The Risks of Purchasing an Online Car Insurance Policy

The risks of purchasing an online car insurance policy include inaccurate quotes and a lack of customer service. Some comparison websites will give you instant quotes online without confirming your information, which can lead to inaccurate quotes and an unhappy surprise when you see your first premium statement. Insurance laws vary by state, and without an understanding of your state’s laws, you run the risk of buying an online auto insurance policy with inaccurate quotes.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Jun 4, 2021

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In the last decade, e-commerce has exploded through the roof. Something that was once unheard of, making a purchase via the Internet, has today become as commonplace as walking into the grocery store to buy a loaf of bread.

Find the best car insurance prices online when you put your ZIP in the FREE tool on this page!

According to the U.S. Census bureau who now keeps separate track of e-commerce in the United States, retail Internet sales increased by 16.3% in 2010 over 2009. The Census Bureau E-Stats report is available right here.

Potential for Risks

In truth, there are few risks associated with buying car insurance online, or most anything else for that matter. Improved security protocols for private information and customer friendly tools and applications have all but eliminated most online shoppers’ concerns.

The number of households with computers and Internet service is continuing to climb and the sheer number of customers that turn to the Internet each day to purchase goods and services continues to climb dramatically.

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By the Numbers

In 2010, as a percentage of all retail commerce in the U.S., e-commerce sales increased by 10% to a total of $169 billion. This represents 4.4% of the total retail sales in the U.S. during that year. By comparison, in 2009, 4% of retail sales were concluded electronically, totaling $145 billion.

In 2011, Americans spent $202 billion online.

By the time 2012 has ended, it is estimated we will have spent $226 billion over the Internet. The growth of e-commerce continues at a steady rate of just over 10% each year!

It is estimated that by 2016, electronic sales will jump another 62%! According to Internet Retailer, we can expect the total volume of Internet transactions to increase to $327 billion in just the next four years. By 2016, e-commerce will comprise 9% of all retail sales, up from 7% in 2012.

The U.S. Census Bureau reports e-commerce revenues for selected service sector industries, which includes insurance, increased by 6.6%, accounting for 2.3% of total sales, $255 billion, for 2010.

The Benefits of Shopping for Car Insurance Online

Proven to provide convenience, shopping ease and a number of potential money-saving benefits, e-commerce is here to stay! While many consumers and shoppers still prefer to do business with local brick and mortar offices, shopping online has many advantages.

Car insurance, or proof of your ability to pay for damages you cause, is a requirement in every part of the United States.

Car insurance provides motorists with at least the state required minimum liability coverage in case of an auto accident. But car insurance also provides a driver and his loved ones peace of mind, every time a family member gets behind the wheel of a motor vehicle and turns the key in the ignition.

Older members of the community remember a time when insurance purchases, benefits, and claims were all funneled through a local agent. An agent might represent one or several different insurance providers that were often all but invisible to the insured customer.

During the twentieth century, a few giant insurance concerns ruled the industry and served the needs of Americans across the country. There were smaller regional firms as well, building confidence in the local areas they serviced.

Today, it seems as if there are countless ways to get insurance online. Third-party hosted comparison websites have all but leveled the playing field for the giant national insurance organizations and smaller regional players.

Online Convenience

The Internet offers many options, choices of vendor and the convenience of shopping from your home without picking up a phone, waiting in line, or having to talk with anyone. One of the major benefits of shopping online for car insurance is the number of simple online tools that have been created to assist Internet shoppers.

Primarily, the Internet provides consumers with information, giving insurance shoppers the knowledge to make informed choices for their insurance needs. Many different policy options can be compared side-by-side, making it easy for shoppers to find the best auto coverage at a fair price.

The Internet also offers online applications and other forms. Insurance applications can be completed, submitted, and accepted within minutes, saving time and money by not having to drop off paperwork in person or having to use snail mail services.

Once insured, most all car insurance companies now offer online portals at their websites where existing customers can:

  • Manage their account information
  • Fill out additional application forms
  • Change their coverage
  • File a claim for an accident or other auto mishap.

Once filed, an online claim can be processed quickly and efficiently, saving customers added time and aggravation as well as money. Claims can be paid out faster, creating a much more satisfying customer service experience.

Modern online transaction screens have become far easier to navigate for average consumers. Secure data transmissions help protect applicants’ private data, helping to ease concerns that individuals might have about the security and safety of giving out personal financial information over the Internet.

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Comparison Shopping

The most important advantage of online shopping for car insurance is the ability to compare any number of insurance vendors side-by-side with the click of a computer mouse. There are many different insurance providers to choose from, and Internet shopping allows you to compare the offerings of as many as you like.

Testimonials are also readily available on the Internet. Folks who like a particular company or have found good service with another auto insurance provider, are often willing to share their experiences with other consumers.

It’s also true that dissatisfied customers will have their say on the World Wide Web as well. Some even go so far as to start their own, “I Hate the XYZ Insurance Company,” website. For or against, there are plenty of opinions to go around on the Internet and plenty of good information to sort through, all in one place, right at your fingertips.

Request for Your ZIP

On every comparison website and in every online ad for car insurance, consumers are asked to enter their ZIP codes in order to retrieve information about available programs in their area. The reason for this request is simple. Insurance providers must be licensed in each state in which they do business.

Individual state insurance commissions regulate insurance practices, which can differ from region-to-region and state-to-state.

The types of policies and available coverage may also change depending on what state you live in. Even premium rates can vary as determined by the state insurance commissioner.

So a ZIP code will narrow down your location and allow the service provider to provide you with accurate listings of available insurance concerns ready, willing, and able to compete for your business on line.

Shop to Your Best Advantage

The National Association of Insurance Commissioners website gives consumers plenty of helpful hints when shopping for car insurance, and how to best compare online quotes.

First, the NAIC recommends that you decide what auto coverage you need and compare quotes for the same coverage from a number of different insurance companies. Then be ready to provide some personal information to help companies determine your risk category.

You should be prepared to share your driver’s license information along with the registration data on the vehicle or vehicles you’re looking to insure. You should also have your current auto policy available for comparison.

For the most detailed quotes, an online company will ask for personal credit information and relevant employment data. You’ll need to be honest in this process to insure that you receive accurate quotes.

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Things You Should Know Before Getting Quotes

There are many, many websites that offer car insurance quotes, with more popping up it seems every day. Some rate insurance applications for a single specific company, while other sites will have you fill out one form, which will produce quotes from several different companies.

Because of differing insurance coverage requirements state by state, you may not be able to get online quotes for every company in every state. Some websites will send the information you submit online to a local agent, who will complete the quote and if accepted, issue your new policy.

While some comparison websites offer immediate quotes, other sites will have a company representative call you to confirm you application information and give you an actual quote. If this happens, you should ask the agent to provide you with the details of the quote in an e-mail so you have a written record of the information.

Some companies may not offer specific coverage information online. If you are interested in these companies, a phone call will generally get the information you need.

It’s important to note that some companies have the ability to take a payment online and make coverage available immediately. For other insurance providers, there may be a waiting period of some sort before your policy takes effect, even though you’ve made a premium payment.

Customer Service is Still Important

While online shoppers are always looking for value and a good price on their auto insurance policies, customer service is still an important factor. Forbes Magazine publishes a list of car insurance companies with the most satisfied customers that you can see at the link here.

The top five companies for 2012 include the Hartford, Liberty Mutual, American Family, the Auto Club Group, and Nationwide. All of these companies have a strong online presence and offer multi policy discounts for existing auto insurance customers.

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