I’ve had Progressive insurance for the past year and a half, but my car insurance policy is now up for renewal. I have not gotten into any accidents, so as expected, my 6 month premium has decreased a little each renewal period. I like that, but as a good personal finance blogger (and reader) should do, I checked out the competition to see if I could get a better deal.
Not Spending Is Different Than Saving
I’m not going to pretend I saved $400 on car insurance, the ads that many auto insurance companies put out are quite misleading. Very rarely do people actually save that much on their car insurance. Rather, people choose not to buy from the company that offers the higher price, which isn’t really saving, it’s just spending less (and there’s a big difference). Plus, choosing less coverage will also reduce your rate; that is just comparing apples to oranges. What’s worse, with this math, all car insurance companies claim to save their customers hundreds of dollars. That’s very unlikely!
New Customers Get The Best Rates
I know from my previous job at one of the major insurance companies that users who request quotes more than 6 months apart will be offered better rates. Why? Because new customers are offered lower rates as a way to try and get them through the door, and at least at our company, a “new” customer was defined as someone who hadn’t requested a quote in the past 6 months. Yes, that one day really could make a difference in your rate.
I waited the required 6 months and a day and then contacted several other companies, including GEICO. It turns out that for comparable insurance (actually, slightly more coverage), I am able to save $43 over the 6 month term.
$43 over 6 months is not a lot of money. It’s just over $7 a month, which isn’t much to write how about, but the whole idea of paying a lot for insurance drives me nuts. I know I need it, but I’ve never used it before and the only way I’ll get my money’s worth is if I get into a big accident. Unlike phone insurance, we’ve got no choice here. Seems like a lose-lose situation there, doesn’t it?
In order to save $86/year on my car insurance, I spent about 10 minutes (who needs 15 minutes these days?) typing in my information, getting my quote, adjusting coverages, and purchasing. It was a very easy process, and anytime I can spend 10 minutes to effectively earn $86, I will!
How Much Do You Need To Save To Switch?
At what amount of savings will you switch your car insurance? For me, it’s around $40 for the 6 month term. Car insurance is one of the easiest things to switch, you simply receive a new card in the mail and stick it in your car, but the same cannot be said about cable or Internet service. For those, the hassle of returning equipment and setting up new service is quite often more costly than the difference in price.