Have you ever found that the face value price at the beginning of something ended up costing you much more in the end? Well, I just had this experience buying a printer. I bought the lowest priced printer for $30. In the end, I ended up paying $25 for the special connection cable that I needed and of course no ink was included so I had to spend another $30 on the ink. In the end my $30 printer cost me almost $100 when it was all said and done.

There are many examples of life situations, such as the one I just mentioned. You can buy the cheapest oil for your car, but how much would it cost you if your car broke down while you were on vacation with your family. You can always buy the cheapest gas, but just like with oil, it could cost you a lot more when the car starts breaking down.

This transaction made me think about our decisions to buy things. And I realized that even though we think that we always want the cheapest possible price, I would argue that that is not the reality of our actions. Here is my reason: If we always wanted the cheapest possible price, than we would always stay at the cheapest hotels, eat the cheapest food, drive the cheapest car, wear the cheapest clothes, etc. But the reality is that we don’t always buy the cheapest car, or the cheapest gas, we don’t always buy the cheapest foods, and we don’t always wear the cheapest clothes. Which means that we have other factors that are important to us in making the purchase.

Similarly with insurance, there is always the “cheapest” options, and we have it. However, we also have the medium option and then we have the high end option. What are some of the differences with insurance companies you might be thinking, well here are just a few:

A Company’s Financial standing(if it is weak, it will show on how they pay your claim, because they will try to cut corners)

Billing Fee’s(Some companies will give you the “cheapest” price, but end up costing more because they will add on hidden billing fee’s. Trust me, you would not even notice)

How they pay their claims(All the things are not the same. All things are not equal. All companies do not pay claims the same way. Some will put on used parts on your vehicle and others will insist on new parts. Once again, most of the time you would not even know the difference.)

Your Agent Does your agent have a higher education in insurance? Or is your agent just someone who got a license to sell insurance and is selling insurance as if it were cell phones or anything else. Does your agent really know what he/she is talking about? MOST IMPORTANTLY does your agent represent 1 company or at least 7 or 8 to choose from?(Think about it, if they only have 1 company than how can they get you the best choice?)

Choosing the wrong agent could cost you a lot of money. I had someone come in to my office last week and they said that they love their current agent and that they are great friends. I understand. When we took a look at his policy his “friend” was charging him $3200 for auto insurance that I provided for him at $1400. Is it time to see if you are overpaying? Is it time to see how qualified your agent is? Is it time to start asking some questions? Or are we always going to do things the way we always have done them? My favorite phrase is: “If you always do what you always did, then you will always get what you always got!” In other words,  if you have always been overpaying, than unless  you start asking some questions, you always will be overpaying.

Cheapest insurance carrier, we’ve got it. But we also have the quality carriers as well. I will give you an example of a client who was insured with what he thought was the cheapest price. Last month we had rains, and this particular client was supposed to have coverage for what caused his claim, however his agent decided to save him $20, which meant he did not have this coverage. So I ask you, what is the price and what is the cost when you save $20 but then you do not get $5000 paid for your damages? Think about it.

The author

Edward H. Lukatsky is the President/CEO of Lukatsky Insurance Group. He and his team help businesses all over the country improve profitability through his trademarked Risk Reduction Approach™. This approach consists of identifying the risks, threats and opportunities facing an organization, developing a program to reduce the risks and take advantage of the opportunities, and helping to implement the plan at all levels. He has been chosen as a “Top 20 Producer” in the country by the National Insurance Organization in 2005. He often speaks at industry associations, conferences, and other engagements. You can reach Edward at 617-928-9222 or by email at edward@lukatskyinsurance.com