Inter-insurance is a unique form of insurance offered by automobile clubs and associations to provide coverage for their members. With inter-insurance, members essentially self-insure by pooling their premiums together to pay out claims. Inter-insurance plans often provide coverage at lower rates compared to traditional insurance.
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What is Automobile Club Inter-Insurance?
Automobile club inter-insurance is a type of self-insurance program offered exclusively to members of a specific auto club or association. Instead of purchasing insurance from a traditional third-party insurer, members pay premiums into a fund that is used to pay out claims.
How Inter-Insurance Plans Work
Inter-insurance plans work by pooling premiums from all members to create a claims fund. Claims are paid from this pool as needed. Since there is no third-party profit motive, inter-insurance plans can often offer lower rates.
Key Benefits of Inter-Insurance
There are several advantages to automobile club inter-insurance plans:
- Lower rates – By removing third-party profit, rates can be 20-40% less
- Dividend potential – Premium surplus may be returned as dividends
- Roadside assistance – Most plans include standard roadside assistance
Limitations to Consider
However, inter-insurance also comes with some limitations:
- Limited eligibility – Only available to auto club or association members
- State restrictions – Not offered in all states due to regulations
- Limited coverage – Benefits may be narrower than standard insurance
Major Automobile Club Inter-Insurance Providers
There are a handful of major auto clubs and associations that offer inter-insurance coverage:
AAA
AAA is the largest auto club in North America. Their inter-insurance is available in select states to AAA members.
Key Perks: Competitive rates, dividends paid, robust roadside assistance
Drawbacks: Limited by state and AAA membership
American Automobile Association (AAA)
The American Automobile Association offers inter-insurance as an alternative to standard insurance for members.
Perks: Low costs, money-saving benefits
Considerations: Only for members, not available in every state
American Automobile Touring Alliance
This auto club provides inter-insurance for alliance members across several states.
Benefits: Cost savings, member rewards
Restrictions: Alliance membership required, regional availability restrictions
How Automobile Club Inter-Insurance Rates Are Determined
The rates for automobile club inter-insurance are calculated differently than traditional plans from third-party insurers. Here’s an overview of how pricing is determined:
Member Loss Experience
Perhaps the biggest factor in inter-insurance rates is the actual loss and claims experience of auto club members. If members have fewer accidents and claims, rates can be lower.
Operating Expenses
The administrative, sales, and other expenses involved in running the inter-insurance program will impact rates. More efficient operations translate to lower premium costs.
State Regulations
State insurance regulations, fees, and taxes will influence inter-insurance rates to some extent in certain territories. Less regulatory burden allows for lower pricing.
Target Claims Fund Size
To ensure financial stability for paying claims, each inter-insurance pool will target an ideal size for their claims fund based on expected member loss experience. Rates must sustainably fund this pool.
Claims Process and Administration
The automobile club functions as the virtual “insurance company” administering everything from sales to claims:
Paying Premiums
Premium payments are made directly to the auto club as the administrator rather than an outside insurer. Payments fund the program’s claims pool.
Filings Claims
Claims are filed directly with the automobile club insurance team, who validate and process payments from the member-funded claims pool.
Customer Support
Support services like sales, policy questions, roadside assistance, etc. are typically handled by the club’s in-house insurance personnel rather than third-party insurer staff.
Pros and Cons of Automobile Club Inter-Insurance
Inter-insurance can be a great option for some members, but also comes with tradeoffs:
Key Pros
- Lower premium costs compared to standard insurance
- Good driver discounts more common due to member base
- High member satisfaction claims handled directly by club staff
Potential Cons
- Limited eligibility based on auto club membership status
- Availability restrictions prohibited by some state regulations
- Narrower benefits in some cases versus comprehensive coverage
Is Automobile Club Inter-Insurance Right For You?
Inter-insurance offers compelling benefits, especially on costs, but isn’t ideal for everyone. As you consider options, be aware of some key questions to ask:
Are You a Member?
Since inter-insurance plans are only available to members of specific clubs or associations, membership status is the first prerequisite.
What Restrictions Are In Place Where You Live?
Some states prohibit or limit the offering of inter-insurance plans. Be sure to check if they are available in your location.
How Extensive Is the Coverage Offered?
Compare the scope of coverage – deductibles, liability limits, exclusions etc. – to a standard policy to ensure sufficient protection.
If you can join an automobile club providing inter-insurance, give strong consideration to the savings potential and service benefits. Just be diligent in ensuring coverage meets your protection needs. With the right circumstances, inter-insurance can be a winning choice.
Automobile Club Inter-Insurance FAQs
Still have some pressing questions about inter-insurance provided by automobile clubs? Here we cover some top frequently asked questions:
Does inter-insurance cover accidents with uninsured drivers?
Yes, automobile club inter-insurance typically includes uninsured motorist coverage to protect members in accidents with drivers lacking insurance. However, coverage limits can differ from a standard policy.
Can I get inter-insurance roadside assistance if my car breaks down far from home?
Most inter-insurance plans come with standard roadside assistance. So breakdowns, flat tires, empty fuel tanks, and other common issues on road trips would also be covered by your friendly auto club.
Do inter-insurance rates go up after an accident like regular insurance?
While claims can impact future renewal pricing, accident forgiveness is more common with inter-insurance given the overall safer driver profile of auto club members compared to the general public.
What discounts may be available on inter-insurance plans?
Good driver, good student, anti-theft device, and multi-policy discounts are commonly available with inter-insurance. And as a non-profit, some clubs may offer special discounts to military, seniors, teachers etc.
Can I pay my inter-insurance premium in installments over several months?
Yes, you can usually split your annual premium across monthly bank drafts or quarterly installments. Be sure to ask about payment plan policies when you enroll.
In The End
We’ve just explored automobile club inter-insurance plans offering a unique self-insurance option for members seeking quality protection at lower-cost. By combining member premiums to pay claims, inter-insurance eliminates expenses associated with traditional carriers – to everyone’s benefit through reduced rates. Check availability through your local auto club and compare intelligently to optimize savings while still getting adequate coverage. Reach out with any other questions!
