This article was last updated on February 4
Auto insurance is probably one of the most competitive industries out there. This is generally good news for consumers, who have access to hundreds of insurers and a myriad of options. However, because it is easier and the more hassle-free option many people tend to stick with their existing insurer for a long time, despite significant savings to be had by shopping around. Based on anecdotal evidence and a recent AARP survey, which looked at the average insurance costs by state, it is likely that folks could easily save up to 20% a year on their auto insurance. The hardest part of finding better and cheaper auto insurance though is knowing where to start. Based on my recent experience in saving $243.50 on auto insurance here are the three main channels you should use to find, compare and sign-up for better auto insurance.
The Majors – These are the big guys that advertise the most and have dominated the market for a long time. They are well know to most Americans and include names like GEICO, State Farm and All State. Most people have or have had one of these “majors” as their insurer because they had little real choice. But deregulation of the auto insurance industry coupled with the advent of the internet has created a much more competitive environment which means that the majors don’t always have the most cost effective premiums. This is particularly the case if you have a less than perfect driving record. While online quote systems have made pricing more transparent and easy to compare, one big advantage the majors still have is their large agent and customer service networks. This is important if service, rather than price, is your key criterion for selecting an insurer. Another advantage the majors have over their smaller rivals in terms of pricing is when it comes to combining various insurance needs like home and auto in multi-policy packages.
The Portals – Portal insurance sites have grown in popularity because they provide the option to compare multiple provider’s insurance quotes in one place. The operators of these sites are generally re-selling insurance policies of the larger or specialist insurance companies and make money by referring a customer to the company. But to stay relevant to customers they also try and get the best price/premium based on the insurance options and characteristics of the prospective purchasers. They are a good place to start your search or if you just want to get an idea of what your current coverage would cost in the marketplace. But because you are giving your personal information and to avoid spam mail, go with reputable insurance portal sites like InusreMe that protect your privacy. Also there should be no charge or obligations for getting an online quote from these or any other insurer websites. If there is, do not proceed with this site or provider!
The Specialists – With deregulation and a diverse population a number of specialist providers have emerged in the auto insurance marketplace. Companies like Esurance which operated in a handful of states have grown rapidly by leveraging technology and low overhead networks to offer insurance to 90% of the population. This allows them to target certain segments of the market and provide lower premiums than some of the major players can, who tend to focus more on the mass market. For example motorcycle drivers are likely to find cheaper coverage with outfits like Esurance and similar competitors like Progressive. AARP auto insurance on the other tailors its offerings to those 50 and over which is line with their client base. There are also special deals at various insurers for military staff, but you may need to tell the agent or company about your special status to get the discount.
As a final note, even if you are happy with your current insurance, spend about 10 minutes at some of the above sites and get a free quote to see how your current policy coverage is priced. If you find a significantly lower premium, call your current insurer and tell them this. They will likely match this rather than lose you as a customer. I got this advice from an ex-State farm agent and I can personally attest to its effectiveness!