How to Buy Auto Insurance on the Internet
How to Buy Auto Insurance on the Internet
Are auto insurance agents a dying breed? Today, auto
insurance is one of those service businesses that are becoming more and more
dominated by online providers.
In fact, there's some question whether auto insurance
agents are needed at all anymore. Do you really want to spend your Saturday
morning visiting an auto insurance office being pitched on a single car
insurance company's policy when you can buy auto insurance online any time -
weekends, evenings, etc. Not only that, but buying auto insurance online
enables you to compare the offerings of several companies side-by-side in terms
of policies and premiums. What's more, you can buy the policy online (in most
states), and even file claims online.
One might well point out, of course, that many people
simply prefer meeting and talking face-to-face with an insurance agent, rather
than simply pounding a computer keyboard. For one thing, they may feel more
secure about transferring money (premium payments) in person than on the
Internet. For another, they may prefer having a knowledgeable individual they
can communicate with and ask questions of.
But the number of such people as a proportion of the
adult population is clearly dwindling. According to market research firm
ComScore, 67.5% of 2,000 U.S. consumers surveyed last year said they would
consider purchasing their next auto insurance policy online. Auto insurance
purchasing online has been growing at an amazing 55%+ rate over the past couple
years.
Therefore, whether you're looking for a replacement
policy or for your first policy, online auto insurance offers a number of
benefits: cost-savings, convenience, speed, and better information about
available policies from a range of insurance providers.
Nonetheless, before you sign up for a policy, whether
in-person or online, make certain you're familiar with the basics of auto
insurance.
Basics of Online Auto Insurance
If you drive a car in the U.S. you need insurance.
That's an obvious fact. But what kind of insurance and at what price?
Liability insurance. As you may know, there are two
basic types of liability insurance, namely bodily injury and property damage.
If you buy a 25/30/25 coverage that means the insurer pays up to $25,000 for
bodily injury per person, $30,000 for bodily injury per accident, and $25,000
for property damage per accident. So this would be a relatively low amount of
coverage, and you must assess your own situation in deciding what level of
coverage is best for you. All states, except New Hampshire and Wisconsin,
require that you carry liability insurance.
Collision. This category of auto insurance covers your
property damage and medical expenses in an accident in which you are at fault.
Comprehensive. This type provides coverage for loss
from accidents other than collision, or from theft, for example property damage
sustained from flood, fire, or vandalism.
Uninsured/underinsured motorist. Pays you if the other
driver in an accident does not have insurance or does not have enough
insurance. (It's not required in all states.)
Personal injury protection. Pays your unrecovered
medical expenses as well as lost wages resulting from an accident. PIP may also
include a death benefit. (About 16 states now require PIP coverage.)
A source of confusion are so-called
"no-fault" auto insurance program. In a no-fault system, all drivers
pay their own accident costs, no matter who is to blame. It was for a long time
thought that this system would reduce litigation thereby holding down costs. It
didn't happen. In fact it usually resulted in higher accident rates, higher
costs, and higher insurance premiums. As a result, most states that had enacted
no-fault laws repealed them (DC, NV, PA, NJ, GA, CT, CO, FL). leaving only
Michigan, Kansas, Hawaii, Massachusetts, Minnesota, New York North Dakota, and
Utah. However a couple states - New Jersey and Pennsylvania - adopted
"choice no-fault", allowing drivers to choose between no-fault and a
traditional policy. (Results, in terms of premium levels, have been mixed so
far.)
Keeping Your Premiums Down
To the average consumer, insurance firms may seem to
have some strange ideas about what factors to consider in setting your
insurance rates. For example, I once found my rates increased after another
driver hit my car, and when I called the company, and explained that the
accident had not been my fault, the customer service rep answered, "Yes,
but you were in the wrong place at the wrong time."
That is, it's all a numbers game, and there's no real
effort to achieve equity in setting rates. So to win the game you have to
provide the company with numbers that will result in reasonable premiums. Some
of these you have some control over and some you don't. Among the factors that
will be taken into account are: age/gender (single males under 25 get higher rates;
women generally get lower rates); location (New Jersey and California rates are
high; urban rates are higher than rural rates; many companies now even look at
your zip code); driving history (if you've filed one or more claims in the past
five years, this will boost your premium significantly; so will a speeding
ticket or other violation, even if no claim was filed); amount you drive; type
of car (expensive cars get higher premiums, so do cars with high rates of
theft, like the Toyota Camry and Honda Accord; so do off-road vehicles and
large SUV's).
Finding an Auto Insurance Company on the Internet
If you run a Google, MSN or Yahoo search for "car
insurance" or "auto insurance" you'll see that this is a crowded
business on the Internet. There are literally hundreds of companies advertising
auto insurance online. However your best bet is to use one of the companies
which allow you to order online, like Esurance.com or InsureMe.com.
You'll soon notice that each online insurance company
has its own little qualifying process and series of screens it forces you to go
through before it give you a quote.
Esurance.com is a good example. It starts by asking
you for your zip code - an easy enough question. Then on the ensuing screens
they request detailed information -- How many cars you are insuring. How many
drivers. Year/Make/Model of your car. Uses of your car. Discounts for which you
may be qualified, such as airbags, antilock brakes, car alarm, etc. Coverage
you are looking for. And so forth.
The Esurance.com application process is actually
fairly simple, and takes only a couple minutes - after which you're provided
with a specific quote from Esurance.com, which is a virtual (online) insurance
provider.
By contrast, another website, InsureMe.com takes you through
a very similar application process, but concludes without providing you with a
specific quote. Instead, it lists several brick-and-mortar insurance companies
which will contact you later, either by email or phone, with specific quotes.
This has the advantage that you will be able to compare policies and quotes,
and the disadvantage that you will have to wait awhile for the companies to
contact you.
Other auto insurance aggregators (as they are called)
have other processes -- some, for example, run your credit report as part of
the process.
In any case, as a final step in choosing a policy, you
may want to take a little time to check out your selected insurance provider at
AMBest.com, particularly if it's one you're not familiar with. To do so you'll
have to create an account on AMBest.com to look up an auto insurance company's
rating, but it's fairly simple to do so. Once you've created your account,
click on "rating and analysis" and input your company's name.
Companies are assigned a letter grade from "A++" downward. You'll
definitely want your selected company to have at least a "B" rating,
which is "good."
Incidentally, even if you already have what you think
is a reasonably-priced policy, it's usually still a good idea to apply online
to see if you can get a better premium rate. After all, there's no obligation
and it only takes a couple minutes. According to a recent survey of consumers
by the industry publication EDP Weekly, one in three people who shopped online
for auto insurance and then bought a new policy saved more than $500 with some
saving $1,100 or more.
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