• Jun 22nd 2010 at 12:00AM
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Insurance companies promise that switching over to thei... Insurance companies promise that switching over to their product can save you a bundle of money. But just how accurate are their claims? (mlinksva, Flickr)

If you get the feeling you’re seeing more ads for car insurance in recent years, there’s a good reason. You are. Spending on auto insurance advertising ballooned from $600 million in 2003 to over $1.7 billion in 2007. In 2008, Geico alone spent more than $600 million, with State Farm and Allstate not far behind.

From talking lizards to modern cavemen to that guy who used to be the fake President on 24, it’s almost impossible to escape the constant barrage of advertisements offering huge discounts on car insurance. But how much can you really save? Take a look at the claims in the advertising and it defies logic. If you can switch to Allstate and save 20%, then over to State Farm, where you can pocket $489, jump to GEICO next to get back over $500, and by the time you make the switch to Progressive to save $550, the insurance company should be paying you. And that $451 from Esurance? That’s bonus time, right?

Read The Fine Print -- In The Ads

Well, not exactly. You need to read the fine print because there is always an asterisk associated with those claims. Typically, the insurance companies offer those numbers as the average savings for customers who switched and reported that they saved money. Customers who switched and didn’t save money don’t count when factoring that average. Neither do customers who shopped that company and decided the rates were too high to switch.

Logic says that nobody switches auto insurance companies to pay more. And if you get a few quotes, one will obviously be the cheapest. With few exceptions, like having a particularly poor customer service or claims experience, a cheaper rate is about the only reason to switch.

Most insurance companies maintain proprietary databases and statistical models they use to calculate the risks they take when insuring an individual. Since all of the companies use a wide variety of rating variables and weigh them differently, the odds are pretty good that one company out there will have a better rate for you than all the others. The flip side to that rationale is that no one company can save everyone money.

What’s certainly true is that insurance companies are relying less on fuzzy, neighborly, feel-good advertising and instead are appealing to consumer’s wallets to earn their business. According to Dick Luedke, spokesman for State Farm, the largest auto insurer in the country with around 41,000,000 auto policies in force, “There is no question that the market is very competitive right now.”

But you need to look at more than just the price tag when deciding which company to go with. “Price is not the only thing a customer should look at,” said Luedke. “You really don’t know what your insurance policy is worth -- truly worth -- until you file a claim. The best value is not always the best price.”

Ask For The Discounts

But with price being where the rubber meets the road today, we asked around to find out what those discount claims are really about. Luedke, whose State Farm alternately advertises whole dollar savings as well as savings “up to 40%,” told us that the discounts usually amount to multi-car or multi-line bundles (meaning a car and home or renter’s policy togeter) as well as good driver bonuses. To State Farm, a good driver is one with no at-fault accidents or moving violations in three years.

Other insurance companies offer most of these discounts as well. Some, such as Esurance, an online-only upstart that now has a presence in 30 states, offer a discount simply for switching and another for generating your quote online, whether you purchase online or phone in your order to their call center.

Could it be that your current agent is simply not sharing all of the available discounts or you are not asking the right questions during your annual policy review? (You do have an annual policy review, don’t you?) According to Raleigh Floyd, spokesperson for Allstate, “If you are not taking advantage of all the discounts available to you, then yes, you’re paying too much.”

While it may seem that your current agent is fleecing you when you can get such a better deal elsewhere, the truth is that perhaps your insurance company’s rating variables might not favor you right now.

In explaining why the extremely competitive marketplace encourages such advertising on price, Esurance Chief Marketing Office John Swigart said, “As [the market’s] gotten more competitive and since many consumers make their final decision based on price, it is important to state and demonstrate that you’re competitive on price.”

More Tips

Here are some ways you can save money on car insurance:

Drive safely. Sort of obvious, no? Maintaining a clean driving record with as few accidents and tickets as possible is one of the best things you can do to qualify for the best rates. Insurance is based in math and it’s pretty clear that if you keep forcing the insurance company to pay up, sooner or later your rates are going to increase or they may drop you altogether, forcing you to pay even more with another carrier.

Insure more than one car. Like donuts and that warehouse club package of paper towels, buying in bulk is a good way to save.

