Auto Insurance Merry Go Round

When it comes to Auto Insurance, should I buy from the black guy who played the President on “24” (Allstate), that obnoxious girl selling shoeboxes of coverage over the counter (Progressive) or the lizard? (GEICO)?

Maybe I should buy from the dude with the huge red umbrella, since his company was first in. Yep, Travelers Insurance Company of Hartford , CT (shocker) issued the VERY FIRST Auto Insurance policy on this date in 1898.

Dr, Truman J. Martin of Buffalo, New York paid a premium of $11.25 for the policy that covered $5,000 to $10,000 of liability. A bargain, to be sure, but back then there were a whole lot FEWER cars to bump into. In 1898, you were much more likely to run over an unsuspecting pedestrian…or a cow.

I admit that I have not shopped around much for insurance—as my policy combining home and auto makes stripping the auto portion out a PAIN in my rear fender—and likely not cost effective.

At least that’s what my agent tells me.

Not that I haven’t been exposed to the endless offers. GEICO has clearly been the most persistent. First, it was spoofs of reality shows, news broadcasts and just about everything else that all ended with a pitch for auto coverage that fooled just about every first-time viewer. When the novelty of these ads ran out, in crawled the gecko, then the caveman (“So easy a caveman can do it!”) and now, the stack of dollar bills that sport eyeballs and stare at you. Nice.

I’ve got to give GEICO and their advertising agency some credit for creativity. How many COMMERCIALS inspire a TV series (Cavemen), no matter how stupid the premise? People across the country often followed up the commonplace line” “I’ve got some great news!” with “I just saved a bunch of money on my car insurance!” for so long that the first sentence was almost inextricably linked to the second.

The Progressive girl couldn’t sell me an auto travel cup. At first, I thought the Progressive pitch was effective because they claimed an unbiased website where THE lowest premium would be displayed from a variety of companies—and that even if Progressive wasn’t the lowest, they would show it all. Now, THAT’S progressive—but does that still happen? It certainly is NOT the thrust of their TV ads, which have shifted to the typical “we have the lowest premiums”

Who can believe any of it anymore? They each quote a dollar savings feature when compared to a host of other companies (which they each identify by name). Problem is, they are ALL doing it, so somebody is lying.

And now, Allstate has something called “accident forgiveness”, where your premium won’t “necessarily” go up if you get into a crash. And, if you go accident-free, you actually receive a CHECK back from the company for up to 10% of your premium every six months. Good gimmick, but it could be that you are simply overpaying by 10% (or more) and that giving the excess back makes you feel all warm and fuzzy about your insurance company (yes, I just used “warm and fuzzy” and “insurance company” in the same sentence).

This Allstate gimmick to keep your premiums steady, even after an accident--- is worth looking into, however. We should read the fine print on THAT one.

For me, this is the great scam of auto insurance. Unless there is personal injury or excessive damage, NO ONE wants to make a claim for a fender bender. If your premium is, say, $2,500 a year for minimum liability and some collision, suppose you run into a fire hydrant and cause $1,000 in damage to your car. If you make a claim, the deductible portion is about $500---and then your yearly premium goes up to $3,000 or worse. So, instead of fixing it yourself and forking over the $1,000, you pay a $500 deductible and your premium goes up by the other $500. Seems like a wash until you realize that increase isn’t going away. Five years later, you’ve paid out $3,000 ($2,500 in increased premiums plus the $500 deductible) for that $1,000 accident.

Great deal—if you’re the insurance company.

Here’s quick video on buying cheap auto insurance online that may be helpful:






http://www.youtube.com/watch?v=SwAC6MnuSsc

The fact is that auto insurance is NOT an option. It is required in nearly every state—and the relatively low claims to total autos on the road also means it is a HIGHLY lucrative business, hence the aggressive advertising to dominate the market.

No one with a brain can afford to drive around without insurance, but we are also at the mercy of a business model that resembles Las Vegas. The odds are permanently stacked in favor of the House.

Peace of mind is the true product—and benefit of any insurance policy—and if purchasing from a little green lizard does the trick, then you are getting your money’s worth—just pray you don’t have to ever test your policy limits!

If you’d like my weekday blog in your box, just let me know: tim.moore@citcomm.com