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The Grass Is Rarely Greener at a Different Car Insurance Company

By JLP | August 2, 2013

I see ads all the time for that say stuff like:

“Drivers who switched from State Farm to Allstate saved an average of $362 a year.”

This reminds me of the time when I called my insurance agent to ask a question about our policy and she talked me into a different plan with the same company because it would save us lots of money. So, I went from a one-year policy to a six-month policy. The premium a little over half what I was previously paying. All was great until the 6-month renewal, which increased a lot. I wasn’t happy.

Anyway, back to the ad…

Two things to consider:

1. It’s only savings if the two policies are the same. Insurance companies can and will shave off benefits and call the reduced premium “savings.” Perhaps the reduced coverage is okay. It’s up to you. Just make sure you know what you are getting.

2. Don’t expect the same low premium upon renewal (think about the really low rates for first time subscribers to newspapers. The rate is incredibly low and then incredibly expensive upon renewal). It’s a pain to change insurance companies. Insurance companies know this. That’s why they tell you how much you can save by switching. But…they don’t make money if they are charging a lot less than everyone else.

In another month or so, our household will have our second teenage boy licensed driver. Ugh!

Pray for me.

Topics: Insurance, Kids and Money | 4 Comments »

4 Responses to “The Grass Is Rarely Greener at a Different Car Insurance Company”

  1. Stacey Says:
    August 2nd, 2013 at 9:31 am

    We had been w/Allstate and when #1 became a driver, the premium became obscene. So we received some quotes from others and happily switched to Country Companies–only had to join the Farm Bureau for $20. We haven’t filed a claim (knock on wood!) but rates have been steady.

    Also, don’t forget to call when your child heads to college. Your premium will decrease since the risk has decreased with his/her absence. Our premium decreased $200/year.

  2. Sameer Says:
    August 4th, 2013 at 5:11 pm

    Any insurance company can make a similar claim and it’s probably true. In the example above, drivers who switched from State Farm to Allstate are probably the ones who were getting reamed by State Farm. What I’d like to know is how much did drivers save by switching from Allstate to State Farm.

  3. Stacey Says:
    August 4th, 2013 at 11:17 pm

    Sameer, the savings/result is going to vary with each person. Variables include: vehicle make and model, age of driver, commuting distance, driving history and in our case, our student’s grades.

    There is no one size fits all answer.

  4. BG Says:
    August 5th, 2013 at 12:07 pm

    We use an insurance broker, who’s job it is to find us the best rate. I’ve spot checked a few times, and the ins. company my broker set us up with has far cheaper premiums that what I see Progressive and other ins. companies are offering after I enter all the details. They have insights into the lesser-known companies, and yes, we’ve filed car ins claims which were promptly paid (no hassles).