With a few insurance companies heavily advertising low prices and the ability to get quotes over the Internet, many people have reportedly become more price-conscious when purchasing auto insurance.
But choosing the lowest price could end up costing consumers a lot more if they have an accident, especially if they own a high-end auto, warned Atlantic Mutual.
“We are seeing a growing tendency among consumers to view auto insurance as a commodity product,” said Dan Olmsted, president of Atlantic Mutual. “This is a dangerous misconception because coverage terms and limits and service quality can vary greatly among companies.”
Atlantic Mutual is offering a free list of questions to ask when obtaining auto insurance quotes. Available at http://www.atlanticmutual.com, the questions will reportedly help consumers understand the quality of coverage and service being offered.
Four of the most important questions are:
Will the insurance cover replacement parts from the original manufacturer?
Some low-price auto policies will only pay for “generic” auto parts from
third-party manufacturers. The quality of these parts may differ from the originals. The discrepancy can be of particular concern to owners of luxury or high-performance autos. Policies designed more for the affluent customer will pay for parts produced by the original manufacturer, also called “OEM” parts.
How much will I be reimbursed if my car is “totaled?”
Even if one’s 7-year old Lexus looks and runs like new, standard policies sold at the lowest rates can take thousands out of the reimbursement by applying the most aggressive form of depreciation. Replacing the car — even with another used one — could seriously dent one’s wallet. Ask about adding an “agreed value” clause to the policy. This feature enables one to establish the value of the auto with one’s insurance company before it becomes a total loss, so they avoid an unpleasant surprise.
Will the cost of renting a comparable car be covered?
Even if one used to ferrying the kids to school or commuting in a large
sport-utility vehicle, low-price insurance policies may come with per-day and total spending limits that barely pay for briefly renting an economy car. Repairing or replacing one’s auto could take weeks, so be sure to consider policies with limits that will allow one to rent a comparable car for an extended period.
What quality of claims service can I expect?
Even companies selling low-price policies promise to deliver excellent
claims service, so it’s best to seek a second opinion apart from the company’s Web site or advertising. Ask an independent agent which company has the best claims service. Or, check with one’s state insurance department. Some states (such as New York and New Jersey) provide information about the number of legitimate complaints lodged against auto insurance companies.
“It seems so easy to compare by price, but insurance consumers need to dig into the more complex coverage issues too,” said Olmsted. “Insurance is an important financial service, and like any service or product, you get what you pay for.”
“That’s why we recommend working with an independent agent,” continued Olmsted. “Representing multiple companies, the independent agent has the expertise to discuss coverage and service as well as price and make sure consumers select the company that best meets their needs.”
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