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Insurance Company: A Brief History and Definition

Written by Michele Wilmonen. Posted in Definitions Last Updated: 07/15/2011

Like all businesses, the insurance company started out small with one product and grew into the multiple product corporations that we know today.

Files of Insurance Company Products

Insurance companies sell many different types of insurance.

Insurance companies are now everywhere and unless a person has been living under a rock, they have been a part of all of our lives at one point or another.

But, if someone ever asked you what an insurance company actually is what would you say?

Most people would only be able to answer that it is a company that sells insurance. But, the history and exactly what these companies sell can’t accurately be explained in one simple sentence.

Insurance Company History

The concept of insurance has been around since 3000 B.C. and was started to protect goods while being transported from the seller to the buyer over the seas.

The Chinese were the first to come up with the idea of insurance and it was passed on over the centuries from one culture to another. Today we still have this type of insurance along with home, auto, life, burial and health insurance. Out of all the insurance policies that are available today, the auto policy is the one that is the most frequently sold.

In 1897, the very first of these auto policies was sold in Dayton, Ohio by Travelers Insurance Company. At this time when the automobile was first being introduced, liability insurance was not mandatory to have like it is today. It was a purchase that was made by smart vehicle owners to protect themselves and their vehicle if an accident were to happen.

It wasn’t until 1927, when Massachusetts became the first state to make carrying insurance mandatory for motorists. Over the years, many states followed suit and now it is mandatory to carry the minimum of at least liability insurance on your vehicle to be allowed to drive in all states.

What do Insurance Companies Sell?

Insurance companies sell financial protection for you in the case that the item you purchased an insurance policy on becomes damaged or causes damages.

In the case of auto insurance; insurance companies sell you liability insurance so that you don’t have to worry about paying for the damages or medical bills to a person that you hit with your car out of your own pocket. Comprehensive and collision coverage are available so that you don’t have to pay to get your vehicle fixed.

Other products car insurance companies sell to protect you financially:

  • Towing/ Road Side Assistance
  • Rental Car Coverage
  • Personal Injury Protection
  • Medical Payments
  • Bodily Injury Liability
  • Property Damage Liability
  • Comprehensive Coverage
  • Collision Coverage
  • GAP Coverage

As you can see an insurance company has more to it than just “a company that sells insurance.”

Car Insurance Quotes: Starting at Square One

Written by Todd Clay. Posted in Research Last Updated: 07/24/2011

Getting car insurance quotes is the first step to purchase a policy, regardless if it is for a brand new driver or someone looking for a better company.

Files of Car Insurance Quotes

Car insurance quotes from multiple companies will help you find the best premium.

The reasons for needing car insurance quotes are as different as the drivers that need the insurance. It may be because you are getting terrible customer service at your current insurance agency or it could be because it is time to start shopping around for better insurance rates. No matter the reason, here are some tips on how to begin that search for new car insurance quotes.

Where to Get Car Insurance Quotes

There are three main avenues to go down to get the car insurance quotes that you need.

One, find an independent, insurance agent in your area. A local agent will be able to give you quotes for the handful of insurance companies that they write for. This will give you an idea of the prices that you will be looking at and will give you a chance to compare a number of companies all at once.

Two, contact an insurance company directly. You can contact an insurance company directly for car insurance quotes either by phone or through their internet site.

By purchasing your insurance from the insurance company directly, you usually are going to see a lower price than if you got the same quote from an agent. This is because the quote you are getting directly from the insurance company is not going to include the commission that is paid to the agent for selling you the policy. At the same time though, you are not going to have an insurance agent there to help you if you have any problems with the insurance company.

Progressive and Geico are good places to start to get direct insurance quotes.

Three, use a quote aggregator like the available here on Car Insurance Guidebook. It is the easiest of the three ways to get a car insurance quote. You simply answer the questions that are presented to you and enter your information as directed. Once the system has all of the information that it needs, it will present you with quotes of multiple insurance companies to compare.

How to Start Getting Car Insurance Quotes

To get started, have the declarations page from your current or most current insurance policy in front of you. You will need the limits and coverages from this page so that you can get quotes on the same insurance coverage. This will allow you to know for certain if you are really getting a better price or if you are getting a lower price because the quote is for less coverage.

Also have your driver’s license, VIN number for your vehicle and also your social security number handy before you start your quest for car insurance quotes.

How To Learn About Insurance Companies

Written by Todd Clay. Posted in Advertising, Research Last Updated: 07/15/2011

Finding out about insurance companies takes a combination of their own advertising, but also reading reviews of the company.

A Red Boat Standing Out from the Rest

An insurance company is always trying to make themselves stand out from the competition.

Insurance companies get most of their business by making you familiar with their name and what they sell. They do this through unending advertising, name recognition and more advertising (refer back to unending).

But, even with all of their efforts to make us well known with their name how do we know if an insurance company is really worth our time and money?

We can find out by using both the information from the insurance company and also seeking out information from other consumers.

From the Insurance Company

Insurance is an extremely competitive industry. Each company has to compete with another company to try and sell you something that you have to have and also don’t want to buy.

To do this the insurance companies are going to put their best foot forward. They are going to tell you “we have better customer satisfaction” or “you can save xx%” to get you to purchase a policy with them. This is the advertising that you can ignore or just enjoy for the entertainment without paying attention to what is being sold (i.e. Geico’s woodchuck commercial).

