Practically everyone has seen the ads on TV where the little lizard promises to save you money if you buy their cheap car insurance. Yet, is it true that you will save money, or is it another slick advertising gimmick put on by the glib admen of Madison Ave?
Since the advent of free quotes online a few years ago, literally hundreds of insurance companies have jumped on the bandwagon to promote their own cheap car insurance. The providers accomplish this by showing their rates compared to their competitors and solicit you to choose them as the source for cheap car insurance.
However, is it possible for every car insurance company to actually be the cheapest? After all someone has to be more expensive. So, how does the cheap car insurance phenomena actually work?
The insurance companies employ a great deal of statistical data to determine a cheap car insurance premium to charge a specific customer, and each individual insurance company has different criteria for each class of driver. Each class of drivers has a certain probability that they will file a claim because of an accident or incident, and therefore some insurers are able to absorb the costs of higher risk class drivers than others. Therefore, the ability to offer cheap car insurance to one class will differ from company to company.
For instance, Company X underwrites 65% of their policies for low risk middle-aged drivers. Since the number of claims filed by this particular demographic class is extremely low, they can well-afford to write a portion of high-risk (males 18-25) policies and offer a lower rate to this high-risk class. The insurance company will solicit drivers in that high risk demographic to secure their business as a new customer. Although the savings may be slight, in some cases only 5% to 10%, the consumer is satisfied that he has received a cheap car insurance rate from a reputable company and the company is glad to have a new customer.
An insurance provider normally will not reveal the demographic or statistical data that they use to target a particular class of driver, that is why it is necessary to shop around for the best cheap car insurance quote. Visiting the website of several insurance companies will ultimately lead to a result of a quote that is within your budget. The caveman or lizard may not save you as much as your good neighbor, so be sure you’re in good hands by comparing several online companies to get a cheap car insurance quote.
