Is Online Auto Insurance a Good Alternative

The Internet has truly revolutionized the way that drivers buy auto insurance. It has led many to wonder if online auto insurance is a good alternative to more traditional auto insurance companies. The answer is a resounding yes, as long as the online auto insurance company meets a few guidelines.

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An online car insurance company is a great alternative as long as it meets four particular guidelines. It should meet all of the requirements in order to qualify as a choice that is as good as traditional car insurance companies.

Research

The only way that you will know how any car insurance provider stands is to do some research. The Internet is pretty useful for that, too! While there are certainly much more entertaining things to do online than research car insurance companies, it will pay off in the long run.

Instead of thinking of it as research, think of it as saving a few hundred dollars on your yearly car insurance premiums, and possibly even thousands! It makes research a bit more attractive, doesn’t it?

Researching car insurance companies is one example of the old adage that “Knowledge is power.” It truly can save you a ton of money. Incidentally, the following four guidelines can be applied to evaluating the worth of traditional car insurance companies as well. The best of the best rate highly in all four areas!

Guideline #1: Licensure

The first factor that makes a decent online car insurance company is a license. If a company that you are researching doesn’t have a license to sell insurance in your state, then it’s fraud. Every state requires auto insurance providers to obtain a license; it is illegal to sell insurance without one. Unfortunately, fraudulent companies do exist.

Scam artists create fancy websites, offer rock-bottom prices, and even answer the phone like an honest-to-goodness car insurance company.

However, they are going to take your money and run. You might not find out that your online insurance company doesn’t actually exist until the scene of an accident, theft, or other loss, when it is too late.

The best way to protect yourself from such fraud is to research the company’s license on your state’s department of insurance website. The National Association of Insurance Commissioners offers a map that links to every state’s department of insurance

Your state’s insurance department will likely allow you to search by company name or license number. You can also view the physical address and phone number of the company, financial information, and the nature of complaints lodged with the department.

If you can’t find the company that you are researching, or the physical address is actually a fast food restaurant, then no, it’s not a good alternative. Report the suspected fraud on the very same department of insurance website and move on to another company. If you do find that your online auto insurance company is in fact a real company, then move on to guideline #2.

Guideline #2: Strong Financial Ratings

The next factor that you should research in order to evaluate the quality of an online car insurance company is the financial strength of the company. Insurance is an important industry; you rely on it to make you whole after a crash or a loss so that your life is not interrupted by injury and debt.

Car insurance companies that are not financially strong might not be able to live up to their fiscal obligations in times of economic crisis or natural disasters that create a large amount of claims. An online car insurance provider is only a good alternative if they have the assets and revenue to pay every customer’s legitimate claims, no matter what.

The best way to understand the financial picture of insurance companies that you are researching is to use financial ratings. Rating organizations such as Standard & Poor’s and Fitch Ratings evaluate the monetary makeup of businesses such as car insurance companies on an annual basis. They look at several financial factors and then assign an alphabetical rating to indicate the economic strength of the company.

Generally, ratings that are below the “B” level are not considered to be financially strong, though each ratings organization has its own cut-off point. Companies with low financial ratings may be adversely affected by changes in the insurance market, a poor economy, or a natural disaster in a wide-spread region, such as a flood or hurricane.

If the online auto insurance company that you are researching has a poor financial rating, then you should move on to the next company on your list.

That insurer may not be able to pay your claim and make you whole. If the insurer has a good financial rating, then research the next guideline.

Guideline #3: Positive Customer Reviews

Good customer service is almost as important as financial ratings when it comes to an insurance company. Some only care about the bottom line, and you are more of an account number than a valued customer. Online insurance companies really need to work hard in this area because there is no opportunity to build a relationship with customers face-to-face.

Good customer service is displayed in a lot of different ways. It includes helpful agents that can be easily reached over the phone or online, a phone system that connects you to a live person quickly, and help during the claims process.

Unfortunately, poor customer service does occur in the form of a lack of communication, rude or unhelpful representatives, and a claims process full of stalling and low settlements. There are ratings in place for larger car insurance companies, but most online car insurers are too small for such ratings, so you will have to rely on customer reviews.

There are many online websites that host customer reviews of online insurance companies, and you should read as many as possible. Take such reviews with a grain of salt, because you will certainly see more negative information than positive.

Customers are more likely to rant online when they are upset than praise when they are pleased.

Look for reviews that mention the inability to get anyone to return a phone call, rude employees, or a claims process that was drawn out or unsatisfactorily settled. If you see too many negative reviews, then you should cross that online insurance company off of your list.

Another option might also be the Better Business Bureau. They also rate companies based on business practices and other factors. You can view if the company has unresolved complaints that have been lodged with the Bureau; if you see a high amount of complaints, then that should tell you how that particular car insurance company operates.

Your state’s department of insurance should also be able to provide complaint information if any have been lodged with that state department. Using all three sources for information, you should be able to get a picture of the customer service level of any insurance company. If the picture is a good one, then start your research on the next guideline.

Guideline #4: The Best Price

The last guideline is the one that most people care about. They want a low price and that’s it.

However, that is not the best way to judge an insurance provider. What you need to realize is that a cheap price without excellence in all of the other areas really means that you are paying for nothing. It would be the same as buying a bicycle even though, for a little bit more money, you could have gotten a Corvette. It doesn’t seem like much of a comparison, does it?

However, price is important–no one wants or needs to overpay for car insurance. You just need to understand that this is not an effort to buy the cheapest car insurance possible. It is an effort to get the best price along with all of the other factors already discussed. If you can get a better price for the same insurance coverage with a traditional insurance company, then where is the incentive to go with an online insurance company?

If the online company that you are researching is licensed, is financially strong, and has good customer ratings but doesn’t have the best price, then you need to look elsewhere.

There are many traditional car insurance companies that are licensed, financially strong, highly rated by customers, and have great prices, too!

If a traditional company offers you the best in all four areas, then they are the best option for you. If an online company is the strongest in all four areas, then they are a good alternative. However, the only way you will be able to know how much any car insurance provider will charge is by getting a quote from that company.

Comparing Quotes

You must compare quotes to find out which company will offer you the best rate. There is no other way to know for sure, and comparing quotes is highly recommended by the insurance department of any state, such as the Maine Bureau of Insurance.

You can do all of your research on a handful of insurance providers, and then let the quotes decide it, or you can get multiple quotes and then research the other factors. The order doesn’t really matter.

There are many ways to get quotes for coverage; just make sure you are getting quotes for the same amount of coverage.

You can get quotes over the phone, from the company’s website, or by utilizing quote comparison websites.

The first two ways to get quotes will work best if you have already performed research; quote comparison websites will work best with the last way, offering you quotes from many insurance providers that you can then research.

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