by Ed Sneineh, Auto Insurance Quotes Specialist
If the auto insurance rates are set too high by a company compared to its competitors then the company stand a chance to lose its customers. Also the company will perhaps lose some of its captive or independent agents who market the auto insurance, because customers are doing their share in shopping for low auto insurance rates.If the company adopts very low car insurance rates then the profitability will suffer and the company may lose its credibility during claims handling, hence it may lose customer. To cut on cost during low profitability a company may have to lay off employees, agents, and even shut down some office. That can also be distressing to agents and consumers as well.It is very important for car insurance quotes shoppers to understand that extremely low auto insurance rates are not a good sign. Some financially distressed insurance companies may resort to take drastic measures in offering very low auto insurance rates, to get as many customers (and cash) as possible. But this will lead to a disaster unless the company is using this as a temporary measure and in connection with another marketing strategy.
One of the main challenges to the average consumer is to figure out how the auto insurance rates are determined by the auto insurance companies. Determining the rates of auto insurance is critical to the auto insurance companies because the rates will determine first the competitiveness of the insurance company and the profitability of the company.
Auto insurance quotes shoppers should consider it an alarming sign if a company is offering significantly too good to be true price! Remember that the insurance is about a promise, a promise made by the insurance company to provide protection for your wealth and assets in the event of a covered loss. Many companies in the US could not make it under the intense competitive forces or poor management or both. For that reason, the rate you pay is not the value of the credit card charge or check you pay to your agent. It is also the time you may have to pay in dealing with a distressed company.
So what is the solution? Shopping on the phone or even on line may not be the answer for most people. It is always best to ask for, and accept, the advice of your agent. All agents are eager to make more money, but the reputable agents realize that more money may come only in the long run with proper advice and greater customer service.