A “name your price” approach might get you a good deal on a hotel room or rental car that would otherwise have gone unused on a particular day, but is that a good way to buy insurance? At least one major company is advertising that they’ll do business with you that way, but be careful if you go down that path.
The laws of the marketplace suggest that sellers should discount products subject to spoilage from age. That’s why day old bread is cheaper. An unused airline seat or hotel room represents spoilage in the travel industry, so getting any revenue at all is better than getting nothing. A name your price deal truly is a win-win for both you and the seller.
But insurance doesn’t spoil. The insurance company can provide all the fresh insurance you want any time you want it, so the principle that makes name your price work in travel doesn’t exist in insurance. It’s a clever marketing approach to attract your attention, but there’s no bargain in it for you.
You will simply get less insurance for a lower price. That might mean extremely high deductibles or very low liability limits. Either of those choices might mean owing a pile of money out of pocket because you bought inadequate coverage.
Blog Authored by: Ken Mogren, CPCU