1) Are your discounts being applied?
Although most insurance discounts should automatically update within your policy, such as good driver discounts, multi-car discounts (after adding a vehicle), multi-policy discounts; this just isn’t always the case.
Always consider calling your insurance company if:
- You recently became married.
- You recently purchased a home or second vehicle.
- You’re a student who reached an above average GPA.
- You’ve been clean of tickets and accidents for over 3 years.
- You change professions; perhaps you landed a government career.
2) Do you need the optional coverage?
Insurance companies like to make sure you’re properly covered – most times. Sometimes they just want to sell you as much coverage as they can.
I remember when I was 20 I purchased an old Isuzu Amigo for a total of $850. When I called Progressive for a quote she insisted I get collision and comprehensive coverage since it was only a few bucks more as long as I selected a $1,000 deductible. Really, what’s the point?
If you’re driving an older inexpensive vehicle, you may save hundreds a year simply by insuring the vehicle with liability only. Before removing collision and comprehensive coverage, be sure it’s something you really want to do.
3) Ask your agent for suggestions.
Every insurance company is built a little different. Some will offer programs to help you reduce your rates. Some may offer discounts for attending a defensive driving course. Others may discount your rate after you install a car alarm system. If you can get one installed for $100 at your local shop and save $150 a year on car insurance, why not make the upgrade. This is a win win! By asking the Agent questions, you can get insight to what you can do to lower your insurance cost.
Why Do Car Insurance Rates Vary By So Much
Finding low cost auto insurance is like finding low cost anything. You need to shop. There is no getting around this if you really want the cheapest insurance rates. Insurance companies have different goals in mind. Here’s a quick illustration to show why insurance rates vary so much from one company to the next.
Company Profile 1
This company wants to insure only drivers with perfect records. Their ideal client is one who may be in their 50s or 60s and have no tickets or accidents on their record. Their credit is superior and they’ve earned the trust of this company. Their goal is to target as many of these drivers with traditional advertising and word of mouth. Their rates are a little higher and can be extremely high for those who don’t fit within this category. Their goal is to provide the superior protection needed by someone that has accumulated a decent amount of wealth.
Some companies that target these types of driver include: Farmers, Travelers and The Hartford
Company Profile 2
This company is targeting the younger crowd and those who may have a couple bumps in their record. Sure, the risk to insure this group is high, their policies generate a substantially higher commission also. As risk increases with any investment, so does the potential reward. As long as this company can insure enough people, these higher than average premiums will offset the amount of loss claimed by it’s insured.
Companies that I found to offer competitive rates for these drivers include Dairyland and 21st Century.
Company Profile 3
This company targets both groups of drivers and meets somewhere in between with their rates. Their main target may be newlyweds and young families. Their premiums are very competitive for this group of drivers and premiums offered to younger and older drivers may be slightly higher than other carriers, but still competitive enough to close sales. Company C reminds me of Geico and Progressive, possibly Allstate although Allstate’s advertising really pushes the idea of the good driver discount and their bonus check offers for driving safe.