Lower Insurance Premiums, or Better Terms & Conditions?
Posted by Andy Gregory on Mon, Jun 01, 2009 @ 09:22 AM
In a meeting with some insurance industry prognosticators this morning, someone mentioned that the signs continue to warn that a hard insurance market is in fact on its way. One of the signs mentioned is that terms & conditions are beginning to recede, which is something that I have been seeing over the last several months. In competitive situations, insurance buyers are now having to decide on whether they take an option that might be 10-20% less premium over a more expensive option with more favorable terms & conditions. Making this even more difficult is the recession, and any financial manager will jump at the chance to reduce costs.
But remember, insurance is just like any other product or service that you buy; you get what you pay for. If you need to haul a 10,000 lb trailer, you don't buy a Honda Civic. Just like any other purchase, your insurance coverage is something that should be based on your needs first and foremost. When it comes time to tow that 10,000 lb trailer, you will rip the bumper off the Civic. Conversely, when you have a claim, the terms & conditions in your insurance policy will be the deciding factors as to whether there is coverage or not and to what degree.
So remember, cheaper is not always better. You should review the forms and endorsements to determine any differences. At least you will understand what you are buying and you can then make an informed decision, even if you are taking on some risk to save premium up front. For all you know, there may not be any major differences and the cheaper option is simply a better deal. But you also might just be saving $10K today to lose $100K tomorrow!