Will I Always Save Money by Swapping Insurance Companies?
Car insurance is an extremely competitive business. Because insurance is required by law, all drivers already have insurance policies. This makes it difficult for insurers to acquire new customers, and it limits the number of customers looking for policies at any given time. In order to grow their business, insurance companies must lure customers away from their competitors. This is why many insurance company commercials focus on how much money you can save by switching to their company.
In many cases, the claims made by these advertisements are correct: You often can save money by switching your insurance policy. What you may not realize is that this is often true of any insurance company. Insurers are so eager to gain new customers that they may offer very attractive discounts to drivers who switch, even if their normal policies are not as affordable. If you’re debating whether to change insurance companies, here are a few things to keep in mind.
There is No Single Best Insurance Company
No one insurance company offers the best rates to all of its insureds. This is why it’s important to shop around, and it’s also why insurance is so competitive. Insurance rates vary dramatically from one driver to the next depending on the driver’s risk level, gender, age, geographic location and other factors. Because of this, your neighbor may have very affordable coverage with one company while you pay a substantially higher amount.
The reason for this variance between companies is risk tolerance. Some insurance companies can afford to take greater risks on certain groups of insureds than others. Additionally, some companies may find certain groups less risky to insure than others. For example, some companies may be more willing to offer low rates to students while others may find these young drivers too risky to insure without high premiums.
All of this means that no one insurance company will ever offer the lowest rates to every possible customer. If it did, there would be no other insurance companies. Even if the company you’re with currently offers reasonable prices, you might always be able to save money by switching to a different insurer. Just because your company was the cheapest when you bought the policy doesn’t mean that’s still the case today.
Discounts for Switching Can Be Attractive
Even insurance companies that don’t traditionally offer low rates may offer an incentive to switch. The company may offer a discount specifically geared toward people switching from competitors to their brand. Once you’ve purchased that policy from them, your rates may begin to creep up over the years. The premiums you paid immediately after obtaining the policy may not be the premiums you continue to pay in subsequent years. On the other hand, you may be locked into excellent rates for several policy terms.
If you’re currently unhappy with what you’re paying for auto insurance, it makes sense to shop around for a new quote. If you don’t find a company that can offer you a policy similar to the one you have now for a lower rate, you don’t have to change insurers. If you do, however, find a company that will offer a discount to you for switching companies, you can put more money in your pocket every month.
Some Insurance Companies Reward Loyalty
Before changing insurance companies, it might be a good idea to see whether your own insurer offers any rewards for loyalty. Not only can these loyalty perks lead to discounts, they can reduce your deductible or have other positive effects on your policy. Here are a few common rewards that insurers offer loyal customers:
— A yearly rebate check for an accident-free year
— A deductible reduction for each year without an accident
— A modest but regular annual discount
— Additional discounts or other features offered on a per-person basis
It’s in an insurance company’s best interests to keep a loyal customer. Good drivers who pay their bills on time are valuable to insurers, and a good insurance company will put in the work to keep those customers. If you’re unhappy with your current rates, it may make sense to discuss the concern with the insurance company first. You may be able to negotiate a discount with your insurer without needing to find a new company. This is especially helpful if you have an agent who can assist you with finding discounts.
Nevertheless, many insurance companies offer their best rates to new customers. In order to take advantage of this fact, you should get insurance quotes frequently. This will help you determine whether another insurer will offer lower rates for the coverages you need. While researching these companies, you can also find out whether the insurer will offer any loyalty rewards to you down the line. A company that offers a low starting premium and attractive loyalty discounts is one worth staying with for the long term.