Many of you are familiar with the common television promotion of the talking reptile that pledges to conserve your cash if you purchase their cheap car insurance. Nonetheless, is the cash-saving lizard genuine, or is it another slick advertising gimmick put on by the glib admen of Madison Ave?

Since the advent of free quotes online a few years ago, Insurance websites popped up virtually overnight to get in on the action with the mission to urge customers to buy their cheap car insurance. The insurance providers accomplish this by comparing their rates in contrast to other providers and urge you to purchase their brand of cheap car insurance.  

Nevertheless, how can it be plausible that every provider is the lowest priced? Still, there has to be a high-priced company in order for there to be a cheapest. So, how does the cheap car insurance phenomena actually work?

The insurance companies employ a great deal of statistical data to determine a cheap car insurance premium to charge a specific customer, and each individual insurance company has different criteria for each class of driver. The insurance companies are aware certain drivers are more likely to file a claim than others, and simply by writing more policies to lower-risk drivers, they are then capable of offering less costly insurance to high-risk drivers. This is why a company is able to offer cheap car insurance while other companies have to charge more.

For example, Company Y writes 72% of their insurance to middle-aged (low risk) drivers. Since the number of claims filed by this particular demographic class is extremely low, they are better financially suited to underwrite more high-risk (males 18-25) policies at a discounted rate. The insurance company will solicit drivers in that high risk demographic to secure their business as a new customer. Even though the amount saved may be less than 15%, the consumer is satisfied that he has received a cheap car insurance rate from a respectable company and the company is glad to have a new customer.

It is improbable an insurance company will disclose their statistics or demography employed for formulating insurance premiums, that is why it is necessary to shop around for the best cheap car insurance quote. Checking more than one online quote source will ultimately lead to a result of a quote that is within your budget. Try not to let the caveman or the lizard sway you, be a good neighbor and put yourself in good hands by finding a cheap car insurance quote that is within your budget.

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Filed under: Car Insurance

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