There’s never really anything new in the world of marketing. The same ideas that sold three bottles of wine for the price of two in ancient Rome still work today. We all like to think we’re getting good value for money. The most usual approach is to offer volume for a discount. The more you buy, the less you pay. In the insurance world, we see bundles on offer. Pay less if you buy both an auto and home insurance policy. There will be further discounts if you insure multiple vehicles or several different “homes”, e.g. when your teens go off to college and need cover for their possessions. This is simple commercial sense. Unless your family is particularly unlucky, you are paying an increasingly large amount of premium income to the insurer which turns into more profit when you make no large claim. That earns a discount to reward you for your loyalty.

Well, here comes a new experiment from the motor industry. General Motors is flexing its muscles now it’s recovering from the Chapter 11 reorganization. During the last ten years, its reputation has taken a beating and sales of its brands has been declining year-on-year. The last financial year, 2010, was the first time it showed a profit since 2004. It has also shown a slight increase in sales volumes – the first increase after ten years of losing market share. To boost sales this year, it’s offering one year’s free insurance if you buy one of the eligible models. Before you all get too excited, this only applies to the good folk who live in Oregon and Washington, and the offer expires come September. But we can assume more of these offers will be made if sales in the models shows significant increase. So why is this potentially a good thing for you?

Not everyone manages to drive for years without getting into an accident. Once you have a claims record, rates tend to rise. The rates will also be high if you fall into a high-risk group, e.g. you are a teen or have the misfortune to pick up a conviction for DWI/DUI. This offer of auto insurance is “as of right”. If you buy the vehicle, you are insured. Although there are questions asked by the insurer, this is not to refuse you cover. All insurers like to know who you are. GM is also promoting the plan as “good” for other drivers. We have an increasingly large number of uninsured drivers on the road. GM says this is “free” insurance and the number of uninsured drivers will fall. Well, that’s less than honest because most everyone who can afford to buy a new vehicle can afford to insure it. Most of the uninsured drivers cannot afford the high premium rates, even for basic liability cover. That said, this is a convenient way of buying a new vehicle. It’s one-stop shopping. At the end of the year, the insurer will send you a renewal notice. Whether you renew is up to you. It’s at that time you should get auto insurance quotes from as many companies as possible. That way, you’ll find out whether the renewal offer is a good deal or not.

Any car owner that has ever dealt with auto insurance will surely tell you that most insurance deals are there just to rip you off. And while such exclamations tend to be far from the truth, still the question of optimizing insurance costs remains to be pronounced for a lot of car owners. Paying too much for insurance while there are other more important things that need their portion of the family budget isn’t a good bargain for many households these days. So is there anything that can be done in order to get more competitive auto insurance quotes in the first place and reduce the premiums afterward?

Fortunately, there are different ways for getting affordable insurance for your car and you don’t have to break the law in order to succeed. In fact all these methods are very easy and only require you to learn a bit more about insurance for vehicles. So here’s what you can do to get competitive auto insurance quotes:

Analyze your actual needs

The most common mistake customers make when buying insurance for their cars is that they don’t even know how much and what types of insurance they really need. Most people simply choose to buy the first policy they are offered right at the dealer’s office just to save themselves from additional shopping. And this rarely reflects the actual needs a customer can have. For example, if you’re driving a fairly used car it’s really unlikely that you will benefit from having a fully comprehensive policy. Or you may be overpaying for uninsured motorist coverage simply because there aren’t any in your area. So try to define your needs first and only then start looking for a policy that actually meets your needs.

Consider the discounts

You may be unaware of many discounts the insurance provider may offer but this doesn’t mean that you can’t opt for them. It only takes some time to ask what discounts are offered to different groups of customers. There’s a set of commonly featured discounts that many providers seem to share and there’s a chance that you may comply with some of them. If you want competitive auto insurance quotes the following discounts can give you exactly what you need: low mileage, good student, defensive driving course, good driver, multiple car, multiple policy and others. Just ask around and if it happens that you can actually opt for any of these – don’t hesitate to do so.

Get an insurance-friendly car

And if you want a radical change in your insurance rates there’s just no more effective measure than buying an insurance friendly vehicle. Drivers often forget that the cars they own are the main factor influencing insurance rates. So it’s logic to buy a car that’s cheaper to insure in the first place. In order to get an idea which cars are insurance friendly consider those that have low repair costs, are rarely stolen and do not end up in accidents too often. Sports, muscle, luxury cars and SUVs don’t make part of that list.

You are probably used to seeing articles warning you that insurers check on your credit rating as part of the process of setting the premium rates. Quickly confirming this here, you should all verify the accuracy of the data collected by the credit rating agencies. But the point of this article is the mirror image. The trigger that finally burst the bubble of the property market here in the US was the failure of Wall Street banks. You might think the recession is over, but the Federal Deposit Insurance Corporation (FDIC) has reported 39 banks have failed up to the end of May 2011. The current estimate is the FDIC is on the hook for just over $640 million and it will struggle to break even this year as the failures keep on coming. In this race to closures, Georgia is in the lead with its regulators closing ten banks.

You might think insurance companies would be less at risk but you would be wrong. There’s a great deal of uncertainty about the business of insurance. The profitability depends on being able to estimate how many claims will come in. So long as there’s enough premium income, they are safe. But if the companies are caught by an unexpected surge of claims, they can quickly find themselves in trouble. Take the recent changes in the weather as an example. The weather patterns have been changing quite quickly with this year’s tornado season being particularly bad. In past years, insurers have been relatively lucky with the worst tornadoes missing the towns. This year we’ve seen major damage to buildings, their contents and vehicles. The claims on comprehensive policies for damage to cars and trucks have been unusual and this will run down the affected insurers’ capital.

