It pays to be loyal. All of these incentives will keep you loyal to your favourite brands, including airline miles, loyalty reward points and anniversary freebies. Car insurance is a two-way street. Loyalty is often a one-way thing. Michael DeLong, research and advocacy associate at the non-profit Consumer Federation of America, says that insurance companies […]
It pays to be loyal. All of these incentives will keep you loyal to your favourite brands, including airline miles, loyalty reward points and anniversary freebies. Car insurance is a two-way street. Loyalty is often a one-way thing.
Michael DeLong, research and advocacy associate at the non-profit Consumer Federation of America, says that insurance companies exist to make money. They are not your friend, despite their cute mascots. DeLong recommends that you shop around for better deals as your insurance company may not be loyal to you in the majority of cases.
According to a survey by NerdWallet, 26% of American vehicle owners say that they purchase car insurance at least once per year.
These are the signs that it is time to leave your car insurance company.
1. Rates go up when they go up
It is normal to pay more over time for certain things, such as taxes, rent, or a carton of eggs. Insurance is no exception.
Price increases can sometimes be justified by your driving record (e.g., if you were involved in an accident or received a speeding ticket). Sometimes, price hikes are justified by driving history, like getting married or changing jobs.
Many car insurance companies practice what is called “price optimization.” DeLong describes it like “price optimization”: charging people higher premiums and rates based on their willingness to accept them and not shop around for better deals.
DeLong states that price optimization can be a major problem for loyal customers. DeLong adds that it can also be detrimental to people who are less knowledgeable about insurance.
It is worth noting, however, that price optimization is not allowed in all states and not all companies practice it. Insurance companies can adjust rates for many reasons. Although a low-priced policy might have attracted you initially, the sweet deal could have become a problem when you renew your policy (typically six to 12 months later).
2. Life happens when you are there
Insurance companies can use a variety of non-driving-related signals and driving data to determine their pricing policies. Pricing formulas vary from one company to another. Some insurers will charge more for a speeding ticket, or simply for being a young driver.
It’s a smart idea to contact other car insurance companies when you:
Lease or buy a car.
Add a driver in your policy.
Get into a car accident.
A DUI/DWI, or traffic infraction can be obtained.
See a significant improvement in your credit history in most states.
You need to drive less.
3. Neglecting someone is a sign of weakness.
Insurance is more than just finding the lowest price. Stephen Crewdson is a senior director at J.D. Power.
It is important to pay attention to the way your insurance company treats customers. This is a sign that you should be careful about. Most people do not deal with their insurance company or agent regularly after establishing an account.
You may feel dissatisfied if a claim was too slow to process or you couldn’t reach a customer support representative when you needed it. DeLong says that if an insurance company treats customers poorly, it should be a red flag. Your business may be valued more by other companies.
Keep the relationship open
Some people find shopping for insurance daunting, much like finding love. It can be relatively easy to switch to a better car insurance company. Most insurers won’t penalize you for doing this, even if it is only one week into a 6-month contract.
These are some considerations to maintain a casual relationship you your insurer:
Make shopping a routine
Marty Ellingsworth is the executive managing director of J.D. Power. This means that you need to be vigilant about your price, as the market is always changing. While you can expect prices to increase regularly, it is possible to ask the reason and get transparency.
NerdWallet recommends that you shop for car insurance at least once per year from at least three companies. You should also consider small, local insurance companies that may offer better rates and customer service. A great place to begin is working with an independent agent. These agents work with many insurers and can help you find the right policy for your needs.
Find what you need
It’s easy to get over- or under-insured with car insurance. You might be charged for coverage that you do not need or want by some companies, which could lead to you paying more for packages with fewer features. Many states permit residents to drive with low coverage limits. This could leave them uninsured.
This part can be handled by independent agents or insurance companies. NerdWallet suggests that you have enough liability insurance to protect your net worth. This is the sum of all your assets, including your investments and your personal property, less your debt.
You can also read reviews about companies online, and ask family members or friends for their opinions. You might also look into companies to see if any have been featured in the media recently. DeLong says it doesn’t matter if the news is for good or evil reasons.