Friday, January 04, 2008

Online Auto Insurance Is Not Guaranteed To Be Your Best Value

By Jay Anderson

Many people may not like the idea of using online auto insurance, but this begs the question of why. Let's face it, the only time you need to take advantage of your car insurance policy is when you have a claim to make or an accident. Other than that, it probably does not make any difference to you whether your car insurance agent lives next door or lives on Mars, as long as you can get your claim processed.

Some people are also afraid of being taken in by a scam. While that is a valid concern, it is really no more valid than having that same concern about buying something at a department store or at the mall. Insurance is a regulated industry and there are laws in place to protect you, as long as you know what you are buying and understand the coverage that it entitles you to.

You need to understand the online company that you are purchasing car insurance from. Are they reputable? What kind of backing do they have? What are their assets? If you need to make a claim, do they contract with somebody locally or do they have to fly someone in from Timbuktu who is only available every other Tuesday mornings?

These are all excellent questions that you should think about, but they are every bit as valid even if you are purchasing auto insurance from the company down the street from where you live. Do you really know them? Can you answer these questions with 100% confidence about the local insurance company compared to the online insurance company?

Another area of concern is really making sure you are comparing apples to apples when you are comparing quotes. Some of the factors that come into play when determining your car insurance rate are things like the maximum amount that would be paid out for hospitalization in case of an accident, or the amount of deductible that you are responsible for in the case of theft.

If one policy is quoting a ceiling of $50,000 for maximum hospitalization and another is quoting $1 million, there is a vast difference. In the same way, if your theft deductible is $500 on one policy and $1500 on another, then you really are not doing a valid comparison of two policies.

Do not assume that an online auto insurance company is going to have the best rates. They will likely have very aggressive rates, but if you are a long-term customer of your existing carrier, chances are that they will also offer aggressive pricing in order to retain you as their customer.

Make sure you are comparing the same things when comparing policies, but by all means shop around. You don't want to pay more than you need to, and the only way to feel confident that you are getting the best deal possible is to get quotes from different companies, both online and offline, and see which one really wants your business.

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