How Does Progressive’s Name Your Price System Work?
Name Your Car Insurance Price?
Name Your Price For Car Insurance?
One auto insurance company, Progressive, has come up with a new and innovative way to attract more customers to their online website. No, I am not talking about Flo the Progressive Lady, though I think she catches a lot of people’s interest too!
What did catch my attention were the new ads for Progressive’s Name Your Price online pricing system. But whenever I see something like this, alarm bells start to go off in my head. Obviously the internals of the system have to be complex, though I have heard the actual insurance consumer interface is very good.
Concerns About Consumers Naming Their Own Car Insurance Price
- The system has to allow for state minimum requirements
- Car insurance loan companies have more requirements than state minimums because they want to protect their investment.
But more than these obvious points, I have to wonder if the system will entice consumers to be penny wise and pound foolish.
For example, an insurance shopper may be tempted to save a couple of bucks a month by skipping the rental car allowance. But if that consumer does have an accident, they will be paying their own bills for alternative transportation. Renting a car for a month while a vehicle is being replaced or repaired will not be a trivial expense!
Consumers may also be tempted to choose a very high deductible, and this can be positive, if the driver understands that they will need to write a check for this amount when they do need to make a claim! It could also mean that some claims, which cost less than the deductible, will not even be covered.
Now that is the sort of risk that many thoughtful consumers should take. They can save hundreds of dollars on premiums over time and hope they never need to make a claim. But if you are better at paying bills than adding to an emergency fund, this is a risk you should think twice about!
Advantages of A Price Naming System
The system does have some positive side effects. It makes auto insurance pricing easier for average people to understand. It takes out some of the voodoo we associate with any sort of policy charges. I do believe that informed consumers can make good decisions.
Should You Name Your Price?
If you understand the risks and the merits of picking your own coverage (within limitations imposed by state laws and lenders), you may be very happy to cut out some frills to save money now. However, if you really do not know what types and amounts of coverage you should have, you may be better off finding a good insurance agent to guide you!
Explore Your Options
One system makes it easy to get competitive insurance rate quotes from multiple insurers. The best auto insurance quotes give you plenty of online information that has been matched to your driving habits and record. But it also gives you contact info for local agents who are eager to work for your business!
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Beth is a freelance writer and former insurance professional.
