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Sound Advice: October 7, 2026

 Name your own price for insurance?

 Name your own price for insurance can be dangerous and misleading because insurance isn’t like negotiating the price of a car or a hotel room. The premium is tied to the amount and type of risk being transferred.

Here’s why:

  • A lower price can mean less protection. If you choose an unrealistically low premium, the insurer may only be able to offer that price by reducing coverage, increasing deductibles, adding exclusions, or limiting benefits.

  • Insurance pricing is risk-based. Factors such as driving history, location, claims history, property characteristics, coverage limits, and the likelihood and potential cost of a loss affect what coverage reasonably costs. Consumers generally can't simply declare what that risk should cost.

  • The cheapest policy may create a false sense of security. Someone might think, “I have insurance,” but discover after an accident, fire, lawsuit, or other loss that the policy doesn't provide enough coverage.

  • Coverage limits matter as much as the premium. For example, paying $600 instead of $1,000 for a policy isn't necessarily a bargain if the cheaper policy has substantially lower liability limits or a much higher deductible.

  • It can encourage underinsurance. People naturally tend to choose the lowest price when given control over the price. But with insurance, the consequences of saving a few dollars can be enormous if a major loss occurs.

  • “Your price” doesn't necessarily mean the insurer will accept any price. In legitimate insurance markets, underwriting and regulatory requirements constrain what coverage can be offered. So the phrase can be more of a marketing concept than genuine price-setting power.

The key distinction is:

You can choose how much insurance you want to buy, but you shouldn't confuse choosing a lower premium with choosing the same protection for less money.

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