I need Insurance but Should I Buy Auto Insurance Online?

Buy Auto Insurance Online

I want to buy auto insurance online? But I'm not sure it's a good idea.

I worked in leadership for both GEICO and Esurance and have a deep affection for the internet and I'll always tell you there is nothing wrong if you want to buy auto insurance online.

We created ComparisonQuote.com so we can provide online rate comparisons to help consumers shop their home and auto insurance online, so we're obviously are just fine with online shopping.

But if you're considering buying your auto insurance online, you need to consider if it's is a good choice for you, because it's not for everybody.

How will I know if it's right for me? Well, that depends on a few factors, let's walk through the pros-and-cons of the buy auto insurance online shift. Then you can make your selection.

Can you save money if you buy auto insurance online?

The main reason folks look to the buy auto insurance online is the perception that there are savings in the do-it-yourself model.

Is it true that you save money when you buy auto insurance online?

If the cost you are referring to is the price for the policy you purchased, there is a chance that the direct-to-consumer insurance model can offer a lower price. Direct-to-consumer distribution models, regardless of the product category, is only created because it can control costs of distribution and/or new customer acquisition for a company.

Direct-to-consumer insurance companies reduce the new customer acquisition costs because they don't have recurring commission paid to insurance agents, and while their operations costs will go up to handle the customer relations that a dedicated captive or independent insurance agent channel would naturally service, the total difference between reduced acquisition cost and increased operations cost can lower the insurance company's overall costs.

So, There it is ... IF the insurance company passes this savings on to the consumer ... the is potential savings.

How much can I save it I buy auto insurance online?

If the insurance company does pass the savings on to the consumer, the savings is actually modest.

You see, [I'm going to get a bit technical, sorry, but I'll keep it as simple as possible - promise ] regardless of the distribution choices of an insurance company, the claims costs, adjustment expenses, and taxes will be similar from company-to-company. This means the only different is in the operations and acquisition expenses, even if we assume a huge savings in acquisition and only a moderate increase in operation expenses, we estimate that the difference in overall budgetary differences would average approximately 8.8%.

So, if the average auto insurance policy costs approximately $770, you could expect to save approximately $68 per semi-annual term for the average policy. Any other difference you may see in the premium is the normal differences in normal pricing choices made by statisticians or actuaries, and not related to the distribution channel. These difference exist between all insurance carriers who have any form of pricing sophistication.

What does that $68 cost the consumer? Someone has to pay it ...

When you elect to buy auto insurance online, you are making a trade-off. You are going to make your insurance purchase without a dedicated insurance agent. This may be what you want, but this is a significant choice, which impacts the foundation of your family's financial plan, so you should understand what you are electing to sacrifice for $68 of savings:

  • A licensed personal advocate: Insurance is complicated, it is a contract drafted by the insurance company, and it has very objective terms that control what is - and IS NOT - covered. Each section of the insurance policy has specific definitions and exclusions, and the application forms also can excluded specific behavior or named drivers from coverage. The policy contract controls when you need to notify the company about new vehicles, replacement vehicles, when coverage applies to rental cars, loaner cars, and who is covered and at what level of liability when driving you inured vehicles.
  • Your Time: If you elect to buy auto insurance online, you will need to shop with several insurance companies, compare the coverage (if you fully understand them), and make you purchase choice. This can be time consuming, if if the quote process only takes 15 minutes. You never get that time back, and an hour of your time may be worth much more than $68.
  • Convenience: It may sound like the online auto insurance companies are more convenient because they have slick user interfaces and awesome websites, but if you have to do research or investigate the web page for answers, this can be inconvenient. Additionally, many direct-to-consumer insurance companies only offer one product, so if you have to purchase home and auto insurance, you have to do this all over again.
  • The personal touch: You local insurance agent lives in your neighborhood, they are closer to your situation than a corporation that has a call-center somewhere in a low cost local in the mid-west. An insurance agent, if they are good, will offer you ancillary benefits, like education, additional financial services (eg Life Insurance, Annuities, or investment opportunities).

So, if you're going to buy auto insurance online, you need to think about these trade-offs, make sure that the savings - IF you are getting them - are really worth the modest difference in premium.

Somewhere the focus on price distracted us from why we buy auto insurance, for financial protection

It seems like whether it's an agency company or direct-to-consumer company, the focus has been on price and not coverage. I understand it, insurance isn't a tangible product, so it's hard to understand why we pay for insurance.

Somehow we need to redirect that focus. Sure price is important, nobody wants to get a bad deal. But if you're buying cheap auto insurance, you may not be getting the coverage - the protection - you need.

It's that simple.

Just like there is a difference between a BMW and a Kia, an Apple and an Asus, and McDonald's and In-N-Out. The same is true between insurance companies. Just like with your consumer packages goods, you have the low priced, cheaply made options, and the luxury choices. The options, protections and exclusions in an insurance policy vary like the raw materials, or quality of ingredients that go into consumer packaged goods or food choices.

Since a sales counselor at a direct-to-consumer insurance company is an employee, they are less inclined to offer you the comparisons between companies. Captive agents may not either, but that is a totally different discussion.

Honestly, most of the bad rap that insurance companies get has to do with consumers buying a stripped down product and being disappointed that it doesn't perform. You want the comfort, performance and luxury of a Mercedes Benz, but you bought a Gremlin and your upset because the acceleration and ride stink.

The same is true for auto insurance.

You still want to but auto insurance online, great

If you're still want to buy auto insurance online, please start at, ComparisonQuote.com and get a comparison auto insurance quote first. If you elect to shop elsewhere, make sure to ask a lot of questions and don't buy if you feel uncomfortable with the level of detailed explanation about the policy. Buying auto insurance online is not bad, it requires that you spend some time, do the research, and make informed choices. And remember, there may not be any difference in price if you elect to work with an insurance agent ... so don't be bashful, give an insurance agent a try ... you may just may be impressed.

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IronPoint Insurance Services is an independent insurance agency licensed (#0G87821) with the California Department of Insurance. We are authorized agents for many A+ rated Arizona, California and Utah insurance companies. We provide consumers with online, phone, and in-person insurance services through our insurance company relationships. IronPoint Insurance Services, LLC offers multiple insurance quotes to provide consumers several options for their insurance products. We offer auto insurance through Mercury Insurance Group, Travelers Insurance Companies, The Hartford, MetLife Auto & Home, and Progressive Drive Insurance. We are authorized insurance agents for these companies and do not charge any fees for our services. If an IronPoint insurance agent trys to charge you broker or agency service fees for representing these companies, please contact us immediately.

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