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Insurance Is Not a Commodity

Progressive’s “Flo” makes it seem easy to get the insurance you need — just pick a box off the shelf and you’re done. Our agency sells policies with Progressive, among dozens of other companies, but I’m here to tell you that insurance policies are not alike, and you can’t compare them like you would compare boxes of cereal in the grocery store.

An insurance policy is a legal contract. There is some standardization, but even two policies from the same company may have different endorsements, coverage amounts and other details that make it right — or wrong — for you. The key is to find the best fit between you, the policy, and the insurance company: the best value proposition for your situation.

You

First, determining how much any policy will cost for you is a process. Insurance companies need to take in enough money to pay the claims they’re going to have during a a certain period of time, but they also charge proportionally to the amount of risk they’re taking on. For instance, 50-year-old with a minivan and a spotless driving record represents a different risk than a teenager with a Trans Am and two speeding tickets.

The Company

Some insurance companies offer policy endorsements that are a better fit for you than those from another company. Insurance companies also differ in their finances; one may have more money stashed away for paying claims in the event of a wide-scale emergency than others. Finally, the services offered by insurance companies vary widely. Some are easier to deal with than others, both before and after a claim has occurred, or they may offer different payment terms.

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