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'Name Your Price' car insurance: What's the catch?

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CarInsurance.com

Price Gun

Most of us have seen the TV commercial where Progressive seems to offer the ultimate car insurance discount.

There's "Flo," the company's quirky mother hen of a spokeswoman, handing over her price gun to a surprised customer who looks like he's been given keys to a hidden kingdom.

He's all wonder and joy with this new power. Is he thinking what you or I would? Can I now get what I've always wanted, car insurance for a buck a month?

Of course not.

Not that Progressive wants to discourage that kind of lowball thinking as customers search for the best quotes. It's not silly, Progressive says -- more like reasonable and smart. Progressive adds that its customers enjoy the empowerment and find the tool useful, even fun.

"We want to make car insurance easy to shop for, buy and own, and 'Name Your Price' is just one example of how we're trying to do this," says Brittany Senary, a Progressive spokesperson. "It makes shopping for car insurance easy--and it gives people more control. We show them what they're buying and give them the ability to match coverages and prices to meet their needs."

What's the catch?

That's true, the "Name Your Price" tool on Progressive's Web site does allow you to input information and then adjust a scale reflecting what you want to pay per month as you search for car insurance discounts. You can only go so low, though.

We got down to $47.08 a month with a random auto, a 2008 Nissan Altima driven in Southern California. Consumer Reports also tried, with a 2006 Toyota Camry, and came up with $61 a month.

As you answer questions, discounts are added to your policy, helping to trim the cost. But, as you'd expect, when the price drops even more, your coverage goes with it. Down go liability, collision and comprehensive protection.

Here's where problems could arise--you may just price yourself out of what you and your family need.

Hey, careful with that slider!

"Naming your own price doesn't mean you're getting the coverage that best suits you, it just means you're entering a desired dollar amount and ending up with whatever Progressive will offer for that price," notes The Truth About Car Insurance.com on its website. "That probably isn't the best way to ensure you're properly covered."

(Here's a state-by-state map of minimum insurance requirements.)

The Insurance Information Institute also warns against shopping solely by price.

"I don't want to speak directly to Progressive, but, in general, when you're looking at a bare-bones policy and price is the first consideration--with coverage issues second--you should reconsider," says Michael Barry, the vice president of media relations for the Institute.

Barry notes that while most states require mandatory liability coverage when you buy insurance, collision and comprehensive protection levels are the driver's decision. Lowball coverage levels could cause problems.

Without comprehensive, for instance, your vehicle wouldn't be covered for vandalism, theft, flood, fire, natural disasters or even accidents involving animals. Look out, it's a deer!

And in the realm of liability, the minimum levels can leave you and your assets brutally exposed. For example, the property-damage minimum coverage in California is $5,000. Is there anything on the planet that can be repaired for $5,000 after I crash into it?

A Progressive position

Progressive counters that "Name Your Price" is helpful to those who may not be able to pay for expensive collision and comprehensive.

"There will always be people who can only afford to buy the minimum coverage available [to keep them legal] and this is especially true in tough economic times," says Senary. "'Name Your Price' isn't about finding the cheapest insurance --rather, it's about giving people coverage they want at a price that's right for them."

Further, Progressive isn't saying that the only way to make your final decision is through the pricing tool. Senary notes that Progressive agents are available to talk to prospective customers on the telephone about their needs and discuss "Name Your Price" results.

If you do shop Progressive, do so with your current policy in hand. Know what you're giving up. Know your personal situation and requirements. Do the research.

Talk to your current agent, especially if you're confused about what's covered. Barry says an agent may also show you ways to save on a new policy while determining how much coverage is beyond haggling.

This is also important if you want to drop your current carrier and find a new one. Have a sit-down with your existing agent and spell out what you have and how you might reduce costs with various car insurance discounts. It takes some time and work, but it should be worth it.

"Education, knowing what you have and what you need, is always a great idea when it comes to your vehicle coverage,'' Barry says.

Everything comes down to the right protection.

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