EPISODE 35 ~ SAVE MORE: Car Insurance: Shopping Around for It And Save $1000+

I like to save money on the boring things, so I have more for the fun things. And perhaps the most boring thing of all that we spend money on is insurance. Fortunately, with car insurance it’s possible to save BIG bucks just by shopping around. Consumer’s Checkbook magazine did the hard work of shopping around for dozens of policies and Executive Editor Kevin Brasler is here to reveal what kind of savings they found.

How much can people realistically save by shopping around for car insurance?

Our comparisons of prices charged by the Washington area’s largest auto insurers found that most area drivers will save $500 or more a year by making a better auto insurance choice. Many will save $1,500 or more.

Our illustrative couple with two cars living in the District with clean driving records would pay $568 with GEICO, compared to $1,955 with State Farm, $2,033 with Farmers, $2,577 with Allstate, and $3,219 with Nationwide.

Although it’s a bit of a pain to shop for auto insurance, most consumers would agree that spending a few hours to save $500, $1,000, or more every year is worth the effort.

Do you need to wait until your policy is about to renew?

No, when you switch to a lower-priced company, your old insurance company will refund the unused share of your premium.

I think people worry that switching to a cheaper insurance company means they won’t get good service or get their claims paid if they get in an accident.

You also don’t have to forsake service for a better rate: We found that some highly rated companies offer low rates.

Which companies had the best rates?

we found dramatic company-to-company rate differences for all of the profiles and locations we looked at—several hundred dollars a year in every case, and several thousand dollars in several cases. For almost all our profiles and locations, GEICO charged very low premiums. Other companies that charged low rates for many, but not all our profiles and locations were Erie, Esurance, Progressive, and USAA, but other companies charged low rates for specific policyholder profiles and locations.

Which companies had the best customer service?

Our ratings reveal big differences in how customers rated companies. For “speed of claim payment,” for example, scores range from 54 percent to more than 90 percent for Amica and USAA.

Should consumers buy their car insurance directly?  Or through agents or online or what?

•For auto insurance, we find that most agents can quote accurate rates, but problems still exist.  Some agents quote wildly inaccurate rates, while others persistently push more coverage than requested. 

•Online comparison sites only quote rates from the companies that pay them commissions and some of the most affordable insurance companies may not participate with the site.

How do insurance companies decide what to charge each of us for car insurance?  is it all about accidents and tickets?

Insurers increasingly are offering their best rates only to customers who meet criteria that have nothing to do with their driving histories. For example, most companies offer their lowest rates only to customers with excellent credit scores and who are college graduates and homeowners.

For example, we found that if you have:

•Fair credit you’ll pay $903 more than somebody with excellent credit.

•If you’re 20 years old you’ll pay $890 more than somebody who is 38

•If you’re 80 years old you’ll pay $431 ore than somebody who’s 38.

•And If you drive a BMW 5 series instead of a Honda Accord, you’ll pay $500 more

You can save even more money by dropping coverage you don’t need.  What kinds of coverage should people drop?

When you buy more insurance than you need, or insure against small risks, you are wasting money.

Decline rental car coverage:

Although most insurers push this add-on, the problem is that even a modest level of coverage—typically $30 per day with a limit of $600 per claim—usually costs $20 to $60 per year for each car on your policy. Since the additional premium over time is likely to greatly exceed any benefits you can collect, our advice is to decline it.

Decline roadside assistance:

Under many policies, this optional coverage will reimburse you only for $25 per claim, but for $3 or $4 more per year you can get coverage for up to $75 per claim. Though towing and road service coverage is inexpensive, joining AAA will be a better deal if you use other club benefits.

Skip Accident Forgiveness:

With this option, if you have an accident your premiums won’t change.But most companies charge an additional premium for accident forgiveness (and most other advertised add-ons), and with some companies you pay $100 or more per year to buy it.

You heard it here. Shopping around for a new car insurance policy is the easiest way to save a thousand bucks or more. Kevin Brasler of Consumers Checkbook, thanks for being here and providing it to us.

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