Auto insurance companies can be very different from one company to the next. Be certain to research the many discount companies that exist in order to get the best rates. Searching for car insurance for most people is not high on the list of favorite things to do, and if it is then it is time to get out of the house more often
But one of the things that makes it so tedious is that you often have to call many different auto insurance companies and give them the same information over and over again just to get quotes on their rates. And what’s really surprising about this is that while many quotes are very close to one another, some are different by even hundreds of dollars every six months or every year, and this is for the same car and the same driver.
Are all affordable car insurance companies so unique that they can justify such a large price variance, and what determines the quality of one provider over another? Is the lowest price always the one you should lock in?
One fact you need to understand about car insurance companies is that they are sometimes underwritten by a parent company. Therefore, the company giving you the quote is not the same company taking the risk and providing the insurance policy. Most car insurance companies act as a middleman with the larger company buying your policy for a predetermined price. The smaller company does business by marketing customers like you as well as the processing of the insurance policy and the insurance claims. But behind the scenes, the larger parent company is the one issuing your coverage.
As such, insurance companies that purchase insurance policies “manufactured” by the parent company can set the selling price as they see fit. For instance, in order to earn more profit, company A will sell at a much higher rate than company B. These pricing practices take place on a regular basis within many car insurance companies.
Another reason for large swings in policy quotes is that some companies have a higher overhead than others. Due to the size of a company it may have to support more employees or incur other high operating costs. On the other hand, larger firms who have more sales volume can offer lower prices.
An important factor to consider in the difference between affordable auto insurance companies is the type of coverage you are receiving and the associated deductibles. When you obtain a quote from one company and they assume you are interested in a low deductible you end up with an inflated quote. On the other hand, another company may assume you want a high deductible and gives you a much smaller quote than the first company.
Many car insurance companies fail to question their clients about coverage thresholds and deductibles. It is important to ensure that you are obtaining rate quotes for the identical coverage and identical deductibles. If you fail to do so, a large price difference between two affordable car insurance companies could exist. However, in actuality you are buying different coverage based on a different deductible. So do not be discouraged to shop and compare, just make sure you are not comparing apple to oranges.
Lastly, it is important to shop for free quotes from affordable car insurance companies. It may take some extra time to find the insurance that fits your needs, but it will be worth the time spent in the end.