Do You Save with Auto Insurance Discounters?
Auto insurance discounters have really found a sweet spot among American consumers. Auto insurance is a legally mandated necessity of life if you live in the United States. Auto insurance discounters realize this and have carved themselves a very nice spot in a lucrative niche serving people who want or need to avoid paying very much for the insurance they are required to carry. Long gone are the days when a person would motor about legally without regard for his responsibility for the harm he might cause other people as a result of his negligent or reckless driving. Today, people are searching for a happy medium between getting the best insurance and the cheapest insurance they can afford.
Each state has its own particular requirements for the amount of insurance required for each vehicle and the risks to be covered by that insurance. Auto insurance risks are determined by each company based on actuarial data. That is information based upon historical records showing how much risk a particular vehicle owner's actual or projected usage of their vehicle will present to the insurer.
The records on which such risk assessments are made span many decades and are the same regardless of which insurer looks at those records. One might think, then, that if the risks are the same for all insurers, the coverage they offer and the price they charge for it should show little variation.
Wrong! You might not want to count on that.
Anyone who ever watches television or reads any media outlet is well aware that insurance companies incessantly tout their rates as being lower than others. In recent years there has been a growing trend for companies to advertise themselves as auto insurance discounters. They promise to provide their customers with legally mandated coverage for less than any other insurers can or will do. These claims are often enough to get people to pick up the phone or visit insurers online in search of cheap auto insurance quotes that will keep them legal in their state.
How Do Auto Insurance Discounters Do It?
How are these discounted rates possible, if the risks and liabilities for which they are providing coverage are the same when looked at from an actuarial perspective? If you are in the market for discount auto insurance you should be aware that, as in most markets, you will get what you pay for.
One way that auto insurance discounters can make a profit and stay in business is to save money in doing their business by adopting policies and practices that other companies avoid. An example, perhaps the prime example, is to cut out the insurance agent who has typically been the interface between the company and the customer.
Auto insurance discounters typically choose to do their selling and all customer interactions via the telephone or the internet. If you value having a friendly local agent with whom to have a personal relationship to advise you about your insurance needs, you are in for a disappointment. Any questions you may have will be dealt with by a random customer service representative who won't know you from a lump of clay. Many people are uncomfortable with this arrangement.
Depending on the discount auto insurance company you may choose, you may find yourself in for a long siege on hold if you call with a question or claim. Auto insurance discounters have to save money somewhere. Once they have a customer, they are willing to risk his or her dissatisfaction with long wait times and less than fully knowledgeable representatives.
Another way that insurance discounters save money is by denying or delaying claims that other insurers would pay quickly. You can check with your state insurance department for a record of claims by insureds against their insurers for improper denial of coverage.
Before signing on with an auto insurance discounter, or any auto insurer for that matter, it's a good idea to investigate its record. Ask yourself if you're willing to put up with some inconvenience to save some money. Assess the risk of having your insurer turn against you regarding a claim based on a denial of routine liability under the policies it issues. Keep in mind that you are going to get what you pay for, and proceed accordingly as you check out the auto insurance discounters of your choice.
