Are local and state auto insurance companies better than national?
Local auto insurance companies are not necessarily better than national companies. Save as much as $100/mo. by comparing rates from the smallest and largest companies.
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UPDATED: Jul 15, 2021
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- Because national auto insurance companies have far more car drivers as customers, it allows such companies to offer larger policies and to manage the claims of policyholders more consistently
- National insurance companies can’t seem to manage is their inability to be flexible with a standardized corporate approach to business
- The Internet is a great place for comparing car insurance
For folks who are going out and looking for car insurance for the first time, many advisers suggest sticking with a large, national company to avoid any fly-by-night fraudulent situation.
However, there are a lot of good local car insurance companies that can and do provide quality auto insurance services.
Even national companies started out as small, local insurers at one time before their success. That said, there are still unscrupulous characters out there who look for opportunities to take people’s money and run before being caught.
So the reputation of local companies versus national ones suffers as a result of this auto insurance fraud. Both local and national companies have their benefits and hazards.
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The Pros of Larger Insurers
Because national auto insurance companies have far more car drivers as customers, it allows such companies to offer larger policies and to manage the claims of policyholders more consistently.
Processing of claims on a regular basis then obviously improves the reputation of the larger companies and draws further consumers looking for reliable auto insurance coverage.
The national company’s strength comes from the active management of the customer pool. By keeping the majority of the customer pool paying premiums without filing any claims, the insurance company takes a clean profit.
This helps create an operating profit margin that exceeds claims when they do occur. That said, such companies don’t sit back and wait for common auto insurance claims to happen.
They proactively work claims that are filed to make that as low of a cost as possible. This is done through low settlements, using a network of preferred mechanics for repairs, and aggressively seeking reimbursement from other insurers when their drivers are at fault.
All combined, a successful company then keeps the cost of claims low and manageable.
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Local Insurers Provide Personal Service
The one thing that national insurance companies frequently can’t seem to manage is their inability to be flexible with a standardized corporate approach to business.
Local car insurers need to be flexible as well as craft customized policies for their customers that national companies often can’t match. Of course, the success of a local insurer highly depends on the company reputation.
Many local insurance companies actually operate as insurance brokers rather than sales agents of bigger companies. This gives local companies an added nimbleness.
Brokers can work with multiple car insurance companies to craft hybrid plans or customers-specific plans.
If the first plan doesn’t work out well, the broker can switch the customer to a different plan and customer quickly. This allows the broker to adjust quickly as well as make commissions on renewed policies with happy customers.
Local insurers have strengths that stand out among the concerns.
Is there a price difference?
On a cost basis, policies between local companies and national car insurance providers can be very competitive. Because there are so many players in the industry, it’s not possible to specify a nparticular price range for locals versus national companies.
The only way for a consumer to see what differences exist in his particular region is to seek quotes for the same kind of policy coverage and examine the differences.
If a local company provides a significantly lower price for a policy than a national car insurer, a consumer should pay attention.
There’s no need to hand out hard-earned money to a large company just because of its size if a local company is reputable and dependable.
However, not everyone works with local insurers. For instance, many mechanics who want reimbursement for their services won’t work with small business insurers they are not familiar with.
The Internet is the great equalizer today when it comes to comparing car insurance.
Regardless of whether a car insurance company is local or national, if their information is available, comparison websites will place them against each other. This works to the advantage of consumers.
By using such websites consumer can easily see how the same policy terms work differently from company to company. In some cases, a large company may very well be the best deal. In others, a local company should be considered with a closer look for potential car insurance coverage.
The best part of these websites is that the majority of them operate free of charge, gaining their revenue instead from website advertisement.
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