Are cheap auto insurance quotes legitimate?
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UPDATED: Mar 11, 2019
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Affordable auto insurance is a necessity for drivers. Insurance companies draw new customers from the marketplace by stating that their rates are lower than the rates offered by other companies.
Marketing claims will win some customers, but the savvy insurance shopper will remember that purchasing adequate insurance coverage is the goal.
Cheap insurance is not always sufficient insurance for the driver’s specific situation. Enter your ZIP code to compare auto insurance policies.
Reasons to Insure
Individual need will determine the actual reasons a driver chooses one auto insurance policy over another. Agents and representatives can guide the process, but the final decisions rest with the policyholder.
- Legal requirements – In every state, drivers are required to carry minimum levels of auto insurance coverage. Most major insurance companies will encourage the driver to carry more insurance than the law requires.
- Lender demands – A bank or financial institution can require the policyholder to carry certain components on the auto insurance policy until the loan is repaid. This practice is common on expensive vehicles.
- Mitigate loss – Very few drivers are able to afford to repair or replace a vehicle following an accident or other loss. Insurance is designed to cover losses that would cause a financial hardship for the policyholder or a third party.
Requirements for Sufficient Insurance
Insurance premiums are based on the dollar amounts that are stated on the policy.
Coverage limits, discounts and deductibles are used in the calculations for the final annual premium charged by the insurance company.
Insurance companies can manipulate the amounts to cause the annual premium to appear lower, but the driver must be cognizant of this practice. Saving money on adequate car insurance is not the same as carrying insufficient auto insurance coverage.
- Affordable deductible – The fine print in the policy documentation will reveal the fact that the policy deductible must be paid for each claim. A $1,000 deductible is not affordable for most drivers. Multiple claims in the same calendar year will cause a financial hardship if the deductible amount on the insurance policy is too high.
- Sufficient coverage – Minimal coverage amounts might not cover the cost of a severe accident that involves multiple vehicles and injured persons. Insurance companies recommend certain amounts based on the location and population density of the area. Savvy insurance shoppers will accept the advice offered by the insurance company representative and purchase adequate coverage.
- Necessary components – Old vehicles might not be worth enough money to justify full auto insurance coverage. Expensive vehicles should be covered by collision and comprehensive components. All custom features should be covered according to the requirements of the insurance company.
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Evaluate Every Quote
Comparison shopping for auto insurance requires careful comparison between multiple quotes. Each insurance company has a quote generation method that is believed to win the highest number of customers from the vast marketplace.
Differences between the dollar amounts on the suggested policy will impact the annual premium calculation.
Savvy auto insurance shoppers will not be fooled into comparing annual premium amounts without evaluating the following facts about each quote.
- Exact coverage amounts – Coverage amounts for the collision, comprehensive and liability components must be identical on every quote. A difference of $5,000 can change the quoted premium amount. Comparison efforts will be difficult if the coverage amounts are not identical.
- Identical deductibles – Quotes that have different deductible amounts will not reveal the cost of insurance for the savvy shopper. Common deductible amounts of $250, $500 and $1,000 change the annual premium dramatically. Savvy insurance shoppers cannot assume that the highest deductible is always the best choice.
- Similar discounts – Basic discounts might appear on quotes that are returned during the online quote process. Insurance shoppers will notice a trend between the quotes. During subsequent discussions with each insurance company, more discounts must be requested to obtain the best rates for adequate auto insurance coverage.
Avoid Glaring Issues
Automated quote programs are written by smart people who know how to gain the attention of busy people who need to save money on car insurance. Multiple auto insurance quotes will be returned to the online shopper, and then the work begins.
Annual premiums must be the last deciding factor after the auto insurance shopper eliminates all quotes that possess the following characteristics.
- Liability-only quote – Insurance companies have the option of returning an insurance quote that contains only the liability coverage component. This method will create a low annual premium that might lure an unsuspecting insurance shopper into making a costly selection.
- Minimum liability coverage – Insurers are required to underwrite auto insurance policies that meet each state’s minimum liability coverage requirement. Quotes can be returned with the absolute minimum legally required amount. Financial hardship can occur if the driver has a severe auto accident where the costs exceed the coverage limits on the policy.
- Missing components – A quote that has liability and collision components will have a lower premium than a quote that contains all three major coverage components. The savvy online insurance shopper will notice this glaring difference.
- High deductible amounts – One way to create a very low annual premium amount is to place a high deductible amount on the quote. This approach is used to win customers for newer insurance companies that are attempting to build a customer base in a short period of time. The savvy online shopper will avoid these quotes.
Insurance companies follow proven marketing methods that have worked for many years. An appealing quote will cause the online shopper to make direct contact with the insurance company to acquire more information about auto insurance policies.
Savvy online shoppers will not be fooled by cheap car insurance quotes that do not have the coverage that was requested by the online forms.
The quote process might seem cumbersome to the first-time online insurance shopper. Careful auto insurance comparisons in the early steps of the process will save time later.