Evaluation Insurance Companies Offers? 5 Things To Look Out For

If you want to switch to a different insurer, you must look beyond the prices that they offer. Insurance companies often lure in customers with attractive quotes. These are the five things to beware of while you research companies that give you reasonable quotes.

insurance companies offer

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1. The Fine Print

It might seem something of a trope, but it is always important to read the fine print. Although insurance seems straightforward, you must take care to review the policy contract for several reasons. Many policyholders only realize at the time of making a claim that things they assumed were covered either require a higher level of insurance, or are entirely excluded under the policy wording.

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For example, not all insurance companies offer OEM (original equipment manufacturer) parts for repairs. If OEM parts are important to you, it will be disappointing to find out that you may not get them if something goes wrong. Some insurance companies offer special riders for policies that allow OEM parts for all insurance-related repairs. Read the fine print carefully to see if you may need to purchase any riders. Find out how much they will cost.

It is also common for policies to include fine print regarding car rental limits, towing fees and other costs. Since they can vary considerably from one insurer to another, think about how likely you may be to need such services. Some insurance companies also impose a penalty fee if you make payments in installments. When comparing car insurance providers, it is imperative that you go in knowing what you may need, so that you can scour the fine print to make sure these are covered.

2. Policy Length

The length of your policy is important because of rate fluctuations. In most cases, it is better if you have a policy that is in effect for a year. As you have signed a contract which covers that entire period, your premiums cannot go up during that time. However, it may go up sooner if you choose a half-year policy instead — particularly if you have an accident during this time.

The exception to this is if you have an event that may reduce the policy's cost, and you can use a little foresight to make smart decisions about your cover. For example, imagine that you start your policy in January. You have a ticket that drops off your record in June. Since that would likely lower your rate, a half-year policy may be better. The same is true if you are turning 25 soon, as many insurers lower premiums once this threshold has been crossed.

Think about any cost-changing events that are coming up for you as you compare policy prices and terms. Do you intend to take on a new job, which will affect the frequency and distance of your driving? If so, it may be worth considering a shorter policy to take sooner advantage of the savings you’ll receive from your change in lifestyle.

3. Compare Car Insurance Discounts

Ask each company that you are considering for a list of discount possibilities. Some insurance companies offer safe driving discounts if you have a clean record. Some insurers offer discounts for good students, military personnel and retired individuals. You may qualify for additional discounts if you buy other insurance products from the company in a bundle.

With the advent of more widespread access to technology, many insurers are offering discounts if you allow them to track your driving habits. Either using a plug-in device, or an app, they’ll receive information about your rate of acceleration, braking, distance, even instances of distracted driving. This allows them to build a more accurate profile of your risk-taking behavior. Be aware, however, that while a discount to help you save money can be attractive, it may also result in a rise in your premiums if your driving habits are less than responsible.

Also, ask about discounts that do not relate to your driving habits. For example, there may be discounts for paying your premium upfront or for enrolling in automatic payments. Today, some insurance companies offer a discount if you take a safe driving course or enroll in pay-per-mile insurance.

4. Top Insurance Companies Offer Company Stability

Smaller insurance companies now compete with larger ones by offering special rates and deals. If you are thinking about working with a smaller insurance company, research it well to see if it looks financially stable. It is also worth your while researching whether the company has sufficient reinsurance — a policy that insures insurers — to cover any outstanding claims in the case of insolvency.

If your insurance company goes out of business, you will have to start looking for another provider. Find out how long the company has been in business. Look at its customer ratings on independent review sites. Also, look for its letter grade. According to the Securities and Exchange Commission, there are several ratings. Lower alphabetical grades are based on one to three. For example, AAA is extremely strong, AA is very strong and A is strong. There are multiple grades on the B and C scales, and there are grades of R or NR. If you see one with a grade of R, this means that it is under regulatory supervision. NR means that it has not been rated. Try to find a company with a rating of BBB or better.

5. What Good Insurance Companies Offer: Customer Service

While coverage and prices are the top concerns, customer service will also determine how long you stay with the company. If a company makes a lot of mistakes and has a reputation for treating its customers poorly, loyalty is hard to build. The company should have good ratings for response time, problem resolution, customer service hours and ethical business practices. If you see a lot of bad reviews about unsolved problems, mysterious charges and long response times, keep looking for other companies.

The best way to find out about company practices and how they handle customer service is through consumer reviews. Dissatisfied customers will generally share their experience online, as was the case with the Bristol West Auto Insurance company. Being involved in an accident, or having your car stolen is a stressful time, and you want your insurer to act appropriately. You need a responsive and reliable company if you ever have a problem that requires immediate attention.

It can certainly be time consuming to compare car insurance providers, but it is ultimately in your best interests. Each company wants to benefit from your custom, so take the time to see how you can benefit in return. The number of insurance companies to compare in your area depends on where you live. If you live in a rural area, your options are more limited, but you may find that locally-based insurers spend more time on providing a personal service. If you live in a big city or in a populated area, there are more options available, and you can be more discerning about reviewing each. Try to compare at least five different companies after you request quotes from several providers.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver