Auto Insurance Policy, Coverage and Cost Disparities--What You Must Know Before Buying!

by Mike Boerner, in4m8ion.com

Auto Insurance Policy, Coverage and Cost Disparities--What You
Must Know Before Buying!

By Mike Boerner



There can be vast differences among auto insurance quotes and
auto insurance policies currently offered in the marketplace.
Use of your favorite search engine with the terms "auto" and
"insurance" quickly provides a plethora of coverages, coverage
levels, rates, options, payment terms, insurance companies, and
geographic availability, just for starters. With virtually
limitless choices, how does one select a suitable policy?



First, remember what you are buying: risk coverage, pure and
simple. You want this coverage to pay for any damages, bodily
injury, medical care, or loss of life, for which you are found
liable. Sounds pretty serious, doesn't it? It is. Not only is it
important to insure against the full range of risks under which
you will operate your vehicle, it is of the utmost importance
that you be indemnified (protected) against those risks by a
company with the resources to do so. While those resources
include the obvious financial ones, they also include customer
service, and good will within the industry. An insurance company
customer service function that is efficient, conscientious, and
courteous can prevent a lot of distasteful complications.
Similarly, good insurance company relations within the
fraternity of auto insurers may greatly facilitate handling of
your claim, or the claim of the damaged party. Basically, a
lawsuit avoided is a win for all concerned parties. With risk
coverage established as the primary consideration, all others,
including cost, take a back seat. Nevertheless, no matter what
selection process you utilize, keep in mind the following
factors:



1. Buy only the insurance coverage you need, and cannot
self-insure. If you're driving a $2500 vehicle, and Collision
coverage (which covers the cost of repairing YOUR car) costs
$3000 per year, it should be obvious that you can self-insure
total loss of your vehicle, and do so at a profit. It should
also be obvious that any automobile in motion, regardless of
cost, is capable of inflicting approximately the same amount of
property damage, bodily injury, or death, and that these
Liability coverages are necessities for all but the super-rich
and the penniless. Many other coverage options allow you to
customize your policy based on your aversion to specific risks
and the premiums quoted to relieve you of those risks. Among the
many factors that influence the amount of your premium, the
coverage deductible, which you specify, offers the greatest
opportunity for overall premium savings. These savings aren't
free, of course, as you are assuming the risk of covering the
cost of the deductible should a mishap come your way, in
exchange for a lowered premium.



2. Buy only from a reputable insurance company. These companies:
- are generally corporations of, and hold corporate assets in,
your country of residence, and are subject to local and national
laws and court decisions; - are registered with your state
insurance commission (website URLs can be found at
http://www.naic.org/state_web_map.htm) - are licensed to do
business in your state; - compare favorably against their peers
in the A.M. Best (http://www.ambest.com) Ratings for qualities
such as: - financial stability; - customer service; and, -
claims handling.



3. Get the best price you can for the coverage you need. While
this sounds like an endless process, it is self-limiting when
restricted to obtaining an auto insurance quote from reputable
insurance companies. Three auto insurance quotes should suffice,
but get as many as you need to exhaust a given level of
insurance company quality: if there are six top-rated firms, get
six quotes, for the same coverage needs, in order to ease your
selection. Since no two companies have the same customers,
workforce, or business base, no two companies have the same
experience (profit and loss) base, and therefore, no two
companies will have the same cost history on which to predicate
(future) premiums. Although companies must compete with their
peers in the marketplace, a number of considerations (such as
whether a company made a profit or incurred a loss, consumed or
accumulated reserves, or added or lost policyholders)
necessitate obtaining multiple rate quotes. While many people
have reported substantial savings purchasing auto insurance
online, it is critical that you purchase your insurance from a
reputable insurance company. Remember, you're buying risk
coverage here. Don't buy without checking the rating of your
intended risk coverage partner.



4. Don't invalidate your coverage by being less than completely
candid during the application process. The quote an insurance
company gives you is based on rating a number of factors
concerning you and your driving habits. This includes your
driving record; number of tickets; age; sex; marital status;
location; daily and yearly mileage; vehicle use (business or
pleasure); make, model, year, engine/hp; number of operators;
number of vehicles, etc. Your driving record is public
information readily available to your insurance company. You
provide most, if not all, of the other rating factors. Doing so
with less than complete candor is almost certainly not in your
best interest. Most reputable insurance companies validate the
information you provide. Those that don't are not what you want
in terms of a risk partner. Among the options available to
companies that have unknowingly issued policies based on
falsified information are correcting (raising) your rates or
cancelling your policy, upon discovery of falsified information.
Once again, remember that you're buying risk coverage here. You
don't want to find out that your risk coverage partner has
dropped you because of falsified application information AFTER
you've had an accident or are involved in a lawsuit. This
situation may be a rarity, but if you were the insurance
company, and were being sued for millions in damages caused by a
policyholder who materially mis-stated the factual basis on
which your risk coverage contract was based, how hard would you
try to invalidate the policy? Enough said.



