in general terms. Umbrella insurance rarely pays out, so premiums are very low for how much coverage you actually get. Simply put, if the possibility of having to use your coverage is high, you want to allocate more money for that policy to make sure it will do what you want it to (cover the loss).
How much insurance is enough for you? That’s up to you and how much risk you are willing to take on. My recommendation for starters is 250/500/100 on auto policies PLUS a million dollar umbrella. This configuration costs more money than state liability minimums (25/50/10). The question really becomes how much money do you want to be responsible for if a loss happens? You can have high limits with high deductibles (good for coverage and cost, but more out of pocket if a loss happens) low limits with high deductibles (good for cost, bad for coverage and more out of pocket cost for a loss) and many other combinations. You can have high limits with low deductibles (the most expensive, but good for coverage and low out of pocket cost in a loss situation). It depends upon what is important to you.
When you call for a quote BEWARE!!!! Lots of agents quote minimum limits with high deductibles to get to the lowest price. THIS IS BAD FOR YOU. Is having a cheap price really important if you are going to get sued to cover what your low limits of insurance didn’t cover? If you have to pay for insurance, it might as well cover you decently. If times are really tight, raise deductibles to save money. You may have to borrow some money if a loss occurs and you have a higher deductible to cover, but that is a short term stress. If you lower limits to save money and get sued, that is a long term problem that can take years and years to remedy. You can bounce back from a thousand dollar loan pretty easily. Bouncing back from a $200,000 lawsuit because you saved 50 bucks would feel much worse.
In my experience, strict price shoppers don’t care to be educated and generally don’t like insurance or insurance agents. Therefore, if I detect that someone is interested ONLY in price, I will usually recommend they call a different agent for their insurance. I want to build a business and that means building relationships. In the overwhelming majority of cases, most people start as price shoppers because an agent hasn’t taken the time to explain the difference between price and value. The simple solution is to learn about it by asking questions. Talk to your agent. If they don’t have time for you, contact me and I will be more than happy to answer your questions.