Ask Stacy: Is It OK to Buy Insurance Online?

Ask Stacy: Is It OK to Buy Insurance Online?
Photo (cc) by Damian Morys Photography

Although you’d think the entire world is now attuned to shopping for virtually everything online, there are still certain transactions that are best done face-to-face. Is insurance one of them?

Here’s an email I recently received from a reader.

Stacy, I wanted to know your opinion on getting insurance online, as opposed to in the vicinity where you live? I’ve always been told NOT to contract through the internet because claims are harder to make and they’re not very friendly – and don’t really care. Whereas someone in your neighborhood is more personable and quicker to work with. Your answer will depend on where I get my next insurance…
Thank You
Mjxfingers in NH

Here’s your answer, Mjxfingers! (May I call you Mjx?)

This is an interesting question, because it applies to other things as well. For example, just a couple of days ago, I was shooting a series of real-estate stories and, while interviewing an agent, I asked if he’d recommend shopping online for a mortgage.

His response? “While shopping online is fine, I tell my clients never to deal with anyone out of state. These transactions can be complicated, and timing is everything. It’s much easier to stay on top of the paperwork if the paperwork is right here in town.”

That sounds logical. And the advice received by Mjx also makes sense: It would certainly seem that dealing with a claim or other insurance issue would be easier, quicker, and more personable face-to-face than long-distance.

Logical perhaps. But in my experience, not true.

I’ve been dealing with both mortgages and insurance long-distance for many years. Two of my last three mortgages were obtained online from out-of-state mortgage brokers, and while I’ve lived in seven different cities over the last 30 years, my insurance company – USAA – sat there in San Antonio, Texas, the entire time.

Don’t get me wrong: Like romance, face-to-face and local is preferable. But I’ve had successful long-distance romances, and I’ve had successful long-distance business relationships. I’ve also had local romances and business relationships that I truly regretted.

I’m a firm believer that one should support his neighbors whenever possible, whether you’re shopping for a pair of shoes, a mortgage, or an insurance policy. But I shop price and features first. If I can find the best deal locally, I’m down like James Brown. But if I’m best served from Timbuktu, I don’t mind sending my money packing.

When it comes to things like insurance, mortgages, or even shoes, it’s far more important to understand what you’re buying than where headquarters is. Know what you’re looking for, ask questions, and compare price and features. That’s the way to get the best deal on the right product.

I live in South Florida and lost part of my roof when hurricane Wilma blew through town back in 2005. Although USAA is in Texas, the adjuster they sent came right to my house. Personable? Nicest guy in the world – we actually kept in touch for months afterward.

On the other hand, one of the long-distance mortgage companies I used faxed me paperwork 30 minutes before closing that included a previously undisclosed $400 fee. When I saw it, I called them and told them to fax new paperwork without the fee or I’d refuse to close their loan. They did, and I did.

Bottom line? Whether the person you’re dealing with is online or on the front porch doesn’t matter. What matters is that you’re informed enough to make the right decision and to remain in control of the transaction. At least, that’s my take. But then again, maybe my opinion doesn’t matter: After all, I’m both online and long distance.

What about you, readers?

By the way, if you agree that shopping for insurance, mortgages, and other stuff online is a good idea, don’t forget our mortgage search, insurance search, and deals page!

Got more money questions? Browse lots more Ask Stacy answers here.

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