The promise is simple-a few minutes could save you a bundle on insurance, but is there any truth to the promise? Can getting a quote online really save you money, can it reduce the hassle of shopping for insurance, and if so, what’s the catch? I decided it was time to find out.
One of the first companies to sell insurance online was Esurance. Launched in 1999, they offered auto insurance to a somewhat timid Internet audience. Back then people had lots of concerns about purchase transactions and the risk of credit theft online. Surprisingly, Esurance took off. They were acquired just a year later, and according to the website Metrics, reached Internet sales of more than $350 million by 2005.
What helped them overcome the consumer concerns was that they helped customers get past the pain of calling or going to see insurance agents, something some people would put on par with going to see a dentist. Soon traditional insurance companies jumped in the fray, and the insurance business has never been the same since. Today the number of online quotes generated numbers in the tens of millions annually.
THE BENEFITS
What advantage does online quoting give you? I’ve identified three key benefits to online quoting. The first is convenience. Rather than calling an insurance company or visiting an agent’s office, you can get a quote from the convenience of your own home… or office… or with a smartphone, the convenience of being just about anywhere. You can get a quote anytime of day or night. For many, this is truly a great benefit.
The second benefit is the ability of receiving quotes from multiple companies. When you call traditional insurance companies like Allstate and Nationwide, you’ll find out what your insurance cost will be from them only. When you call a multiple quote service, such as Progressive, QuoteHero, or The General, they actually quote multiple companies. Progressive quotes “a handful of companies”, whereas companies like QuoteHero access more than 25 insurance carriers.
The third benefit is that it is fast. Geico says, “Fifteen minutes could save you fifteen percent.” My experience is that 15 minutes is a long time. I tested several companies, and found I received quotes as fast as just a couple of minutes.
THE DRAWBACKS
There are some downsides to online quoting. One that I find little discussion of is the quality of the quote you receive. What I mean is that one thing you give up is having an insurance agent working with you.
This can lead to errors, mostly by you. If you ask for the wrong coverage, you will get a quote for the wrong coverage. Also, you need to be sure the quotes you receive are “apples to apples” and quoting identical coverage. Changes or additions can impact pricing.
This drawback is not as bad as you might think, as most of the online services now offer toll free assistance. If you have questions about coverage, state minimums, or things that can affect your rates, you can reach a live person if you desire by making a phone call.
The second drawback, and huge one in my opinion, is that some online services will actually sell your name and contact information to local insurance agents. This results in a bombardment of phones calls hoping to get you to “sign the dotted line” with them right away.
In doing research for this article, I had the experience that I began to receive phone calls just minutes after I received my quotes. Five different agent and companies contacted me during the next few days. One local agent still calls me and emails me months later!
Upon close inspection, research showed that one site I found had the following in small print: “By clicking “Get Quotes!” I provide my signature, expressly authorizing telemarketing calls from up to eight insurance companies or their agents or partner companies”.
The website Consumerist.com features an article supposedly written by a former insurance telemarketer. She tells the website that they paid $8 per hot lead. She also volunteered that their phone efforts were far more effective than email or mail, which is a big reason you get bombarded with calls right away, while the lead is hot. While I can’t vouch for the website or the author’s authenticity, it sounds in-line with what I experienced.
TIPS FOR SAVING
First off, not all companies sell you name. One I found, QuoteHero.com, expressly states they don’t sell your name. In fact, for some policies you don’t even have to provide any personal information! That’s a big deal for me, drastically reducing the harassment factor.
Next, if you have it, get a copy of your existing policy, and make sure you know want kind of coverage you need. If you are driving an older car, you might be looking for the very minimum coverage your state requires. On the other hand, if you are older, have a lot of assets or an expensive car, make sure you are covered appropriately.
And finally, make sure to get numerous quotes. In a recent article, U.S. News & World Report recommended to readers to shop their auto insurance annually, and that online was a good way to do that “in minutes”. Edmunds.com concurs, stating, “by doing some comparison shopping, you could save hundreds of dollars a year.” In research done recently, tests around the country indicated the average person’s savings to be just over 30% when factoring the difference between the high and low quotes!
Can you save with online quotes? Yes, I did. But compare multiple carriers, and be careful to read the fine print to make sure the insurance company isn’t just going to sell your name to the highest bidder!
