Auto Insurance: Can You Really Save Like the Ads Say?

Everywhere you go, there are auto insurance ads trying to convince you to change companies. Radio, television, airplanes with large banners in tow and online car insurance ads are making claims that in just a few simple steps their company can save you money. Are these statements truly accurate? Can you see auto insurance savings that beat your current policy? Learn how companies calculate the supposed savings, and the steps you can take to get the most afforbable rate for your particular situation.

You’ve Heard It, “Switch Now and Save!”

Several major auto insurance companies claim that drivers who changed to their respective companies have saved hundreds of dollars. Another company makes the claim that you can save 15% on your auto insurance if you switch to them. How can all these claims be true? While they may be accurate, they are also not showing the entire picture.

What is Meant by “Auto Insurance Savings”?

Many times the auto insurance companies will calculate the savings, or the average savings, that correspond to those customers who stated they did save money when they switched to the new company. This denotes that not every client necessarily saved money and that only those that did were incorporated into a pool.

Another noteworthy tidbit is that auto insurers prefer customers that present a lower risk; their reasoning for this is that it saves them money. Therefore, as is is more profitable, they pursue those low-risk customers. This could include drivers of a particular age range and marital status. For example, a company will research and determine its most ideal group(s) of customers and will create initiatives and programs targeted to that group, convincing them to switch. This tactic not only protects the insurer from a financial liability standpoint, but it also allows them to present savings numbers in a more favorable light.

Understanding how “average savings” are calculated, you can recognize that these savings may not pertain to every customer. Another note is that some customers may find better rates with different companies. Therefore, it is important to evaluate both price and coverages from multiple insurance companies.

How Saving Money Might be Costing You

Keep in mind that while shopping different insurance companies can result in savings, sometimes those savings come at a cost. You may want to reconsider an inexpensive auto insurance policy if it comes at the expense of losing coverage. Reducing coverage to lower your premiums often comes in the following ways:

  • Increased deductibles
  • Decreasing coverage limits for injuries and property damage
  • Elimination of optional insurance coverages like rental car insurance, towing coverage, or comprehensive coverage

Perhaps you’ve had life changes and no longer need the same amount of coverage, it might make more sense to downgrade your existing policy rather than shopping around. However, it might not be worth the risk of surrendering your present level of protection for the little bit of savings you may gain. Take time, whether in person or online, to carefully compare your current policy’s rates and coverage to any quotes you obtain. Make sure you are comparing apples to apples to ensure that any savings are, in fact, savings at all.

Are You Entitled to Any Savings?

Perhaps you have been with the same insurance company for several years. If this is the case, it might be a good idea to check other rates in the current market. There is a chance that you may be paying more than you need to for auto insurance just because you have not checked rates from other providers.

Remember that it is important to compare prices especially if you have recently experienced a major life change. The following milestones may lower your premiums.

  • Reaching age 25
  • A marriage or divorce
  • Purchasing a new home and/or moving
  • Shortening your commute (by getting a job closer to home)
  • Buying a new car that has more safety features included

Do Your Homework Before You Shop

As you endeavor to locate less expensive auto insurance rates, it is beneficial to comparison-shop. You can look-up rates throughout the market by:

Utilizing an online auto insurance calculator
These tools can show you a range of premiums in your area, and they don’t require a lot of personal information.
Receiving free auto insurance quotes online
You can get a more accurate estimate with the online quote forms. However, online quote forms do require that you input more personal data.
Picking up the phone and calling specific insurance companies to receive quotes
You can call dedicated licensed auto insurance agents who speak for only one company or a broker who can assist you in receiving quotes from multiple insurance companies.

All insurance companies rate differently, so receiving at minimum three quotes before making a choice aids you by allowing a more accurate impression of what your options are and what the standard rates are in your area.