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UPDATED: Mar 13, 2020
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If you watch TV, you’ve probably seen a wide number of car insurance advertisements. One company you may have seen advertised is The General. This insurer claims to offer low-cost car insurance to people who have a hard time getting coverage elsewhere; it also prides itself on providing policies quickly to people who need insurance right away. Watching these advertisements, it’s easy to wonder if the company is too good to be true.
Fortunately, The General is a legitimate car insurance provider, and it really does offer what it claims to. A high-risk insurance provider, it services a niche among customers: People who can’t get good rates through mainstream insurers. Through careful marketing and savvy business practices, The General can keep costs low enough to attract customers.
High-Risk Auto Insurance
Insurance companies are risk averse. In an ideal world, an insurer would never need to pay for claims; they would obtain premiums every month and never lose money by paying for repairs. Of course, real life doesn’t work that way, and car insurance companies exist because people get into accidents and need protection.
In order to keep their costs low, car insurance companies are careful to avoid drivers who are expensive to insure. They will charge higher premiums to people who are more likely to get into accidents, and after enough risk factors accumulate, the insurance company will deny them coverage altogether.
At this point, people may need to turn to high-risk insurance companies to find the coverage that they need. High-risk companies charge higher premiums than regular insurers, and the coverages they offer may be limited. Most high-risk insurers mitigate their costs in other areas, such as keeping a reduced customer service staff or selling policies directly to consumers rather than using agencies.
The General is a high-risk insurance company that focuses on direct sales. Customers can purchase a policy online and print the proof of insurance right away. This convenience is also cheaper for the company, allowing The General to provide lower-cost coverage than if it needed to pay the salaries of a full-time agency staff across the country.
The other way that The General is able to mitigate its operating costs is by occupying several niches. In addition to high-risk insurance, the company also provides insurance to exotic and collector cars. By marketing affordable coverage to those people, it can secure premiums from one of the lowest-risk driver populations in the country. People who drive collector cars very rarely wreck them, so the premiums The General earns from these policies turn a high profit.
The SR-22 Form and Insurance
On advertisements for The General or other high-risk insurance companies, you may see mention of the SR-22 form or reassurance that the SR-22 can be filed the same day as the policy is obtained. This is a “proof of insurance” form that must be submitted to the DMV whenever your insurance status comes into question.
For example, if you are pulled over and given a citation for not having insurance, you will need to obtain insurance and submit the SR-22 form within a certain number of days or your license will be suspended. The deadline for the form varies from state to state, but it’s usually between 10 and 30 days. You must also submit the form whenever you get into an auto accident if you don’t exchange insurance information at the scene.
People who do not have auto insurance may be desperate to find an insurance company that will provide coverage right away. When you purchase a policy online from The General or similar insurers, you can print a proof of insurance right away and submit your SR-22 without waiting for anything. This is part of The General’s niche marketing, and it attracts people who are in a hurry to buy insurance rather than carefully comparison-shopping for the best possible deal from an insurer who may take longer to process an application.
Some people take advantage of this instant approval by buying an insurance policy, submitting the proof of insurance to the DMV, then canceling the policy or allowing it to lapse. This is one way that people are able to drive cars without insuring them.
Although this is prevalent in some areas and is a reason why The General and other companies may have a poor reputation to some, this scheme is not the intent of the insurance company. In the long run, this sort of dishonesty will backfire on the insured, who will inevitably be caught and need to find insurance at the last minute. Most insurance companies are reluctant to re-insure people who have previously canceled policies, so an insured can quickly burn bridges and find it more and more difficult to afford car insurance.
It’s much safer and smarter to find a single insurance company that you’re comfortable with and maintain a policy with them. This will keep you out of trouble with the law and help improve your chances of getting insurance discounts from the company of your choice.