Car Insurance Companies Are Not on Your Side: What You Need to Know

When you shop around for car insurance, you’ll talk to agents who seem like they’re working directly for you.

When you shop around for car insurance, you’ll talk to agents who seem like they’re working directly for you. They claim they just want to save you money, or that they want to keep you safe and protected in case you’re involved in a collision, and on the surface, this may be true. However, when you’re involved in a collision, you can’t count on the fact that car insurance companies are on your side. In fact, in many cases, treating them as an adversary can help you end up in a better position. 

Car Insurance Company Motivation 

To understand car insurance companies, you have to consider their primary goal: turning a profit. Maintaining customers is a priority, but only when their loyalty and payments outweigh the costs associated with their risks. More importantly, when a high-cost event does arise, like an actual car collision, they’re going to do their best to avoid it. 

This leads to a few important tendencies that consumers need to understand: 

  • Insurance companies will fight to lower claims. When anyone tries to make a claim that the company needs to pay, the company will always try to find a way to lower it. Sometimes that means making a lower offer than is reasonable, and sometimes that means pinning part of the blame for the accident on someone else. 
  • Insurance companies will let costly customers go. Past a certain point, insurance companies would rather see you leave than keep you on while underpaying compared to your risk profile. 
  • Insurance companies value money over people. This isn’t necessarily an indictment of insurance company morals, but remember, companies exist to turn a profit. If they can’t make money, they can’t keep operating, so profits will always be the top priority

How to Use This Information 

So what good does this information do? Instead of just being angry at insurance companies, you can use these insights to greatly improve your circumstances: 

  • Don’t be afraid to shop around. First, forget about customer loyalty. Car insurance rates are highly variable, with the same customers paying significantly higher or lower rates with different companies. Don’t be afraid to shop around for a more competitive rate, even if you’ve been with a company for a long time. Your loyalty won’t matter when it comes time to manage a major claim. 
  • Challenge rate increases or new costs. In some cases, your insurance rates will actively increase. For example, you might get a speeding ticket, or you might move to an area with higher accident rates. If you notice your rates silently increase, don’t simply accept it. consider challenging your insurance company on these increases. In many cases, simply standing your ground and refusing to accept the increase can be enough to revert the changes. 
  • Avoid revealing more than you need to. After an accident, you’ll likely be in contact with both your insurance company and the company of the responsible party. If you’re talking to the other person’s insurance company, they may try to get you to reveal information that could illustrate you as partially responsible for the collision. For example, they may ask whether you were on your phone while driving, or if it was possible that you were distracted and neglected to see an important traffic sign. Try not to state any more than necessary, as extra information could implicate you. 
  • Never admit fault. Similarly, never admit fault for the accident (unless you’re absolutely willing to take on 100 percent of the blame). If you’re not sure about the answer to a question, or if you feel like the answer to a question could imply your responsibility, state that you aren’t sure about the answer and move onto the next question.  
  • Be wary of settlement offers. In many cases, an insurance company will offer you a settlement as compensation for any damages you sustained in the accident. Because they want to save as much money as possible, they’re almost certainly going to offer you less than they think you deserve. Don’t be afraid to enter negotiation and try to get more
  • Hire a lawyer. If you’re concerned you’re being taken advantage of, or if you aren’t getting the compensation you deserve, your best bet is to hire a lawyer. Your initial consultation will likely be free, and at that point, you’ll learn your chances of successfully getting more money. 

It may seem like car insurance companies are a positive influence and a way to reduce your costs or provide more protection, but in most cases, they’re more concerned about their bottom line. Don’t accept low-ball offers, be wary of manipulative tactics, and when in doubt, hire a lawyer to make sure you aren’t being exploited. 

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