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There is No Such Thing as the Cheapest Car Insurance Company!

December 21, 2010

Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

Each and every day people are greeted at their mail box by ads from insurance companies promising that they are the cheapest rate around. After collecting our mail, we turn on the television only to find even more carriers promising to be the cheapest. Twenty First Century (AIG) and GEICO are often the biggest promise makers in the savings department. The reality is that on any given day, any insurer may be the least expensive.

The fact is that there are lots of different variables that go into today’s sophisticated rating programs. Similar to your finger print; almost no two people are alike from a risk standpoint. As a matter of fact, two neighbors living side by side on the same street, driving the exact same car, having the exact same claim history, and insured by the exact same company may have two very different rates. Any insurance company that makes a wild claim that they are going to be the cheapest will be right only some of the
time.

Some of these risk variables that account for your rates are common knowledge. Things like the type of car you drive, the distance that you drive it and your infraction and claim history certainly are responsible for part of your rate. Over the past twenty years, your credit history has also had a great deal to do with your rate. There are other items that insurance companies use to determine rates and future claims that are well guarded secrets. Of course they are not a secret to the state insurance department. The auto insurance market place in most states is very competitive and any edge a company has in better predicting future losses is very important.

To make the situation more complicated, rates are sometimes manipulated by cutting coverage. There are a group of insurance companies that sell directly and advertise often that are often guilty of this practice. In a recent “scout” mission in getting quotes from one of these insurers, on more than one occasion they gave me a rate and asked for a down payment prior to telling me the coverage amount! Yesterday, in reviewing a new client’s coverage, this same company had given her liability limits that were near the state minimum even though they knew that she owned a home and had assets to protect. Sadly this type of pricing malpractice is seldom addressed by our state insurance department. So, buyer beware!

There is currently an ad running in our state by a company called 21st Century. In the ad they place two identical cars side by side and then each car sustains the exact same loss. The message of the ad is that the two cars are identical, the loss is identical and the repairs are identical. The “call to action” in the ad is that since the above mentioned items are the same why not buy the 21st Century policy and save hundreds.

The ad neglects to mention items such as:

  • Does each company offer replacement parts or aftermarket parts?
  • How long did it take for an adjuster to see the car?
  • How long did it take for each company to settle the claim?
  • How was their interaction with the body shop and the policy holder?
  • How about ease in getting and paying for a rental car?
  • If there were injuries involved, did they make it easy in dealing with the medical costs?
  • Did they offer a fair amount for pain and suffering or did they dig their heels in?
  • How well did they defend you in the liability suit?

These are the real questions that matter at the time of loss. Anyone can fix a fender.

The fact is that an independent agent, with experience in dealing with many companies will usually be your best option in selecting the best rate and more importantly, the best performing insurance carrier for you!

Have a great day!

Chris Garlasco

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