The main loss you can face from having a car without insurance is financial, since any repair or medical attention, whether to your car or that of an affected third party, would have to come out of your pocket.
In addition, having this protection allows you to obtain additional services that will make your life easier in case you have a simple problem to solve, such as changing a tire, switching on the battery or opening a door because you do not have the keys.
“When you buy insurance, you hope not to use it” is a maxim that is used frequently in the insurance industry. But when you need your insurer, you want their service to be the best and to assist you promptly and efficiently.
What do we evaluate to purchase auto insurance?
Normally the first and only aspect that we take into account to acquire a policy is the price. It is very easy to think that the cheapest is the best, because practically all insurance is the same, but that is a myth.
Other parameters that you should consider are:
Financial solvency of the insurer
Cost benefit relation
Quality of service when hiring
Robustness of the coverage contracted
Efficiency in service by requiring the support of an adjuster
Veracity in compliance with the clauses
Opinions of other users and authorities
Price as the main factor
To sell you a policy, insurers buy their own insurance. This is called “Reinsurance” and it allows them to have solvency to face all the risks they sell without losing all their capital. The cost of this contract is a first parameter to define the price of the insurance that they sell to their clients. This reference varies by factors such as the number of stolen cars where you live or your driving record. Reinsurers apply these same parameters to assign the cost of the contract that they give to insurers. Therefore, the price and its coverage cannot be the same between insurers. To be a bit standardized, they add additional services at no cost called “added values”, so that their cost is more competitive, although it is not necessarily the cheapest.
There are other factors that do allow your policy to have a good amount of coverage at a lower price. Among them are that you include your car in a fleet, which may be from the company where you work.
Another alternative is to insure different risks such as: house, medical expenses, life, etc. with the same insurer.
Financial solvency of insurers
When an insurer has bad financial results, for example, a very high loss ratio, its prices can go up. For example, if you have a policy that has several claims throughout its term, at the time of renewal they will give you a higher price so that you use it less, or you contract elsewhere. The same happens with reinsurers and insurers. A high loss ratio raises the cost of your contracts.
In addition to the fact that these contracts become more expensive, if the insurer has to pay a considerable amount to compensate its clients, its profit is reduced and its financial solvency can be put at risk. This causes them to limit their service, either by raising prices or reducing the number of coverage they include in their policies. For this reason, it is also interesting to analyze the financial result obtained in the immediately preceding year. You need to compare car insurance carefully. Insurers are required by law to have their financial statements available on their internet portals, precisely so that you can review this information.
Finally, you need to focus on cost benefit relation
When you quote insurance, you should check what coverage they are offering you for a certain price and compare different options. The ideal is to consult an insurance agent who clarifies your doubts, explains the coverage and its limitations. Thus, you will be able to evaluate what you receive in exchange for what you pay and see which are the most robust alternatives. Consider your needs as a driver, so that your policy includes them and do not buy coverage that does not interest you.