What Does "Apples to Apples" Mean in Insurance?


As convenient as it may be to compare products and services on an “apples to apples” basis, comparing apples to apples in the insurance industry is impossible.  Why?  Three principal reasons are:

1)  Different language within each policy.  Your policy “declarations,” which contain information like name, address, coverages, deductibles, premiums, etc., are followed by a legal policy that is generally 30+ pages long.  The language in this policy is what determines how those coverages shown on the declarations actually apply when you need to use your insurance.  Very few insurance companies use the exact same language in their insurance policies.  Instead, each insurance company makes their own modifications to policy language based on their desire to provide (or restrict) coverage in certain areas.  Each insurance policy is a legal contract that is interpreted based on the policy language, so small differences in policy language between insurance companies can have a large impact on the usefulness of an insurance policy when a claim needs to be filed.

2)  Claim processes and procedures.  Even with the exact same coverages and identical policy language, the claim experience from one insurance company to another will vary greatly.  This depends highly upon the culture of the insurance company that trains and employs the claim representatives.  Each claim representative is trained extensively by the insurance company on how to pay (or not pay) claims.  Some companies have a reputation of paying claims fairly and quickly, whereas others have a reputation for fighting claims and dragging the process out for months.

3)  Different methods of valuing property.  Have you ever haggled over the price of a used car?  Each insurance company uses their discretion when settling claims.  This often yields claim payments for the same damaged property that are thousands of dollars different between insurance companies.    

For these reasons, we are intentionally selective with the insurance companies we represent.  We’ve been around long enough (100 years!) to know that insurance is not a commodity and, although it would be convenient, can’t be compared on an apples to apples basis.

This article was written by Brian Boer.  Email Brian with questions or comments at brian.boer@boerinsurance.com.