We Have Met the Enemy, and He Is Us

Recently, I did a Kiplinger interview about shopping for homeowners insurance focused, of course, on how to save money…as are virtually all consumer articles about insurance. I tried to make a point of how important it is to understand that you can’t compare prices in isolation. It is impossible to make a rational purchasing decision without considering what that price buys you in the form of coverage and exclusions. It would be like buying a car online based solely on the name of the manufacturer and a price. Then I got a link to an article by the Texas Department of Insurance that says: How to Shop Smart for Insurance 1.  Shop Around Yes, it’s that simple. Make sure to check prices for home and auto policies at least every three years. Insurers want your business, and you often get the best rates when you’re willing to switch companies. You can also get sample rates at www.HelpInsure.com. Sorry, but no, it’s NOT that simple. You would think a regulator charged with reviewing policy forms would know that. The advice does NOT help consumers “shop smart.” In fact, it makes it far more likely that they will choose poorly, thinking that price comparison is the only criterion for buying insurance. The first statement in this advice piece says, “We have a few tips to help you get the protection you need at the best price.” None of their tips necessarily get the consumer “the protection you need” because they don’t caution about the differences in protection provided within different quotes. I did a sample price quote at the link they provided and found premiums ranging from $250 to $2,500 for the same quote. There’s no way, for the factors used in the quote, that you could have that kind of premium differential. That tells me the quoting system is likely worthless and, worse, misleading and misrepresentative of the carriers’ programs. Who is being served by this kind of system? See also: Future of Insurance Looks Very Different   Recently, I made a blog post about the bad advice that permeates the internet and media on whether someone renting a car should buy the loss damage waiver (LDW), lamenting that much of the erroneous insurance advice comes from within the insurance industry itself in the form of advertising and well-intentioned information from insurance regulators and others. How can we expect mainstream media outlets to write accurately about the insurance industry when we don’t do it ourselves?