Not necessarily... in most cases, that coverage costs EXTRA (but not a lot more), then, your deductible goes down by a given amount (usually $50 every six month term, or $100 every twelve month term if the policy is annual, if there are no claims made) without having to pay the price for the lower deductible, only the charge for the diminishing deductible. So eventually your deductible can drop down to $0, and you're paying less than you would if you had a $0 deductible the whole time, but you still had to get that diminishing deductible.


But whether they give it or not, the most profit is generated when their loss ratios are at their lowest, not necessarily because they did or didn't give a certain coverage.

 

For what it's worth, our insurance rates with State Farm went up recently because we got a "new" (to me) 2012 Fit Sport last fall and then a brand new Prius last week.

I guess we could complain about this, but I look at it a little differently.

When a reckless driver t-boned our old Toyota a few years back, State Farm was great to work with. The agent helped us work with the people who process claims. They totaled our car and gave us what was in my mind a generous amount of money to cover the loss. They worked quickly, and didn't hassle us or anything like that. Even though the other driver had bogus paperwork and wasn't actually insured, we still had a settlement check in under a week.

I'm willing to pay more for good customer service, especially from an insurance company. When you need insurance, you REALLY need insurance, and you don't need a lot of hassle.

 

Profit also comes from taking in a higher premium.

Don't want to beat a dead horse but if you worked for a company that declared bonuses for everybody each year, you would expect to get it. If you were busy and didn't check your pay stubs, or had other items raising your pay or trusted them, wouldn't you be upset when you found out a few years later that all bonuses were only given if you had asked for them.
This is from the consumers point of view not the company accountants profit margin or ceo's a bonus for making a bigger profit margin.

 

That's not quite the same example.


People just have crazy expectations for insurance that they don't have for other industries. When you see a car in an advertisement, often times it's understood that not all examples are going to be equipped the exact same way, whether it's because you read the fine print or listened to the commercial ("AVAILABLE with [insert feature]"). But when it comes to insurance, the consumer always seems to expect everything to be built into their premium, when in reality, there are a TON of additional coverages available (medical payments, comprehensive, collision, diminishing deductibles, towing/roadside, rental car reimbursement, OEM coverage, new vehicle replacement, full permissive user coverage, etc.) that you can't expect the company to add on automatically or ask you, one-by-one, if you want them. Let's be honest, did most of you care to hear them? Or want to, when calling your agent to let them know that you got a new car? Or read your declarations page that is mailed to you at every renewal? Probably not.


Not to attack anyone, but we've already had a number of people unhappy enough to post about an increase in monthly premium of $10, give or take. We're likely dealing with people who passed up on some extra coverages that may have been discussed in commercials for the sake of saving a few bucks. It's not uncommon for insurance agents to get the request of making the monthly as low as possible, and when they get that request, they probably make a judgment call and decide to not read off the optional coverages available from A to Z when the client is already wanting to shave off a couple dollars.