Have you ever given any thought to what goes on so you can get your “fifteen minute” insurance quote?
You become the recipient of many factors needing to be addressed before that quote can be given. Here is some interesting information for you to consider. It is not necessarily presented with any attempt to prioritize as one being more important than but can be considered as cogs in the insurance quote wheel.
Licensing
Before anything else can happen in getting a quote, it is necessary to have licensing by the department of insurance in the state where the insurance is being offered. All 50 states have their own autonomous departments of insurance, which is good, but it complicates the licensing procedure where the insurance company intends to do business in different states.
Once these licensing requirements are met–sufficient financial reserves are in place to meet administrative and future claims, marketing strategy is established to meet standard of fair and equitable practices; management team is scrutinized for their business philosophy, and the sales force is properly trained and licensed, etc. (www.harborcompliance.com)– the company can proceed to market its products.
Product driven vs. market driven concept
It is interesting how this marketing is accomplished. Some products are conceived out of a market driven philosophy while others are product driven in their conception. What I mean by those distinctions is, the company first sees what the public market is desiring and then builds a product around that desire. Vintage and classic automobile coverage is a good example of a specific market. Tenant homeowner insurance was developed when the insurance industry saw many of their clients choosing to rent rather than purchase a home. A standard homeowner policy was modified to meet what the insurance industry saw as a product to meet this trend.
In other words, one approach attends to an already existing market, while the other is intended to develop a potential market. In either event, the insurance company provides its quote based on the needs of the potential insured–“You only pay for what you need” may sound familiar to you.
Liability coverage
As you begin the process of obtaining a quote, several parts of the quote need to be considered. Practically every state requires you to have a certain amount of liability coverage in order for you to legally drive on a public thoroughfare. There are also some states considered to be no-fault states where each party is responsible for their own injuries or vehicle damage. It is not hard to find out what your state requirements are by simply typing in a request on your computer and asking for that information.
These amounts established by each state’s department of insurance are not regulated by individual insurance companies, but there is a provision in insurance policy contracts which states if you are going from state to state and the amounts required per state is different from that which is stated in your policy, those limits will automatically adjust to individual state requirements. (Farm Bureau Mutual City Squire, page 29, Section 111, Conditions, 1, Out of State Insurance)
Keep in mind there are legal limits established by law while there are also ethical limits one must determine. Some states have a very low limit of $15,000 per person for bodily injury which if met satisfies the legal obligation. Having acknowledged that it is informative to note the National Association of Insurance Commissioners reported that in the year of 2016 the average bodily injury claim tallied at $19,201. (www.wallethub.com).
Who makes up the difference? What about the individual you injure and through no fault of their own is disabled for life? That is a moral debate one must have with oneself when deciding whether to purchase just minimum requirements or purchase additional amounts to cover the more extreme scenario.
The premium you will pay for liability coverage is going to be based, among other things, on age, gender, driving record, distance to work or school, grades in school, insurance company’s risk experience in the area, and amount of insurance coverage. Some quotes could also be affected by type of vehicle, i.e. muscle car, being insured. If you are using a vehicle in racing or off road driving or in committing a felony, you may get a quote; but if there is a claim reported from any of these events, the policy would be considered null and void and coverage would be denied pre-event timing. (Farm Bureau Mutual City Squire policy, p. 27,Section 111 Exclusions)
Medical, Uninsured Motorist, Underinsured Motorist
When these coverages are included in the quote, they will be priced according to the same criteria as liability coverage (see above paragraph)
Material Damage Coverages
In obtaining your quote, the insurance representative will ask you if you would like to receive a quote for collision, comprehensive, or perhaps just fire and theft.
- Collision is the coverage which pays for direct and accidental loss to your insured vehicle and its equipment when it is hit by or hits another vehicle or object or rolls over.
- Comprehensive is usually spelled out in your policy as paying for any direct and accidental loss of or damage to your insured vehicle and equipment not covered by collision.
- Fire and theft is self explanatory and is a popular coverage for vehicles being stored for a long period of time.
Factors affecting material damage premiums
All these premium rates will be based on the following:
- your place of residence, (www.dfs.ny.gov/consumers/auto_insurance/factors_impacting_physical_damage_coverage_premiums)
- loss frequency in your regular driving area
- damageability to the type of vehicle you are driving
- distance you are driving to work or school
- availability of replacement parts
- age and gender of predominant driver
- driving record of all drivers having access to the vehicle
- loss experience of the company giving the quote
- amount of deductible you choose.
Some companies also give special discounts to students maintaining good grades, defensive driving classes for senior drivers, low mileage use of vehicles, and may even allow you to suspend the premium while you are gone for a certain amount of time and the vehicle is in storage.
Actuarial Computations
The casualty insurance industry is one of the major beneficiaries of computer technology. It is the ability of the computer to rapidly crunch information which allows the industry to establish premiums commensurate to the expenses involved in providing the product to the consumer. The information available may not be specific to a particular company’s experience; but when it is combined with others in the industry, a pretty accurate conclusion can be reached of what future experience will bring.
Insurance companies take advantage of the accumulation of information by subscribing to companies who gather such vehicle information i.e. (www.carfax.com/company/vhr-data-sources)
Specific classes of vehicles are established, and then each of those classes are assigned a code which allows insurance companies to quote the proper premium. It is interesting to note each individual vehicle in any of those classes has a unique vehicle identification number (VIN) which is public information, so even though it is in a particular class it can still be tracked for its own claims history.
Cheapest Car Insurance Quote
The internet is inundated with websites suggesting you can go to them to find the cheapest insurance. Unfortunately, after you spend time on those sites you generally are directed to another source where you go through the process of entering your personal information and then attempt to obtain a quote specifically for you. Your “fifteen minutes” time would probably be better spent in just calling a few reputable insurance agents in your town and getting your personalized quote directly from them. This is really where you will find the truth of “You’re in good hands,” “Like a good neighbor,” “Living beside you, working for you,” “Only pay for what you need,” “You get a whole lot more,” etc. mottos.
Happy shopping!!
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