Insurance premiums for automobiles seem to rise every year. When the annual notice of renewal arrives in the mail, there is often sticker shock at how much the premium has gone up. Is there a way to save money with discount auto insurance? The television advertisements for discount auto insurance appear to make it attractive, but is it a right fit for you?
There are three basic types of auto insurance, Liability, Collision and Comprehensive. These three types are defined as follows. Liability is coverage for damage done by your vehicle. Collision is coverage for damage done to your vehicle. Comprehensive is coverage for fire and theft damage. If you lease or have your vehicle financed, either through a bank or finance company, the bank or finance company will require you to have all three, which is considered “full coverage”. If you own your vehicle outright, most states will require you to carry liability insurance only. However if your vehicle is involved in an accident you may have to carry the burden of repairing your vehicle if you do not have full coverage. There are numerous other types of coverage that are available to the insurance purchaser.
The traditional method of purchasing auto insurance was either through a local agent or broker. The difference between an agent and a broker is that the agent works directly for a specific insurance company. A broker can represent several companies in the coverage that they offer. These agents and brokers are paid by the insurance companies for the policies that they write and renew. In many cases discounts can be obtained from these agents and brokers for combining policies with a specific company. An example of this is the combination of insurance for the home and for the auto. The agent or broker works to develop the best policy for the individual. A relationship is formed which insures that the insurance company will pay the agent or broker when the policy is renewed with the agent or broker.
If a customer was dissatisfied with either their coverage or their broker, a long and involved process needed to be undertaken to make a change. Multiple telephone calls with repetitive questions and answers needed to be made to various insurance agents. This process was both time consuming and in many cases caused frustration for the consumer. It was often difficult for the consumer to compare the coverage offered by the different companies.
In the late 20th century, insurance companies, recognizing the growth of the Internet created specific programs to allow consumers to get insurance quotes on line. This method of allowing the consumer to get a quote for a product allowed the product, insurance, to be offered at a discounted rate. The insurance company not having to pay a commission to the agent primarily generates this lower rate. Another factor in the ability to offer a discount rate for insurance is that by offering quotes on line, a greater number of customers can be attracted which allows for better economies of scale for the insurance company.
Prior to purchasing any insurance on line the customer must compare the policies rather than just the cost of the policies. The policies must be compared, including the “fine print”, to determine if both the company offering the policy and the policy itself fit the purchaser. This in itself can be a daunting task for the consumer who is not fully versed in all aspects of automobile insurance.
Auto insurance is quite simply another product that is sold on the open market. A multitude of prices and options are often available for what on the surface appears to be the same product. There are consumers who will purchase the lowest priced product simply because it is the lowest price. There are other consumers who will purchase a product simply because of the name recognition of the supplier of the product. Name recognition is an important factor. The reliable brand name often means a quality product that is combined with quality customer service. Maytag washing machines are an example of a reliable brand name. Maytag washing machines seldom require service yet, when they do, the Maytag service is known to be prompt and efficient. The purchasing of a brand name auto insurance, even at a discount rate may be higher than that obtained from other companies. However the brand name insures reliability and prompt efficient customer service when an accident and resulting claim occurs.
Discount auto insurance is a viable alternative when budgets are strained. Everyone desires to save money and insurance costs appear to be an avenue in which to cut costs. When purchasing discount auto insurance, the consumer must be able to accurately compare and evaluate all facets of the insurance and know what the policies cover and what they don’t. The company that the insurance is purchased from should be checked with the Better Business Bureau for their performance and any complaints that may have been lodged against them. If any doubt exists in the mind of the consumer, perhaps the best alternative is to consult a local insurance agent or broker and inquire about rates that they can provide. It is entirely possible that those rates are competitive with discount rates available on line. This provides the consumer the peace of mind that a professional has been consulted and both the policy and the insurance company fit the consumers’ needs.
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