What’s the difference between price and cost? A lot of people consider these to be the same thing, but here is a question that may get you to see the difference: what does your price cost you? When you think about it like that, it is easier to break down the difference.
Price in Insurance
This is what you are paying for. Your monthly premium is your price. You may only have auto insurance or you may have a bundled policy. Whatever coverages or policies you have, the amount you pay each month is your price. On the other hand, cost is something entirely different.
Cost in Insurance
Cost is not something you are paying for with physical dollars. It’s not your premium. Your cost is the effect of your price. Think about if you decided to get the bare minimum on a homeowners policy and one day a flood occurs. In this instance, you didn’t add flood insurance because the cheapest policy sounded better. Now, that cheaper price has cost you.
Our owner, Patrick Brennen, explains more on the matter of price vs cost. Check it out below.
What is the Difference Between Price VS Cost in Insurance? – Entrust Insurance Agency – St Clair Shores, MI
Video Transcription
“A lot of times we see people who simply look at the price. When I work with them, they know what their price is, (but) they have no idea what their coverages are, so they don’t know what that price is comprised of. And (that) makes you think, what am I paying for? Do I have the right coverages? Is there any coverages lacking in my policy? So although it’s wise and you don’t want to overpay or pay more money than you rightfully should, you want a very competitive price. It’s important to really gain an understanding of what are you paying for? So if you’re the type that just wants the cheapest policy, without question, you want the absolute bare minimums. The question then pose, what does that price cost you if something happens, and you lack a coverage or you don’t have enough coverage.”
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