Consumer insurance is big business in California. One of the most important sectors is the car insurance industry, which was worth more than $30 billion a year in 2020.
That eye-watering amount is why insurers compete so hard for business in the state’s major metropolitan areas, like San Francisco and the Bay Area. There are about 8 million people living and working in The Golden City itself and the wider Bay Area. That’s one-fifth of the total population of California. All those drivers need auto insurance coverage under the state’s financial responsibility law.
Insurers are all fighting for a slice of the pie using the same tools. It is hard to turn on the television without seeing an advertisement for auto insurance. And, once you start browsing for coverage online, you quickly see ads everywhere you go. All this is supported by physical mailings and other marketing, especially around renewal time.
But one thing that may surprise Bay Area residents about their car insurance is that, like so many things, it is a “fungible” item. You’ve heard of, and may even own, Non Fungible Tokens (NFTs) which are unique digital assets authenticated by the blockchain. Think of car insurance as the opposite. Fungible is defined as:
capable of mutual substitution
and
readily changeable to adapt to new situations.
What this means for consumers is that you’re in control. You have the power to switch car insurance from one company to another, and it can be adapted to suit your needs.
When looking at auto insurance, it helps to think about:
1. How much coverage you need
Auto insurers selling to the public must offer coverage that includes, at least, minimum liability insurance terms coverage. What that means varies depending on the state. (For example, you can see California’s terms here.) Insurers will often encourage customers to buy more comprehensive policies. They can be worth it for people who value the peace of mind these policies provide. But that level of coverage may not suit everyone.
And, especially if you live in The City, you might not need unlimited mileage coverage. Flexible insurance options like pay-per-mile car insurance are worth exploring, especially if you have access to Muni transit, bike, or walking.
2. How closely you want to be tied to an insurer
Customers decide how much business they want to give one insurer. For some, the convenience of having everything covered by one company makes bundling auto with other insurance attractive. Others prefer to insure separately, especially if they have existing coverage like condo insurance.
3. How you prefer to deal with auto insurers
The covid-19 pandemic forced insurers to become more fungible. They had to adapt by offering remote access for customers and staff.
When choosing insurers, look at how they deal with customers and handle claims. For many of us, the convenience of paperless communications, auto-billing, and smartphone app claims processing have become essential features.
Knowing that you’re in control of the car insurance process makes buying it empowering.
Stewart Thurlow
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