The Internet has changed the auto insurance business so extensively that it no longer resembles what it was prior to the creation of the World Wide Web in 1992. Back then, when car insurance renewal time came around, an estimated sixty-three per cent of car owners ended up remaining with their insurer, according to the Insurance Institute of America. Today that figure is down to less than twenty-three per cent due to the abilitiy to obtain auto insurance quotes online.
Insurers have attempted to adjust to the growing preference for getting auto insurance quotes online by a number of methods. Specialized programs for low risk drivers, primarily those over 50, are common now. Year-to-year increases for members of this group are kept at about a percentage point above the inflation rate, which is low enough to keep the client from going through the trouble of shopping around.
The insurance companies have to balance off the income they lose in giving group rates to older drivers. That’s the way business works. And in this case, business working means rates for high-risk young males and new drivers have soared in part thanks to the Internet. It is no longer uncommon for young drivers to drive without collision coverage even in an almost new car, or to drive with no insurance at all. It is one of those unintended consequence of new technologies.
The benefits of online insurance shopping are so great for the consumer that it will only grow as the preferred way to shop for automobile coverage. The use of the Yellow Pages and telephone as the preferred method of shopping for car insurance continues to drop. By the time someone picks up the phone these days they have likely already checked out the insurer’s website, entered their vital statistics and gotten a quote.
When asked why they would shop online for car insurance in a 2001 Wharton School of Business survey, the most often response was the advantage of getting an instant quote. After all, who needs to seek advice from an agent? Many people don’t even know what questions they should be asking, and agents aren’t about to volunteer the questions they really don’t want to deal with.
An unintended consequence of the ease in obtaining online quotes for car insurance is the transparency of the risk profiling process. When shoppers answer the questions, they see what factor the make of their car plays, or where they live. They understand the financial implications of getting liability only, rather than full coverage.
Did you know that your place of residence affects your rates? It does. People in urban areas have a far greater chance of having their vehicle stolen. What’s the difference between full coverage and full liability? You can find out yourself without worrying about looking like a cheapskate or an ignoramus.
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