It’s amazing to see how much literature there has been about car insurance online. Most of the literature is focused on selling car insurance rather than offering it as an insurance product. When you search for “auto insurance”, a lot of websites will appear with phrases such as affordable auto insurance, low-cost auto insurance, and low-cost auto insurance.
According to Google AdWords, there were 8,100, 74,000 and 9,900 monthly searches for these key phrases in the first half of 2011. However, 110 searches were made for the term’reliable’ and 170 for quality auto insurance. There were 8,100 searches for ’top auto insurers’. It’s easy to see that the majority of online searches are focused on price and not quality.
Marketing is based on the principle of understanding what people want and designing your product or service to satisfy those needs. We can see that most people want affordable auto insurance. If you don’t do this analysis when designing a campaign, you might fail the marketing tests.
What is the difference between auto insurance policies? A ‘financial planning perspective’ should not be used to compare car insurance. Most people will agree that low-cost insurance is not always the best. What most people don’t know is that the most expensive insurance policy may also be the most troublesome. Three factors should be considered when comparing auto insurance policies:
1. Price: Of course, the lower the price is, the better.
2. Company Rating: Non-standard companies have a higher tolerance for past violations of credit scores and MVR activities. Non-standard companies can be more difficult to work with and pay claims. Non-standard insurance companies are the most common source of complaints. Although preferred companies will pay smaller claims, such as seven to eight thousand dollars or more, all companies from the top will examine each application to determine if they need to or not to pay $100,000.
3. Limits on liability. This is the most overlooked and least understood aspect of the policy. However, it is the most important. It affects customers when they are in need of insurance. This is how much coverage you have in case you are sued. If you have sufficient information to prove that you and your spouse are wealthy enough to sue for auto insurance, a professional financial advisor will not sell you low-limit auto insurance.
Many insurance policies can be sold through superior insurance companies with the lowest state-mandated liability limits. These limits in Illinois are 20/40/15. This means that if you are sued for an accident you caused, your company will pay no more than $20,000 to one person for bodily injuries, $40,000 for each other person in the accident, and $15,000 for property damage. If you’re a business owner, and cause a major accident that results in a lawsuit for $300,000.00, your insurance company paid $20,000 and the maximum amount of the policy, then the $280,000 difference will have to be paid by you.
Financial Planners and Auto Insurance Marketers are not in Harmony
Insurance marketers and financial planners disagree on the importance of placing limits of liability in auto insurance. While marketers like to emphasize the factors of price and company ratings, financial planners prefer to emphasize the importance of liability limits, followed by company rating and price later.
While financial planners and auto insurer marketers share the same goals, their activities are different. Auto insurance marketers make money selling as many policies as possible. Marketers try to sell as many policies as possible. This means that they make a small profit on each sale. Financial planners are different because they work with a limited number of customers to make large profits. A financial planner may not be concerned about selling an auto policy, but auto insurance is a fundamental part of the financial planning process.
Auto insurance is a way for car insurance agents to protect their clients in the event that the car is stolen, damaged by fire, or any other loss. Financial planners view auto insurance as an integral component of clients’ risk management. An auto policy does not cover the cost of repairing the vehicle in case of loss. Instead, it protects the insured’s assets and wealth, particularly against possible lawsuits.
Some auto insurance agents would suggest that you reduce your liability insurance to save money. This suggestion is not sound advice from a financial planner. It’s impossible!
When does height matter?
When you purchase car insurance, the most important thing to consider is how high your liability limits should go. If you shop for higher limits but are unable to afford them, or (2) your assets and wealth are not sufficient to cover you in case of an at-fault auto accident, you will probably only need the minimum liability limits. (3) You are considered a high-risk driver and no other insurers will insure you beyond the minimum limits. You should be concerned about your maximum liability limit if you have substantial assets or wealth.
What about those who aren’t wealthy and have few assets? The liability limits should be a major concern for anyone, regardless of their wealth. Liability insurance provides coverages that pay for bodily injury in the event you are hit by a vehicle with no insurance or that is not legally insured. The Insurance Research Council estimates that approximately 15%-17% of drivers in the United States lack insurance. The coverage for Uninsured Motorists (UM) or Underinsured Drivers (UIM), varies from one state to the next. This is due to differences in their mandatory status and limits. UM coverage in Illinois is required at $20,000 per person for bodily injuries and $40,000 per accident for bodily injuries. Although coverage for underinsured motorists is not required in Illinois, insurance companies must offer it to clients if they issue policies with liability exceeding the state’s limits. Although clients can refuse to be covered by higher uninsured/underinsured motorists, it must be done in writing. Your liability policy covers your bodily injury. It is important to have high limits on liability, UM, and UIM.