Educating Car Buyers to Defuse Insurance Pricing Qualms

F&I managers and sales staff aware of shoppers’ misconceptions about rising auto insurance rates may overcome buying objections and save sales or lease opportunities.

As we previously reported, the JD Power 2022 US Auto Insurance Study notes serious collisions, higher used-car prices and rising repair costs have led auto insurers to raise rates. Those increases, which Forbes reports average 4.9% across the US, have surprised some shoppers and potentially squelched some auto sales.

“As we know, setting insurance rates is complicated,” insurance expert Michelle Megna, Forbes Advisor, tells Wards. “The cost of repairs and the cost of cars are now much higher than in the past. A fender-bender can result in thousands of dollars in repairs.”

The type of car, the buyer’s driving record and the mileage driven per year are among the factors considered. Many people don’t realize insurance providers also consider their credit scores, gender, education and other non-driving factors.

Some groups push back on those factors. In New Jersey, a number of groups are pushing to prohibit factors they say result in “racist auto insurance rate setting policies,” reports NJ101.5.

“The non-driving factors have always been a bit controversial,” Megna says. “Of course, insurance companies have found that non-driving factors do correlate with the number of claims filed.”

“There has been an uptick in legislators looking at insurance rates and trying to pass bills that would prevent car insurance companies from using certain rate criteria,” she says. “So that was why we decided to do the survey. And it looks like people are softening toward insurance companies using (non-driving) factors

“The average person probably doesn’t realize the factors that go into setting rates,” Megna says. “Setting rates is complicated. Some drivers see their rates increase and wonder why that happens when they drive the

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What auto insurance discounts are you eligible for?

To find out what types of auto insurance discounts Canadian drivers can avail of, Insurance Business checked out the policies of some of the country’s top car insurance providers. Here are the most common rate-reduction schemes these companies offer. The list below is categorized into discount types.

Read more: Survey: Majority of Canadians lack auto insurance literacy

Policy discounts

1. Bundling discount

All insurers considered for the list offer discounts for policyholders who combine different insurance products. Bundling auto and home insurance with the same provider, for example, allows homeowners to slash up to 20% from their car policies. Tenants can also combine their auto and renters’ insurance to save on premiums.

2. Multi-vehicle discount

Another popular money-saving perk, insurance companies typically reduce premiums by as much as 15% for households insuring more than one vehicle.

Price comparison website describes this type of rate reduction as a “win-win” for both the policyholder and the insurance provider as “[the insurer] gets more of your business, and you get a discount.”

3. Group discounts

Some insurers offer group rates for drivers holding memberships with an eligible group, which may include the company they work for, a professional or occupational association, non-profit or charitable institution, or union membership. Belairdirect, Co-operators, RSA, and Sonnet are among the auto insurance companies that provide this type of discount to policyholders.

4. Loyalty discount

Several car insurance providers reward loyal customers with reduced rates come renewal time. Typically, the longer motorists stay with their insurer the higher the discount. Economical, Peel Mutual, The Personal, and Wawanesa offer this type of discount. Peace Hills offers policyholders premium reduction if they remain with the insurer for at least three years while L’Unique gives drivers who opt for a two-year policy a guarantee that their rates will not increase

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