Practically everyone has seen the ads on TV of the talking reptile that assures you he will reduce your expenses if you purchase their cheap car insurance. Nonetheless, is the cash-saving lizard genuine, or is it a further promotional attempt put on by a silver-tongued Madison Avenue ‘suit’?

A couple years ago, the insurance industry began offering free online price quotes, Not long after, literally hundreds of insurance companies have jumped on the bandwagon with the mission to urge customers to buy their cheap car insurance. The insurance companies follow through with this by showing their rates compared to their competitors 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. Therefore, there has to be a reason why so many companies can claim to have cheap car insurance.

Insurance actuaries utilize large amount of statistics to arrive at a cheap car insurance premium they will set for certain drivers, and each individual insurance company has different criteria for each class of driver. The various classes of drivers inherently has a likelihood of filing a claim due to a covered occurrence, and simply by writing more policies to lower-risk drivers, they are then capable of offering less costly insurance to high-risk drivers. Accordingly, this permits some insurers a large variance in the capacity to offer cheap car insurance.

An illustration would be, lets say Company Z sells 81% of their insurance to low-risk clients. Because they are ‘heavy’ with low risk drivers and the probability of claims is extremely low, they are better situated to offer high-risk (males 18-25) policies for less than some companies who write only high risk policies. The insurance company will solicit drivers in that high risk demographic to secure their business as a new customer. Though the overall discount might be less than 15%, the consumer is glad to get a cheap car insurance rate from a reputable 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, for that very reason it is important to comparison shop for a cheap car insurance quote. Visiting the website of several insurance companies will ultimately lead to a result of a quote that is within your budget. The lizard may save you more than the caveman, however you could be in better hands with a good neighbor, if you just comparison shop to secure a cheap car insurance premium.

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