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Besides Price, What Factors Differentiate One Car Insurance Company from Another?
October 28, 2021
Cost is important, but it is not the only thing to consider
The marketing used by the one-choice-fits-all, direct/online auto insurance companies would have people believe that the only significant difference between insurance companies is price.
What you pay can vary by company and is undoubtedly an important consideration. However, other factors are essential when comparing car insurance offers. Here are a few things that should be considered:
Financial Rating of the Company:
A company’s financial rating is an indicator of its ability to pay claims in a worst-case scenario. Since insurance’s primary function is to transfer the risk of significant financial loss, a company’s financial stability may be of interest. You can see your company’s rating by checking them on online third-party services. The most rating popular rating service is:
- AMBest Financial Ratings: https://ratings.ambest.com/search.aspx
The Company’s Customer Service and Satisfaction Ratings:
Companies are rated based on how well they provide service to their customers. Among the most popular services that track customer satisfaction are:
- JD Power & Associates:
- Auto Insurance Satisfaction: https://www.jdpower.com/business/press-releases/2021-us-auto-insurance-study
- Home Insurance Satisfaction: https://www.jdpower.com/business/press-releases/2021-us-home-insurance-study
- New York Auto Complaint Ratios
- https://www.dfs.ny.gov/system/files/documents/2021/04/2020_auto_complaint_ranking.pdf
Coverage Enhancements:
Despite what many think, there are differences between how liberal versus restrictive auto insurance contracts can be. Some companies lean towards providing restrictive language and coverage options, while some companies offer consumers a broad range of coverage enhancements and features. Some of those options are a great place to engage with your agent to help determine what makes sense for your situation.
Agent Representation:
Does your company come with an agent who can advocate on your behalf without bias? An Independent Agency/Agent represents you and not just one company. They are in a unique position to assist you with:
- objective advice and counsel regarding the price you pay
- the service you will receive
- the coverage options available.
A quality independent agent represents
you
and is not beholden to any one company.
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Factors You Can’t Easily Control These factors are built into your profile, but still play a major role: Your location: Claim trends, traffic, and weather patterns where you principally drive. Your age and driving experience: Especially for younger drivers. Other drivers in your household: Their age and driving history. The vehicle you own: Unique to the Year, Make, Model, and Sub-model’s damageability and cost of parts/labor. These factors significantly influence price differences, but they don’t tell the whole story. Factors You Can Control This is where habits and wise decisions can make a real difference: Your driving habits: Minimizing tickets and accidents can have a direct impact. Your coverage choices: Liability limits, deductibles, and optional coverages can vary widely. Your insurance consistency: Avoiding lapses in coverage. Your annual mileage: How much and how often you drive. Discount opportunities: Bundling, pay-in-full, NYS defensive driving course. Your Insurance Score (Yes—You Can Influence It) Insurance companies use a credit-based insurance score as part of their rating process. While it’s based on financial behaviors, it is not permanent—and it can be improved over time. Simple habits like: Paying bills on time Reducing outstanding debt Avoiding excessive credit inquiries… can positively impact your score—and in turn, your insurance rates. Your insurance score is under your control and a worthy mid to long-term project in and of itself. For more information on what you can do to positively influence your score, see: Great 8 Tip #8 - What's Credit Got to Do with Insurance? How Can I Improve My Auto Insurance Score Why Comparing Rates Doesn’t Work When someone says, “I only pay…” , the uniqueness of their fingerprint is missing. What are their: Deductibles Driving history Insurance score Household profile Coverage limits: what they may be giving up in terms of protection. Price without context can be misleading and discouraging.
Part 7 – Designing a Value-Driven Insurance Plan
Part 6 – Advice, Advocacy, and Answers
Part 5 – Can Your Company Deliver?
Part 4 – Custom Coverage = Real Protection
Part 3: Coverage Limits - "The Ceiling You Don't Want to Collapse"
Part 2 – The Risks of Chasing Cheap
Part 1: What Are You Really Paying For?
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