Shop around to save on auto insurance
Through a special arrangement with Checkbook, Inquirer readers can see ratings of local auto insurance companies until April 5.
Most drivers stick with the same auto insurance company year after year, and that’s often a costly mistake. They don’t shop for lower rates because they believe most companies charge about the same prices or conclude that the steep discounts they get (for their loyalty, or lack of speeding tickets or accidents) mean they won’t find better pricing elsewhere.
But they’re wrong: Insurance companies charge vastly different rates for the same families and policies, and although you might be getting a price break from your current company, you’ll likely find a better deal elsewhere.
Nonprofit Delaware Valley Consumers’ Checkbook compared prices charged by insurers operating for seven illustrative policyholders and found that most area drivers can save hundreds of dollars every year by making better auto insurance choices — many will save more than $1,500. For example:
One of Checkbook’s illustrative couples, living in Montgomery County with two cars and with clean driving records, would pay $1,667 per year with Liberty, $1,690 with Erie, or $1,786 with Travelers, compared to $2,549 with GEICO, $2,694 with Allstate, and $3,482 with Farmers.
If that couple lives in Camden County, their annual premium would be $1,361 with AAA or $1,510 with NJM, compared to $3,456 with Farmers and $3,705 with State Farm.
If they moved to Philadelphia and added a teenager to their policy (gulp!), they’d pay $3,397 per year with AAA or $4,254 with Liberty, but more than $9,300 per year with Allstate or GEICO, and more than $10,500 per year with Amica.
Through a special arrangement with Checkbook, Inquirer readers can see ratings of local auto insurance companies until April 5 at Checkbook.org/Inquirer/auto-insurance.
You don’t have to wait until your current policy term expires to switch and save. If you change companies, your old insurance company must refund the unused share of any prepaid premiums. You also don’t have to forsake good service for a better rate: Checkbook’s ratings reveal that some highly rated companies offer low rates.
Checkbook compared companies for price and quality. Because small differences in policyholder characteristics, many of which have nothing to do with driving records, can have big effects on some companies’ premiums, be sure to check rates yourself.
You want to buy enough coverage to protect yourself — but not so much that you’re wasting money. Avoid common car-insurance mistakes by doing the following:
Maintain the highest deductible amount with which you’re comfortable.
Be vigilant that your coverage doesn’t lapse.
Consider dropping collision and comprehensive coverage when your car’s value drops below $5,000.
Find out how much more it will cost to raise limits beyond standard coverages. It is usually inexpensive to increase limits for liability coverage above standard amounts.
Carefully consider the extras. Some optional coverages aren’t worth much, but companies charge a lot for them.
Many companies now offer discounts if you allow them to track how much you drive, how far, how fast, and whether you often do knuckleheaded things like suddenly accelerate, brake, or turn. Under these programs, you get an initial discount (10% or 15%) for playing along; after three to six months of tracking, your company might offer a bigger discount (on average, an additional 10-15%) if they deem you a “safe” driver — or provide no price break if it decides you’re a maniac. Of course, in our world of Big Data and big data breaches, it’s important to consider the privacy risks these programs could pose.
You might think that if you’ve been driving for many years without an accident and with few speeding tickets that insurance companies will offer you their best rates. Unfortunately, that’s not necessarily the case. 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. And companies are increasingly using secretive and opaque methods to calculate rates. With most companies, your credit score and other information may matter more than your driving record. Research by Checkbook and other organizations has found drivers with fair or poor credit scores can pay twice as much as similar drivers who have excellent credit scores — a similar penalty for having a recent at-fault accident or several speeding tickets in the last year.
Delaware Valley Consumers’ Checkbook magazine and Checkbook.org is a nonprofit organization with a mission to help consumers get the best service and lowest prices. We are supported by consumers and take no money from the service providers we evaluate.