Discount Auto Insurance – Is It Right For You
March 24, 2009 by Joseph Welusz
Filed under Auto Insurance
You’ve just received your auto insurance renewal notice from your insurance agent and are trying to determine how you are going to fit the new premium into a shrinking family budget. You’ve seen all of the ads on the television about discount auto insurance is it time to look into them and see just how much you can save?
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.
Prior to the availability of the Internet, auto insurance was purchased either from an agent or a broker. One particular company employed insurance agents while brokers represented several different companies. The agents and brokers were paid a commission for both the policies that they wrote and renewed. In theory, the insurance professionals could develop a relationship with the consumer and determine exactly what the needs were of each individual person.
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.
The growth of the Internet in the late 20th century provided insurance companies a medium to both attract new business and reduce costs. The insurance companies provided a vehicle by which the consumer could get quotes on line. This provided a greater market base for the insurance companies and allowed the insurance companies to offer discount auto insurance rates. This reduction in rates often reflected the cost savings of not having to pay commissions to agents or brokers. Another factor in the discount auto insurance rate was that the insurer could have a larger base of people from which to collect premiums, which allowed lower rates to be offered.
All insurance policies are unique and while offer the same coverage may have differences. These differences often called exclusions allow the insurance company to specify what they will not cover in case of an accident. In many cases these exclusions are included as “fine print” which the purchaser may or may not read. A consumer may in evaluating an auto insurance policy can potentially miss an exclusion that could potentially cost them money in the long run.
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.
Costs are constantly rising often outpacing gains in income. Discount auto insurance is available from many suppliers. When purchasing any discount auto insurance without the aid and assistance of an insurance professional it is required that the consumer carefully evaluate both the policy and the company that is issuing the policy. If the company that is issuing the discount auto insurance is not familiar to the consumer it is recommended that the consumer contact the Better Business Bureau to familiarize themselves with that company. Should the consumer doubt their ability to determine which policy and or company is the right one for them, an insurance professional should be consulted. In many cases the insurance professional can offer comparable rates to the discount auto insurance available on line, which insures that the consumer gets the best coverage for their money.
