LET’S TALK INSURANCE BASICS – Making complex insurance stuff easy to understand


Today’s topic:  The TV guy who “saved $$$ on car insurance premiums by switching to XYZ Insurance!”

A few months ago a fast-food sandwich shop had a tag slogan on their commercial that said something like, “If you find someplace that wants you to buy a sandwich from them for $1.00, run away fast.  Something’s wrong with that sandwich!”  Their point was well made.  A cheap price sends a message that something’s not up to par, and it doesn’t take much imagination to envision the unappetizing experience of a below par, $1.00 sandwich.  I like saving money and I love to eat but I also like getting my money’s worth from what I buy and a $1.00 sandwich just doesn’t sound good.


Let’s change that scenario just a bit.  “If you find someplace that wants you to buy insurance from them for less money than anywhere else, run away fast.  Something’s wrong with that insurance!”  Insurance is just like the sandwich, or anything else for that matter, you’ll get what you pay for and a cheap price usually means something’s not up to par.


The insurance marketplace is fiercely competitive.  Insurers compete for the same customers, in the same legal environment, in the same marketplace.  Therefore insurers must sell their products competitively priced or customers will buy from competitors.  It’s that simple.  If you find an insurer that offers insurance for a premium significantly less than other insurers, something’s not up to par.  Ask, “Why, and how?”  There’s a reason why it’s cheap.  You’ll likely find that it’s like that $1 sandwich.  Something’s wrong.


Now, what about all those TV ads that always tell you that you can save money by switching from your insurance to their company?  What about the TV guy who “saved $1,400 per year by switching car insurance to XYZ Insurance?”  How did he do that?  What did he do?  As Ben Marks, vice president of marketing at Anderson & Murison, Inc., an independent property and casualty insurance wholesaler, points out, “Well, that’s because you went from 100/300/100 limits down to the state minimum.”  That’s easy to do.  In fact, some insurance companies only sell the minimum because they don’t want to pay more than the minimum if you have a claim (smart for them, bad for you!)  Serious problems result when you have a claim and not enough insurance.  When that happens, your insurance fails to do the job you bought the insurance to do.


In Oklahoma, the required bodily injury minimum is $25,000 per person, $50,000 per occurrence, and $25,000 property damage.  So, if you’re legal why would you buy more insurance?  The answer is simple.  Let’s say you’re at fault in a wreck (I know you’re a careful driver but bad accidents sometimes happen to good clients.  That’s why you have insurance) and you have minimum insurance and people in the other car(s) have serious injuries.  Your insurance will pay only the minimum for the injuries and you have to pay the rest!  How much might that be?  Well, a helicopter ride to the emergency room costs more than $20,000, then there are ER charges, hospital charges, doctors’ fees, x-rays and other diagnostics, medicines, etc., and don’t forget that you have to pay the injured person’s wages while the he/she is unable to work due to the wreck.  And you have to pay those expenses for each injured person.  Expenses can easily reach hundreds of thousands of dollars.  Your insurance stops at $50,000.  If that’s not enough, the injured people are likely to sue you to pay the rest.  If they win you could lose your home, your savings, your retirement accounts, your investments,… everything, and ultimately be forced into bankruptcy.  Investing a few dollars more in insurance premiums now might save you hundreds of thousands of dollars later.  Interestingly, the difference in premium for insurance with higher limits is often small.


How much insurance do you need?  Call me and let’s talk about it.  Got questions?  Call me.  I’m glad to help.  Even if you’re not one of my clients, I’m still glad to help.  Answers and help are free.  Of course, I hope you’ll consider becoming one of my clients.  I promise to make you glad if you do.