Signifying Nothing

This is a rant…

Recently it came to my attention that I was probably paying too much for my car insurance. Not because I saw a Geico commercial or anything, but because I was randomly musing about the fact that we have two cars, one a 1997 Volkswagen Cabrio and the other a 1998 Jeep Cherokee, and they are both (obviously) old, 15 and 14 years old respectively, and that they probably aren’t worth very much, each is worth – in theory – about $2,000 for private sale or maybe $1,500 trade-in value. We currently are sporting a policy with a $1,000 deductible. Given the worth of the cars, any accident which is going to cost more than the deductible to fix is going to be 50% or more of the value of the car, thus the insurance company is likely to just “total” the car and cut us a check instead of paying for repairs. So, it seemed silly to me to pay them what I was paying them for them to not really cover anything.

So, I called them up and cut my insurance payment in half, maintaining the medical coverage and the liability (damage to other people). They were very happy to do it and thanked me for my continued business and all was right with the world. Until…

Money to Burn

Like any average American, I have so much, I can do this. Not.

A couple hours later, I’m sitting there smiling about the money I’m going to be saving when it occurs to me that the value of my cars hasn’t changed much in the last couple of years. They’ve hit a sort of “value plateau” where the fact that they are running in good condition is the bulk of the value. Which means that I’ve been overpaying on my insurance for a couple of years. It’s going to total out to probably around $600 a year that I save, which means I’ve probably paid $1,200 to $1,800 for coverage I didn’t need.

Being a software developer, I know that it would be painfully simple to have a program that compares the coverage on a vehicle to the vehicle’s reported value (using something like the Kelley Blue Book as source) and this would generate a list of people to whom you could contact, by mail or email, and make them happy by offering to adjust their rates.

Of course, I know why they don’t do this. Something like auto insurance is seen by people as being required but interchangeable. They have to have it, and they pay more attention to the ads the companies run than to their actual policies. Most people will go to another company, get a quote and switch insurers before ever considering calling their current insurer to see if they can get a better rate. As such, companies focus more effort on signing new customer than on retaining existing ones.

For a non-insurance example, look at your local cable company. When was the last time they called to say they were running a special for all existing customers? Never, that’s when. The half price deals are for new or returning customers. Or for people who call to cancel. If you don’t leave and don’t complain, they’ll happily charge you twice what they charge new people, returning people, or people who threaten to leave.

Lesson: call your cable company every six months or so and threaten to cancel. Tell them you are switching to satellite, and then accept the new rate they offer to keep you.

You can probably do this with your garbage collection too, if you have to pay for it yourself and there is competition in your area. I’ve had the same company for a couple years, but where I was originally paying $30 a month, I’m down to $10 because they’ll “price match” any competitor’s offer, I just have to prove it’s a real offer. But they know who their competitors are, and they know what they charge. Why aren’t they sending out a letter to all their customers saying, “Hey! In appreciation for using us, we’ve reduced our rates!”

The other main reason they don’t randomly call existing happy customers to offer new lower rates is because those customer are, apparently, happy overpaying. Why would they throw away that money? Sure, being awesome for your customers might breed some loyalty, but loyalty is nothing in the face of cold hard cash.

Where am I going with this?

I have no idea. It all folds into that idea of “enough” I suppose. Some of these companies are making lots of money in profits, and they don’t reinvest that money into making the company better, nor do they reinvest it in reduced prices, they take it out of the system. Maybe they spend it back into the system somewhere else, but not at the rate it would get spent back into the system in the form of a few dollars into the pockets of thousands, tens or hundreds of thousands. Despite what the self proclaimed “job creators” tell you, a person, or small group of people, earning $5 million a month aren’t going to spend $5 million a month, but a million consumers saving $5 each on their bills are incredibly likely to spend that $5.

It just seems logical, for the better health of the entire economy… which is probably why I’ll never run a company or be in politics.

Leave a Reply