Cover Wallet, PIE, Hippo: How Low Start-up Premiums Lead to High Costs

Mike A. Dwyer | Apr 1, 2021 | minute read

As a business owner, you have a million little things to do every day. From handling invoices to leading marketing initiatives, you’ve got a to-do list that’s a mile long.

So, if a tool or service looks like it can help you quickly and easily knock off a tedious task from your list—something as mundane as purchasing insurance—you'd try it. I mean, what could go wrong with an instantaneous insurance quote? More than you realize. Although we’re used to getting everything at the press of a button, some things are worth waiting for—especially when it comes to protecting your business.

If you’re thinking about using an instant quote, then be aware of the following issues.

New insurtech companies that have popped up know you’re looking for a quick solution for your insurance needs, and are profiting on your desire for a quick fix. In recent years, startups like Cover Wallet, Lemonade, Pie, and Hippo have come of age, promising near-instant insurance quotes for everything from commercial insurance to home insurance in a matter of minutes. In this article, we explore the drawbacks to using the instant-quote services, and why traditional brokers and insurance agencies are the best way forward for your company.

Why You Should be Wary of Companies Promising Automatic Insurance Quotes

Companies promising near-instantaneous insurance quotes don’t want you to be aware of what’s really happening behind the scenes. To safeguard yourself and your business, you need to be aware of the problems surrounding automatic insurance quotes before you move forward.

Online Insurance Quotes Can Be Incredibly Inaccurate

Eight out of ten people believe that online insurance quotes are inaccurate, and for good reason. They are. The reason is twofold, and stems both from the company generating the automatic quote, as well as the information provided by the insured.

To generate a quote, the online insurance companies are forced to rely only on that information provided by the customer—whether or not that information is actually accurate. For a quote to be truly accurate, the insurance company must verify the information provided by the customer. But with an instantaneous quote, there’s no way to do that. The end result is nothing more than a quote that must be regenerated.

You Typically Won’t Have The Ability To Fine Tune Your Quote

With a quote that’s generated automatically, you have no ability to turn your insurance quote into something that reflects the unique needs of your business. Does your business really need that extra coverage for floods? Are you paying extra to protect your company from a product exploding, even though you have no physical product? With an automatic quote, you receive three to four coverage options that are simply the basic package offered to nearly all of the consumers.

The instant quotes also strive to get you hooked by dangling one low cost in front of you. But the cheapest quote may not be right for your business. As a business owner, you know that price is only one factor that goes into a consumer’s decision to purchase. And when it comes to insurance, one study showed that only 30% of people shopping for insurance said that price was the most important factor.

While price is important, there’s more to selecting insurance. You want to fully understand the breadth of the coverage offered and know that you’ll receive the best customer experience you can get when you have to submit a claim.

There’s A Lack Of Transparency Into How Quotes Are Calculated

When you speak with a broker, you get a clear understanding of how and why you received a certain quote. Did that claim you submitted last year really affect your coverage price? Is the new car you’re thinking about buying going to triple your car insurance rate? By having a personal relationship with an agent, you can understand how your life choices will affect your insurance premiums. With an online quote, you get nothing more than a preset algorithm that doesn’t understand the details of your life.

You May Not Get The Best Price

With preset algorithms and basic packages, it’s hard to get the best price. Online insurance companies, as opposed to traditional brokers, aren’t going to shop around your insurance needs to multiple companies in the same way that a traditional broker will. With more quotes, you also have more options--options which can save your company money in the long run.

Why You Should Talk to an Independent Insurance Agency

Independent insurance agencies offer advantages that online insurance companies simply can’t. When deciding whether to use a traditional broker, remember the following:

  • Your broker will shop around to multiple carriers to get the best quote for you
  • You’ll get a better understanding of how certain changes in your business can increase or decrease your insurance premiums
  • You’ll receive policies that are custom-made for your business
  • Feel confident that your personal broker will keep all of your information confidential
  • You’ll have a dedicated rep to help you through the claims process

At the end of the day, your company is important to you, and your broker and traditional insurance agency will provide the personalized touch that you and your company deserve.

Leap | Carpenter | Kemps Insurance Agency is Ready to Leverage its Experience On Your Behalf

At Leap | Carpenter | Kemps Insurance Agency, our knowledgeable agents have decades of experience helping customers with their diverse insurance needs. With us, you get a dedicated agent who will be there from inception all the way through helping you process a claim. Learn more about how we can help you by contacting one of our knowledgeable agents today.

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About The Author

Mike Dwyer is a Commercial Insurance & Risk Advisor, who specializes in Group Captive Insurance, and specialty insurance and risk management solutions for businesses in the construction industry.

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