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If you ask the average car owner why they chose the insurance company they did, they will most likely tell you that it was because the car insurance company gave them the best price. Beyond that, they may say that all car insurance companies are the same.
All car insurance companies are not the same. In fact, there are enough differences between them to suggest a fair amount of research before deciding on a provider for your auto insurance coverage. While finding cheap car insurance is important it’s not the only thing that you should be thinking about when trying to find the best car insurance company.
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Dedicated vs. Diversified Car Insurance Companies
The first thing to consider is the fact that some car insurance companies are dedicated only to covering motorized transportation like cars, motorcycles, motor homes, and so on. Others are more diversified, providing policies for home, life, and vehicle. This may be important to owners who have special circumstances surrounding their cars.
When cost is a factor, the diversified insurance company might be a better deal if they give you discounts for using them in multiple areas. For instance, if you carry both home and life with a single provider, that provider may offer you a discounted auto policy with equal or better coverage than a dedicated car insurance company.
Specialized Car Insurance Companies
In the insurance business there are certain niche providers catering to specific demographics. Classic car owners and boat owners are but two examples. For standard auto insurance, there are providers whose niche might be young drivers with limited income and experience. Such car insurance companies provide basic coverage and affordable monthly payment plans to their customers.
Another niche is covering high risk drivers who have DWI convictions, multiple traffic violations, or a history of accidents. These providers take an unusually high risk on those they insure, so premiums are naturally higher.
Different Rates Among Car Insurance Companies
When you finish sifting through all the dedicated, diversified, and niche insurance providers, you’re left with the decision of cost in relation to the amount of coverage provided. Regardless of which type of company you chose, there will differences among competitors for pricing and coverage options.
Comparisons begin with the cost for basic coverage. By basic coverage we mean the minimum requirements for liability, bodily injury, and property damage required by each state. Depending on your age, the vehicle being insured, and the amount of annual mileage, you may be surprised at some of the quotes you get for basic coverage.
When you get into things like collision and theft protection, that’s when you really begin to see the difference in various quotes. Some companies will cover a vehicle only at the value as expressed in the Kelly Blue Book at the time of loss. Others will pay full replacement value of a new, similar model at your local dealer. You will notice that premiums vary according to which method of valuation is used.
Car Insurance Companies Offer Extras
Car insurance companies make their money by investing the premiums they collect from their customers. The goal is to make a higher return on the investments than they will pay out in claims. Therefore, volume is more important than outright premium cost. In other words, insurance companies would prefer more customers at a slightly lower rate then vice-versa.
This dynamic plays out in terms of policy extras like full glass coverage and roadside assistance. Such extras are often offered free of charge as a standard part of any car policy. Car insurance companies know that these things will cost them very little over the long run, but they will attract a larger number of customers to their products.
Comparing such extras requires the same amount of diligence as you give basic coverage and collision. Often, the differences in the extras are found only in the fine print. Free towing, for example, might be without restriction on one policy, but subject to mileage limits on another. Read the fine print.
Car insurance companies are not all the same by any stretch of the imagination. They do offer many things that are similar in price and scope. Yet they also offer many things that can be vastly different form the competition. It is up to the individual consumer to do his or her homework when choosing an insurance provider.
Once you do find one you like, make sure you keep doing comparisons on an annual or semi-annual basis. What various insurance companies offer may change according to their own business models or financial situations. You may find a better policy elsewhere in the future.
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