If I receive a quote, does the insurance company have to honor it?
Great question. As an insurance agent, I deal with different variations of this issue a lot.
Here's the typical scenario. A client comes to get a quote for coverage. They take a few days to mull it over. When they're finally ready to buy, they come back, only to find out that the quote is no longer the same – some coverage was removed, the premium is higher than initially quoted, or there are some new exclusions or clauses in the proposed contract. If they thought the quote would be the price they'd pay, you can imagine how frustrated they are once they realize that isn't the case.
You should think of an insurance quote as an estimate. It's contingent on several factors and is, therefore, not binding.
So, the short answer is no, the insurance company does not have to honor the quote. Now, with that being said, there are some scenarios that could cause an insurer to honor the quoted price or change it in your favor.
Sometimes, your quoted price can be revised downward. If you're a new driver thinking of switching insurance providers and you get a quote, waiting several months before making the jump and purchasing a new policy could result in lower premiums because you have built up experience as a driver (find out Why It's Not a Good Idea to Switch Insurance Companies Every Six Months).
There are also insurance companies (mostly in automobile insurance) that will honor their quotes for a set period of time, like one day or one week.
Rates can also change as the result of a company-wide increase after a catastrophic loss in one region. Or the market could simply have shifted and the company needs to modify their rates to remain profitable.
The most common reason for rates to change, however, is that something material occurred during the lag time between quote and purchase. Let's say you receive a quote for auto insurance and then are hauled to court and convicted of a moving violation, your quote might not be honored and you're likely to be offered a higher premium.
In summary, an insurance quote is just a quote. Often, the insurance company will honor it as a gesture of good will, but until you have a signed insurance contract, they can change the rates on you at any time.
Written by Jacques Wong
Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.
In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.
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