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Subscribe to RSSAuto insurance is one of those things you buy and then forget about. We have coverage, so we figure there’s no need to worry about it again. That could be a costly mistake.
“Shopping is very important because insurance company pricing is wildly different,” said Robert Hunter, director of insurance at the Consumer Federation of America (CFA). “We just finished some research on auto insurance and found that it’s very easy to have a quote of $700 from one company and up to $3,000 from another for the exact same risk.”
According to new survey from the price comparison website InsuranceQuotes.com, a lot of us are missing the chance to save money. Only 21 percent of the car owners said they shopped for auto insurance within the past 12 months to see if they could get a better deal. Of those who did check, 43 percent ended up switching companies.
“This suggests that many people who shopped around liked what they found,” said John Egan, managing editor of InsuranceQuotes.com. “If you’re not doing it, you may be leaving money on the table.”
A more detailed analysis of the insurance marketplace done by Deloitte Research last year found that nearly 24 percent of the respondents said they never shop around when their auto insurance policy is up for renewal, another 34 percent rarely do.
Why? Most said they are satisfied with both the price and the service they get from their insurance company.
Of course, there’s no way to know if you’re getting a good price if you don’t see what the competition can offer.
“I think people spend more time shopping for Christmas presents and trying to decide where to go out to eat then they do shopping for auto insurance,” Egan told me.
The editors at Consumer Reports point out that some insurance companies reward their loyal customers, especially those who don’t make many claims, with better rates.
But that may be changing.
The CFA’s Robert Hunter, a former insurance commissioner in Texas, told me some companies are moving to what’s called price optimization. Simply put, they figure out which customers are unlikely to switch carriers and then raise the rates on them.
“So not only do you miss good deals that might be out there by not shopping, but your own company may be jacking up your rate a little bit because they don’t think you’re going to leave them,” he noted.
Hunter recommends price shopping every couple of years, right away if you’re notified of a major price hike.
Where do you start?
Visit your state insurance department’s website and look for a comparison chart that lists the rates in your area for various hypothetical customers. It’s a good way to see how your insurance company stacks up to the competition and where you might want to go to get a quote. (Find a link to your state’s insurance department at: National Association of Insurance Commissioners.)
I went on the California Insurance Department’s website and looked at the prices for a married couple living in Long Beach who drives 9,000 to 16,000 miles a year. Both the husband and wife have one traffic ticket but no accidents.
Get this: The annual premium for this family ranged from $2,441 to $12,497. That’s a staggering difference!
You can get quotes from an independent agent who represents various companies or go online and do it yourself at sites such as InsuranceQuotes, InsWeb, NetQuote, InsuranceHotline or Answer Financial. Don’t expect an instant quote from these sites. In most cases, you’ll be contacted by agents looking for your business.
Remember: Saving money is good, but you also want a company with first-rate customer service. Consumer Reports says the insurance companies with the highest satisfaction scores (based on the experience of 28,000 subscribers who filed a claim between 2006 and 2009) are: NJM (New Jersey & Pennsylvania residents), USAA (military and veterans), Amica and Auto-Owners.
By the way, the same situation exists with home owners insurance. Few people price check to see if they can get a better deal after they buy it. Again, the only way to find out if you’re paying too much is to take the time to shop around every few years.
More information:
Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.
Leave a Comment:
People need to shop around for EVERYTHING, not only for car insurance. The price difference is huge from store to store.
BUT: Don't forget each time your selected vendor checks your credit it will cost you up to 3 points on your credit score. (And dont believe the hype, these data thieves will not reinstate even if its obvious your shopping)
Buggered if you do Buggered if you dont ( & I mean buggered in its literal sense.)
(Technically means to sodomize, but most people use the word in a variety of situations, often without realizing the true meaning.)
A political statement: The same way in which you can shop around for car insurance was in the suggestion to the Obama administration to include in the Health care act. By allowing companies to sell across state line it generates competition and lowers price... But this was rejected... the reason.. because it works... The HCA is a total wash and has increased the cost of "other" insurance.... Bare this in mind when you read the article... we could have had the same "shop around" environment.
@ Flame77_7
I have been screaming this for years, why do you have to go through an "Employer" to get health insurance, as a self employed it is crazy to try and get a policy. An employer doesn't buy your car or house insurance.
This is a hold over from FDR, when he put on wage freezes and companies used "benefits" to lure and hold employees. And it needs to be done away with. Also it does away with the Religious concerns of what is provided in the coverage. Just give the employees a voucher, or increase in salary. (make it tax exempt or deductible expense)
sit back and watch the premiums come down through competition.
