This scene from Tommy Boy came to mind recently while I was shopping for car insurance. Periodically, I shop around just to make sure I am not paying too much. 15 minutes or less right? Well, not really. After submitting your information to multiple different companies and looking at your 6 month quotes, you then become inundated with phone calls, emails and even snail mail all trying to get you to switch to a ‘better’ insurance. For me it all comes down to price. I understand what I am paying for and what the insurance company is obligated to do. It’s a contract. I pay x, you will pay y if I am involved in an accident. It should be that simple. But with over 500 billion dollars at stake worldwide, the auto insurance industry is anything but simple.
So one of the selling points of one of the companies I spoke with was that I would be satisfied with my claim. In fact, it was guaranteed. Never mind that they quoted me more than double the 6 month premium of a national auto insurance company. Doesn’t matter that the quote was hundreds more than my current insurance State Farm, which I am more than happy with. (just want to make sure I’m not paying too much) Didn’t I care about my potential claim experience? Didn’t I want a guarantee that I would be happy with it? No. Let me explain.
At that point I was fed up. They called me, asked me all the info they already had (I submitted it online), wanted to know how much I was currently paying, and then kept trying to sell me their services without giving me a quote. They drive a hard selling technique. So, I responded in kind. I told him I knew he didn’t want to waste his or my time. I didn’t care about the fluff or frills of the policy. If they didn’t hold up their end of the bargain, well, I was an attorney and I would sue them. So, just tell me how much it costs. Too much. Now I knew why he was selling the ease of making a claim with them rather than the price point.
But that got me thinking, are people willing to pay more just so they don’t have as much of a hassle when making a claim with their car insurance? Clearly, some people might. Is that a good thing? Not according to research done by insurance companies. What do you mean Mr. FitzPatrick? Well, according to the results of a 1999 study from the Insurance Research Council, on average those represented by an attorney received 3.5 times more in auto accident settlements. Im not the only lawyer who knows this. When do people get an attorney involved? Usually when its a hassle to get a payout. Based on the study, if my claim experience isn’t satisfactory, and I hire a lawyer, it’s more likely that I will get a larger settlement? So, really, shouldn’t I pay less to have a hassle free claims experience? I wish I had thought of that when I was on the phone.
So, I say get the insurance that makes it really difficult for you to have a positive claim experience. Maybe it is a little self interested, because then you will give a lawyer like me a call. But maybe its in your best interest because then you might get an attorney, and, on average, you are then more likely to get a larger settlement.