Allstate uses a soothing message to promote its new "Value Plan:" Get cheaper car insurance without sacrificing "good hands" protection. A living, breathing agent will even help with any claims.
An oft-aired television ad shows a young dude (clearly too poor to buy prime coverage) and an older man in a fender-bender faceoff. The silver-haired gent assumes the longhair has a lousy policy, if any policy at all, and looks worried.
Cut-rate insurance plans typically offer bare-minimum levels of mandatory liability coverage and nothing else. You may not have ever heard of the insurance company. You're covered only for damage you do to someone else's car, and then only for legal minimums, which often are only a fraction of the cost to replace or repair a newer car.
The result? Once your limits are hit, the person you hit either has to make a claim against his own coverage or take you to court. (See "Expensive car, cheap car insurance.")
No wonder the old guy is grumpy.
How is Allstate's Value Plan different?
The Value Plan promises basic insurance through a respected company. The Value Plan is the least expensive of Allstate's auto insurance offerings and the main draw as the insurer tries to attract younger drivers and dedicated bargain-hunters.
The savings don't come from forcing drivers into legal-minimum coverage levels for state-required bodily injury liability and property damage liability or from jacking up deductibles for optional coverage such as comprehensive and collision -- though those options are available. Instead, the Value Plan omits some of the extras that Allstate has been heavily promoting for the past few years. With the Value Plan, you do not get:
- "Accident Forgiveness," which keeps rates unchanged after an accident. It comes with the Standard, Gold and Platinum plans. (See "'Accident forgiveness' car insurance: What's the catch?").
- "Deductible Rewards," an Allstate program that gives customers an immediate $100 off their collision deductible and another $100 off for each year they're accident-free, up to $500, through these rewards. "Deductible Rewards" are part of the Gold and Platinum plans. (See "'Disappearing deductible' car insurance: What's the catch?").
- "New Car Replacement." Customers who qualify for the "New Car Replacement" option may be able to get a check for a new car - and not just compensation for their car's depreciated value - if their car is totaled in vehicle's "first three model years." It's offered with Gold and Platinum plans. (See "'Better car replacement' car insurance: What's the catch?").
- "Safe Driving Bonus," which is essentially a rebate check. "For every six months of accident-free driving you have the opportunity to earn a check of up to 5 percent of your premium," says Allstate's website. This is only available with Platinum plans.
In addition, the Value Plan requires enrollment in automatic bill pay. The other plans don't.
If you qualify, standard discounts apply equally to all of the plans, including the Value Plan. These are the same discounts offered by most insurers: bonuses for good students, for car safety features (like anti-theft devices and anti-lock brakes) and for multiple policies.
Does it save you money?
To get an idea of Value Plan savings, we used the Allstate website's "Ballpark Estimate," which delivers an approximate quote without requiring your name, phone number and other personal details.
Our first test-driver was a 35-year-old male living near Chicago and cruising in a 2010 six-cylinder Toyota Camry. He has a clean motoring record and good credit.
Opting for the minimum coverage required by Illinois, Allstate quoted $1,060 for a year of the Value Plan package; $1,100 for a Standard Plan (about 4 percent more than the Value Plan); $1,240 for the Gold Plan (about 17 percent higher than the Value Plan); and $1,320 for the Platinum Plan (a hike of about 25 percent over the Value Plan).
For a woman living in the Dallas area with the same car and driving record, Allstate's Value Plan was $1,320 annually; the Standard Plan was $1,340 (about 1.5 percent more than the Value Plan); the Gold Plan was $1,420 (about 6 percent higher than the Value Plan); and the Platinum Plan was $1,520 (about 15 percent more than the Value Plan).
Don't let an ad sell you
Insurance companies can charge very different rates for the same coverages.
And your need for protection grows along with your income and your family. State-minimum levels of liability coverage are fine for a driver with no savings or any assets, but might not be enough once you own a home and are a viable target for a lawsuit after an accident.
Both the Insurance Information Institute (III) and the Insurance Information Network of California (IINC) offer the same advice: Spend quality time shopping for a policy that fits your needs, no matter how appealing the commercials.
Pete Moraga, a spokesperson for the IINC, likens auto insurance to a "good suit" that needs to be tailored carefully from the start. You should also be prepared to make changes as time goes on. A policy "might fit great when you first get it, but you may have to have it adjusted," says Moraga.
III spokesperson Michael Barry adds that it all comes down to research: "Education, knowing what you have and what you need, is always a great idea when it comes to your vehicle coverage,'' he says."The consumer needs to be prepared."