Use this Esurance review to decide if the online insurance carrier is right for your car insurance needs.
We highlighted insurance as part of our five-week personal finance fix, looking at how much insurance you really need. Let’s face it, nobody likes having to pay for insurance but we are all extremely happy when we need it.
One of the most important types of insurance you’ll need, and required by law in every state but New Hampshire, is car insurance. Most states require you to carry liability coverage of at least $20,000 per person and $40,000 per accident. Beyond this, you’ll also need coverage for property damage from $5,000 in most states.
Adding up all the coverage you need, especially for younger drivers or those with less-than-stellar records can get extremely expensive. In an industry controlled by insurance agents and firms, one company offers a different approach that could save you a lot of money.
Esurance Review: A new(er) way of doing things
I was surprised to see that Esurance was launched back in 1999 which seems like a million years ago but is more like a few seconds in the insurance industry. The company sprang out of the excitement in the online craze where everything was going online for savings from the traditional brick-and-mortar approach. The company was eventually bought by Allstate in 2011 but remains an online company which helps it provide lower rates on insurance.
As an online insurance provider, Esurance does not have local agents. You handle your claims online or via phone. Phone support is available 24/7 from one of the company’s 17 nationwide offices and customer service is available by live chat as well.
Esurance provides vehicle coverage in 43 states and partners with other providers to offer coverage in the rest. The company offers all the standard discounts including safe driver, good student and multi-policy discounts. Esurance was one of the first insurance companies to extend policies to same-sex couples in 2004.
Besides auto insurance, the company provides the range of policies from homeowner’s to business and life insurance. The company underwrites its life insurance policies by partnering with other providers to offer term and universal coverage. Besides its ability to offer lower premiums, I think it’s this ‘works with others’ business model that has really helped Esurance over the years. The ability to get a customer the best deal on the biggest variety of policies through its partnerships has drawn millions to the online insurer.
Being online doesn’t mean the company does not provide local support and customer service. There are over 3,000 associates at 17 office locations around the country, most in a customer support and claims position. The company reports an average of 10 days or less to settle most vehicle damage claims.
Even since Allstate bought the company in 2011, it has maintained its own headquarters and its own operations. The ability to stay separate from the traditional insurer helps it keep costs low but it can still rely on the financial backing of Allstate for claims.
Esurance Review: Are premiums really cheaper?
Most insurance premiums have to be split between the insurance agent and their firm and with the underwriting company that pays out claims. As much as 25% or more of your premium could be the agent’s cut. It’s understandable since agents have to pay for their own offices and all their expenses but is a big reason for the high cost of insurance. Since eSurance doesn’t have sales agents, they can offer lower premiums and still cover claims and other expenses.
Even people switching from a local agent of Allstate, which owns Esurance, to an online policy can see savings because of the agent cost. I compared policy rates on full coverage for the car we owned before moving to Colombia and got a quote that was $15 a month lower than GEICO and $10 a month lower than Progressive.
Beyond the standard savings on premiums, the company offers a list of discounts to make switching easier. Some of the discounts are temporary while others offer permanent savings on car insurance.
- The Fast 5 Discount provides 5% off your first policy term for switching
- The Switch & Save discount covers your first two policy terms after you switch to Esurance
- The multiple vehicle discount generally offers a 10% discount on policy premiums
- A discount is available for those taking a defensive/safe driver class
Esurance has also unveiled a driving habits discount program called DriveSense. You plug a small electronic device into your car and it measures your speed, how often you brake and other driving information. You don’t have to worry about being a bad driver. The company doesn’t raise rates based on the information but it will lower your premium if you’ve got good driving habits.
As with most insurance companies, it’s difficult to gauge customer satisfaction from the consumer affairs website and the Better Business Bureau. Esurance has 382 complaints against it over the last three years on the BBB website but retains an A- rating by the agency for its responsiveness to consumer complaints. Both GEICO and Progressive both have far more complaints on the site though they’re also much larger companies.
The most often cited complaints against Esurance seem to be around premium increases after a claim or several years after switching to the company. With other insurance companies, I’ve found the best way to fight premium increases is to shop around when your premium goes up and negotiate your rate lower with the provider.
Esurance Review: Getting your lowest rate
Getting a quote on Esurance is fairly easy. You’ll enter your zip code and then be directed to a page where you can enter your personal information manually or have Esurance look it up for you.
After entering your information or letting Esurance look it up for you, you’ll select different policies of coverage needed. You’ll then be given options on coverage and premiums before selecting which fit your needs.
The company’s new CoverageMyWay is a nice campaign to help you find a policy customized to what you need. The program collects basically the same information as for a regular policy but then analyzes it to provide different coverage options at different prices.
Esurance has come a long way from the early days of an animated Erin Esurance, which I thought was kinda cool for an insurance company. The company has stayed true to its business model of offering the lowest premiums possible through less paperwork, less overhead and no sales agents. As with most expenses, it pays to shop around so I wouldn’t say to just go with the first quote you get. Check out Esurance along with a few other providers for the policy that’s best for you.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.