Problems with the Cheapest Auto Insurance Companies

Everyone is on the lookout for cheap auto insurance these days, but the problem with the cheapest auto insurance companies is that they sometimes act cheap. Auto insurance is about safeguarding your finances and well-being, and the last thing you need after an accident is an auto insurance company that is not there for you.

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The problems with the cheapest auto insurance companies are that they don’t really work the way they’re supposed to. Auto insurance is supposed to give you peace of mind, protection in the event of an accident or loss, and expert customer service no matter what it is that you need as a customer. Furthermore, the cheapest auto insurance companies might not even be true auto insurance companies it all!

Fraudulent Companies

One of the first problems with a truly cheap auto insurance company may be that it’s not actually a true insurance provider at all.

Unfortunately, fraud in the form of bogus car insurance companies or a scam artist posing as an insurance agent is becoming all too common.

The Coalition Against Insurance Fraud estimates that insurance fraud across all lines costs insurance companies $80 billion a year.

Unfortunately, insurance companies pass the cost of fraud on to consumers, so every driver who buys car insurance pays the price for fraud. The last thing you need to hear at the site of a car accident is a voice recording telling you that the telephone number for your insurance company is no longer a working number.

In effect, if you buy car insurance from a fraudulent company or scam artist agent, you actually have no insurance at all. All of the costs of an accident or loss will have to be paid by you out of pocket. Few people have the cash on hand to immediately pay for damages and injuries resulting from a car accident.

Spot and Report Fraud

One of the most important things that you can do is to spot a fraudulent insurance company or agent before paying out any money. One of the first things that you should notice is that the insurance company or agent is offering insurance that’s cheaper by far than any other auto insurance quote you have seen. The reason they can offer such affordable rates is that you’re not really buying insurance!

The check for your premium is actually going right into the bank account of the scam artist.

Remember as well, that a nice-looking website or a reputable name of a car insurance company does not guarantee an honest-to-goodness car insurance company. It’s not very hard these days to create a professional looking website or claim to be an agent with a popular car insurance provider.

What to Look For

A good rule of thumb is to ensure that an agent will take the time to explain every detail and type of coverage about which you ask; most scam artists don’t have the time or inclination to stay with you on the phone for a long time.

However, the best way to make sure that you are not paying for fraudulent car insurance is to research the company or agent with your state’s Department of Insurance. To find the contact information for your particular state’s insurance department, check out this state map from the National Association of Insurance Commissioners. All states have laws that require an insurance company and insurance agents to be licensed to sell insurance in that state.

Every state’s Department of Insurance website allows consumers to search for the licensing and background of any car insurance company licensed in the state, as well as every insurance agent licensed to sell insurance in the state. Each website also offers a place to report suspected scams and insurance fraud.

Most states have enacted tough laws and stiff penalties for those convicted of insurance fraud. Remember, it doesn’t matter how cheap the insurance is if it is all completely fake.

Poor Coverage

Another problem with the cheapest auto insurance companies is poor overage. Almost as bad as fraud, these cheap auto insurance companies offer such substandard coverage that it really won’t help in the event of an accident. Some may be offering something that looks like car insurance but isn’t, while others are offering insurance coverage on which they truly will not pay.

Essentially, once you put in a claim with the cheapest of cheap auto insurance companies, you’ll find that somehow your claim just doesn’t fit the parameters that are covered by your auto insurance policy.

Generally, such auto insurance companies are only one step above fraud, but they are licensed to sell insurance in your state.

However, the fact that these cheap auto insurance companies are not fraudulent in no way helps you to get your claim paid in full and in a timely manner. These cheap auto insurance companies may employ an array of tactics aimed at paying the lowest amount on your claim possible, or not paying at all. For instance, they may never return your calls or e-mails, they may reject your claims out of hand, or they could use confusing insurance jargon to explain why your claim is not a valid one.

No one needs the hassle and headache of trying to shame a car insurance company into living up to its promises. Car accidents or other losses are stressful enough without having to do battle with your car insurance company as well. Again, don’t be surprised when that cheap auto insurance company acts cheap and miserly.

Check out Insurance Package Ratings

One of the best ways to protect yourself from a cheap car insurance company that has a reputation for not honoring its promises is to fully research customer complaints for the company. First, most states’ Department of Insurance websites also contain complaint information about particular auto insurance providers.

They also offer ombudsman services to assist you in mediating the complaint between you and your car insurance company.

Furthermore, you can find complaint information about most car insurance companies with the Better Business Bureau. The Better Business Bureau rates companies and businesses like auto insurance providers to promote fair dealings and best practices in the business world. Before buying from a cheap auto insurance company, check out their rating with the Better Business Bureau. This might save you a whole lot of hassle and headaches in the future.

Poor Customer Service

Another problem that plagues the cheapest auto insurance companies out there is poor customer service. This type of company may not be purposely trying to avoid paying your claim or fully explaining your coverage; they just really don’t have the best agents working at their call centers. Common examples of poor customer service include rude agents, poor communication, and information that is inaccurate or outdated.

If you have an accident or suffer a loss through theft or natural occurrences, one of the last things you want is an agent who is rude or unhelpful in the claims process. Many people need the use of their vehicles to get back and forth to work, to get to school, and to conduct those errands and chores that make life run smoothly. Without the honest help of an insurance adjuster, a car insurance claim can stretch out for months. This creates hassles and financial hardships that can include job loss, bills going to collection, and a poor credit score.

The cheapest auto insurance companies are not going to have the time or inclination to truly assist you in your time of need. They might not even have the time to answer your most basic of questions. Most cheap auto insurance companies are just after your money, and they don’t put much thought or effort into keeping you as a customer once you’ve paid your premium.

Find Companies that Are There for You

You have rights as a consumer when you buy auto insurance, according to the Insurance Information Institute. While rudeness is not against the law, every customer has a right to be treated with respect. You can certainly contactor your state’s Department of Insurance, your state’s Attorney General’s office, or your state’s Consumer Affairs Department in order to lodge a complaint about the poor service received from your car insurance company.

However, a better course of action is to make sure that you don’t get stuck with a car insurance company that has poor customer service just because they offered the cheapest insurance premiums.

One option for finding out the reputation of the company before buying car insurance is to utilize customer satisfaction ratings.

One of the most trusted providers of such ratings is J.D. Power and Associates, with its Power Circle ratings. J.D. Power and Associates conducts annual ratings of car insurance companies based on customer survey responses. They compile the information into Power Circle ratings that award up to five circles for the best service. Car insurance companies are rated on topics such as pricing, customer service, and their claims process.

While a complaint here or there is going to happen with every car insurance company, seeing an auto insurance provider who can only scrape two out of five Power Circles for customer service speaks volumes. Basically, it’s yelling for you to go with another car insurance company!

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