Name Your Price- Really? Is that good for you?
11:56 AM by Chris Nordyke
Just heard one of the major auto insurance companies touting their latest promotion "name your own price, only at __________". On the surface, seems like a great idea. Reminds us of the auction-style buying we came to enjoy on E-bay or other auction sites. All of us would probably love to say "I'll pay $50 a month and that's it."
The trouble is, (name of big insurance company, starts with a P) plays by the same rules all the other companies do- We can't change our rates to sell to the highest bidder, or charge what someone wants to pay. So how do they manage it? Well, they take the amount you're willing to pay, and give you a coverage level that corresponds with that number. What this means is you could end up with coverage that feels great in your budget, but doesn't protect you properly. We'd all feel pretty foolish if we took a policy just to save a few bucks, but in the long-run led to bankruptcy because we weren't covered properly when a worst-case scenario materialized.
This ad campaign, in my opinion, is a disservice to clients. What people ought to do is talk to an agent they're comfortable with, to determine what kind of liability limits they need, and what kinds of additional coverage make sense for their situation. Then, if necessary, work backwards from there to get as close to the needed coverages as their budget will bear.
The trouble is, (name of big insurance company, starts with a P) plays by the same rules all the other companies do- We can't change our rates to sell to the highest bidder, or charge what someone wants to pay. So how do they manage it? Well, they take the amount you're willing to pay, and give you a coverage level that corresponds with that number. What this means is you could end up with coverage that feels great in your budget, but doesn't protect you properly. We'd all feel pretty foolish if we took a policy just to save a few bucks, but in the long-run led to bankruptcy because we weren't covered properly when a worst-case scenario materialized.
This ad campaign, in my opinion, is a disservice to clients. What people ought to do is talk to an agent they're comfortable with, to determine what kind of liability limits they need, and what kinds of additional coverage make sense for their situation. Then, if necessary, work backwards from there to get as close to the needed coverages as their budget will bear.
Comments (1)
8:50 PM
It's a clever marketing campaign. Most people think more about their premium payments than their coverage limits because they have to pay the bill every month. Also, I bet it helps with short term customer retention - if the customer chooses the premium they are probibly less likely to lapse.
That being said, I agree with you 100%. It's a horrible disservice to the customer. Also, said insurance company is likely going to pay in the long run because of it's bad reputation for handing the customer a portion of the liability after a loss.