Be sure to wear your snow boots in Miami. Slather on the sunscreen in June. And remember to pack your surfboard for a trip to Kansas City.
Sound silly? Of course it does. As consumers, we know that we don’t waste money on things we have no chance of using. The unique characteristics of different locales throughout the US are well-known by both natives and visitors, so it’s rare that anyone is so irrational in buying goods that they’d stock up on those products in those places.
Yet the insurance industry seems to mysteriously escape this kind of thought process for some buyers. They over-insure against the unlikely, under-insure against the probably, and over-pay for the whole thing. Considering the number of people who are looking at overspending of all types, there’s plenty of energy to invest in cutting back on wasteful insurance purchases.
Choosing A Large Insurer Without Local Knowledge
Thanks to the dramatic growth of nationwide insurance carriers, many policies are, at best, pooling customers’ risk with others who have dissimilar perils or, at worst, insuring those customers for things as ludicrous as a Kansas City hurricane.
The problem emerges when a potential customer calls an 800 number or logs onto a website and makes a purchase through someone who has no idea of the specific risks of the customer’s state. This problem can be avoided by researching the company to make sure they understand your particular local needs.
A customer who is buying auto insurance doesn’t necessarily need the same type of coverage as a driver in Ohio, for example. The Buckeye driver is likely to encounter a lot of snow and ice each year, while that’s very rarely a problem in the desert Southwest. Companies that operate in fewer states will be unlikely to have these problems, so consumers should think about going with a more local agency to ensure a more tailored policy.
Moving Policies Without Changing Them
Cross-country moves are a common part of daily life. Families frequently must pack up and relocate to a completely different area, sometimes on very short notice and sometimes after only recently getting settled in their current neighborhood. In the rush and hassle of moving belongings, securing housing, and finding schools, many families simply make a change of address for premium billing and make no further changes to insurance.
This is another hazard that is made worse by non-local agents. But it’s critically important not to miss these updates. Despite its many years of relative dormancy, the New Madrid Fault seems to bear great potential for a major earthquake in the nation’s midsection. A family relocating to that area from a less seismically-active state is unlikely to give a second thought to such a risk, but if it ever comes through, they may be badly under-insured. Families who are pulling up stakes and setting up housekeeping in a new area should be alert to the need for revisiting their coverage.
The message to take home–or to take on the road–is this: There is as much variation in necessary insurance across the 50 states as there is variation in dialects, food, and weather. The wise consumer should have a thorough understanding of what they are and are not covering, not just to keep premiums down but to keep risk down as well. It’s always important to remember that cheap insurance is only a bargain if it still covers you when you need it.