More About Shopping Around

The well-known rule about money – make more, spend less – still works, so let’s talk today about the possibili­ties of bringing down the insurance costs.

Before we look at numbers, let me remind you that saving money on insurance should not mean switching to the lower level of protection. Let’s assume that you have already selected an optimal insurance policy (its evaluation and analysis is a topic for a separate discussion) which can be used as a standard for comparison. Market is governed by a number of self-evident rules, and one of them says: there is nothing that is absolutely better on the market. This means that no matter how good your insurance policy may seem, there is always a chance to find some­thing better. So, shopping around, my friends, is a must.

Please bear in mind that Market, with all its competitiveness, never fails to safeguard our interests because we are both its major consumers and providers. That is why there is a tendency for a steady cost reduction of goods and services. It is worthwhile using this tendency for your benefit, making it work for you. The reasons for cost reduction of insurance policies vary in different sections of insurance business. For example, the fluctuations in the cost of automobile insur­ance policies have a cyclic nature. Within the same insurance company, they tend to go up first and then go down again. The reason for these fluctuations is the constant ‘migration’ of clients caused either by the increase or decrease of the insurance cost. To get a clear understanding of this process, let’s compare the structure of the insurance company to that of a mutual aid fund. In other words, the total volume of company’s funds is deter­mined by the number of clients who acquired its insurance policies. Another thing to bear in mind is that statistics of car accidents and insurance coverage payments has nothing to do with the company itself but fully depends on the number of the company’s clients. The more clients, the more accidents; the fewer clients, the fewer accidents. The more accidents, the more money the company spends on coverage payments, and the other way around. The more payments, the larger the losses the company incurs. The company tries to compensate the increase of losses by raising the cost of insurance policies. At this point, the company faces the outflow of clients who start looking for cheaper deals. This, in turn, results in the decrease of acci­dents and company’s losses.

This is a natural cycle which determines the cost fluctuations on the automobile insurance market. Remember the joke: the more we know the more we forget, the less we know the less we forget? Fortunately, it is quite a slow process, in which a noticeable change in the cost of insurance may take three to four years. Additionally, the cost of insurance policy offered by the same compa­ny may differ from state to state. That’s why it makes sense to shop around once a year for a similar coverage but at a lower cost. As a comparison, use the Declaration page of your current insurance policy. Today, Internet allows us to make shopping around easy, fast, and efficient. Just forward your Declara­tion page to your insurance broker or to the companies you consider reliable. I am always happy to help you evaluate the results of your search in order to make the best possible choice.

joseph RozenbergPlease call me for more information: 847-520-7030.