Direct Auto Insurance

May 7, 2017 · Posted in General Articles on Car Insurance 

You may be wondering if direct auto insurance right for you. Perhaps you’re trying to cut costs these days and are evaluating your expenses for areas where you can trim your outgo and maximize your income. If that’s the case, then shopping for better auto insurance deals is a wise move.

The business model is called ‘direct’ because the customer deals directly with the company without the intervention of an agent. The customer gives up the security of personal, on-going contact with the same human in exchange for lower rates. Like all insurance, the trade-off is a gamble. If your claims are straight forward, you may well be happy to deal with a direct auto insurance firm.

The majority of direct auto insurance firms operate only in states or areas where no-fault auto insurance is mandatory. In circumstances where fault determination is taken out of the settlement equation, firms can calculate their rates with much higher statistical certainty. The downside is that safe drivers must go to civil court to recover monies lost to higher insurance rates due to claim-filing for damages that were not the fault of the policyholder.

Which party pays the cost for damages and losses incurred in a traffic accident is determined by a finding of fault provinces and states without no-fault legislation. As of spring, 2009, there are twelve states in the US with some form of no fault auto insurance; Massachusetts, Minnesota, Utah, California, Kentucky, Pennsylvania, North Dakota, New Jersey, Hawaii, Florida, Kansas, New York, and Michigan.

The purpose of going no-fault is to reduce wait times for accident victims. The only kink in the pipeline is at the insurance appraiser stage. No-fault states typically avoid creating a bottleneck in the claims settlement pipeline at the appraiser by instituting state-run or licensed collision centers. For these reasons, insurance companies are willing to run in no fault states exclusively and offer no agents but provide attractive discount rates.

If there is an area in which one is vulnerable under direct auto insurance, it is in claims that are complicated by physical injury. The affects of a physical injury can continue throughout a person’s life. With an agent, the consumer has someone who is familiar with their case and can navigate the insurance process on their behalf. And the agent is available to do that at the start of the injury, when the consumer needs the help the most. It simply is not possible for a call center to take the place of face-to-face contact.

Caution and thinking things out thoroughly must be advised when making the decision to forego the insurance agent in favor of the discounts direct auto insurance companies offer. But if you’re willing to handle some of your own paperwork, then dealing with a direct insurer may be the way to go. Keep in mind that as the industry evolves, the more consumer friendly companies will be the ones to outlast even the best insurance agency in the neighborhood.

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