Auto Insurance Companies
There are many different options of auto insurance companies to choose from. So, how do you know which is the best company and also the cheapest in price? First of all, it is important to not make your decision of who you place your auto insurance based solely on the monthly price. We have seen over the years you get what you pay for. Auto insurance companies that are 40% cheaper than every other company that is a red flag that you may want to look into how that insurance company handles their claims and customer service. If you have ever had a claim and it was not been handled properly you probably wish you would have paid more monthly on your premiums to have your claim taken care of in a quick efficient manner. It is also important to recognize the difference between your insurance company and your insurance agency or broker. Your insurance company will do the following things regarding your policy:
An insurance agency or auto insurance broker is an independent insurance agent who contract with numerous insurance companies to find the consumer the cheapest auto insurance quotes possible. A lot of your national companies sell their auto insurance through captive insurance agents. This is where the company appoints licensed agents to sell their company only. Many people like the auto insurance broker concept because they do a lot of the shopping for you. It would take forever to get individual quotes from 20 different insurance companies. These auto insurance brokers have capabilities to quote you through 20 plus different auto insurance companies in less than ten minutes. Here are some roles the auto insurance agency plays on your policy:
Different types of auto insurance companies
It is important to understand which auto insurance companies specialize in each sector of auto insurance. Here are a few types of segments auto insurance companies fall into:
- Nonstandard or High Risk Auto Insurance Company- This is when a consumer has no insurance history and or a bad driving record.
- Preferred or Standard Auto Insurance Company- This is for customers who have a long insurance history and a good driving record.
- Semi Preferred Auto Insurance Company- This is for consumers who have just completed their first six months of insurance coverage and in process of cleaning up their driving record.
Here are some examples of auto insurance companies that provide nonstandard auto insurance companies:
Here are some example of auto insurance companies that offer good prices for standard insurance policies:
The reason why it is important to know what an insurance company specializes in is that for example if you have no insurance and 4 accidents you may not want to contact one of the national carriers that focus heavy on insurance history and driving record. Insurance quotes take long enough, there is no need to waste your time with an insurance company that is not priced to give you affordable car insurance. If your driving record is bad and you don’t have any prior insurance history you may be able to find a good auto insurance quote from a nonstandard auto insurance agency. On the other hand, if you want to bundle your home and auto and you have a good insurance history you probably can save more money by calling a standard company who is more nationally based.
How do auto insurance companies set their prices?
Auto insurance companies use many different factors to set their rates. Here are some of the core factors insurance companies use:
The rating algorithms auto insurance companies use can be very complex. They hire actuaries to set their prices. But usage-based rating systems are becoming more and more popular as these new tech companies start to enter the auto insurance market. Take Root for example, they use an APP to monitor your driving habits and set your auto insurance rates based mainly on that. Some consumers though may not like their driving habits being tracked. And sometimes the rate you sign up with can change a few months into it for better or worse based on the way you have driven.
As far as discounts offered by insurance companies its fairly standard across the board. Here is a list of discounts that most auto insurance companies offer:
Also, it is worth noting that USAA offers a big military discount and Progressive and a few others offer discounts for your occupation and degree. Be sure when you are out getting auto insurance quotes to always ask for the maximum number of discounts the insurance company allows.
Weather can also play a major factor on auto insurance rates. Natural disasters cost insurance companies millions of dollars each year. Here are a few of the natural disasters that plague Oklahoma and Texas each year:
Hailstorms cause major damage to insurance companies financially if they have a big book of business of full coverage policies. Hail damage is covered under the Comprehensive coverage of the insurance policy. Although the customer is responsible for their deductible portion during a Comprehensive claim it leaves the insurance companies paying out thousands of dollars per vehicle that is damaged. Hail damage does not affect policies that are liability only. Since liability only auto insurance only covers damage you do to a 3rd party there is no money to be paid from the insurance company for hail damage. Tornados are the same way; insurance only pay out on tornado damage if the policy has full coverage on it. Tornados have less of an effect on auto insurance companies and more so on Homeowners policies. But a bad tornado can definitely wreak havoc on auto insurance companies if they are bad enough. Flooding is starting to cost auto insurance companies more and more. Flooding is also covered under Comprehensive coverage but can cause great damage to a vehicle.
When Insurance companies have to pay out a lot of money due to claims from these natural disasters you will usually find this is usually passed on to the customers with rate increases. Auto Insurance companies adjust rates frequently to make up for the losses they take in certain areas. Natural disasters are not the only thing that costs insurance companies, Metropolitan areas with heavy traffic and uninsured motorists also really affect your auto insurance prices. So, if you are trying to save money on your auto insurance it is definitely cheaper to settle at a city that has a lower population and lower traffic. Heavy Traffic has been proven to cause more accidents which cost insurance companies more money.
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Cheapest Auto Insurance specializes in helping people find the cheapest rates for whatever your needs are. Whether your driver's license is active, suspended, or just a state id we are able to find the best rate for you! Call us at 918-744-5145 or to take advantage of the world's fastest anonymous quoting system click here!