Can I save money switching car insurance companies?
Car insurance companies have some of the most aggressive advertising campaigns of any product on the market. Because car insurance is a necessity, all drivers need to purchase insurance in order to register their cars. This means that insurance companies cannot make demand for their product; they can only try to hook new drivers and convince established drivers to switch to their company.
Many car insurance companies claim that they have lower rates than other companies and that you can save money by switching to their insurance. While this may be true in some situations, it’s not consistent for all companies. Several factors are involved in determining your auto insurance, and you should never assume that you will receive a discount until you obtain several quotes from multiple companies. Only by comparison shopping can you guarantee the lowest rate for your insurance.
What determines my car insurance rates?
Your auto insurance will cost a different amount than your neighbor’s or friend’s. Insurance premiums are based on an individual’s driving history and demographic information, and can change frequently if that information changes. For example, you will pay more for auto insurance if you have been involved in a car accident than if you have a perfect driving record.
Auto insurance premiums will also vary from one area to the next. Big cities will have higher insurance costs than rural areas, and some neighborhoods are cheaper than others for insurance.
Whenever you apply for a quote, the insurance company will take down your demographic information and run a background check on you. Once it determines your driving history and credit score, it will be able to provide you with an accurate insurance quote.
Why are car insurance rates different from one company to the next?
Different car insurance companies offer different quotes to the same driver. Some will be cheaper, while others will be substantially higher. If all other factors are the same, why would rates vary at all from one company to the next? There are several reasons why an insurance company might have lower rates than others.
The company may be offering a promotional rate to lure in new customers. Sometimes companies will offer a discount to drivers for switching from one company to theirs. The promotional rate may not last forever; it might be good for only one policy term, for example. The insurance company takes a chance that you will remain loyal to the company once you change, even if your rates increase.
Whenever you sign up with a company, be sure to ask if there are any limits or promotions to your premiums. This way you will not be surprised if your rates increase at the end of your policy period. It can also help you make a smart choice regarding your insurance coverage. While cheaper premiums for a few months can be enticing, slightly more expensive premiums for the lifetime of your policy will add up to a better value.
Of course, some car insurance companies really are more affordable than others. Companies that specialize in direct sales are usually more affordable than those that utilize agencies; this is because these companies need to pay fewer employees.
Some companies may also specialize in affordable insurance by cutting corners elsewhere. They may employ fewer insurance adjusters or handle claims through a call center. They may also write policies with more exclusions. For example, a low-cost insurance company may only cover a claim if the driver is listed on the policy, or it may only cover certain types of losses but not others.
Before agreeing to an insurance policy, be sure that the rate you are quoted includes the coverage that you need. Saving money on car insurance isn’t worthwhile if you purchase a policy you cannot use. The low rate that you were quoted on a company’s website may not be the same as the rate of your final policy once you purchase coverage.
Also be aware that there may be a trade-off between the quality of a company’s customer service and the cost of its premiums. While not all low-cost car insurers have poor customer service, it’s certainly a possibility. Always contact the insurance company directly prior to purchasing a policy to get a feel for the quality of its support staff and see if you will be happy using that company for any claims in your future.