You know what I hate about the insurance industry? It’s pretty basic. I hate that consumers almost always have to pay more than they’ll ever get back.
That time you got your windshield replaced for free, or most of the expenses for your hospital visit were paid for? Maybe it felt like free money at the time. But you’ll pay that back and a whole lot more over time in premiums.
Think about this for a second. Insurance is like an investment that promises you a negative rate of return. Insurance is the only monthly bill you have where you don’t expect to get anything back out of your money. And you want it that way — because the sorts of things insurance policies cover (lawsuits, car accidents, major illnesses, theft, etc.) are things you hope never happen!
The insurance company wants it this way too. They can only make a profit if you get less in coverage than you pay in premiums. (If they thought the risk you would need coverage was higher, they’d raise your premium!) Their goal is to widen that gap between what you pay and what you actually get.
Your goal is to narrow that gap. Being underinsured to lower your premium is a bad strategy — it means you don’t even have coverage when you need it. Buying insurance based on what makes you feel most secure and comfortable is also a bad strategy, since it makes you willing to pay high premiums for coverage you’ll never use. Having an independent agent with professional insurance experience who can help you is a good strategy, because he can get insurance companies to compete for your business.
That’s why it’s so important never to be captive to one insurance company, even if it’s a really good company. That’s one big reason I created Stewardship as an independent agency, so I could help people narrow the gap.