Why auto insurance companies don’t operate in all states

You might be surprised to know that most auto and home insurance companies do not operate or provide coverage in all 50 states. In fact, most don’t even come close to operating in all states. Here’s an explanation.

To begin with, auto insurance companies are of course businesses, and business needs are the driving considerations on whether the company operates in any give state. Those considerations include the cost of operating in the state, which includes regulatory applications, fees and approval, as well as the possible return on investment the companies can expect. For instance, some auto insurance companies decline to operate in sparsely populated states, as it may take too long to recoup their startup costs.

You may ask, “then why do all of these auto insurance companies advertise in my state if they don’t offer insurance here?” The answer is that large auto insurance companies pay for national advertising campaigns, which means that their ads show up in all states. In some cases, auto insurance companies do advertising state-by-state (especially on the radio, newspapers, etc) but when it comes to television, most campaigns are nationwide. Just because you see a spokesperson on TV doesn’t necessarily mean that you’ll be able to get auto insurance in that state.

That said, just because an insurance company is currently not operating in a state, it doesn’t mean that this will be the case forever. As auto insurance companies grow and expand, they naturally look for new markets and adding a new state is the clearest way forward.

Also, in order to provide the best possible customer service, many insurance companies will help you find auto insurance quotes from other companies by using a comparison shopping platform such as Answer Financial. By working with over twenty insurance companies, we can offer multiple quotes in your state, regardless of whether the company you initially contacted operates in your state. Also, even if the initial insurance company that you went to does offer coverage in your state, you can still use Answer Financial to compare quotes to see if your first choice is actually the best choice for you.


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