Happy National Coffee Day! Now what does this have to do with your insurance? Well, did you know that your morning coffee can cost about the same as your auto insurance?
Before Starbucks and fancy coffee houses were serving up $6 lattes and blended coffee beverages, coffee was … well … just coffee that the local diner used to sell you for a $1.00. But this simple commodity was shaped into “an experience” that compelled consumers to pay $2 – $6 for a cup of coffee. Similar to the difference between an elevated restaurant dining experience compared to the local fast food joint, many are willing to pony up for a more personalized, higher level customer experience. That simple cup of coffee is now a premium product and consumers will pay “value” prices to get it.
So what about your auto insurance? Many people put less value in their auto insurance than they do that cup of morning coffee. They remain reluctant to pay for the premium auto insurance product, always seeking to find the low cost option, regardless of what that may (or may not) provide for coverage for them and their family.
The same morning coffee that we put a premium on, for the “experience,” costs roughly the same as the average auto insurance policy.
The average auto insurance policy will cost roughly $1,300 per year (for a 2 person household). If you get a coffee each morning before work, and pay $2.00, you will pay (for a 2 person household), about $1,000 per year … and that’s if you only get one before work.
Psychologically we are accepting of a $2.00 or $6.00 cup of coffee, the same coffee we could brew in our home for a nickel, because we place some premium value on the experience as well as the ease and convenience, but we struggle to reconcile the value of our auto insurance.
But coffee is awesome! I need it to function and it’s delicious. Auto insurance is boring and I don’t get anything out of it… right?
Sure, there are plenty of reasons some of this is true. First, unlike your morning cup of coffee, insurance does not have any immediate reward, it’s an intangible product. And, most of us think we’re great drivers and won’t need our auto insurance. We set it, and forget it.
And, this is probably more likely, we think that all insurance is the same.
But all insurance is not the same. There is much more to it than the limits and deductibles you see on your declarations page. Just like any other product, when you pay less, generally speaking, you are trading off something… and with insurance it is likely coverage or service, or could be both.
Insurance is not a commodity
The reality is that auto insurance is not a commodity and there are real differences between insurance companies and insurance agents. This is very different from purchasing your morning coffee on your way to work.
Your auto insurance is an intangible product … you can’t wear it, eat it, or drive it, but you will most likely need to use it at some point in your life.
If you’re not willing to invest as much in your auto insurance as you do in your morning coffee, you may find out the hard way what a ‘bad’ auto insurance company looks like when you have to file a claim.
Products become commodities when marketers have run out of ideas for providing value to consumers.
Roughly 20% of Americans consider shopping their auto insurance each year, so if you’re one of these people, think about how much you spend on your morning coffee, and treat you auto insurance with the same “value” consideration you place on other service based industries and what you’ve come to expect when you buy a nice cup of coffee, a craft cocktail, or a nice dinner out. The value is in the service and the experience of the purchase. We hope that you’ll consider Stephen Benjamin Insurance Agency to assist with your auto insurance needs. We’re a 4th generation family owned and operated small business that focuses on personalized customer service to get you the product you need to protect your most important assets.