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Here are the top five tricks I saw car insurance salesmen use to try and get more money out of you. Falling for any one of these tricks could cost you THOUSANDS a year!
Number 1 Trick Car Insurance Salesmen Use: Saying They Found You The Best Rate
The first trick car insurance salesmen use is lying. Car insurance salesmen are under NO OBLIGATION to tell you the truth. They can lie straight to your face and misrepresent the truth with no legal repercussions. This is because they have no fiduciary duty to you. If you hear them say any of the following, LEAVE: “this is the best rate on the market.” “I found you the lowest price.” “With your record, I don’t know if any other company will even take you.”.
Most of the time, these are just lines to trick you into thinking they are working for you. In fact, if they work with multiple companies, they probably will only telling the prices from the companies that pay them the most of your money. Only believe that is it the cheapest rate after you have looked at 10+ quotes from at least 3 different websites or companies.
Number 2 Trick Car Insurance Salesmen Use: Let’s Start At Higher Coverage And See How Affordable It Is
When I sold auto insurance, I was told to always find them a quote at 100/300/100 coverage. To be clear, if you are a homeowner or have substantial assets, you want AT LEAST 100/300/100. In fact, 250/500/150 is probably where you should start. However, if you are a renter or are uncollectible, you just want the state minimum coverage. This is because once the insurance policy is exhausted, it wouldn’t make sense for them to take you to court.
They can’t take anything away from you if you don’t have much to take. However, the reason insurance salesmen will start with this rate is either to make a higher commission or to make the rate you end up getting seem more affordable than it really is. Makes sure you know your state’s minimum requirements BEFORE you go in and double check what they quoted you.
Number 3 Trick Car Insurance Salesmen Use: You’ll Want Full Coverage
This is another one of the tricks car insurance salesmen use to boost their commissions. Full coverage does make sense when you finance a car, if the car is newer or you live in an area with lots of accidents. Most car loans require full coverage and it probably makes sense if your car is 5 years old or newer. If you total your car and you know it wouldn’t be worth the cost of repairs, skip the full coverage. The law only requires liability coverage (and some states require personal injury). A rule of thumb is that full coverage is roughly twice the price of liability. If your car isn’t expensive to replace, do yourself a favor and save the difference toward the cost of repairs.
Number 4 Trick Car Insurance Salesmen Use: Bundling In Coverages You Don’t Need
Would you like to add renters insurance? Would you like to make sure your house has coverage? Do you have enough life insurance?
Bundling can save you a bundle but only when you need the coverage anyway or it overall lowers the premium. If adding renters insurance lowers the overall cost, add it. If it adds even $1 per month, skip it. Renters Insurance only makes sense if you have several expensive items. Also, there are usually coverage limits on things such as jewelry and electronics. Insurance agents can make more money by having you add a $15 a month renters policy. However, that adds up to an extra $180 a year for something your probably won’t use anyway.
Number 5 Trick Car Insurance Salesmen Use: Bundling In Roadside (And NOT Telling You)
I quit my job as an insurance agent and this is the biggest reason why. This trick car insurance salesmen use to make more money. In our agency, we were told to have the customer buy roadside on EVERY policy. To be clear, most car insurance companies include free roadside with every policy and people often have AAA already so they don’t need this. Because most people calling in for car insurance just want insurance, they taught us to not even tell the customer they were getting roadside until after they agreed to a legally binding recorded message. My sales trainer taught me to say things such as: “don’t get confused when the message says this isn’t insurance. It’s just a legal requirement.” Or “try not to fall asleep to this boring message! Just say ‘I agree’ after it ends”. This was allegedly legal but deceitful.
We also couldn’t change the price of insurance but we could sell roadside at a cheaper rate. If we told someone that it would be $300 to get started today ($150 for insurance and $150 for roadside) and they said they didn’t have it, we would put them on hold to talk to “underwriting”. Really, we would just put them on hold for about 30 seconds and the price would magically drop by $25. If that was still too high, we would rinse and repeat until the roadside was half the price. If that was still too high, we either wouldn’t do business with them or we would, sometimes, drop the roadside. They designed this process to squeeze every cent we could out of each customer.
Why Was This So Bad?
This wouldn’t be so bad except that the agency exclusively targeted low-income people. These people were sometimes homeless or trying to get back on their feet after jail, divorce or a DUI. They encouraged us to try and take advantage of the customer’s naiveté by draining their bank account dry. If they didn’t have the money, we would ask when their payday was, who could loan them the money, if we could split up the payment (still not telling them that half of it was roadside assistance) or set them up with liability when their auto loan require full coverage. It made me feel gross and slimy on the inside but most of my coworkers are still using those same tactics everyday.
Be Careful Out There!
So there are my top five tricks car insurance salesmen use to take advantage of you. If you want to skip the insurance sales agent all together, try Root Insurance. I love having their insurance! Click Here to read my Top 5 Reasons I think they’re the best car insurance company.
Adam is a license Property and Casualty Insurance Agent for over two years in 25 States. He has worked with 10 different insurances companies. His interests include marketing, insurance, sales, and personal finance.