How to Use Comparison Auto Insurance Quotes

Online quote comparison sites have existed for some time, and they’re experiencing a resurgence with a few, well-funded, new entrants to the market. I understand why, as a business model it’s attractive, simply render a rate for several insurance companies and let the consumer decide. What could be wrong with that?

Maybe it’s me, it possible I don’t understand the business model, but I’m not sold that it’s the best way to sell auto insurance.

Why do I think this way? Well, for one, there are differences between insurance companies that don’t show up in the rate. Therefore, if the only piece of information the consumer has is the price, then bad decisions are bound to happen.

How to use comparisons auto insurance quotes

It’s easy to get an online auto insurance quote. Is this really the point? It can’t be. Frankly, it’s easy to get an auto insurance quote if you call your local insurance agent. Auto insurance quotes are easy regardless of where you decide to get one.

There is too much emphasis placed on the price of a policy, and not enough on the coverage. The important thing is the coverage that is behind the price. When we talk about coverage, it’s not always the limits of liability or deductibles shown on the declarations page. That too only tells part of the story.

However, the implied assumption of the online comparison sites is that all insurance companies are created equal. That all auto insurance policies are designed to provide the same level of protection. That’s not true. It’s not true today, wasn’t true yesterday, and won’t be the case in the future.

Comparison auto insurance quotes are an increasingly valuable part of the insurance shopping experience. What is also important, however, is knowing what insurance company, policy, and coverage combinations are right for you. The combinations of these items really represent the cost of owning an auto insurance policy.

What is the real cost of owning a policy?

It is tempting when you compare auto insurance quotes to base your decision on the lower total price. As consumers, we’re trained to look for the best bottom line. We want to leave the transition feeling we get the best deal.

It’s our consumer mentality and the reality that people don’t want to shop for auto insurance that makes online comparison auto insurance sites attractive. They appeal to the bottom-line consumerism that defines us all.

When you think beyond the price, you begin to understand the real cost of the insurance purchase. The price works in conjunction with the limits, the deductibles, with the coverage afforded in the policy, and the service levels of your agent and the insurance company.

Price alone won’t tell you:

1. What are the service levels of the insurance company, do they offer 24/7/365 assistance?
2. What is their claims reputation?
3. How does the policy handle permissive use drivers?
4. How does the policy handle newly acquired vehicles?
5. How does the policy handle rental cars?
6. How long do I have to add a newly acquired vehicle to the policy, and how much coverage is provided before I add the car to my policy?
7. Does the collision coverage actually have a limit of coverage?
8. Are there drop-down provisions for the liability limits if I allow an unlisted driver to use my car?
9. Are brand-new cars subject to Actual Cash Value, or do I get a new car replacement?
10. Does the policy provide identity theft, or is that an option?
11. Will the policy cover diminished value if I crash a rental car?

These are just a few questions unanswered by price. We’re just talking about auto insurance, it’s even more important for a homeowners policy, and don’t get us started on comparing business insurance quotes. If you focus too much attention on price, you may miss the true costs of owning an insurance policy.

Why are you buying insurance?

I know, for some it’s to be legal on the road. 🙂

But that’s not true for all of us, we are transferring the financial risk of a loss to the insurance company for a premium. The amount of risk the insurance company is willing to accept is a combination of the limits of liability on your auto insurance declarations and the policy language provided in your contract.

It’s in the policy language where the insurance company will define all the terms, state the insuring agreement, provide the exclusions, and begin the process of reducing (or increasing) the amount of risk they are actually underwriting. This isn’t bad, it is just the reality, and this is what makes one insurance company a value brand vs. a budget brand.

These differences in the policy language often show up in the price you see, and can often explain why one company appears to have a lower price. But when you have a claim and realize that there is no coverage, or coverage is being reduced, and you have to pay out-of-pocket for the loss … that’s, too frequently, when consumers learn the real cost of their auto insurance.

It’s more than comparison auto insurance quotes

When you get comparison auto insurance quotes from an online comparison company, make sure you get all the details about the coverage you’re about to purchase. This is the same advice if you’re purchasing your policy from a local insurance agent as well.

Now that you know that there are differences between insurance companies, you need to get an apples-to-apples comparison of the limits and the coverage provided in the policy … you’ll likely find that the comparisons are fewer apples-to-apples and more apples-to-potatoes. If the online site doesn’t provide you with a phone number to get these questions answered, then you should reconsider using their site.

If you’re not completely sure what you need, you should be able to consult your existing policy declarations as a benchmark, but you’ll want to review your current financial situation to determine if you have sufficient coverage for your assets, and your willingness to retain risk. Once again, if you are unsure what the right choice is, call the online provider and speak with one of their representatives.

Trust the opinions of your friends and family

It’s not a popular party conversation, but you should reach out to friends and family who you trust and solicit opinions about the insurance carriers they have insured with in the past. This is a good way to narrow down where and how you’ll shop.

Since some of the “intangibles,” like claims and customer service aren’t easy to compare on paper … or on a computer screen, getting testimonial advice can be extremely useful.

And if your friends and family don’t provide you with any help, then check out the online comparison auto insurance site or carrier’s reputation online or on social media.

Last important thing to consider

The financial condition of the insurance company is actually important. It is not a frequent happening, but insurance companies do fail. Most of your large, recognizable brands are normally very good bets, but if you don’t recognize the name of the insurance company, understanding their financial rating may sway your opinion.

Many auto insurance companies are not widely branded, and make use of independent insurance agents to market and sell their products, so just because you haven’t heard of them doesn’t mean they are financially weak. Take some time to check them out at A.M. Best if you haven’t heard of them, it’s free and easy, and a smart thing to do.

The bottom line

We’re not opposed to comparing auto insurance quotes online. We offer online insurance quotes ourselves. We do disagree with online sites that prey on the price motive, and the consumer’s misunderstanding of auto insurance as a means to convert sales.

If you’re only value proposition is that you can render a price fast, then you don’t have much of a business model.

However, if you provide quotes online but have agents available to service calls, answer questions, and help to bind coverage over the phone, well that’s a local independent insurance agency, the OG of comparing auto insurance quotes. If you’re interested in learning more, getting a quote, or just a consultation, contact us, and an agent will be happy to help.