This appeared originally as my answer to a question on Quora, which can be found here: Why is it that auto insurance companies spend so much money on TV advertising?
Great question! I feel the other answers, even though detailed and informative, missed out on a very important point of view that is especially true for auto insurance. You see, you are most likely to change your insurance provider for your car insurance as compared to any other insurance product. There are a few reasons for that:
- Car insurance is on an annual basis, and the least lock-in period is 1 year. So, if you aren’t satisfied with your auto insurer over the year, you will switch without any hesitation because most of the insurance providers coverage are homogeneous, with the premium sometimes being the only variable factor between different insurance companies. So, to lure you with lesser premium on your auto insurance with almost similar coverage will definitely get you thinking, and hence, make you switch. The more aggressively this is done, the more chance an insurer has to get people to switch their insurance providers;
- Car insurance is mandatory (third party coverage is mandatory in some countries, and comprehensive coverage is mandatory in some countries) which makes every individual owning a car a potential customer. The more aggressively an insurance provider tries to sell their insurance products, the more chance that insurer has to get customers to choose their product over others. Other insurance with personal coverage (like medical insurance, life insurance, etc) isn’t mandatory, hence, the customer base reduces (why would you buy something if its not mandatory and you feel its not necessary?), because of which, you see less advertising from insurance providers of other products.
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