Is There Really Cheap Car Insurance

Practically everyone has seen the ads on TV where the little lizard promises to save you money if you buy their cheap car insurance. However, is this for real, or is it just more marketing subterfuge put on by another loquacious ad-man?

Since the advent of free quotes online a few years ago, practically every major insurance provider joined the craze to promote their own cheap car insurance. The insurance companies achieve this by showing their rates compared to their competitors and solicit you to choose them as the source for cheap car insurance.  

Despite the claims, is it practical to believe every insurer is the least expensive? After all someone has to be more expensive. Well, there must be an answer to how the cheap car insurance strategy is possible.

Insurance actuaries utilize large amount of statistics to arrive at a cheap car insurance premium they will set for certain drivers, furthermore, every provider has their own set of ‘rules’ for certain types of drivers. The insurance companies are aware certain drivers are more likely to file a claim than others, and by reason they choose to accept or decline certain classes, they are able to afford to cover other higher-risk classes. Therefore, the ability to offer cheap car insurance to one class will differ from company to company.

For instance, Company X underwrites 65% of their policies for low risk middle-aged drivers. Since the number of claims filed by this particular demographic class is extremely low, they are better financially suited to underwrite more high-risk (males 18-25) policies at a discounted rate. The insurance company will solicit drivers in that high risk demographic to secure their business as a new customer. Even though the amount saved may be less than 15%, the consumer is satisfied that he has received a cheap car insurance rate from a respectable company and the company is glad to have a new customer.

An insurance provider is unlikely to disclose the demographic or statistical data employed for formulating insurance premiums, for that very reason it is important to comparison shop for a cheap car insurance quote. Checking more than one online quote source will eventually produce a suitable and affordable quote. The lizard may save you more than the caveman, however you could be in better hands with a good neighbor, if you just comparison shop to secure a cheap car insurance premium.