by Jim J Jones

Created on: June 04, 2009   Last Updated: June 09, 2009

"Call now and save up to 15% on your car insurance!" Sounds good, doesn't it? In the case of that ad, the claim of potential savings was legitimate. However, online insurance has drawbacks that cannot be ignored, and risks that must be considered before paying a cent in premiums.

1) No agent: Online car insurance companies will only rarely have an agent you can call and speak to, and will instead require you to send e-mails to the site's public relations e-mail address. This makes filing claims extremely difficult, and also prevents you from getting the professional advice you need to figure out what policies are right for you.

2) No way to determine insurer's reliability: When you purchase online insurance, there is absolutely no way to know whether you are buying into an outright sham, or even a business model that is experimental but risky. When your insurer goes under, your premiums disappear, and you cannot drive legally on American roads.

3) Online quotes are unreliable: Because net-based companies spring up every day, you cannot determine reliably whether the quotes you are being showed are what you will actually pay, or whether there is scheme similar to that of the credit card companies, where you pay a low upfront price, but lose thousands more to "hidden costs" that were buried in fine print.

4) The coverage will be generic: Many Americans find it most convenient to work out a special unique deal for their auto insurance with their insurer. Given the lack of customer service provided by e-insurers, it is virtually impossible to avoid winding up in a generic, cookie-cutter, one-size-fits-all policy that is probably not ideally suited for you - and possibly too expensive.

5) The fine print: Aside from the hidden costs, mentioned before, you might wind up in a situation reminiscent of homeowners with adjustable-rate-mortgages when your insurance rate suddenly adjusts up by a ridiculous amount, be it because your payments are a day or two late or because you try to add your teenager to the policy. The key thing to remember is that the fine print is written in tiny, cramped writing so that you will not read it, and its sole purpose at any company that is not an established firm with its reputation at stake is, to put it lightly, to screw you out of every cent it can.

6) Lack of discounts: Many online insurers will make it difficult or impossible to get discounts. Although most non-net-based insurers have high premiums at first glance, they wind up being competitive with e-insurers once the discounts are factored in. This erases most of the difference between the local Allstate and the "cheaper" e-insurer.

Net-based business has fueled most economic growth in the past ten years, but do not let that fool you into thinking that is is all good. People are tricked, conned, and robbed every day over the internet - in fact, the net has made it easier. This is why you have to keep your wits about you when selecting an online insurer, and make sure the insurer in question is reputable, and recognized by the Better Business Bureau.

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