Whether it's car insurance, life insurance, health insurance or homeowners insurance, everyone who shops and compares quotes wonders why the price of insurance can be so different between companies for the same policy.
The answer is pretty simple. Price differences occur because every insurance company evaluates risk in its own, unique way. And when we say evaluating risk, we mean evaluating you.
So let's say, for example, you have a speeding ticket or two on your driving record. One car insurance company will consider you an O.K. risk. Hey, everyone gets a speeding ticket once or twice in their life. To another car insurance company, though, speeding tickets might raise a red flag.
End result? One quote will likely be lower than the other.
To better understand, let's explore how insurance works. Don't worry. The business model isn't all that complicated.
Essentially, every insurance company works the same way. Business success, or profit, is determined by the premiums we all pay plus the company's investment income minus business and underwriting expenses, which is everything from salaries, agent commissions, overhead expenses, office rental and supplies and more.
Underwriting, in insurance jargon, is simply the method insurers use to select risks (you, me, our driving habits, life expectancy, and so forth) they're comfortable insuring - and how much to charge for that risk.
It's this process that's the most complex. And it's this process that produces the quote - and final rate - you'll pay for car insurance, life insurance, health insurance and homeowner's insurance.
It helps to think of the quoting process in three simple steps.
It is important because every insurance company evaluates your information differently. By shopping and comparing quotes, there's a good chance you'll find a low rate for the policy you want at a great company that caters to people just like you. And you'll rest assured that you're paying the best price for the policy you need.
It's easy at insurance.com. In 10 minutes or less you can compare multiple quotes from top-rated insurance companies and choose a policy that's right for you. Spend 30 minutes on insurance.com and you can compare car insurance quotes, life insurance quotes and health insurance quotes. It's one-stop insurance shopping at its best.
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