A common misunderstanding among motorists is that premiums are not much different among hundreds of companies. Mistakenly, they think that the regulation of the industry applies to prices. A few people including brokers and agents suggest this to their clients and this may be where all started. Unfortunately, they earn money if they sell policies and at time they may be a little far off the truth.
The myth is that companies cannot charge whatever they like for auto insurance policies. Well, actually they can, they will and they do. It is a business after all and they will aim to make profits from their endeavors. They have shareholders like any other business and there is not much point in going on if you cannot turn on profits.
There is no way that state insurance commissioners can change this fact. They do inspect the companies and approve their rates. But this doesn’t mean they decide for the companies what to charge. What it means is that they look at the way companies price each type of risk to make sure there is no discrimination or similar law breaking when they are setting rates.
What is all these mean for you as a consumer? Does it mean that companies can cheat and lie to you? Not really, since you are not captive to one particular firm. You are practically a free agent who can choose among sea of alternative. This is the case when you are buying most things and it doesn’t change when you buy insurance products.
If a company is not honest and expensive they can get found out easily and lose customers. This is the idea anyway but the market is not perfect. Some people may be impressed with TV adds and go with a company without checking others. A few others will never see the point of shopping around because of wrong information and misguided loyalty they feel towards their insurers.
However, you are responsible for your own choices and you look after your own wallet. You should even consider buying a policy without getting a few quotes. This is the way to see where you stand at this moment of time. It doesn’t really matter that last year your insurer was highly impressive in terms of prices. Life moves on with so many changes every day that we have to look at where we are the present moment.
Getting a quote is like taking a picture in a way. It reflects the prices at that moment. A week later you may not be able to find the low rates anymore or get them even cheaper. What you need to look at is what is the position at the moment. By getting several quotations you would be taking a few pictures and comparing them.
When you must choose only one picture you put them side by side and see which one impresses you in terms of composition, lights and quality. You apply the same logic to your quotations and pick one. If you follow this path you will see that prices are a lot different from each other even when you have approximately the same coverage.