5. Consider limited field of membership, and group affiliated
policies. Due to the narrow slice of the risk pie that such
policies cater to, rates may be substantially better than those
available to the general public. Since this type of policy
focuses on the lowest risk groups, it invariably raises rates
for all other motorists, since the low-risk policyholders are
removed from the general risk pool. If you fall into the field
of membership for any of these policies or companies, be sure to
compare their costs with your other quotes. Companies offering
highly advantageous policies for preferred risk drivers include
USAA (for US military members, retirees, spouses, veterans, and
their children); GEICO (for government employees); and most
major insurers in association with many fraternal and
professional organizations.



6. Investigate "bundling" your insurance coverage needs. Some
insurers offer discounts, favorable payment plans, or improved
coverage for such things as multiple vehicles, multiple drivers,
homeowners insurance, renters insurance, and life insurance
policies purchased by the same policy holder. Get quotes.



7. Take advantage of all of your positive policy rating factors.
These merit reduced rates for: High-Credit-Rating Applicants;
Good Students; Anti-Theft Car Alarms; Anti-Skid Braking Systems;
LoJack or similar systems; Electronic Stability Protection;
Multiple Vehicles; Multiple Drivers; and, Safe Driver Discounts,
for example.



Time to Shop



With the foregoing factors in mind, you are now ready to
quote-shop, via the internet. Www.insurance.com, or similar
sites, are excellent starting points to obtain multiple quotes
or more detailed information concerning policies and coverages
over the internet. Companies such as Geico, Allstate, Hartford,
State Farm, Progressive, Liberty Mutual, USAA, INA, Nationwide,
Travelers, and most other large companies maintain an online
internet presence, with quote capability. The advantage of using
a multiple quote site is that the application information, which
is as extensive as necessary for an accurate quote, need only be
completed once, vastly reducing the time required to get the
quote process started. Once you've got some baseline quotes,
you'll find the company-specific sites very easy to navigate,
especially if you've printed out the input data you used to get
your multiple quotes. Remember, you're looking for
"apples-to-apples" quote comparisons from reputable, well-rated
insurers. Using the internet, you'll avoid the ubiquitous
automated call menus; being placed on terminal hold while
waiting to speak to an agent; driving half way across town to
get rates then repeating the process until you're either
satisfied or exhausted. It's so much easier to identify the
reputable, highly-rated insurers; mouse-click your way to one or
two multiple-quote sites; fill in the input data, keeping a copy
for later use; compare cost, features and qualities of the top
insurers; and, make your selection.



A Final Warning!



We cautioned earlier concerning the absolute necessity of
dealing with an insurance company that is reputable and
well-rated among its peers. While the internet offers the
possibility of substantially reducing your premium costs, it
also brings into your field of view unscrupulous insurers that
pay few claims, use stalling tactics, or worse, while offering
coverage at premiums well below most of the quotes you obtain.
Living through one claim with one of these insurers will
convince you of the wisdom of buying from a reputable,
highly-rated insurer, despite any advertised savings from lesser
companies. Unrealized savings, coupled with unpaid claims,
relieve you of your premium dollars and leave you basically
self-insured, at risk for whatever damages the insurer avoids,
escapes, or evades. You'll find it far better to reduce your
premium through the many other means mentioned here, than to
stint on the quality of the company you pick to assume your
risk. As the headline above advises, all auto insurance policies
and companies are not created equal. Having thus far tried to
hammer the concept home, one last repetition seems in order: buy
from a reputable, highly-rated insurer, reducing your premiums
through the many means presented herein, and sleep soundly,
knowing your risk-partner's got your back!



Mike Boerner has served aerospace, finance, automotive, and
government clients for over 28 years as a business process
consultant and freelance writer on both professional and
personal issues, offering information, advice, and decision
support. This article may be freely used so long as the by-line
and the writer's resource box in which this notice appears is an
integral part.

To explore other articles of interest, please visit the site at
http://in4m8ion.com



About the author:
Mike Boerner has served aerospace, finance, automotive, and
government clients for over 28 years as a business process
consultant and freelance writer on both professional and
personal issues, offering information, advice, and decision
support. See http://in4m8ion.com for more articles/categories.