The nation’s top auto and home insurance companies all have something in common beyond catchy television ads. They’re all investing in enhancing their online shopping capabilities. That’s not surprising, considering 87% of Americans are online, according to Internet World Stats. But determining the cost of a premium isn’t as simple as those advertisements can make it seem — and buying the cheapest policy can have consequences. That’s where advisers come in.

The average consumer has no idea the complexity involved in determining prices, says Todd Chanon, partner at Dallas-based brokerage Waldman Bros. There can be anywhere from two to 200 rating variables, he says, but all the consumer sees is different prices from different carriers. Often, the adage “you get what you pay for” holds true, Chanon says, and unfortunately, the customer doesn’t find out that their coverage is lacking until it’s too late. Consumers need to know what they’re buying, he says, and brokers are a great resource for that knowledge.

“Not every coverage is the same,” Chanon says. “We understand the nuances and complexities of that coverage.”

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Each line of coverage can have various complexities, and a consumer needs to understand all facets of the policy — instead of settling for the quickest, cheapest plan, he says. “There are variables inside every single rate,” Chanon says. Factors like the make of a vehicle and/or type of house also affect rates. “Everybody is still individually underwritten,” he says.

That means people who use their home or personal vehicle to earn a profit — like homeowners who rent out their property via Airbnb or Uber drivers — can be vulnerable. “It could negate coverage,” Chanon says.

Some carriers consider those activities as business ventures, he says, and companies have different thresholds for the amount of money a person can earn before they’re no longer protected under their plan. Individuals need to ensure they know how their policy handles such situations, Chanon says.

Premiums are rising

A broker’s assistance isn’t limited to helping a client understand what’s in their plan. They can also find discounts. Like the pricing of auto and home insurance, discounts vary on an individual basis, and brokers can help a person find extra savings, Chanon says.

Clients will appreciate those discounts as rates continue to increase. According to the National Association of Insurance Commissioners, Iowa had the cheapest auto insurance in 2014, with an average premium of $630. The Hawkeye State was one of seven states with an average premium below $700. Twelve states eclipsed the $1,000 barrier — Louisiana had the most expensive average premium, $1,277.

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Premiums will likely keep rising, Chanon says. “We’re seeing rates continue to go up in every area,” he says. “The consumer is led to believe the opposite.” That’s why understanding a policy is so critical.

When someone goes to the doctor, a six-minute consultation about their health wouldn’t be expected or acceptable, Chanon says. The same should be true of auto and home insurance. “The more that is known, the better off the purchasing public becomes,” he says.

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