What Is A Co-op Car Insurance Policy?

By Sharon Gibson Posted in Car Insurance News

What Is A Co-Op

Co-op car insurance is a relatively new concept. While cooperative set-ups like stores, farms, and apartments have been around for over one hundred years, co-op car insurance has been a recent invention. In a co-op, or cooperative situation, each participant pays into the collective. The benefits of this arrangement are that the money you put in does not line the pocket of some no-name CEO. If you pay into a co-op you essentially become part owner in the company.

How It Works For Car Insurance

Policy holders pay their premiums to the co-op car insurance company, which then holds the money in a sort of trust for the use of all policy holders. With this type of set-up there is little to no profit paid to the co-op car insurance companies. However, some of the money goes for overhead, which is just the costs of doing business. In a co-op company the employees usually make less than they would at a profit driven company.

The co-op car insurance companies act just like the standard big car insurance companies. They employ claims adjusters and investigators to investigate claims and determine how much and to whom the claim money should be paid. They also have strict rules about filing too many claims or filing a false claim.

What Are The Savings

With a co-op policy the potential for savings are substantial. Because co-op companies operate on a minimal budget, usually, then the savings can be passed on to the consumer. Some of the co-op companies may be selective of who they decide to give insurance to. They might not be as willing to take on someone who has a poor credit rating, bad driving record, and a history of filing too many claims.

Some larger insurance companies offer co-op type insurance policies. The savings with these companies might not be as big but the security may be greater.

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  4. How Does The Process Of A Car Insurance Claim Work?
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