You Get What You Pay For

We purchased our house last summer, and along with it, I “voluntarily” signed up for a long list of projects.  Some I knew about, many of them apparently were put in the very fine print of our marriage contract.  Being a handy guy I figured I could knock ‘em down one by one before the end of the year.  To add to the fun, we also had our first homeowners claim when our toilet overflowed for the better part of an hour.  Props to Heather for knowing where to find the shutoff valve.

After our place dried out, my “to do” list got a lot longer.  I figured could save $100 and put in a new toilet by myself.  With no prior experience, a little help from YouTube and Terry’s Hardware, I went to work and was feeling pretty good about myself.  Three days later, the floor around the toilet was like a wet sponge.  I knew it was time to call the experts before I’d catch more hell for my mistake.

I may have saved $100 up front on plumbing, but it wound up costing a lot more money and time in the long run.  The same thing can be true with insurance.  Everyone feels good about saving a few bucks, especially from the “evil” insurance carriers.  In fact many carriers themselves have managed to commoditize the industry by blasting you with ads about how cheap their insurance is.  I think a lot of people assume it's as complicated as picking up milk from the grocery store - do I want name brand, store brand, or the organic thing.  At the end of the day they're all the same - white, delicious, and liquid.  Back to insurance - as long as you don’t have a claim, everyone is happy – you, the insurance company, and your agent.  The problem is that once you do have an issue, that cheap quote could end up costing you a lot more in the end. 

Maybe it was cheap because 1) your claims adjuster is MIA when you need him; 2) your policy didn’t cover what you expected it to, and you’re left holding the bag; 3) your agent left out some important parts of the policy or it is not programmed correctly (get ready for a not-so-fun surprise year-end audit); or maybe 4) the carrier is buying market share and doesn’t understand your business.  If the carrier is buying market share, see #2.  And again if #4 is true, prepare for a bait and switch or the carrier leaving the market altogether in a few years because they’ve underpriced the market.  And then you’re back to square one again. 

Cheaper isn’t always better.  Saving a few bucks up front could wind up costing you way more than you had bargained for.  Whether it’s unexpected self-insured losses, wasted time, shopping for insurance every year, or dealing with other headaches, at the end of the day it doesn’t end up being a better deal.  I learned my lesson with plumbing the hard way.  Hopefully you won’t have to with your insurance. 

And for those of you wondering, I couldn’t have been happier with how our homeowners claim was handled.  Thank you West Bend Mutual for doing an awesome job!

 Next up… picking a broker.  If you have any topics you’d like me to cover, I’m always open to suggestions.  Stay tuned!

Andy Bertram CPCU, ARM-E
Risk Advisor
620 Main St
Red Wing, MN 55066
Phone: 651-800-6173
Fax: 651-388-8443

www.cobrown.com