Thursday, May 9, 2013

Cheap Auto Insurance, Cheap Premiums for Cheap Parts

     Who would have ever thought that auto insurance mascots would ever have reached a level of stardom akin to Justin Bieber or One Direction?  Maybe that is a little bit of an exaggeration.  As I have yet to see an auto insurance mascot with a similar group of fans as the "Directioners", who would burst into tears at the sight of the band, and would likely risk life and limb for concert tickets.  That being said, I'm sure that if I was to mention the name Flo from Progressive, or the Geico Gecko, you could likely recount the plotline from four of their respective commercials.  While these mascots lack fan groups with clever names like "Flo-riderz" or "Geckominids", they have reached their superstar status because of advertising campaigns built upon that all too familiar phrase. A phrase that goes something a little like this, "Come with us, and save money on car insurance in a matter of minutes!!"  Guess what? It's not that simple, let me broaden your view so that you can better understand why.  To put it simply, much like everything else in life, when it comes to auto insurance, you get what you pay for.

CAPA Certified auto body insurance

1. Aftermarket/Reconditioned Parts

    As you read through the various parts of this post keep one thought in mind, insurance companies operate on a for profit business model.  Meaning that in able to decrease premiums for existing and prospective customers, they must find ways of decreasing overall operating costs. Believe it or not, auto insurance carriers do not offer low prices out of the goodness of their heart.  One way that many auto insurance carriers have decreased costs, is the use of aftermarket and reconditioned (used) replacement parts. While this may not worry you if you have an older Honda Civic, it may cause a little more stress if you drive a higher end car such as a Porsche, BMW, Audi, Mercedes Benz, etc. While some companies will only bid CAPA (Certified Auto Parts Association) certified aftermarket parts, some auto insurance companies will bid whatever part they can find at the cheapest price.  While CAPA certified parts are built to a given vehicle specification, non-CAPA certified parts vary widely in manufacturing. CAPA certified parts often have imperfections or appear substandard, while non-CAPA certified often fit poorly on the intended vehicle, leading to disjointed connections and skewed body lines.  In my professional experience, factory OEM (meaning manufactured by the actual company, like BMW parts for instance) are always preferred.  Most aftermarket or reconditioned parts are turned away because of flaws, warping, damage, or improper repair.
Auto Insurance Losers in This Category:
- Farmers Insurance, Geico Insurance, Progressive Insurance, Mid-Century Insurance.
        Reasons for failure: Nearly always bid aftermarket or reconditioned parts if there is even a slight savings in cost.  Little consideration for newer or higher-end vehicles. Will bid non-CAPA certified parts, and often refuse to approve factory OEM parts, unless they will agree to price match.

Auto Insurance Winners in This Category:
- Chubb Insurance, Allstate Insurance, State Farm Insurance, Esurance, USAA Insurance.
        Reasons for Praise: While some of these companies may originally try to bid aftermarket or reconditioned parts, only CAPA certified parts are bid.  These auto insurance carriers will often opt for factory OEM parts replacement, unless there is quite a large discrepancy between prices.  Further, these auto insurance carriers are much more receptive to customer and repair facility requests for factory OEM replacement parts.

     Ultimately for owners of newer model vehicles, or vehicles with a higher book value, this auto insurance trend should be considered. On the other hand, for owners of older model vehicles, or vehicles with a lower book value, it may not concern you that these parts are used to a greater or lesser extent.  Either way, when looking at the cost of premiums, just remember, you often get what you pay for.