The Name-Your-Price Trap: What Buying Insurance Online Can Cost You

A Bay Area software engineer earning over $150,000 bought the minimum California auto liability through Progressive's name-your-price tool. Then he caused a multi-car accident. This is the story of how we rebuilt his coverage — and what anyone buying insurance online should know.

The Phone Call That Started It

A gentleman calls me up a couple years ago and says, "Mr. Nadler, I need to buy a personal umbrella policy." That's how he starts the conversation.

"Why do you want to buy an umbrella policy?" I ask. An umbrella sits over your home and cars — can you tell me about your situation?

"My wife and I rent a house. We have two cars. I need to get an umbrella over it."

Okay, but is there a reason? Did a financial planner tell you to get one?

"Oh, no. I was in an auto accident in San Francisco. Multi-car. My fault. I'm afraid I'm going to get sued. I don't have enough liability on my auto policy that I bought from Progressive. It was a name-your-price tool."

I hate that commercial.

$150,000 Income, Minimum Liability

Both this gentleman and his wife are software engineers making over $150,000 each. And they bought the minimum California liability insurance through Progressive's name-your-price tool.

In California, the minimum liability limits are 15/30/5 — that's $15,000 per person, $30,000 per accident for bodily injury, and $5,000 for property damage. For a household earning over $300,000 a year, that's almost no protection.

He could well afford higher coverage. But the tool let him name his price, so he named the lowest one.

Now he's got an at-fault multi-car accident with bodily injury in San Francisco. When you have bodily injury with an auto accident, that's two strikes — you become what's called a non-good driver in California. Any insurance company can deny offering you coverage at that point. They don't have to, but they can.

His Renters Insurance Made Things Worse

I asked who he had his renters insurance with. Lemonade.

Here's the problem with Lemonade: they're a non-rated insurance company. We can't do an umbrella over them. No admitted umbrella carrier will sit on top of a non-rated underlying policy.

So now we've got minimum auto liability after an at-fault accident, a renters policy we can't build on, and a household earning over $300,000 a year with essentially no asset protection.

How I Restructured the Whole Program

First, I told him to stay with Progressive for auto. They're order-takers — you tell them you want to increase your limits to 250/500/100 and they're not going to ask why. If they do, just tell them you're buying an umbrella.

Second, Progressive owns a company called ASI that writes renters insurance. I moved his renters from Lemonade to ASI through Progressive.

Here's where it gets good. His auto policy was running about $5,000 for six months — two cars, bodily injury accident, higher limits. But once he had the Progressive renters policy, he qualified for the multi-policy discount. That's 10% off his auto — $500 savings for six months.

That $500 savings more than paid for his $300 Progressive renters policy.

Then he bought the umbrella from me.

One Important Caveat

The umbrella couldn't provide coverage for the existing claim. That accident happened before these policies were in place. He's still exposed on that one.

But at least he's now prepared for the future. And the restructured bundle actually saved him money while dramatically increasing his protection.

Key Takeaways

What I'd Tell Anyone Buying Insurance Online

Price-comparison tools let you name your price. That's the whole pitch. But nobody's asking you: Is that price actually protecting anything?

When you name the lowest price, you get the lowest coverage. And when you need that coverage — when you're at fault in a multi-car accident in San Francisco with bodily injury — you find out exactly what "lowest" means.

Get the right limits. Get an umbrella. Talk to someone who's going to tell you what you actually need, not what you want to hear.

Paul Nadler has been a licensed insurance broker in California since 1976. He is the third-generation owner of Nadler Insurance in San Carlos. Let's review your coverage →