What can the typical consumer do about the high cost of auto insurance? According to a recent Auto Insurance Survey from Consumer Reports, the answer is to switch insurance. They surveyed over 90,000 members and found that of those who had switched insurers in the last five years, 62% found a lower rate.
54% have been with their current insurer for 15+ years
41% experienced a premium increase within the last 12 months
22% switched insurers in the past five years
For the 41% that reported their premium going up, Consumer Reports notes that “[m]embers who saw increases of $200 or more in the previous year mentioned reasons that included adding a new vehicle or teen driver to a policy, or having one or more recent accidents.”
We comparison shop for everything - except insurance
To stay with one insurance company for over 15 years almost seems incomprehensible. What’s more, only 18% of people said they regularly shop their auto insurance for lower prices or better coverage.
In comparison, the average length of time most Americans keep their car is only about six years. Replace their TV? About every seven or eight years. It’s even recommended that we change our mattress every 7-10 years.
And when it comes time to buy that new car, TV or mattress, one of the first things the majority of us do is comparison shop. Price is typically the deciding factor in these purchase decisions, and for many it doesn’t matter what brand as long as it meets our other requirements. Ask anyone who has owned more than one car what brands they were, and I bet they weren’t all the same.
The high cost of car insurance
Owning a car is getting more expensive. After factoring in vehicle depreciation and your car payment, there’s gas and maintenance to pay for. And, of course, your car insurance payment.
But what’s causing the rise in insurance premiums? Your insurance rate is determined by several factors. Some common ones include your driving record, vehicle type, where you live and your marital status. Some other facts aren’t so obvious.
Car repairs. Thanks to the increasing presence of high-tech car features, a small fender bender could result in you paying thousands to have your car repaired. Broken headlight? No problem, right? Think again. Many cars today come equipped with headlights that require LED, xenon or other specialized bulbs, and the cost to replace each one can cost upward of more than $1,000.
Today, replacing a windshield on a car that has a camera equipped behind the glass can cost as much as $1,500 - nearly three times the amount to replace a windshield without the technology.
Vehicle theft. One motor vehicle theft was reported every 40.9 seconds in the United States in 2017, according to the latest data on car thefts from the Insurance Information Institute. And for every car stolen, the average dollar loss was $7,708. If you live in a state with a high car theft rate, you’ll find your car insurance reflects that.
Advertising spend. Insurance companies are shelling out major dollars on ad spend. In 2017, Geico spent $1.52 billion on ads, according to S&P Global Market Intelligence. Insurance companies know they’re not likely to gain a new customer just from someone watching one of their commercials. But, by enforcing brand recognition, they’re hoping a consumer will think of them when they’re in the market whether it’s after an accident or getting a new car.
Distracted driving. Talking on the phone or texting while driving. Putting on makeup while driving. Eating in the car. These are examples of distracted driving, and it’s the cause of an increasing number of accidents. As Americans are more attached to their phones, texting while driving is now illegal in 48 states, Washington D.C., Puerto Rico, Guam and the U.S. Virgin Islands.
>>RELATED: This is why your car insurance is so expensive
Switch car insurance for savings
Of the Consumer Reports members who reported they switched insurers, 62% said they found lower rates. And more than three-fourths of them are now ‘highly satisfied’ with their new carrier.
Of the Consumer Reports’ members who reported switching insurers:
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62% found better rates
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18% regularly shop for new insurance
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40% experienced a rate hike from previous insurer
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77% are highly satisfied with their new carrier
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You can switch insurance anytime, and the best frequency to shop for car insurance is typically annually.
Another time to consider switching insurers is if you’ve had a major life change, which could impact your rates. For example, let’s say you just paid off a large debt such as a student loan or mortgage. Your credit score many have improved after this, so it’s a great time to compare insurance to see if another provider could be more competitively priced.
Factors that could affect your insurance rates:
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Relocating to a new ZIP code
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Buying a new car
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Changing coverage types and amounts
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Getting married or divorced
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Starting a work-from-home job
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Enrolling in college full-time
Getting the best auto insurance
Comparing auto insurance can lead to huge savings. When you compare insurance, you’ll see how much rates can vary from one company to the next. Use a quote comparison site to get multiple quotes, then review each one to see where to get the best insurance. That is, you want to have the most coverage at the lowest price. Squeeze works with real agents to get you up to three unique quotes.
$278 average annual car insurance savings from switching
Source: Squeeze
You may get an auto insurance quote for the same price you’re paying now, but it could include higher coverage limits or extras like car rental insurance. In addition to price, Consumer Reports recommends looking at the insurers’ claims-settlement experience.