So this this year, five insurance companies have gone into liquidation, three in Florida, and one of both Illinois and California. In 2010, twenty insurers failed. This may indicate the rate of failures is slowing. To be sure, you should check the rating of any insurance company quoting you a premium rate. It would be tragic if you paid the premium and then found it had disappeared when it came to make a claim. The most reliable of the credit raters for insurance companies is A M Best. So far this year, it has downgraded a number of insurers, the biggest being the State Auto Group (which is unlikely to fail but worth watching carefully).

As a word of reassurance, if you do buy a policy from a company that goes into insolvency, the companies fall into the hands of the regulators appointed by your state. All states have a guarantee fund designed to protect you. Under normal circumstances, you are transferred to another stable insurer. If that fails, the guarantee fund pays out on valid claims. This is good protection but it can slow down the process. To avoid being left waiting for someone to deal with the claim, it’s better to go with an insurer with a good credit rating. So when you get your free auto insurance quotes, check out the credit rating for the companies offering the best terms. If they are sound, buy with confidence. Otherwise, get more auto insurance quotes.

Last week, A M Best which monitors the financial health of the insurance industry issued a warning. This has been one of the worst years for natural disasters since records began and the insurers are running out of cash to meet all the claims. If cash reserves are exhausted, this drives up debt and hits the capital base. Were the stock exchange running with high confidence, the insurers could simply sell more shares. Unfortunately, there’s a real sign the economy could be moving toward a double dip and the stock exchanges are losing value as panic sets in. This means the only way the cash reserves can to topped up is through increasing the premium rates.

Now don’t be deceived by the latest headline-grabbing Hurricane Irene and all those television images of battered property, there are thousands of vehicles caught in floods and resting under fallen trees. It’s at times like this that vehicle owners say prayers of thanks they paid out for comprehensive cover. It should mean they can be back on the road as soon as the sewers drain the waters away and the wreckage is cleared out of the way. Unfortunately, the consequences are going to be long-lasting. This has been one of the worst years on record for natural disasters. It all began with seriously bad winter storms which made avoiding collisions a challenge. Then came the tornadoes and hailstorms. The current estimates are this year’s claims for tornado damage are more than $18 billion with four more months to go. It might surprise you to know $7 billion of losses came from April 25 through 28. You do remember Tuscaloosa, Ala which leveled homes and threw vehicles around like they were toys.

Now think about the flooding when the Mississippi decided it preferred the scenic route to the sea. Every time a home is flooded, the odds suggest vehicles will be damaged. This might be because they are caught in the garage or, more likely, because they are driven though the water. If you are lucky, this is relatively clean water and, even if it comes inside, the smell will not be too bad when it dries out. Should you fail to keep the revs high and the water passes up the exhaust pipe and into the engine, it can be a big job to clean out all the grit and dirt. Now suppose you live near the sea. There are winds to drive salty water on to the land. This both wrecks the farmland and starts a process of rusting in your vehicle.

So whether you are a private insurer or insure through a business, next year’s auto insurance quotes are going to come in with higher premium rates. It’s the only way in which the insurers will be able to stay in business. Now you could react by increasing the deductible to keep down the cost. But ask yourself, can you afford to pay out should there be more disasters next year? The scientists keep telling us global warming is causing all these tornadoes and storms. If weather-related disasters do become more common, can you afford each new set of auto insurance quotes? And before the knee-jerk response, can you afford uninsured losses as the alternative?

During WWII, Washington lawmakers were sometimes persuaded to pass laws that, by modern standards, seem strange. Take the McCarran-Ferguson Act as an example. When Washington should have been protecting the ideals of capitalism and enforcing the principle of free markets, the lawmakers decided to create state-by-state monopolies for the insurance industry. Here’s what they did. If you want a book today, you can buy discounted books from a major internet retailer. Even when you add in the shipping, it can still be cheaper than buying at your neighborhood bookstore. But if you want to buy an insurance policy, you can only do so from an insurance company registered in your state. No company can sell a policy across state lines. The result is a lack of real competition. The insurance companies pick and choose where to set up, aiming to keep the number of companies low in each state. This allows them to parallel each others’ prices and maintain their profitability. Now you’re all saying this is not significant. Except the difference in premium rates between states can be great.

Let’s start at the bottom of the league table with a low-population state like Maine. In a recent survey, researchers got quotes for a “standard” man for all the major makes and models of vehicles. He was aged 40, drove an average distance to and from work, and accepted a $500 deductible. Averaging out the quotes allowed our average man to buy a policy for less than $1,000 per year in low-population and/or rural states. Why so low? When you only have a small number of drivers, even at peak commuting times, the risk of accidents is low. Indeed, the drivers in some of these states take a real pride in their skills and the statistics show significantly lower rates of claim for damage or injury. Now switch to a state with large population centers and heavy commuting traffic at peak times. Here the risk of accidents is far higher. Worse, because the standard of living is often higher, people are likely to be driving more expensive vehicles which cost more to repair. So our same standard man will be paying about $2,500 in Michigan.

There are also local factors that force up premium rates. This can be high levels of fraud, as in the no-fault states, or court rules that encourage more generous settlements, as in Louisiana. This means the accident of where you are born can place you in a state with very high premium rates – hardly the most fair system. What should happen is that federal insurers should offer policies for sale across state lines. This will even out the premium rates with the drivers in the low-population states subsidizing the driver in other states. Although a small number of drivers will end up paying more, the majority will pay less. Unfortunately, reform is unlikely in the immediate future so you should shop around and get as many auto insurance quotes as possible to find the policy offering you the best value. Meanwhile, start writing your elected representatives and start a political campaign. Just relying on the auto insurance quotes from your home markets is not a good defense against exploitation.