The Three C’s of Insurance

Daniel Crichlow
Written on January 9, 2017

We have all been in a situation when someone talks about the new insurance policy they recently were sold, or have seen a catchy commercial with promises of how great it will be. Inevitably, the thought creeps into our minds, is it time to shop my insurance? To help answer that question, or to help with your search, remember the Three C’s.

1. Coverage.

Zach is ready to hog tie his current company to a cactus and saddle up with his shiny new company. Woah partner! Consider the first C before you start your search. Do you have good coverage with this company?

Always make it priority to consider your coverage needs. Your current company may be providing you with outstanding coverage, while the new company who is offering cheaper premiums is going to cut your coverage in half. Let’s consider this scenario for a moment. Western saddle comes into town offering premiums that are lower by $250 per year! All right, now we’re talking! Oops, they also dropped your auto coverage from $250,000/$500,000/$100,000 to $100,000/$300,000/$50,000 and took off collision coverage.

You buy the new policy and go out for a nice Sunday drive. On your way back, while spit shining your new cowboy boots, you run into the back of a doctor’s brand new Buggy. The doctor is not seriously hurt, but is taken by ambulance to a nearby hospital. A while later, in court, the judge and jury awards the doctor $225,000. What?! His ambulance and hospital stay bill was only $98,000. True, but he also was unable to work for those two months, and the judge awarded him his lost wages in the judgment. He also had extensive bumper damage to his Buggy for a total of $10,000. So where does this leave us?

The $10,000 will be paid by your new insurance company under property damage liability. The $100,000 will be paid of the remaining $215,000 from personal injury liability. What about the other $115,000? Well, you can use the $250 you saved to help pay off the $115,000 that will be coming out of your bank account, as your new policy will only pay for $100,000 per person. Oh, and by the way, the damage to your car will now have to be paid by you, because Western Saddle took off collision.

So, make sure you think about the coverage you are getting, when you are considering switching companies.

2. Company.

Let’s take the same scenario, except this time, you are thinking about leaving Western Saddle, for Northern Ranch.

Over the 25 years you have been with Western Saddle, you have only had 4 claims. Two auto, and two home. Each of these claims were relatively small, none of them going above $10,000. None of the auto accidents were your fault, and both claims on your home were catastrophic (caused wide spread damage to other around you, not just your own home). However, looking back, you remember that each of the claims you turned in, you had to fight with Western Saddle to get anything out of the claim.

You’ve finally had enough. You decide that it is time to look for a company who values their customers. As you search around for who to let shop your insurance, a friend suggests Northern Ranch. You do a little research, and hear that Ron, a longtime customer of Northern Ranch just had a big fire loss due to lighting. Uh-oh you think, Ron is in for a long fight. Then something catches your attention; Northern Ranch tells Ron that they are not just going to replace the brick siding that was affected by the fire, but to avoid having some brick that doesn’t look quite right, they are going to go ahead and replace all of the brick! Finally, a company who wants to do the right thing for their customer, instead of fighting lasso and cattle prodder to not pay a claim.

It is important when looking for a new insurance company, to think about the claim history, and customer service which that company provides. It will only hurt you if you decide to buy a policy from a company that has a bad track record with claims, no matter how cheap the policy may be.

Extra Credit: When doing research online, be careful what you read. Everyone posts about their bad experiences with insurance companies, not many people post about their good experiences. When reading reviews, take them with a heavy grain of salt.

3. Counsel.

When you are thinking of who to hire as your new agent, think of the counsel they offer. It is very important to not only look for someone who will be able to get you attached to a good company, with good coverage, but also be able to tell you why these things are important. Here are some things to look for in the counsel you are receiving.

Overall knowledge. Does this gun slinger who is helping you purchase a new insurance policy actually know the coverages he is proposing to you? Don’t be afraid to ask him questions on the coverages and amounts he is suggesting. Asking questions not only confirms that this person knows what he is talking about, but also helps them realize that you are serious about finding the best coverage possible.

Risk Management. Does he look more at the price tag of the policy, or at how it will help you transfer more risk from you to the policy? Yes, it is nice to pay smaller premiums, however, many times those smaller premiums give you more risk to carry. It is important to see if your possible new agent is only concerned with price, or making sure that you are covered well, and able to escape the weight of risk as much as possible.

Independence. Does this agent have many companies to look at, or just one? Agents who are tied to only one company will not be able to show you multiple competitive options, and will not be able to go to duel with the company on your behalf, because they only have one insurance option. Having multiple companies means that the agent has more of an opportunity to find you a great policy, and if things start to go awry, then there are other options for you, and your new agent to look at.

So, next time you are thinking about switching companies, think about the three C’s. You may be suppressed at what you find.