The Internet was supposed to make shopping for auto insurance fast and easy.
There still is no single comprehensive insurance marketplace on the Web; consumers have to visit several sites, filling out time-consuming forms at each, to glimpse the range of rates being offered.
The California Department of Insurance premium survey, intended as a guide to auto insurance rates, is too general and outdated to be of much use. The most helpful shopping guide, a customized quote service run by the creators of Consumer Reports magazine, quietly died for lack of interest.
That means consumers should plan to spend at least an hour, and to make a couple of phone calls, to make sure they know their options before they commit to an insurer.
Fortunately, all this effort can still pay off. Premiums can differ by hundreds and even thousands of dollars, depending on the company and the consumer’s situation.
The lack of progress in Internet car insurance marketing is the fault of both insurance companies and consumers. Insurers have been far slower than brokerages or even banks to embrace the Internet, while consumers haven’t helped matters by being reluctant to shop.
In fact, consumers’ tendency to stay with the auto insurer they already have helped kill the Consumers Union’s Auto Insurance Price Service, a phone-and-fax service that until this summer offered individualized quotes from dozens of carriers for $12. That’s the same price the union charges for its new-car pricing service, which reports wholesale prices and other details on buying a specific car. The car pricing service has proven far more popular and survives.
“There’s something about shopping for a car that’s infinitely more interesting than shopping for auto insurance,” said Joel Gurin, Consumers Union executive vice president. “It’s difficult to interest people in that [insurance] purchase.”
Consumers Union used the rate plans that insurers filed with state regulators to come up with their quotes; the insurers’ cooperation wasn’t needed, so consumers were able to get a broad survey of the rates being charged in their market.
Insurance sites on the Internet, by contrast, depend largely on their relationships with insurers. Most offer quotes from a mere handful of companies, and usually only one or two of those are insurers with any appreciable market share in California.
For example, QuickenInsurance--rated by research firm Gomez Advisors Inc. as the best insurance marketplace on the Web--recently offered a California consumer quotes from 21st Century Insurance Co., Kemper Insurance Co., Esurance Inc., Electric Insurance Co. and General Electric Auto Insurance. 21st Century is the only company in the batch with more than 1% of market share.
QuickenInsurance has “referral relationships” with bigger companies but that doesn’t mean you get an automatic quote from those insurers. Instead, you can opt to send your name and e-mail address to the insurers as a possible prospect, and they’re supposed to call or e-mail you back.
State Farm does allow you to get a quote on the Web by visiting its site and reentering all the same information about number of drivers, driving history and vehicle type that you entered at the QuickenInsurance site. The State Farm quote covers only one car, however--which makes the exercise fairly pointless for most car-loving California households.
The ideal Web site would offer instant quotes from at least one and preferably all three of the California market leaders: Allstate, State Farm and Farmers. It would also include the companies that have been the most aggressive about cutting their prices, including Mercury, Progressive, 21st Century and the Automobile Club of Southern California, among others.
Most insurers are understandably nervous about competing head-to-head on price, however. Quotes for a two-car, two-driver Los Angeles household varied by more than $600 at several Internet insurance quote services. The state Insurance Department’s survey--which includes more insurers but is not customizable--shows the gap between the cheapest and most expensive annual insurance premium for a similar household was a stunning $5,500.
Now, most consumers know that auto insurance is about more than just price. Customer service, prompt claims-paying and financial strength matter, too. Some drivers are happy to pay more to get better service and the help of an agent; others want the cut-rate, do-it-yourself option.
Still, it’s stupid to pay hundreds of dollars more than you have to for what is essentially a commodity. It would be nice to have an Internet insurance shopping service that’s efficient, reliable and comprehensive.
Will it ever happen? That depends on whom you talk to.
Greg Davies, a financial analyst with Gomez Advisors, doesn’t see a comprehensive insurance shopping service on the horizon. As Consumers Union discovered, setting up and maintaining an accurate quote system reflecting the criteria of dozens of insurers is mind-numbingly complex and expensive. Without insurer interest and support, it won’t happen, and many insurers simply aren’t interested in cooperating, Davies said.
Brian Sullivan, an independent analyst and editor of Auto Insurance Report, takes a longer view. Eventually competition and consumer demand will force reluctant insurers onto the Web pricing services, he said.
“The insurers don’t have a collective interest in having it happen yet, but they will,” Sullivan said. “I still consider it an inevitability.”
Car Insurance on the Web
Shopping for auto insurance is still a time-consuming process, but Web resources can help streamline the task somewhat. Here’s a plan of attack:
* Know what you need. Your current auto insurance documents will provide you with valuable information about the types of coverage you’re paying for now. Tutorials available at several sites, including the insurance marketplaces listed below, can help you determine whether your coverage needs to change.
* Start with the state Department of Insurance. The department’s premium survey is based on data that are a year old, and you can’t customize the results based on the cars you drive or your exact driving history (both of which can have a huge effect on what you pay). But you can get a general idea of which insurers might be the least and the most expensive for your situation. You can also check out the companies’ complaint histories and their market share information on the site, at https://www.insurance.ca.gov. Make a list of the companies that you want to contact for personalized rate quotes.
* Pick one (or more) of the insurance marketplaces. You have plenty to choose from. Intuit’s QuickenInsurance at https://www.insuremarket.com and Fidelity Investments’ Insurance.com at https://www.insurance.com offer tutorials and helpful tools as well as quotes; so does InsWeb at https://www.insweb.com.
* Check out Progressive’s site. Progressive at https://www.progressive.com not only gives you its own quote but provides comparison quotes from leading insurers, including State Farm and Allstate.
* Make a few phone calls. If you still have insurers on your list that didn’t provide quotes through the services above, you can contact them directly to ask for a quote. Some provide quote services on the Web sites; others will require that you call their toll-free phone numbers.