It used to be that finding just the right auto insurance policy was a long and arduous task. Comparing quotes meant writing letters, making phone calls, or scheduling in-office visits.
But thanks to the Internet, getting auto insurance quotes and comparing policies is easier than it’s ever been.
Quote comparison websites have revolutionized the way people think about purchasing insurance. Instead of making phone calls or talking to various insurance providers in person, customers can now do all their comparison shopping online. These services take in your relevant information and use it to generate multiple insurance quotes in a matter of minutes — a valuable tool if you’re looking to save money on insurance.
But the ease and swiftness of this service might leave you wondering: how exactly do these sites make money? Insurance comparison websites, such as The Zebra, are usually free for users — that’s one of their main draws. But they still have to cover costs for staff, equipment, servers, and more. Where does the money come from? We’ll dig a little deeper and find out just how they generate revenue, using The Zebra as a prime example.
The Growing Popularity of Insurance Comparison Websites
For the last decade, and especially following the quarantines and lockdowns of the COVID-19 pandemic, online services have seen a huge growth spurt. Insurance comparison sites are no exception, and are particularly popular among the younger generation. According to statistics, 49% of Millennials, 20% of Gen Xers, and 12% of boomers have made use of an insurance comparison website. It’s no wonder they’ve grown so popular, given their ease of use, broad utility, and (nonexistent) price point. But again, how are they getting paid?
How Insurance Comparison Sites Make Money
There are a few ways a “free” service can generate revenue, some more transparent than others.
For example, The Zebra primarily makes its money through affiliate programs. That means they receive a commission through insurance providers when a customer purchases a policy through their platform. That doesn’t mean that the service plays favorites, however — websites like The Zebra bank on the accuracy and veracity of their information, meaning the best way for an insurer to sell a policy is to offer a better deal than the next guy.
Another way insurance comparison websites can make money is through good old-fashioned advertisements. While ad revenue has been on the decline for years now, it’s still a relatively common practice, especially on news websites. While ads aren’t inherently a bad thing, they can influence users toward choosing a certain insurer — that’s the whole point, after all.
Protect Your Privacy
Finally, many sites make their money by selling their user data — to brokers, insuyrance companies, and even marketing agencies. Aside from reading the fine print, there are a few telltale signs as to whether a site is selling your data or not. If they ask for a great deal of personal information, it’s possible they’re trying to collect it for sales purposes. They might also ask you for your consent in receiving marketing materials. While insurance comparison sites will require some information to give you an accurate quote, beware of these other sites, which are more like lead-generation websites than actual services. They’re out to profit from selling your information to third parties, not to provide you with any useful information.
So what can you do to protect yourself against harrassment from marketers and spurious information? After all, it can be tricky to distinguish an actual comparison site to a site that’s just mining your information.
One of the main ways you can avoid these pitfalls is to go by reputation. Sites such as Experian, Policygenius, Way.com, and The Zebra all pride themselves on their integrity and their commitment not to sell your data. The Zebra, in particular, sets itself apart in that it allows you to call and speak to an insurance agent directly through the use of their service. The Zebra is not an insurance carrier per se, but their business model is based on helping you get connected with one.
It’s also worth noting that not every insurance company has the same relationship with insurance comparison sites. For example, Allstate and State Farm don’t allow independent insurance agents to sell policies, whether online or not.
You should also take the accuracy of quotes with a grain of salt. While they do their best to be accurate, most comparison sites are making preliminary estimates, and if there’s relevant information that they don’t have — such as credit rating or driving records — then that information is going to change the numbers when it actually comes to buying a policy. (And if they do ask for your credit rating, it’s possible they’re trying to acquire salable data.)
While insurance comparison sites provide a lot of convenience and save a lot of time, there are a few pitfalls. Fortunately, with a bit of legwork and awareness, they can usually be avoided.