As our economy and markets have changed, other insurance
marketing channels have developed. While these alternate marketing channels for insurance initially focused on motor vehicle insurance, more recently they have expanded to include homeowners insurance as well.
marketing channels have developed. While these alternate marketing channels for insurance initially focused on motor vehicle insurance, more recently they have expanded to include homeowners insurance as well.The problem with these direct marketers is that there is no practical ability for the average insurance buyer to compare the terms and conditions of the policies offered in order to determine whether or not the coverages offered meet the needs of the insurance buyer. And there is no one to provide any counseling with respect to decisions involved in the purchase. You do not have the ability to call on the services of an agent to help you choose the policy limits appropriate to guarantee that you have sufficient coverage to repair or replace your residence and possessions in the event of a major loss.
Many of the 800-number or Internet sellers of insurance have engaged in widespread television advertising of their policies. These TV commercials frequently emphasize potential premium savings as the inducement to buy that company’s policies. Premium savings does not mean much without advice about variations in optional coverages or how much in limits the average person needs to purchase for adequate protection
These direct sales operations present a potential trap for the unwary by creating a serious risk of uninsured or underinsured loss exposures. A particular disadvantage of many such direct marketing insurers is that there is often little or no opportunity to review the policy forms utilized to determine whether they contain unanticipated restrictive terms. Certainly, in order to be licensed to sell policies in any particular state, the policies’ terms necessarily will be in compliance with that state’s minimum requirements. However, that does not ensure that such policies will necessarily provide the best coverage for your particular needs.
Compounding this problem is that most insurers charge a penalty if a policy is issued and then cancelled at the insured’s request midterm.
EXAMPLE: You purchased a one-year policy insurance and cancelled it after two weeks because you discovered it contained restrictive terms that did not provide coverage for a particular loss exposure. In this situation, you will receive a refund that is less than fifty-weeks worth of the premium. Unless a direct marketing insurer offers the opportunity to examine the policy in advance or offers a no-charge return policy, you might want to pass. Instead, avail yourself of the services of a local agent you can meet in person and discuss your insurance needs with to obtain the best compromise between cost and extent of coverage provided.
