December 6, 2023

For people in the financial profession, auto insurance does not mean the same things.

It’s amazing to see how much literature there has been about car insurance online. Most of the literature is focused on selling car insurance rather than offering it as an insurance product. When you search for “auto insurance”, a lot of websites will appear with phrases such as affordable auto insurance, low-cost auto insurance, and low-cost auto insurance.

According to Google AdWords, there were 8,100, 74,000 and 9,900 monthly searches for these key phrases in the first half of 2011. However, 110 searches were made for the term’reliable’ and 170 for quality auto insurance. There were 8,100 searches for ’top auto insurers’. It’s easy to see that the majority of online searches are focused on price and not quality.

Marketing is based on the principle of understanding what people want and designing your product or service to satisfy those needs. We can see that most people want affordable auto insurance. If you don’t do this analysis when designing a campaign, you might fail the marketing tests.

What is the difference between auto insurance policies? A ‘financial planning perspective’ should not be used to compare car insurance. Most people will agree that low-cost insurance is not always the best. What most people don’t know is that the best-rated insurance company might also be the most problematic. Three factors should be considered when comparing auto insurance policies:

1. Price: Of course, the lower the price is, the better.

2. Company Rating: Non-standard companies have a higher tolerance for past violations of credit scores and MVR activities. Non-standard companies can be more difficult to work with and pay claims. Non-standard insurance companies are the most common source of complaints. Although preferred companies will pay smaller claims, such as claims of seven to eight thousand dollars or less, all companies from the top will examine each application to determine if they need to or not to pay $100,000.

3. Limits on liability. This is the most overlooked and least understood aspect of the policy. However, it is the most important. It affects customers when they are in need of insurance. This is how much coverage you have in case you are sued. If you have sufficient information to prove that you and your spouse are wealthy enough to sue for auto insurance, a professional financial advisor will not sell you low-limit auto insurance.

Many insurance policies can be sold through superior insurance companies with the lowest state-mandated liability limits. These limits in Illinois are 20/40/15. This means that if you cause an accident and get sued by others, your company will pay no more than $20,000 to one person for bodily injuries, $40,000 for each other person in the accident, and $15,000 for property damage. If you’re a business owner, and cause a major accident that results in a lawsuit for $300,000.00, your insurance company paid $20,000 and the maximum amount of the policy, then the $280,000 difference will have to be paid by you.

Financial Planners and Auto Insurance Marketers are not in Harmony

Insurance marketers and financial planners disagree on the importance of placing limits of liability in auto insurance. While marketers like to emphasize the factors of price and company ratings, financial planners prefer to stress the importance and order of liability limits, company rating and price.