Should We Stay Loyal?

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Somewhere in the past, a person claiming wisdom said, Better the devil you know than the devil you don't. This is a very conservative position, preferring to keep things as they are. People often feel more comfortable with the familiar. That's why, in the good old days, insurance companies employed personal agents to call and collect the premium installments, using the opportunity to build relationships with the family and sell the next policy. This locks us into the relationship because the friendship and the business overlap. We don't want to go to another company because this would mean betraying a friend. Today, insurers have moved on to more impersonal business models. Indeed, there are now internet-only insurers. You can telephone and wait in a queue for a real human being but, for the most part, you are expected to rely on e-mail and chat for communications. As a reward for depersonalizing the business, we pay less. What the insurer saves on employing people is passed on to us as lower premium rates.

Loyalty is an interesting commitment. When you know the local agent, you trust him or her to see you through the claims system. The friend is supposed to be your advocate and ensure you get a square deal. When the business becomes faceless, the only way it can build trust is by results. If you have a query, it can respond promptly giving you sensible and relevant information. Sadly, if you send an email, you often get an automated response or something written in poor English that fails to answer your question. This does not inspire confidence so, for the most part we suspend judgement, hoping we will never need to make a claim. This is where fantasy meets reality. Most insurers take our money and hope we will never make a claim. Indeed, many write so many limitations and exceptions into the policy, it's difficult to get any money out of them. The standard response to a claim is either to reject it or offer us as small sum as possible, hoping we will settle rather than fight on.

Once you accept insurance companies are for profit and really don't care about us individually, there's no reason to stay loyal. You should always be looking for the best set of terms at the best possible premium rates. Too many of us renew on auto pilot, never seriously bothering to shop around to find alternative deals. This is pure foolishness. Only if we use the free market economy and take our business to the sellers offering the best services will the general quality of the services improve. Real competition improves the market for us as consumers. Think about it this way. Suppose you stay with the same company for ten years, paying $1,000 per year. If you never make a claim, all that money disappears into the company's profit. Even if you make a claim for $8,500, the company is still ahead. So why is the next year's auto insurance quote always higher? If you do not get a real loyalty bonus, you are being treated as a sucker. Get auto insurance quotes from competitors and see what welcome bonuses are on offer.

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