Here is a fact that most of you who don’t regularly visit car insurance agencies might not know about. Of all the different insurance products available and given the same set of variables, car insurance quotes are the ones that can vary with the widest spread of prices quotes from one insurer to the next. Meaning, even if you give the exact same details and request for a quote for he exact same coverage, you will get wildly differing quotes from the different insurance companies.
A number of smaller insurance companies have actually decided to use this to their advantage, the have specialized in targeting consumers and offer quotes that are wildly above market rates. They will target certain consumer groups that aren’t particularly savvy when it comes to car insurance needs or those who are plainly too lazy to go for other quotes and are happy to pay the premiums that are over market acceptable rates. This may also be the practice with those who have insurance agents who are supposedly working for their interests. The dodgy car insurance company will offer the agents commission that is above the norm so the insurance agent with direct their clients to their insurance company instead. The insurance agent gets more money and their clients get screwed.
Just to compound matters even more, what these insurance companies are doing isn’t exactly wrong. Although some people would rightly consider it preying on the unsuspecting car insurance rookies, the industry actually considers it smart customer profiling. There are no laws against these practices and even industry watchdogs have turned a blind eye to this practice saying that any fault would lay squarely on the arms of the person requesting the car insurance quotation. Looking at it subjectively, as with any purchase, it is up to the customer to find out if they are getting a good quote. It isn’t the prerogative of the insurance provider to give you a quote at the market price. Almost all insurance companies are profit making entities and thus must strive to satisfy this need. Customer profiling is looking at the pool of customers that you can potentially target and find ones that are easily satisfied with whatever quote your provide to them.
This is where the classic saying “buyer beware” comes into its own. Insurance agencies like any other business are a profit making entity and their main aim is naturally to take as much money off your hands without breaking the law. It is the consumer’s own place to say if they are happy with the quotation they receive for their car insurance or if they want to decline it in favor of another better priced alternative. It is understandable that people are too busy these days to fill in the countless forms and liaise with the many different car insurance companies just to get a few quotes. The benefits of doing so however are far greater than the costs. You will understand the car insurance market better and also get a much better deal if you just spend a few extra hours looking around.
Some car insurance companies also prey on clients who are very loyal to their car insurance providers. Some people stick to their car insurance company as if there is some sort of reward program in place. This consumer group is very loyal and will stay with their insurance provider for many years. What some car insurance companies do it increase the premiums ever so slightly every year. This could be in the lines of 3-4% per year. Most of these loyal customers wouldn’t mind such a small increase and simply continue with their car insurance policy with their old company. Over the years, through the magic of compounding they don’t realize that their car insurance policy has gone up in costs substantially. Some of the time, their insurance costs would have escalated by as much as 50%. It is only when the poor policy holder gets another quote for their car insurance that they realize what a huge increase in price they are paying.
The morale of the story here is to be prudent not only when looking for a car insurance quote the first time, but also be prudent even if you have and existing policy. Always be on the look-out for better deals on the market. Insurance companies really have very little loyalty to their customers and you should treat them the same way that they treat you. Always be cautious of the price and keep a look-out of changes in policy that should be reflected in the pricing.
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