You’ve heard this before: If it looks too good to be true, it’s likely not true. This maxim is particularly applicable when it involves auto insurance. Sometimes, an insurer will give an applicant an amazing premium quote that is significantly lower than what the applicant is currently paying or is being quoted by other insurers. Unfortunately, the quoted and bound premium may not be the final premium. Insurers generally are allowed to complete their underwriting review and revise the billed premium according to the rating elements discovered after the policy was bound. What initially seemed like a great bargain could end up being a big burden.

"Dave" is ready to purchase a vehicle at the local dealership. He calls his insurer to quote the insurance on the new car. The premium will be $3,000 per year, but the current insurer knows Dave’s traffic violation record, the drivers in his household and the losses that he’s incurred over the last five years. This kind of information is available to all insurers, but they must pay a fee for it.

Dave is reluctant to purchase the car because the car payment, combined with insurance costs, exceeds his budget. The car salesperson doesn’t want to lose the sale, so she recommends that Dave call an insurer that she relies upon under these circumstances. This insurer quotes an annual premium in the amount of $1,500. The insurer asks Dave all the right questions, but Dave does not remember the fender bender or the speeding ticket he got two years ago. Nor does this insurer want to pay for the records to verify statements on the application until the policy is bound and the insurer has received the first premium installment. Dave proceeds to purchase the car on the assumption that the car insurance is affordable.

Six weeks later, Dave gets the bad news. Underwriting reports have been obtained by the new insurer, and it turns out the annual premium will be $3,200. As frustrated as Dave is, he probably will stay with that insurer because to return to the prior insurer now will require another down payment, and it will take weeks to get an unearned premium refund from the new insurer.

Shopping for the right price, service and coverage is a wise thing to do. Our agency represents multiple insurers that compete for your business. The difference is that we can ensure that each of these insurers knows the pertinent details about you ahead of binding time so that you don’t end up with an underwriting surprise. That not only sounds good, but it’s true.