Can You Really Save 15 Percent
How Much Can You Really Save on Car Insurance?
It seems like everywhere you turn, car insurance ads are trying to persuade you to switch companies. Radio, television, and online car insurance ads claim that you can save money in a few simple steps. Are these claims true? How can you take advantage of them and get a cheaper car insurance rate than you have now?
Learn how car insurance companies calculate possible savings, as well as the steps to get the best possible auto insurance rates for your situation.
The Claim: Switch and Save
One auto insurance company’s famous claim is that you can save 15% on car insurance by switching to them. However, several other major car insurance companies each claim that drivers who switched to their respective companies saved hundreds of dollars. They cannot all be right, can they? While these claims are indeed true, they may not tell the whole story.
How Companies Calculate Their Estimates
Often, car insurance companies calculate the savings, or average savings, represented by those customers who reported saving money when they switched. This means that while not every customer may have saved money, those that did were included in the pool of those whose savings were reported.
It’s also worth noting that car insurers like customers that present low risk, because it saves them money. For this reason, they seek out those customers. They could be drivers of a certain age range and marital status, for example. Once the company has determined its ideal group(s) of customers, it might seek them out and offer them incentives (e.g., discounts) to switch from their current companies.
When you understand how the “average savings” of customers who switch is calculated, you can see that these savings may not apply to every customer. Also, some customers will find better rates with different companies, so it’s important to compare both price and coverages with multiple insurers.
The Potential Costs of Saving Money
Remember, while it’s important to compare prices because you can often save money by making changes, you might rethink cheap car insurance if it comes at the cost of losing coverage. Downgrading coverage to lower premiums often comes in the following forms:
- Raising your deductible.
- Lowering your coverage limits for injuries and property damage.
- Electing to discontinue optional insurance coverage, such as comprehensive coverage, rental car insurance, or towing coverage.
If you decide you don’t need the same amount of coverage because you’ve had life changes, downgrading your policy might make sense. However, saving money may not be worth sacrificing your current level of protection.
Make sure you speak at length to any prospective new car insurance companies, or if you shop online, be sure to compare your existing policy’s rates and coverage to the online quote you receive. Doing so ensures you will keep the level of coverage you need upon switching; minimally, you should be comparing apples to apples.
Are You Paying Too Much?
If you’ve been with the same insurance company for several years, it can be good to check other rates in the market. You may be paying more than you need to for car insurance simply because you haven’t checked rates from other auto insurance providers.
It’s especially important to compare rates if you’ve recently had a major life change. The following milestones can lower your rates.
- Reaching age 25.
- Getting married or getting divorced.
- Buying a home and/or moving.
- Getting a job closer to home (shortening your commute).
- Purchasing a new car with more safety features.
Compare Auto Insurance Rates
When attempting to find cheap car insurance rates, it helps to comparison-shop. You can check rates across the market by:
- Using online car insurance calculators.
- These tools give you ranges of premiums in your area and don’t require much personal information.
- Getting free car insurance quotes online.
- Online quote forms will give you more accurate estimates but will require that you input more personal data.
- Calling specific companies to get quotes.
- You can call dedicated licensed car insurance agents who represent only one company, or a broker who can help you get quotes from multiple insurance companies.
Remember when you are shopping around that all insurance companies rate differently. Getting at least three quotes before making a decision helps you get a feel for what your options are and what the going rates are in your area.