January 14, 2010

What Auto Insurance Companies Are Doing To Help Customers Minimize Costs

As today’s consumers work hard to find low-cost auto insurance, insurance companies try to offer the most attractive premiums in a ruthlessly competitive industry. They do this in a number of different ways.

For starters, these companies will offer a good driver a lower auto insurance rate than a poor driver. After all, enlisting and retaining good drivers mean fewer accidents. Fewer accidents mean fewer costly claims every year for the agency to pay out on. That enables insurance companies to charge all their policyholders lower premiums. It’s sort of like rewarding a dog with a treat for a performing a trick. Related to this, insurance companies also encourage their drivers to enroll in defensive driving courses. A simple five-hour course can contribute to better driving habits, which can contribute to fewer accidents. This can also contribute to lower premiums for everyone enrolled with the company.

Another method used by insurance carriers to keep rates low is by being vigilant to fraud. Incidents of fraud cost the insurance industry billions of dollars every year. Insurance investigators are alert to the old games where several people pile into a car and deliberately slam on the brakes in front of a truck. They are alert to the patterns of professional plaintiffs who seem to have one suspicious accident after another, sometimes every six months. In addition to keeping up-to-date on new insurance scams, many agencies have bolstered their special investigations units with ex-law enforcement personnel, along with high tech surveillance devices, in order to convict policyholders who file fraudulent claims. Some have also instituted fraud hotlines where vigilant citizens can notify them in the event that they suspect people of carrying out insurance scams with phony injuries or disabilities.

Insurance companies are also able to offer lower auto insurance quotes by managing their property damage departments with smart procurement techniques. By assigning purchasing agents who search for replacement parts at the lowest cost instead of a car manufacturers’ costly replacement parts, carriers can pass large savings along to their consumers. Although some picky drivers aren’t delighted with the prospect of having to settle for a replacement part that isn’t from their car’s original manufacturer, insurance regulations do permit the practice. Insurance carriers are also offering their policyholders the option of designing customized auto insurance policies that are best suited for their budgets. They do this by offering the most sensible levels of protection for an individual’s needs, as well as the option to select higher deductibles that can further reduce premiums.

The combination of all these things can result in a better bottom line for the carrier and a more attractive premium for the consumer.