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5 Reasons Not All Auto Insurance Companies Are the Same

    3 minute read

    Not All Companies and Insurance Products Are the Same

    When people think about auto insurance companies, some of them think that the entire industry sells the same basic product that’s just marketed in different ways. Part of this assumption comes from a jaded view of the insurance industry in general, while another aspect may have more to do with the public’s limited understanding about how the insurance industry actually works.

    birds on a wireWhatever is behind the “everyone’s the same” opinion of auto insurers, the fact remains that these companies are most definitely not the same. Here are five reasons why:

    1. They go after different types of drivers. Believe it or not, drivers come in all “shapes and sizes” in the eyes of auto insurance companies. Some are careful drivers with spotless records, while others have a history of tickets, accidents, or DUIs. Some people are high-mileage drivers, while others have teenagers on their policies. And some policyholders need as much service as an insurer can provide, while others simply want the minimum protection required by law and to be left alone. Insurance companies sometimes tailor themselves to a certain classification of driver; and if you’re in that category, they may offer you a lower rate than another insurer.

    2. They use different statistics and data. Some people may assume that all insurance companies assess risk (and therefore set premiums) by viewing the same information and making the same calculations to reach the same conclusions. This is simply not true. Like in other industries, insurers are looking for an edge over their competition; so they’re constantly trying to better assess risk and make higher profits. One way to do this is to tweak their risk-assessment algorithms or place more emphasis on certain types of data than others. This can lead to a wide variety of rates, business practices, and product offerings.

    woman looking through binoculars3. There are different types of companies. The organization and the makeup of an insurance company have a huge impact on how it does business. A publicly-traded company is accountable to its shareholders, so it may try to boost profit margins more than a privately-traded insurer (or a mutual company, which is actually owned by its policyholders). Also, some insurers may not be licensed to issue auto insurance in all 50 states because of regulatory differences or other reasons. Finally, auto insurers may offer several other types of insurance coverage (like home, flooding, or health), or simply stick to insuring cars.

    4. They may emphasize some risk factors more than others. For example, if an insurance company has a higher rate of claims on full-size sport utility vehicles in a given ZIP code, you’ll probably be charged a higher rate by that company than many others if you own a large SUV in that geographic area. In fact, one recent study found that 48 different auto insurance companies charged different premium amounts for the same (hypothetical) 25-year old male Honda Accord driver living in Los Angeles with one ticket on his record. And the annual premiums varied by as much as $4,250!

    5. They may provide different auto insurance policy choices. Some companies may just have one or two basic policies for a given type of driver, while others may offer a plethora of options. That’s one of the great things about an insurance agency like the Auto Insurance Specialists. Because AIS has access to dozens of different insurance companies, it can pick the policies that meet the specific needs of every single applicant. Furthermore, AIS usually provides quotes from several different companies to choose from, no matter what the applicant’s history, age group, or driving record may be. So whereas some auto insurance companies are like a burger joint with a limited menu, AIS is more like a grand buffet, which lets you pick out exactly what you want!

    This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverage’s in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.