Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 24, 2020

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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Things to Remember...

  • Insurance is a contract between the purchaser and the insurance company
  • A quote constitutes an offer of a contract from the insurance company
  • Contractual law requires that the information provided by both parties to be truthful

Daydreams are delightful. Research shows that people fantasize about winning the lottery, eternal life and youth, and free instant auto insurance.

All of us realize that these daydreams are just that—fantasies. There are reasons for the impossibility of these fantasies.

For some reason, the last daydream persists in the minds of individuals seeking auto insurance, but it’s just as improbable as winning the lottery. A number of reasons for this improbability exist.

Be sure to always compare car insurance before buying. Use the FREE tool at the top of this page by entering your zip code now!

Insurance and Basic Contract Law

Insurance is a contract between the purchaser and the insurance company.

Characteristics of a contract are:

  • Was a contract formed?
  • What type of contract was formed?
  • Has there been a breach of contract?

First of all, there must be an acceptance of a contract. In insurance, a quote constitutes an offer of a contract from the insurance company.

The quote is valid only if the information given is truthful.

Failure to disclose vital portions of relevant information can invalidate the quote – and thus, the insurance contract.

Secondly, there needs to be an acceptance of the contract on the part of the person to be insured.

This acceptance is indicated in several ways:

  • Signature – A signature, which indicates that the person or persons to be insured agrees to the contract, must be included in the policy. At one time, electronic signatures were not valid. In the past only a personally written signature was acceptable. Many insurance brokers lost their licenses to sell insurance for signing an application themselves.
  • Tendering of value – This means that money is exchanged to purchase the insurance by the person wishing to have insurance.
  • Acceptance of the application The insurance company must accept the application, which is indicated by depositing the money and tendering proof of insurance in the form of an insurance policy.

Without these indicators of acceptance of the insurance contract, no contract exists and you have no insurance, nor does the insurance company have any responsibility to provide protection under an insurance policy.

Free Auto Insurance Comparison

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Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

Being Less than Truthful can Invalidate the Insurance Contract

Contractual law requires that the information provided by both parties to be truthful. For example, if you have an additional teen driver that you do not reveal upon the application, you will have been considered to be in breach of contract.

The intent on your part is assumed to be to enrich yourself by avoiding the payment of premiums levied for a teen driver.

The word “theoretical” is used because entering into a contract without good faith intent invalidates the contract.

Why This is Important to You as a Prospective Policyholder

These facts explain why you cannot purchase free instant auto insurance.

Money has to exchange hands to indicate acceptance of the insurance contract by both the purchaser and the insurance company.

The purchaser’s signature, whether electronic or holographic, must be given indicating that the individual certifies the truth of the information stated in the application.

The insurance company must indicate that issuing a policy either in print or electronically is providing the coverage.

Buying an Insurance Policy

You should apply diligence in purchasing insurance. The first action you should do is to request insurance quotations. It is possible to obtain quotations from several companies online through websites.

Compare the quotes carefully to make sure they are the same. Insurance is a major expenditure and prices should be compared carefully.

After determining the best quotation, check the status of the insurance company you’ve chosen.

Go to A.M.Best to examine the financial status of the company.

Their website will allow you to type in the name of the insurance company.

A rating of A or above indicates that the company is financially stable. Then ask friends and family about their experience with the company in regard to the settlement of claims and the service they provide.

You may purchase automobile insurance online usually through the website where you obtained your quote. Many companies have local agents who can process the application as well as accept payment to place the policy in force.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

About Insurance Companies

When purchasing insurance, recognize that the company will examine the following aspects of your driving and your personal life:

  • Driving records
  • Validity of drivers licenses
  • Credit ratings
  • Individuals living in your home

All of this information is available to insurance companies through online sources. Very few of us escape the examination of companies on the Internet, so recognize that much of this information is available.

In fact, free automobile insurance does not exist because the very fact of payment indicates the completion of the contract between the insurance company and you for protection.

Find plenty of good auto insurance options with our FREE comparison tool below. Simply enter your zip code below to start your search!

References:

  1. https://www.geico.com/auto-insurance/
  2. https://en.wikipedia.org/wiki/Breach_of_contract
  3. http://www.investopedia.com/terms/c/costoftender.asp
  4. https://en.wikipedia.org/wiki/Good_faith
  5. https://en.wikipedia.org/wiki/Insurance_policy
  6. http://www.ambest.com
  7. https://www.allstate.com/tools-and-resources/car-insurance/how-to-file-auto-insurance-claim.aspx
  8. http://www.investopedia.com/terms/c/creditrating.asp