Why An Insurance Company Cannot Just Stop Community Giving and Donations to Lower Your Insurance Premium
by Kathleen P.
State Farm Insurance Company Supports the Maryland State Highway Administration in Helping Stranded Motorists
If insurance companies donate so much money to various causes and charities, why can’t they just lower my rates instead? Ronald, Union Bridge, MD.
Good question. Though it is a bit off our main website topic, we’ll tackle it.
Many large companies are run by philanthropic leadership. These are leaders who give not only out of the apparent goodness of their hearts and pocketbooks, but ultimately because it really makes very good business sense to do so. Of course, some of that money has to come from insurance premium investments. Your insurance company cannot just stop investing money in your community and lower your rates; nothing is ever that simple.
Increasingly, people want to do business with companies that they can be proud to be associated with; ones that they feel make a difference in their area or the world. Insurance companies like to cash in on this just like everyone else does; why should they be any different? By investing in community service programs from everything to sponsoring local soup kitchens to sponsoring the US Olympic Team, insurance providers become the sort of companies that people want to do business with. Those investments in the community return the great potential of increased sales in a friendly market.
Another big reason that large insurance companies, and many others, strive to be viewed favorably
by the public is for self-preservation in the legal arena. When a large company is named as a Defendant in a lawsuit, it becomes a sort of target; how jurors view that company may subconsciously color the way they view it as a Defendant and may affect the outcome of the case. A favorable public image may protect a company from what could be considered excessive jury awards.
For example, if Company X was just all over the media for making huge donations to battered women’s shelters and then a civil lawsuit for sexual harassment damages against the company was tried in court, the jury might have the kindness of Company X towards women in the backs of their minds when they decide how much money to award the Plaintiff, if any.
We hope that this answers your question at least in part. We might also respectfully suggest that you contact your insurance agent and ask if there are any premium discounts that you might be eligible for. All automobile insurance companies offer at least a few discounts for safe driving, vehicle safety features, and other things.This article is approved for informational purposes only and is not intended to take the place of competent local legal counsel. The writer is not affiliated with State Farm Insurance Company or its affiliates in any way.