Shopping for Auto Insurance

Auto Insurance Shopping

Car insurance is legally required to operate a motor vehicle in the U.S or Canada. By understanding how the insurance business works you can only benefit as the shopper. Learning in-depth into how rates are determined and can maximize your monthly insurance rate. Shopping for auto insurance more effectively is what we write about the best. Everyone loves a discount, but so few people ask about how to lower.

Many people will call their insurance company after receiving a renewal notice. After managing to forget about car insurance for the rest of the year, the renewal notice arrives and informs you that your premium will be increasing soon. Your response is natural, you call the insurance company and want to know why your rates went up when you are accident-free and have never had a speeding ticket.

Insurance is a shared risk. The premiums that you pay are kept in reserves and used to fund the claims of our fellow customers. When you or I need to file a complaint, that claim is paid out using money from the same reserves. The problem arises when claim frequency increases or when the amount paid out in claims begins to rise. The information analyzed for trends. If, for example, insurance claims tend to be more frequent among individuals who like the color blue, then the rates for individuals who like blue might rise (if the state were to allow it).

Rating, tiering, and surcharging

Everyone begins with a base rate. Statistical information determines rates for a particular location (usually zip code). Your price is the same for everyone, regardless of age, sex and driving history. This rate increases through tiering and surcharging. Though this varies from state to state, most insurance companies have a tiering structure. Here’s how it works. Insurance Company A rates clients based on 50 tiers. Clients at Tier 00 will have the lowest rate.

Based upon factors which are approved by that state’s insurance department and may include marital status, age, gender and driving history. Accidents and moving violations can be surcharged, adding to your premium. Most states allow insurance companies to charge for any accidents or violations which occurred within the last three years. However, even if a company stops surcharging for a crash. There are quite a few states that allow a company to look back five years and use accidents and violations to tier.

Credit reporting

Most insurers also utilize a Credit Based Underwriting Score. It is important to note that insurance companies do not typically pull credit reports. The Credit Based Underwriting Score, given when the insurer develops a formula which they then provide to reporting agencies such as Experian. Using the presented method, the reporting agency then provides the insurer with a numerical score.

Important to note because while this score affects your rate, those within the insurance company most likely have no idea what makes your score. Neither customer service, nor underwriting will have a copy of your credit report and cannot advise you as to what specific data affected your score. The Credit Based Underwriting Score, while numerical, is also different from your FICO Score, which is not obtained by your insurer

What should I ask myself when comparing insurance rate?

  • Market Sentiment
  • Company Financial Security
  •  Claim Details
  •  Hours of Operation
  • Discount Amount
  • Emergency Road Side Assistance

Market Sentiment

This is the number one most important question you should answer when finding your next policy. If people are complaining or have had a negative experience with that insurance company not it. If the trend is that a lot of people have had bad service, stay away from that company. Take others experience with a grain of salt, but if their’s constant bad service that’s a red flag from other insurance shoppers.

Company Financial Security

Digging into your insurance company financial history will give you an insight into what will happen in the event you need to file a claim. If a company is consistently hitting higher revenue targets every year, and market sentiment is still positive that’s a health company to purchase a policy with. Finding who Reinsurance your insurance company, is even more information you can use to determine what would happen if your insurance company were to go out of business.

Claim Details

The policy holder pays premium every month just in case they need to file claim for financial assistance. Knowing how quickly you can have access to that claim, is the shoppers right. Technology is constantly changing in the insurance industry, and you can get access to claims faster. Understanding the insurance companies claim process and how fast you can have access to that cash is important information for the shopper making a policy decision.

Hours of Operation & ESA

Having access to your insurance company around the clock, is important. Choosing an insurance company who has representatives working 24/7 provides the shopper reassurance that they are protected by a financially solvent company. If you are stranded on the side of the road does your insurance policy offer emergency road side assistance. Choosing an insurance company that helps their drivers at all hours of the day is an important question to ask potential insurance companies.

Discount Amount

Asking your insurance company what type of discounts they offer is important in the shoppers decision. Most reputable insurance companies offer discounts to students with a high grade point average, bundling multiple policies, owning a home, multiple drivers and cars on the same policy. These are just a few of the insurance discounts that companies offer, you should ask your company about all the discounts they offer. It doesn’t hurt to ask and in the event that they don’t offer discounts then you can always take your business elsewhere.

Where can I compare the cheapest auto insurance?

At VA Car Insurance you find the cheapest insurance quotes from independent insurance agents. The insurance shopper speaks with one insurance agent who guides you through the entire process. The independent agent, takes your information and gets you live quotes from insurance carriers and consults you on which policy is the best for you. You have an insurance agent who’s in your financial corner, consulting you on finding the right policy. Independent insurance agents have are free to shop policy quotes from any carrier so they can create policy based on the shoppers needs and not what they agency pushes the captive agent to sell.

Why is the online insurance shopping experience difficult?

The right amount of coverage, backed financially by a reputable company at just the right price, that’s all the insurance shopper wants. They are given overpriced policies with coverage that they don’t need, and their information passed around to anyone for the right price. How did we get to this point in the insurance industry? Capitalism, the online shopper is treated as a short term boost in revenue and not a repeat customer, who will compare rates again in the next six months. Who enabled this activity? Legacy players, information brokers, and captive insurance agents. To survive in the most competitive industry in the world, short cuts had to be made, and industries were created to profit off the void that emerged since the Internet. Moving forward the insurance industry will radically change. The two people who suffered the most from the past insurance shopping experience was the shopper, and the captive insurance agent.

How will shopping for an insurance policy change?

Finding the right insurance policy, shouldn’t be difficult. The online insurance shopping experience has led to some of the lowest customer satisfaction feedback in any industry. The internet ruined the experience of buying insurance for shoppers. People hate to be sold, and when you fill out a form only to be called by eight different salesman people, you get turned off immediately. There needed to be something better, and since 2012 there has been over six billion dollars raised in the insurance technology field. For the most part, we’ve seen some unique ideas that have the possibility to change the industry. The trend is fewer agents, more technology, and access to data in real time. In the next ten years, the modern day insurance agent will be replaced with the insurance bot. Their’s few companies implementing this technology today, but the ones who are it’s exciting.