For the past ten years or so, the airwaves have been inundated with commercials touting low cost automobile insurance. It makes one wonder: why are so many companies, even those that are not considered to be in the business of selling auto insurance, spending so heavily to attract customers? As in most things, they are after profits. But, why is automobile insurance so profitable when less than 15 years ago most insurance carriers were turning away from insuring automobiles? The answer has many parts, but undoubtedly the most impacting reason was the invention and use of insurance scoring based on credit. Yes, there is an overwhelming relationship between a credit score and a person’s propensity to causing an accident. This “predictor” has been so accurate that many new and old insurance carriers decided to get into the business of selling automobile insurance.
The next logical question is: why do each of these carriers continually chant that they can save you more money than the competitor? At any given time one insurance carrier may be able to save you money over another, however astonishingly, over a 5 year period most carriers’ premiums will even out. There is no magic underwriting silver bullet to write profitable automobile insurance. For all the efficient carriers using insurance scoring based on credit, the most assured method of saving money is to cut coverage.
Beware! Not all automobile policies and coverage limits are equal. Oftentimes the carrier with the lower premium does not have the coverage you need. By working with an independent agent who specializes in personal home and automobile products, you can ensure that your risk needs are met and that you will have the most competitive premium from the proper insurance carrier. This is, in my opinion, the best way to make sure you have the coverage you need at the lowest cost.