Types of Automobile Insurance Companies in the US

First auto insurance policy was sold in 1897 in the United States of America. Since then, a few conglomerates have grown. It is fair to say that there is no shortage of underwriters wherever you are in the country. Most people would know quite a few of them as they provide various types of policies for businesses, homes, motorcycles, life and health and regularly advertise on prime-time TV. Let’s have a look at the ways they operate and compare them;

1. Typical Car Insurance Companies vs. Specialists

Most of them would provide cheap full coverage to satisfy the needs of vast number of motorists as well as offering Liability only. If you are looking for a typical coverage and you are an average driver you will have no problem finding several affordable prices.

You may need to look for specialists for troublesome drivers, complicated circumstances, unusual automobiles and terrible records. You may need to search a little bit longer but you can place almost any type of risk on cover because the auto insurance market is sophisticated to deal with most unusual cases. For example, performance cars may need specialist attention, particularly with a combination of a perilous driver.  

The problem is that a few brokers may be using this term too loosely in a way to suggest that they can do it better and cheaper than others. Frankly, this is usually not the case and it is all a facade. The worst part of it is that they may think that by adding the word specialist somewhere in there give them a license to act like they know it all and therefore they can charge more. Most traditional companies can do as good a job as any of them or even better and they certainly offer lower prices. So, don’t pay too much attention to it until they prove that they have something superior to offer. 

2. Insurers with Large Agency Networks vs. Direct Approach

Many of them use various intermediaries to sell their products. On the other hand, few of them may like to see applicants coming direct, but most of them use number of channels. Some may have extensive network of tied agents all around the country while one or two only sell direct. Almost all of them have own websites to offer quotes. In addition, there are number of good vehicle insurance comparison websites. They may come with several advantages like finding most of the carriers in your area in one place. Besides, some sites like this one facilitates direct quotes.

3. Advisory Vs. Online Only Automobile Insurance

Few companies like Esurance almost only operate online and direct. Naturally, they don’t have brick and mortar offices and many employees to deal with customer enquiries and transactions and therefore, they can afford to sell policies cheaper. When you buy it online you need to rely on own knowledge, experience and researching abilities. These days, there are automated answering services on several websites but the responses are generic and often useless. On the contrary, you can talk to a broker face to face and ask very complicated and personalized questions. Furthermore, they see your proposal form and can suggest unique solutions. 

There are several well-known names in the industry with very successful and widespread network of agencies, which exclusively sell their products and nobody else’s. That is why their scope is very limited and they cannot compare the market for you. For example, State Farm has nearly 20,000 agencies across the USA and that may be the reason why they are the number one best seller. 

Most others use widespread network of independent insurance brokers. Some small companies can sell policies to large numbers of motorists thanks to good relations with them. Although a broker may prefer a particular name for several reasons including higher commissions, other incentives and easiness to deal with it is still a good sign when they single one out of many.

To a large degree, brokers control the client base and it is everything to them. Generally, they try to make sure they come up with satisfactory coverage. Carriers are happy to work with them despite paying commission because advertising and trying to reach to a large audience isn’t cheap.  

4. Nationwide vs. Regional Vehicle Insurance Companies

The laws, licensing requirements, regulations and participants change in every state. A few operate nationally while some small local gems do pretty well too, like regional Farm Bureaus. Naturally, local operators would understand clientele better and they may even have several offices in the area to deal with them face to face.

Still, at least nearly a hundred of them serve in any zip code. This provides sufficient competition in the market and plenty choices to go to. Every state runs a safety net to protect policyholders from bankruptcies. Every one of them contributes to the funds in order to qualify for the license. This safety nets offer a degree of confidence in the market and its small or big operators.

5. Why Car Insurance Quotes Fluctuate Wildly among Companies

Naturally every one of them will have a unique method of premium calculation. They will have proprietary risk criteria to judge every applicant with. In a way, you will need to find one that is favoring a driver similar to you so that you can get the best deals. Hence, you should not rush into taking the first offer you find. You should explore the options thoroughly before deciding. Getting a few quotes online is pretty easy and quick anyway that you shouldn’t even stop until you have at least 5. 

Two top auto insurers can come up with completely different quotations for various reasons. So, consumers should not assume the rates to be similar across. For example, some underwriters can offer great premiums because they are enjoying efficiencies of modern technology like online quotes, policy issuance and claim handling. And they may like to pass the savings onto customers while others are trailing behind with the innovations.

If not at each renewal at least every couple of years you should check alternatives even though you may be happy with the current terms. Many things change in the market and personal circumstances over the years. There may be a new entrant to the region and aggressively seeking for customers. Or the top one may be enjoying success and going for total dominance with great prices and packages. It is always worth checking it out.

At the end, personal choices would be influential as well. However, it would be a lot beneficial if they were to come into play once you line up several highly competitive options. Otherwise, you may self-consciously come to a prejudice outcome.  

Share on Pinterest
There are no images.