Can you really save $400 or more per year by switching car insurance companies? Can you really believe the spokespeople in those television advertisements?
“There’s no question that Allstate has customers who saved $473 when they switched from GEICO,” Cesar Diaz, founder of AutoInsurance.com, states. “And it’s almost guaranteed that someone switched from Allstate to GEICO and saved $473.”
Bob Trebilcock of CBS’ Money Watch wanted to get to the heart of the matter. He conducted a behind-the-scenes investigation of the car insurance companies which made this claim. “It wasn’t easy getting major car insurers to explain precisely how they came up with their figures,” Trebilcock states. “Every insurer submitted a written response, usually vetted by its lawyers.”
“Translation: they’re not saying that every new customer saved money. They’re only reporting the average savings of customers who said they saved when they switched”, Trebilcock notes.
“Here’s what the figures don’t tell you,” Trebilcock continues. “Each insurer typically seeks particular types of customers in particular neighborhoods and then offers its most competitive rates to drivers it would most like to cover. Problem is, insurers generally won’t say publicly exactly which types of drivers those are and prime prospects differ for each insurer. (Liberty Mutual acknowledges, for example, that it courts members of organizations, such as college alumni groups and professional associations. The company believes represent safe drivers and urges them to switch by offering lower premiums).”
Further, the large savings average is fueled by the fact that most people won’t switch insurance carriers unless the savings is substantial.
An Apples-to-Apples Comparison?
“The key is to make sure you’re comparing apples to apples,” Trebilcock concludes. “It’s one thing if Allstate can save you money by hiking your deductible and reducing your limits; it’s quite another to knock $473 off the annual cost of the same coverage.”
The moral of story: before jumping to another insurance company, work with your independent insurance agent. He or she may be able to save you money by raising your deductibles, combining your automobile insurance with your homeowners insurance, or using his or her expertise to find you other discounts.
Companies, such as SAFECO, believe that the more education you have, the more you can afford to reduce your premium. Your insurance agent will use a comparative rater to simultaneously check what the various companies at his disposal will charge for your coverage.
The Bottom Line
Your insurance needs and laws are complex. How those companies chose to set their rates involve complex algorithms. Coverage varies wildly from company to company. Laws are vastly different from state to state. Your independent agent knows the laws and companies that provide coverage options. Only an independent agent can provide you a wide spectrum of options to choose from.
Don’t try to handle your insurance without an agent you trust.
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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.