Friday, May 30, 2008

Buying Insurance: Not a Walk in the Park

I don't know about other states, but buying insurance in New Jersey is quite a prominent, competitive, and overwhelming business for consumers. Let's consider how many layers are involved in this buying process...

First off, it really boggles my mind to think about all of the types of insurance out there. There's car insurance, homeowner's insurance, life insurance, health insurance, and that's just the tip of the iceberg. So let's say you know what type of insurance you need.

Then, each insurance product has dozens of different options that affect the size of your premium and payout. If it's car insurance, you have to determine how much deductible to pay, what bodily injury limits to choose, whether or not to get rental car reimbursement, etc.

After that, you need to weigh all of the various companies that sell insurance. If it's auto insurance you need, you've got State Farm, AllState, Geico, Safe Auto, new Jersey Manufacturer's, Esurance, Mercury, Liberty Mutual, Progressive... well, you get the point. Life, health, and other insurance providers subsequently exist to sell their specific policies, such as MetLife or MassMutual. When purchasing from any given insurance company, you must subsequently consider the reputation of the company (i.e.-- will they be there to pay up when called upon?), as well as price and the ability to build a relationship with you over time.

Finally, in many cases you need to determine which agent you want to buy from. I would wager to guess that most insurance agents are found thru referrals, be it from family members, friends, or trusted business associates. A large portion would also come from marketing efforts. Ultimately, if buying thru an agent, you have to like the person/staff and trust that he or she is on your side. Sure there's a commission to be made on every sale, but are they selling you a particular policy with particular options that are in your best interest? And are they good at explaining the policy to you? Sometimes, these factors are just a gut feeling more than anything since they are intangible qualities.

One bonus level to consider is the rule of thumb that you should compare your insurance rates every few years to make sure you're getting a good deal. Geico is betting big marketing bucks on this fact since they hammer home the notion that you can save money with their services, and do it in a brief amount of time (I'm sure you know their slogan from the thousands of commercials that air daily). But regardless of how easy it is, it adds another layer to already-complicated matchmaking game of finding insurance.

I can't think of many other fields that are this multi-leveled for a consumer to have to make a purchasing decision. Perhaps that's why nobody ever looks forward to buying insurance... True, insurance is a must-have in many aspects of life, but that doesn't mean it's necessarily enjoyable. It's certainly no walk in the park.

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