How Much Do You Need To Save To Switch Insurance Companies?

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.

How Much Do You Need To Save To Switch Insurance Companies?

Sweating the Big Stuff

8 thoughts on “How Much Do You Need To Save To Switch Insurance Companies?

  1. I have USAA and can never seem to find anyone that can beat their prices for the same coverage I have now. I am not complaining but I ha e never been faced with making that decision. I imagine it would probably be around $50/6 months for me to switch.

  2. I have a friend who is a former car insurance agent and broker, and her insight suggests that the savings people get that may cause them to switch carriers depends on their overall income. For a family making $50,000 a year, saving $50 is not going to cut it. However, if you bump that up to $150, $200 or more, you might have their attention. Additionally, it also depends on their current financial situation. If someone just lost a job, didn’t get that bonus, or incurred an emergency expense, smaller amounts may get them to switch because they feel panicked about their finances.

  3. I switched from Bell to my local cable provider for my phone service and the service call took less than 15 minutes. The savings are over $20.00 per month.

    I am currently paying a higher rate than I want to be paying for my house insurance but it was the only way I could get cheap car insurance for my sons. We have a family bundle and I pay more but they save hundreds of dollars each year.

    As soon as they are done university I will start the hunt for a less expensive company.

  4. Actually, you don’t need a “big” accident to make your money back. A friend backed out of our driveway and hit a parked car right across the street. Seemed like a little ding. Wrong! that little ding ended up being $2500 (had to replace a door), and with $500 deductible, my friend had to pay only $500.


  5. I just changed companies yesterday and saved a lot by moving. Actually, the new company seemed much more interested in servicing my account and gave extra services that the others did not provide. Check out Nationwide.

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