Just goes to show this wasn't about health care but healthcare control
@Farmboy (not so dumb).... I think we forget how far capitalism brought the US.. Is there a lack of equity in the current system ?(yes) but It is the best system in the world when it comes to generating personal wealth and giving the individual choice. That's OK... let the government spoon feed us and provide everything... that is where I see this headed:
Commercial: "Hey Guess what?.... I saved a whole lot of money switching to Obama car insurance. They cover 1 accident per year if its my fault, only cost me a little more taxes and they will still pay for as many "No faults" as I survive... AND... you don't need pesky insurance verification so even my undocumented worker can drive my car and STILL be covered... "
(sheesh)
I have shopped around a few times in the last few years and found it a waste of time. Every quote I've gotten was at least $200/6 months higher than what I'm currently paying. I've been told it's because I have a multi-line discount and a loyalty discount for being with my company for almost 20 years.
Don't forget about CoverHound which actually gives you all the rates and lets users buy a policy right then and there. Solid user experience.
Folks in the NJ area should also be aware that most insurance companies will factor in damage from Sandy to your auto insurance claims regardless of fault. Make sure to compare rates closely and check out local companies like who are offering "sandy forgiveness" to keep costs down.
I don't think to many people ever tell the truth anymore. Honest WHAT IS THAT......
Buying car insurance isn't just about saving money on premiums - just wait and see what happens when you put in a claim. Unfortunately, then it's sometimes too late.
Every year I price compare many different reputable insurers for auto coverage and the quotes are always close to the same. They always give the same explanation.... "in CA, we have to charge this amount" blah, blah, blah.
It doesn't matter that I have an excellent driving record with no accidents or tickets and qualify for all the discounts, over the years the rates have never gone down (even though the value of the vehicle decreased), they've only GO UP!
The insurance industry in general is just one BIG RACKET who prey on consumers.
Well every year they have to pay out ludicrous settlements for "injuries", cover wrecked (maybe if people paid attention to driving instead of texting etc) and stolen cars(they used to hang horse thieves, maybe we ought to try that with car thieves).
Every year the government, and I can guess especially in California, stipulates new regulations. just an FYI, with some of the new EPA controls ALL body shops must have certain very expensive "pollution control" methods in place. ie. large expensive fans and filters, with expensive disposal procedures. That cost is passed along to the Insurance Consumer. Also, those replacement parts, made by union labor...You are right it is all just one big Racket.
Good luck with that, folks. I've shopped around many times. My current rate is always about $50-$100 per year higher. But my deductible is only $100. So I'll gladly pay extra per year, rather than struggle with an unexpected $500- $1,000 deductible down the line from some cut-rate company.
How is your deductible unexpected? It's clearly stated on your policy. A claim may be unexpected, but not the deductible.
Paying extra in premium to get a $100 deductible only makes sense if you make frequent claims. I haven't had an auto claim in over 10 years so if I paid the extra premium to get a $100 deductible instead of a $500 deductible, I'd be out much more than the deductible difference.
Also, just because you didn't find any cheaper rates doesn't mean that applies to other people. You also make the assumption that a lower rate will be through a cut-rate company. That's not always true.
I had been a good driver with Allstate for 20+ years with no tickets / accidents in 10+ years, multiple policy discount, etc. I shopped around this year and found that Geico gave me the same coverage for almost 50% less.
I switched Auto Insurance companies just this past month. I had no issues with the previous insurance provider, I was just shopping around to see if I could find a better deal elsewhere. It's amazing what kind of deal you can get when you get your home owner's insurance and auto insurance from the same company. Saving more than 50% now on auto insurance, which makes it more than worth it for me.
I decided to do some insurance shopping over the last week myself because I felt I was paying to much for my car insurance. I had Allstate and was paying $150 a month with a $1000 deductible. I had been with Allstate for the better part of a year and kept seeing the commercials that noted I should be getting a safe driver check in the mail and a reduced deductible for not being involved in an accident. I called Allstate about this and asked why I was not receiving any of these amazing perks and the answer was, "these offers are not available in California." Ok stop playing the damn commercial every 15 min then!!
So after hearing the agent tell me this I decided to do a little shopping around. Esurance, an Allstate subsidiary, quoted me at $132 a month, 21st at $108, and Progressive at $103. I called Progressive to discuss a plan and the rate went down to $96 a month with only a $250 deductible for collision and comprehensive. I was amazed at the difference! I decided to call Allstate back and let them know what I had found just as a courtesy before I cancelled, hoping they would drop my rate for me. They did not budge, not even a dollar! I thought that was odd! A company I had been with, filled no claims with and I have a clean record and nothing. Who teaches these people how to do business? So I switched! and save over $50 a month with a much lesser deductible and all of the perks that I wanted, like road side assistance, rental car reimbursement, and gap coverage.
I say shop around I'm saving $600 a year and $750 on my deductibles!!
The easiest way to comparison shop is a site called RateKick.com. You will find rates from 10-20 companies in seconds without giving up any of your contact information.