In the United States, every driver that operates a four-wheel motor vehicle on a city, state or federally funded road is required to carry some form of auto insurance.
With gas prices constantly on the rise, and uninsured motorists driving up the cost of auto insurance, operating a car can get very pricey.
What many people are unaware of is auto insurance premiums can vary dramatically from company to company, and combined with different discounts often available, it is in people’s best interest to shop around before making a purchase.
In the last decade, the Internet has proved to be a great resource when shopping for auto insurance because it allows consumers to compare prices and coverage from the comfort of their own home.
They can avoid the pushy auto insurance sales agent and get the information they need to make an informed buying decision.
The Difference Between Agents and Direct Insurers
Auto insurance is primarily purchased in one of two ways:
- Bought through an agent or broker that is licensed and able to sell specific insurance products for specific companies.
- Purchased directly from the insurance company, often online or over the phone.
For the majority of the last century, the only option people had when buying auto insurance was number one. Insurance agents acted as middlemen connecting the consumer with the insurance company.
Because of this, the cost of buying auto insurance through an agent is often higher than buying direct because there are sales commissions tacked onto the price of the coverage.
Who Should You Buy Online
Since buying auto insurance online from a direct-to-consumer provider is often less expensive, anyone interested in saving some money on his or her premiums should shop around.
The perfect candidate for online auto insurance shopping is someone who has relatively simple insurance needs, like autos and homes.
The coverage on these types of auto insurance products is fairly straightforward and can usually be explained with a quick phone call if any questions arise. People with complicated estates and insurance needs may want to seek advice from an advisor or broker if they are not fluent in insurance matters.
Where to Get Quotes Online
There are a couple of options when shopping for auto insurance online. The first option is to go to a quote generator site like InsureMe.com and use their online web form to receive multiple quotes from different insurance companies.
This is ideal for someone who wants to shop many different companies but does not have the time to manually enter their personal data at each website.
The second option is to visit direct-to-consumer insurance sites and manually submit for a quote. This process takes longer, but the results are generally better because each company has their own set of questions to determine the best rate.
When using a generic quote engine, there may not be a 100% clear picture of the final premium price.
With auto insurance shopping on the web continuing to rise, there are a number of reputable firms out there to get quotes from. Three of the best are Esurance.com, Progressive.com and GEICO.com.
What to Know About Coverage and Deductibles
One of the disadvantages of shopping for auto insurance online is that there is no professional to help if there are questions. Coverage and deductible amounts will be picked on one’s own, so it is important that all the details are understood.
Most direct insurers provide 1-800 numbers with trained agents that act as support, and it is advised to use them if there are any questions about coverage amounts.
What many people are unaware of is that most state minimum liability amounts are too low.
Some states may only require a driver to carry $10,000 in property damage liability, and since it is the state minimum, a lot of drivers carry just that. If the driver is involved in an at-fault accident with a new Mercedes, for example, the remaining $70,000 in liability falls back on the insured’s shoulders.
Liability coverage is actually very cheap to upgrade significantly. Often times going from $10,000 to $100,000 can cost as little as $5-10 a month.
This small premium increase can be the difference between a slight bump in the road and financial ruin. An online insurance provider typically has tools that show the difference in premium before making a purchase.
Eric Stauffer is an insurance expert that reviews companies like Esurance. His site helps consumers find reputable firms to work with and offers buying guides for different insurance products.