When we think of a commodity we usually think of a tangible product, an item one may purchase at a retail store, such as at a hardware store or clothing store. Insurance is usually not thought of in the same category as the items referred to above, but there are some who are beginning to put personal auto insurance in that category. Their reasons for thinking of personal auto insurance as a commodity is because the policy is now being sold primarily based on cost and in both television and print by the use of catchy sales personalities. The main sales print of all of these advertisements seems to be low cost and that the shopping experience only takes a few minutes. If cost of the policy and speed of its purchase are the only considerations one could tend to agree with the fact that personal auto insurance is a commodity.
There are, however, many other items to consider in regard to personal auto insurance that clearly take it out of the commodity category. In addition to the actual policy itself, two important points that are never mentioned on television are the claims handling record of the company (some do an excellent job handling claims while others are very difficult) and the financial size and strength of the company.
In regard to the policy itself, there can be many differences based upon the actual policy wording and the coverage enhancements, if any. Many of the insurance companies that don’t advertise and compete primarily on price offer quite a number of additional coverages that are either automatically included in the policy or that can be added.
When one only purchases personal auto insurance based on price and does so as quickly as possible, you could almost go along with calling it a commodity, but when you consider the many coverage enhancements and taking time to consult with a dependent agent to help and guide you in selecting the coverage which best serve your needs you would definitely not consider the personal auto policy a commodity. Call us today at 512.454.5266.