The Dangers of Shopping for Insurance Online

Books. Batteries. Even pizza. You can buy anything online now. You can comparison shop and bargain hunt as long as you wish, spend less time, maybe less money … and choose from many options. It seems shopping online is a win-win proposition.

Not always. For some products, you’ll only lose, and insurance is one of them.

With so many websites providing insurance quotes, you might think shopping for insurance online is completely safe, but that’s not always the case. Here are some of the dangers of shopping online for insurance:

Missing out on discounts

If you’re a new insurance shopper, or don’t know a lot about insurance, you won’t know what discounts you may be eligible for. In fact, there’s a wealth of discounts, some reducing your premiums by up to 10%. These include:

• Safe driver discount
• Good student discounts
• Vehicles with safety and anti-theft features
• Affinity discounts, given for belonging to certain organizations, working for certain employers, or for alumni of certain schools.
• New family discounts for newly married couples or those who have just had a child
• Multi-policy discounts for carrying two or more policies with the same insurer

Not all quoting websites recognize that you may be eligible for discounts. They may not connect the dots, and it’s highly unlikely they’ll ask. For example, the website doesn’t ask if you recently married or had a child and would therefore be eligible for a discount. Your loss is their gain. Your personal insurance agent, on the other hand, knows what to ask and will give you quotes that may land you discounts.

Premiums that increase after you’ve bought

Say you’ve provided all the information required for quotes and decide to purchase the policy that is right-priced. Then you receive your new policy in the mail and discover your premium has doubled. Even worse, the online company tells you you’re ineligible for coverage and your policy will soon be cancelled. How does this happen?

After buying a policy, it’s sent to underwriters for review and official approval. Depending on the policy type, there may be other steps, like visiting homes or businesses. Usually when changes in premiums or eligibility happen between the time of purchase and the time of the first bill, it’s because the purchaser has left out information – either accidentally or on purpose – and it was later discovered by the underwriters.

Other times, the site didn’t pick up on or correctly factor in information found in the new policy reports they submit to insurers. People, reports, and even computers make mistakes, and small pieces of information discovered afterwards can change everything.

Not getting, or knowing, what you need

Always compare apples to apples – be sure the policies you are comparing are identical in every way. This isn’t always easy, especially online. You need to know what you want. Or else.

Most online quoting systems default to the lowest coverage amounts and leave out options like roadside assistance. If you don’t pay attention, you won’t be guided to other options as you would if you were dealing with an experienced agent familiar with your situation. You may get attractive quotes. However, you probably won’t have adequate coverage or will have less coverage than you have had previously.

Some online insurers encourage you to click through without examining the options and will give you quotes that are cheaper than what you’ve had. But just try going to the FAQs online to find answers to your questions.

Beware of websites promoting “name your own price” tools. You can name your price, but 99% of the time to get it you’ll end up with a bare-bones policy with the lowest coverage limits available.

For example, in the case of bodily injury coverage, you may pay $30 monthly for limits of $25,000 to $50,000. But you’re hardly saving if you cause an accident and injure someone, only to find yourself responsible for their $200,000 medical bills. With an agent, you’ll be well-informed, know what options you need, why you need them and in what amounts.

The internet is a great tool, but it can’t ask or answer questions, make suggestions, or look for missed savings opportunities. Buy the wrong sized sweater online – send it back. Buy the wrong policy online? No refunds given, and you may suffer consequences for a long time.