Should You Trust Cheap Car Insurance Offers Online?

For a person who chooses to purchase cheap car insurance online, trust is a matter of choice. If a person accepts the premise that cheap car insurance coverage may or may not completely reimburse their loss due to an accident or other risk, then trust is probably not as important as cost. That said, a person choosing to do business with a cheap car insurance company online should investigate the company to determine the likelihood that they will meet their commitments on a policy.

Cheap Car Insurance Offers Conformity

Cheap car insurance offers are no different than other types of offers found online in that the offers must be bona fide and conform the requirements of the state in which the offer is being made. Insurance laws are governed by the states individually and require that certain provisions be placed in the policy in order to protect the interests of consumers. This means that an offer to provide a benefit in exchange for a premium, no matter how low, must be honored if the policyholder meets its requirements by paying premiums. This is known as an aleatory contract between the insurance company and the policyholder.

Third-Party Ratings

There are several ratings companies that provide third-party information about insurance companies, including cheap car insurance companies. Of those companies, A.M. Best Company provides the most reliable ratings of insurance companies. A good measure of trust is the ratings issued by a company like A.M. Best. The higher the rating, based on a scale with A on the top and C on the bottom, the better the company in terms of meeting its obligations and paying claims.  

Unethical Practices

Lower rated companies tend to have lower costing insurance and engage in the practice of cancelling coverage or raising premiums when a policyholder has an accident. This is deemed a breach of trust by many policyholders and members of the public and should be a cause for concern regarding these types of companies. A company that consistently engages in practices such as rescission, which is cancelling coverage due to some subsequent underwriting factor that was not uncovered during the policy’s issuance, should be reported to the state insurance commissioner for follow-up and investigation.

The Trade-Offs of Cheap Car Insurance

Dealing with a cheap car insurance offer online is subject to risks on the part of the prospective policyholder. It may have to be an accepted fact that in order to obtain a cheap rate for car insurance the policyholder may need to be willing to sacrifice quality or other consumer protection in order to meet their insurance needs.

blog comments powered by Disqus