Many people in New York State, actually, across the entire US view auto, home, and business insurance as a commodity. But, insurance is anything but, it’s not like a pound of sugar that is the same thing at any store only with a different price tag.
An insurance policy is not something that is tangible, holds beauty, or can be sold to your neighbor, but the value is almost limitless to those who need it after a bad car accident, home fire, or a million dollar liability lawsuit after a customer -fall and injury at their business.
Shopping for a generic insurance policy and going with the lowest priced option can get you into trouble if that policy doesn’t have adequate coverage limits or the protective options that you need. Unlike a pound of sugar, insurance policies are made up of many different ingredients and the recipe for adequate coverage for you is unique to your specific requirements.
For instance, say you own a restaurant, leasing a space in a popular strip mall. The cost of everything is going up, from employees to food costs to rent, so you decide to shop your restaurant insurance policy to see if you can save some money there. You call the “Sugar Agency “, who spends 5 minutes with you on the phone and sends you a quote within 30 minutes. You then call the “Spice Agency” who spends an hour with you on the phone asking a multitude of application and underwriting questions and offers to visit your restaurant as well. Spice Agency takes some time gathering quotes with their companies based on best price and coverage needed, sending a quote by the close of business on the following day.
Both quotes are less expensive than your current policy premium, but the Sugar Agency quote is 20 percent less than the quote offered by the Spice Agency. So you should go with the Sugar Agency quote, right?
Not so fast. A further look into the Sugar Agency quote reveals only $300,000 general liability and $50,000 tenants fire legal liability coverage with no water/sewer backup protection no coverage for the $50,000 in space interior improvements installed by the restaurant owner.
The Spice Agency knows that restaurants need at least $1,000,000 general liability as customer injury claims often reach $1 million and sometimes more, and include a $2 million limit. They also know that the per square foot cost to replace the interior of their space would be in the $400,000 range and make sure to include $500,000 coverage in the event a fire emanating from the establishment resulted in a total loss. Knowing that the average cost to remediate and clean up a sewer backup in a restaurant is $40,000, they include $50,000 water/sewer backup protection. They did not miss the $50,000 of space improvements made by the owner in flooring, wall covering, fixtures, custom counters, etc., and add that coverage as business property.
After reviewing both quotes and speaking with agents at both agencies again, the restaurant owner thankfully decides to go with the Spice Agency, understanding that the Sugar Agency option with its low limits and omission of vital coverages could cost the owner tens of thousands up to a million dollars or more for common claims that can and do happen. The owner also views the 20 percent higher price as a bargain in comparison to the other low-ball offer.
The example illustrates the importance of working with an insurance agency that puts your best interest first, has experience, spends time with you and explains coverages with suggested limits based on their knowledge of the industry.
Auto, home, and business insurance is anything but a commodity and going for the cheapest option is not in your best interest if you have a major claim, when you most need it. Accidents happen, and when they do, you don’t want to find out you are not covered, learning a hugely expensive lesson that not all insurance policies are the same.