By Ken Berzof - Gannett News Service
About a year ago, Philip Cooper, a bank manager, was paying about 1,200 to insure his 1992 Camry Too much, he decided. So Cooper, 26; drove over to the Internet to see whether he would get better mileage for his premium dollars. After getting quotes from three Web sites, he settled on a policy for about $850 and in the process became part of a small, but growing trend - buying insurance online. Apparently, few people actually buy insurance over the Internet, but the potential is huge. By some estimates, online insurance purchases are expected to increase tenfold i the next four years.Right now, traffic tends to be research-oriented - consumers shopping around to be better prepared to negotiate when they buy insurance the conventional way, from an agent.Here's a general road map for navigating sites on the Web: The market The biggest seller seems to be auto insurance, said Joseph Frey, senior editor of insure.com, a Web site devoted to news and consumer education. "It's the easiest," he said. "Home owner and renter insurance are just getting started." Online life insurance sales might constitute about I percent of the total market, while health insurance sales might make up about half of I percent, said Dan Wager, president and founder of QuickQuote.comBut there's potential for much more. Forrester Research noted that in 1999, 500,000 auto policies were purchased online, generating revenues of $12 billion. But because of recent developments, such as a new law allowing online signatures, it expects the field to explode to $11.8 billion by 2004.Some advantages:Convenience. "For those people who know exactly what they want in terms of coverage, shopping online is a perfect way to shop," Spagnuolo said. "If you don't have a need for an agent and you understand the coverage," Frey said, "it's perfect" Some disadvantages:Delays. You may have long questionnaires to fill out. Some sites might take several days to provide quotes (quicker ones provide quotes with in minutes).Chance for errors. The Internet might make buying insurance seem easier than it actually is, and uninformed choices may prove costly in the long run, McCleary said.You could wind up being underinsured or not being insured at all for certain needs. The more complex your needs the less suited an insurance project is for Internet shopping.Prices are just estimates. Getting a quote is one thing but what you see isn't always what you pay.Insurance carriers have many ratings in pricing their policies. Frequently the best, lowest rate is quoted, and sometimes the end product costs more because the insured did not qualify for the lowest rate.
How much can you save? Reviews are mixed as to just how much - if anything - you can save by buying insurance online. Savings of 10 to 20 percents is Wager's estimate for life insurance. "Automobile insurance is a different animal. It's driven by motorists' driving records, and is more cut-and-dried. I've not seen any significant savings."
Tips on buying a policy If you decide to buy online and have found a company and quote you want to pursue, heed these tips:Check out the company. Make sure it is licensed in your state and ask state officials how many consumer complaints have been filed against it.Find out how the company is rated by independent companies that analyze a firm's financial soundness and claims-paying ability Top rating agencies include A.M. Best, Standard & Poors, Moody's. Bohannon recommends using companies with at least an A rating. Check out the policy. Make sure you understand what's in the fine print Get an original copy of the policy; pay by check or credit card to establish a paper trail.Check the total cost. "Knowing the initial year's premium rate is not enough," according to The National Underwriter, which studied companies that offered 10- year rate guarantees. "Some quotes had final costs that were simply 10 times the initial year's premium, while a few others were considerably higher." Ask how claims are handled. Ask if a local agent is assigned to you or if you will need to call an 800 number for assistance, if the latter, call the number to see how responsive the customer service representatives are.