According to Investopedia “a commodity is a basic good used in commerce that is interchangeable with other commodities of the same type… The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer. A barrel of oil is basically the same product, regardless of the producer.” This idea that commodities are functionally the same between producers makes perfect sense for oil, grains, and iron ore. After all, oil is oil and wheat is wheat no matter where it comes from.
To many consumers, insurance is increasingly seen as a commodity product. Auto insurance, in particular, is driven by price first and value second. This changing attitude is unfortunate because insurance is not a commodity.
Value over Price
At Safeguard Insurance we focus on the value of insurance policy over the absolutely lowest price. We understand that the cost of an intangible product like insurance is important. But, policies that focus on only the lowest price possible are forced to skimp on coverage, or service, or both.
Related Article: Auto Insurance – Cheap!
Let’s reframe the discussion another way: consumers expect an insurance policy to pay when a claim occurs. When the policy does not respond to a claim as the consumer expects, the blame should fall to who – the consumer who purchased the policy or the insurance company that denied the claim?
This scenario frames the entire value vs. price debate. A good insurance policy will be more expensive than a lousy insurance policy. In this respect, insurance is no different from any other consumer product or service. Providing broad coverage costs an insurance company more versus a policy that provides narrow coverage for more limited circumstances.
As consumers, we are selective in many other purchase decisions such as food, clothing, and cars. We have brand preferences, style preferences, and research large purchases. Before buying a new car most consumers spend hours reading test drive comparisons, reliability studies, and researching pricing. Ironically, that same new car is then usually insured by the absolute cheapest auto insurance policy available, often with inferior coverage and low limits of liability.
Related Article: Can I be sued for more than my auto insurance liability limit?
Remember, insurance is not a commodity. All providers are not the same. At Safeguard Insurance, we help our clients find true insurance value – the best possible coverage for the fairest price available. The value we offer our clients is our advice and expertise in selecting the coverage that is appropriate, whether for your personal insurance or business insurance needs.