What you do need to pay attention to are the advertisements that introduce an insurance company’s latest and greatest new program for the insurance that they sell. Products like Nationwide’s Vanishing Deductible or Allstate’s Accident Forgiveness.

Listen when an insurance company offers a new program that none of the other companies offer. It may be something that could save you money or make it worth your while to call the company for a quote.

From the Consumer

You can find out how an insurance company treats its clients by talking to people that have been insured with them.  First, ask people you know who they are insured with. These are the people you will get the most honest response from. If they are happy they will tell you about it and vice versa.

Find insurance company reviews on websites that write about insurance or business. These reviews are written from the point of view of a person that usually has experience in the area of insurance, but is not affiliated with the insurance company that they are reviewing. These reviews offer a professional and even a consumer point of view about a company.

Look for insurance consumer reviews on the internet. Consumer reviews are the rawest of all information that you can find about an insurance company. They are not professionally edited nor is the person writing it restricted in what they say.

Getting Auto Insurance When Moving to a New State

Written by Todd Clay. Posted in Research Last Updated: 07/01/2011

Don’t forget to add “contact insurance company” when you are making your moving to do list or you may find yourself without the insurance coverage you have paid for.

Jumping from one location to another

Don't forget to update your insurance company on your new location after you have jumped to a different state.

Unknown to most is the fact that insurance is actually a state regulated industry. The individual states make their own insurance rules and regulations and each insurance company that wants to write in a particular state must adhere to these rules and also be granted permission to write in a state.

So if you move to a different state, you are left with an insurance policy that may not be in compliance with your new state’s rules and regulations.

This may cause problems for you in the future if you do not update your insurance company of your new location. This is why it is important for you to go through the steps of getting auto insurance when moving to a new state.

Contact Your Insurance Company

As soon as you know that you are going to be moving or soon after you have moved, you need to contact your insurance company to let them know you are in a new state. Because insurance is issued according to the state that you live in, your insurance company will have to know that you have moved to a new state so that they can adjust your policy accordingly.

Also not letting your insurance company know that you have moved to a new state could nullify your coverage and if you have a claim, your insurance company may not have to pay for it even though you have paid the premium on your insurance.

Change in Rates

Insurance rates are based on the statistical likelihood that you will have an accident. These statistics are based not only on information about you as a person, but also the location that you live in. Some states run a higher chance of an accident happening because of a higher population, natural disasters or crime rates. (This is also true of different cities.) All of which can cause you to see a decrease or increase in your insurance premium when you move from one state to another.

May Have to Find New Company

Because insurance is regulated state by state, some insurance companies are either not large enough to have a presence in every single state or they choose not to write in a state for a number of different reasons.

First, they may chose not to write in a state because the insurance laws may be ridiculous and they can’t or do not wish to comply with them. This saves the company additional manpower and money to make sure that they are in compliance with the state laws and also from having to pay fines if they cannot comply.

Second, insurance companies are in business to make money, with this being said if a particular state poses such a high risk in what an insurance company will end up paying out in claims, they can opt to just not provide insurance in that state.

Accident Surcharges: Paying More Premiums for Bad Driving

Written by Michele Wilmonen. Posted in Research Last Updated: 06/22/2011

Accident surcharges are added on to your policy so that your insurance company can make up the money it had to pay out for your claim and future claims.

Increasing numbers from accident surcharges

Every accident you have is assigned a point value to determine how much your accident surcharge will be for your insurance premium.

No one likes to pay for insurance, but it is something that everyone has to have if they want to drive. To keep your insurance premiums down so that paying them is less painful, stay away from premium surcharges, sometimes called accident surcharges.

How can you do this? Don’t cause an accident.

Minor accident

Insurance companies assigned a certain amount of points to each accident type and then apply your surcharges per how many points you have.

A minor accident has the least amount of points charged and will have the smallest impact to your premiums. A minor accident is classified as an accident that caused less than $2000 in damages. The amount of points and damage cost allowed to be classified as a minor accident depends on the insurance company that you are currently with and also the state you are living in.

Major Accident

Major accidents are the accidents where the damage cost is beyond what would classify as a minor accident. Again how it is classified will depend on your insurance company and state. These accidents carry a heavier point value and you will see a steeper increase in your insurance premiums if you have a major accident.

DUI/DWI Accident

If you are dumb enough to be driving behind the wheel while under the influence of drugs or alcohol, you deserve every single penny in surcharges that you will see if you cause a DUI/ DWI accident. You will not only see major accident surcharges,  you will also get the surcharge of the DUI/DWI traffic violation and also the SR-22 filing surcharge that you will now be required to have on your insurance policy. All of which will make you an honorary member of the high risk insurance pool.

Members of high risk insurance get to enjoy monthly premiums that are high enough to rival what you are making for a car payment all the way up to what you are paying a month in rent or for your mortgage.

Driver’s Safety Courses

Even if you have managed to rack up the points for accidents (and even traffic violations), there is hope for you and your insurance premium. If offered in your area, take a driver’s safety course. This course can help erase points from your driving record and help to decrease your insurance premium. In some cases, you will be given the chance to take a driver’s safety course after an accident or traffic violation in exchange for not having the points land on your driving record.

However, if your insurance company has to pay out damages for an accident that you have been in, regardless of taking this course, you will still see an accident surcharge. These courses are designed to get the points off of or prevent points from being put on your driving record only. In the end though, the lower points on your driving record will still help to decrease your insurance premium.

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Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.