Is a new auto insurance company as good as an established one?

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Things to Remember...
  • These people are right to wonder whether new auto insurance companies can be as good as established companies. The answer is that they can be just as good
  • New companies might be able to come in and wow the market with low policy rates. They do lack the stability that the established companies have
  • Established companies have financial strength and reputation established
  • The key is to compare the market and analyze these companies individually. Do not simply lump them into one category

Car insurance shoppers today are often confronted with the conundrum of established versus new. They might have the opportunity to save good money by going with a new company.

Even with that, they crave the stability and assurance that goes along with getting auto insurance from an established company.

To find reliable quotes from several companies, enter your ZIP code into our FREE auto insurance comparison tool.

These people are right to wonder whether new auto insurance companies can be as good as established companies. The answer is that they can be just as good.

A smart consumer will do all of his research to make sure that he is working with a strong provider, though. To conduct research on available quotes, enter your ZIP code into our FREE car insurance comparison tool.

Barriers to Entry in the Car Insurance Market

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In the past, starting a car insurance company was difficult. This was true because of the amount of starting capital it takes to get a business of of the ground.

The following are standard starting costs for any new business:

  • Multiple months worth of rent
  • Initial marketing costs
  • Capital to make payroll in the early going

The internet has made it easier for companies to compete in this market. There are now ways to find an internet auto insurance company.

Companies now can get the word out about their insurance policies without having to break the bank in marketing. They can advertise in creative, targeted ways that are both effective and efficient.

This is why people are seeing so many new companies pop up in the current industry.

The Benefit of Using a New Company

There are many reasons why a person might want to go with a new company and even switching auto insurance companies to a new one.

Looking past the creative marketing efforts, a person might see that new companies are willing to offer low prices. This is something that often happens when a company bursts onto the scene.

They drop their policy rates low to try and capture initial market share. The price factor is a huge one for people who are mostly concerned about saving money with their auto insurance.

New companies also tend to offer the following things in the early going:

  • Creative bonus and discount programs
  • Personalized customer service

Many people like to use new companies because those companies are serious about a new approach. Many new companies do not yet have the customer base to get overwhelmed.

This means that they can often offer a high level of customer service to the customers who do buy their policies. This type of approach makes a great deal of sense to many people out there.

What New Companies Lack

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There are always two sides to every coin. New companies might be able to come in and wow the market with low policy rates.

They do lack the stability that the established companies have. When you take out a policy with an established provider, you know what you are going to get.

They have the financial strength that you can trust. They have a track record of dealing with customers.

You might end up paying a little bit more in order to give yourself full assurance that the company is going to treat you the right way. It is a necessary fact that new insurance companies just do not have that sort of thing going on.

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New Companies and Established Policies on Dealing with Claims

New auto insurance companies often put the large proportion of their effort into up-front marketing. This is good for attracting customers. But what do they do when they get those customers?

A good new auto insurance company will have set procedures for dealing with claims.

This is where established companies shine. They have good customer service people in place.

They have the financial backing to handle claims in a hurry. At the end of the day, these are the things that matter to customers.

You want to know that your insurance company is going to come through when things get difficult.

Is new as good as established?

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This is the big question that must be answered. It should be noted that a new insurance company is probably going to have a different feel than an established company will.

This does not necessarily mean that the company is better or worse. There are many things that a car insurance shopper should be looking for when he or she compares different companies.

Here are a few of those all-important factors to consider:

  • The price of the policy
  • The price of the deductible
  • The company’s policies on handling claims
  • How the company treats its customers on the little things
  • Comfort level and trust with the company

Many people find that new companies do an adequate job at the things listed above. Those individuals take advantage of the savings offered by these new companies.

In some instances, they can save ten percent or more on their policies. Others find that established companies provide them with a level of assurance that is difficult to top.

Our FREE car insurance comparison tool can help you rethink your car insurance rates when you enter your ZIP code.

The key is to compare the market and analyze these companies individually. Do not simply lump them into one category.

When you compare the market and quote shop among different companies, you will have a greater chance at getting a complete picture of what the market has to offer.

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