3. Agents recommend coverages you may not need…or might not adjust your coverage for many years!
Everyone has different needs and priorities when it comes to insurance. Just because a product exists doesn’t make the product right for you.
Many people with older vehicles choose to forgo comprehensive or collision coverage because the cost of coverage would soon exceed the cost of replacing the vehicle. Agents may use scare tactics, however, to convince customers to buy coverages like this when they really don’t need it.
In another common example, some customers may want roadside assistance from a provider independent of their insurance company, like AAA. This may be because it offers a better deal on the service itself, like longer tow distances, or other incentives, like member benefits that provide discounts on hotels. However, agents may recommend buying through your car insurance company simply because it adds a little bump to their commission check. They might even advise you add it to work in tandem with your AAA coverage, assuring you it can be canceled at any time.
Additionally, your coverage needs may change over the years. You may get married, start a family, buy a new home, or get a better paying job. All these factors influence your coverage needs and risk profile. And if you haven’t talked to your agent for years, they’ll take your insurance renewal for granted, and never adjust your coverage.
Why? Because commission rates are great, and your agent gets paid even if you end up canceling coverage.
But there’s a real danger in being underinsured. If you get into an at-fault accident and are sued for more than your car insurance can pay, you might find yourself in major debt or at risk of losing your home and property. All because your insurance coverage didn’t change when your life was changing, too.