Allstate is the second biggest insurance firm in the United States. Its humble beginnings as a brand of tires from Sears is hardly known, but the company is one of the major insurance brand names in the country today. Allstate has grown from a direct mail and catalog insurance business to a company that specializes and dominates in insurance products, wealth transfer services, and financial products. It is a corporate sponsor for many large scale sporting events such as the Allstate Sugar Bowl and the Allstate 400 at the Brickyard race.
However, being the second largest insurance company in the US doesn’t come without its struggles. In an effort to reduce financial risk, Allstate has notified Arkansas residents that if they want to keep their Allstate home insurance policies they must also purchase Allstate auto insurance. The company claims there is too much property risk to provide only home insurance to some of their customers. Bundling their insurance policies helps to ensure that Allstate takes on less of a risk.
Around 4,000 people from Arkansas have been notified of this change in policy. Policy holders have been informed that their home insurance policies will not be renewed unless additional auto insurance is also purchased. Arkansas car insurance is not the only area where this is occurring; Allstate started this new trend with homeowners in North Carolina.
The Arkansas Division of Insurance mandates that auto insurance policies carry a minimum of $25,000 per person, $50,000 per accident and $25,000 for property damage for each policy holder. All homeowners would need to carry at least this much auto coverage on at least one vehicle in order to retain their policies.
This move creates a multitude of questions including whether or not Allstate customers will give in and purchase an auto policy or seek out another insurance company. While other car insurance companies that offer different services begin to require car insurance for their customers? Will a bundle have to be chosen to sign up with the big auto insurance firms? Will what Allstate started in North Carolina and Arkansas spread to other states?
Inevitably, Allstate will lose some of their customers. Policyholders that are loyal to their current car insurance companies may not allow their hands to be forced. Some people will refuse to corporate simply because Allstate is taking away their freedom of choice. Many, though, will comply to avoid the hassle of looking for new homeowners insurance. Allstate is certainly taking a gamble with Arkansas to gain car insurance customers and only in retrospect will the company and the public be able to tell whether the risk was worth it.