Is it bad to switch auto insurance companies?

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Important facts to know...

  • Customers are free to leave an auto insurance company and switch to a new one
  • Those with misgivings about switching auto insurance providers should weigh the positives and negatives associated with purchasing new insurance
  • A customer does need to feel fully confident he/she has purchased the right auto insurance policy

Customers need to be pleased with the auto insurance coverage they have paid for. A customer should also feel confident the insurance company will not try to avoid paying out on claims.

A first-time auto insurance customer might find his/her experiences with a carrier to be lacking. This problem is easy to address. Since little time and money was invested in the initial insurance company, choosing to switch providers won’t require much thought or debate.

Still, it is best to find the right insurance company from the beginning. Procuring a number of insurance quotes prior to making an initial purchase cuts down on the chances of a disappointment.

Things might get a bit more complicated, however, when the customer has been with the insurance company for many years and treated well. The customer may outright feel bad about leaving as if he or she is doing the wrong thing.

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A Bad Feeling

Feeling bad about switching to a new insurance company is an emotional response possibly based on a sense of loyalty. Or the feeling could be rooted in concern over the unknown.

A customer knows what he or she is getting with a particular insurance company. Even if recently disappointed in service, worries may exist about how things are going to work out after making a switch to a new company.

There is a way to approach decisions about changing providers. Customers making a switch need to select a new company wisely and be “all business” when making determinations about switching.

The Strictly Business Attitude

People who buy insurance should detach themselves from emotional feelings because purchasing an auto insurance policy is a business decision. The policy is a contractual agreement that binds both the insurer and the insured to certain terms.

If the insured discovers a better deal capable of better serving his/her own interests, it would be prudent to at least give consideration to the other offer.

Here is a bit of truth the policyholder needs to understand:

  • The insurance company’s selling of insurance is a business transaction.
  • The insurance company must effectively manage its interests.

If a driver were to get two speeding tickets in the same year, the insurance company, seeing the issue from a business perspective, would likely raise the rates of the driver.

The insurance company does this because the driver’s behavior reflects an increased risk. Therefore, the insurance company must look after its own interests through raising premiums on riskier drivers.

The insurance company would not be looking out for its own interests nor would it be looking out for the interests of shareholders by being lax or careless in regards to how it deals with insured customers.

Policyholders would probably benefit from looking at things from the same perspective. They need to look after themselves and their family members. Purchasing the best possible available insurance policy would help such a cause.

The Claims Denial Conundrum

Not too surprisingly, experiencing a claim denial could lead to thoughts of making a switch.

Comprehensive insurance is intended to cover the costs of damage to a vehicle due to circumstances outside of an accident.

Imagine if a sensor in the engine was damaged due to a weather incident, and the insurance company denied the claim due to asserting faulty maintenance.

While this scenario may seem minor, the incident may lead to the insured wondered what would happen if the $30,000 vehicle was totaled. What would happen if the insurance company denied the total loss claim or denied a gap coverage claim?

This possible denial is something very serious to think about. Taking a five-figure loss on a car due to a denied claim and then being stuck purchasing another car could be extremely costly. Additional concerns are likely to be raised.

Those concerns may focus on the liability coverage in place on the policy. Liability is intended to protect against financial devastation due to causing a severe accident.

Worries over claim denials may end up putting to rest any “bad feelings” associated with switching policies.

Costs and Affording the Policy

A new insurance company may be attractive to a customer simply due to offering a lower rate. Access to more-affordable insurance is going to be very appealing to someone who may be currently struggling with burdensome insurance bills.

The price of the premiums does need to be within the policyholder’s ability to pay for the costs. Otherwise, making the payments could put a strain on a budget.

As already noted, being unable to pay for the premiums may lead to a cancellation and a subsequent total lack of coverage. This lack may be both financially devastating and a violation of state law. In New Jersey, not carrying auto insurance could even lead to jail time.

Acquiring a less-costly insurance policy may be possible with the right amount of comparison shopping.

One insurance company may be very generous with the different number of discounts it makes available to customers.

Access to discounts could greatly cut down on the prices associated with insurance coverage.

Quality Counts Tremendously

The cost of an insurance policy is important, but customer service and a commitment to honoring obligations are important as well. Customers do need to look at the overall broad spectrum of what they are getting from a policy.

Doing so makes it easier to arrive at the right decision about sticking with an insurance company or jumping to another one. Whatever decision is made, staying or switching, the outcome should lead to getting a better deal.

It’s always best to review as many quotes from the beginning as possible in order to get the very best policy. Anyone with a great policy is not likely to make a switch.

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