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Americans Could Save Money by Shopping for Auto Insurance

Study shows average U.S. driver stays with insurer for 12 years.

by on Jul.20, 2015

While Flo encourages comparison shopping for auto insurance, a new survey reveals most American's fail to follow her advice.

Flo from Progressive Insurance appears to be on to something in all of those commercials: shopping around ensures you get the best deal, but a new survey shows that while American’s may like Flo, they don’t heed her advice.

According to insuranceQuotes.com, the average American hasn’t changed auto insurance companies in 12 years and more than a third of U.S. drivers never shop for new insurance.

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“Americans may think loyalty pays off, but when it comes to insurance, that’s not always the case,” says Laura Adams, insuranceQuotes.com’s senior analyst. “If you haven’t shopped for auto insurance since the ’90s, it’s probably safe to say that you’re not getting the best deal.”

The study shows that drivers are loathe to put forth the effort, about 25% of drivers have been with the same insurance company for more than 16 years and 7% for more than 30 years.

The key to shopping for auto insurance is making sure your getting an apples-to-apples comparison of your current policy to the new policy, according to National Association of Insurance Commissioners.

The group suggests shopping for at least three quotes and to create a chart to help you keep track of the necessary coverage, including liability, uninsured motorist, medical, physical damage and other items, such as towing, rental and guaranteed asset protection or GAP. In the event a vehicle deemed a complete loss, GAP coverage would pay the difference between the value of the car and what’s owed on it, if the latter is higher.

They also suggest getting prices for a full-year, six-month and monthly payment plan. Some companies offer discounts for paying in a lump sum rather than stretching out the payments.

Millennials and senior citizens are the most reticent when it comes to getting on the computer or picking up the phone to get insurance quotes.

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“Many people make the mistake of shopping only when they move or buy a new car, but data shows that rates fluctuate even when you haven’t had any major life changes. This is especially true for young people,” explains Adams.

Other findings from the survey:

  • Forty-six percent of Americans do not know that you can change your auto insurance company at any time.
  • Six in 10 millennials with auto insurance think you have to wait until your renewal date to switch insurance companies.

When it comes to describing the experience of shopping for insurance, the opinions run the gamut:

  • Sixty-four percent find shopping for auto insurance “worthwhile”
  • Sixty-two percent called it “time-consuming”
  • Forty-five percent describe the process as “simple”
  • Forty-four percent said it was “frustrating”
  • Forty percent described it as “complicated”
  • Twenty-nine percent said it is “interesting”

While there are no set percentages on how much money can be saved by shopping around, the possibilities are there.

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“All it takes is an hour every year to compare at least three companies’ quotes – that’s worth it to potentially save hundreds, or even thousands, of dollars,” said Adams.

Drivers who don’t want to take the time to call around or use the internet do have an option, according to KBB.com.

“Another helpful resource is your state’s department of insurance, which typically offers information such as rate comparisons, customer ratings and complaint ratios, as well as contact information for a variety of major carriers,” the website noted.

The website also urged drivers looking for savings to ask about discounts for things like good driving records, college attendance, military personnel and veterans or even through your employer. KBB.com also suggests consider raising your deductibles.

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“You’ll have to pay more out of pocket if you have an accident, but if you increase your deductible by just several hundred dollars, for example, you could save anywhere from 15 to 40% or more in collision and comprehensive coverage costs. It’s always good practice to set aside a portion of your monthly car insurance premium savings to ensure you can actually afford a higher deductible in the event of a claim.”

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2 Responses to “Americans Could Save Money by Shopping for Auto Insurance”

  1. Jorge says:

    Loyalty may have paid benefits 25 years ago but now days loyalty in the work place as well as for insurance, bank accts., internet access, etc. sets consumers up to be fleeced and it’s disgraceful. Getting accurate quotes however can be a real PITA as the service providers do not want consumers to pick the best option as the service provider reaps a lower profit in many cases.

    Rates can change by the hour, day, week whatever as the service providers desire. There are so many games played by service providers that it’s not only frustrating, it’s offensive. They often don’t tell the hidden costs or deductibles or co-pays or exclusions, etc. until after you have a claim or issue.

  2. Fred says:

    Although I’ve been with the same company for 40+ yrs due to a couple of my several cars being difficult to insure, getting competitive quotes and bargaining with my agent (son of the one I began with!) have proved invaluable in keeping my rates far below what my friends pay. As pointed out, there are a myriad of discounts and you’ve got to motivate your agent to dig for them to keep you happy. And the Non-cancellable for any reason I got after 30 years is also worth something!