Buy a homeowner’s or renter’s policy from the same company -- more bulk buying.

Maintain good credit. Yes, that ugly credit score albatross rears its ugly head again. Data indicate that people with poor finances tend to use their insurance more. So, pay your bills on time.

Speaking of paying your bills on time, while most insurance companies offer you the option these days of paying monthly with an automatic payment plan, some will offer a discount if you pay the whole premium up front. If you have the cash, go for it.

Let your insurance company know if your regular commute doesn’t involve your family car. It’s kind of hard to get into accidents when the car is parked.

Raise your deductible if you can afford to, as minor fender benders and bumper bruises become out-of-pocket expenses and your insurance company won’t need to pay up when they happen. Similarly drop comprehensive theft and damage coverage on an older clunker that might not be worth much more than your deductible.

Shop around! If there’s one thing this barrage of ads is honestly telling us it’s that there are people out there saving money and it’s free to ask around and get a quote. Maybe you will end up being one of those “average” drivers who switches and becomes the right kind of statistic, with an asterisk, of course.


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  • 192 Comments
      admanweek
      • 8 Months Ago
      I had my auto insurance with Progressive - they raised me last month from $618 to $688 for a 6-month premium on 2 cars (no, we don't have any tickets or accidents). Since we're now retired, I decided to spend a few hours on the phone calling for alternate quotes. The bottom line, Geico was the cheapest - I got the same policy for $380 for 6 months that Progressive wanted to charge me $688 for. I still suspect that the companies give you an ultra-low premium for the 1st year that you're switching (like a loss-leader item at a store), and then may raise it in the future, for no reason at all (like Progressive did with us). So I'll continue to shop around in the future if there's any premium hikes. But this time, I really did save 40% with Geico, just like the ads say!
      Joebudgie
      • 8 Months Ago
      I've had GEICO since i was discharged from the Marine Corps in 1962. I pay less now for FULL coverage than I did then and now I'm 69 years old. I've had three "fender benders" that were all chaged to the other drivers as bing at fault and only seven tickets of any kind since 1956 when I got my DL. I used GEICO for homeowners insurance when I was married in the 70's and made two claims during that time. GEICO was fantastic both times. "Replacement" value was paid for stolen items, not original purchase cost. When a receipt wasn't available for my 20 year old SLR camera they accepted the cover of the instruction pamphlet that came with the camera instead. A 20 year old Yashika SLR was stolen and I bought a brand new Cannon SLR to replace it with the insurance proceeds. AND the adjuster that came to the house told me that due to the trauma of having a breakin people sometimes don't realize some things are missing until weeks later and if that is the case to just call him up and he would come back to make an adjustment for the additional property. THAT is service in my book.
      • 8 Months Ago
      One Word BIKE!
      • 8 Months Ago
      I have had geico 3 years now..still the cheapest of them all..and never a problem....and yes !! i am also sick of all the cheesy ads on t.v.
      rebafarrar
      • 8 Months Ago
      I was covered with Met Life Insurance on my home owners policy and my car. I paid to have everyone in my household covered by a $500,000.00 accident coverage under my auto insurance. Guess what? When my son was injured in an auto accident, Met Life has refused to pay and finally offered one forth of the coverage. Needless to say, I have a law suit pending. When we pay for coverage we should not have to fight a company when an accident occurs. All those cute little Snoopy ads are just a stupid front for a big company who is out to ********** customers. Met Life is one of the worse insurance companies around.
      • 8 Months Ago
      I just switched to All State. State Farm went way up on my rates while claiming to give me huge discounts for multipe line and accident free coverage. I paid for a year for house and 6 months for car for same as State Farm wanted for just the house. Never hurts to compare.
      • 8 Months Ago
      MAYBE SOME DON'T REMEMBER BUT A WHILE BACK IT WAS ON 60 MINUTES HOW GEICO WAS BUYING RADAR GUNS FOR THE POLICE,SOUNDS LIKE THEY WANT TO RAISE YOUR PREMIUMS!
      • 8 Months Ago
      If you really want to know who pays their claims, many cities have their court filings available online. See how often your insurer is being sued for bad faith. Also, you might want to know if you are going to be made a defendant in a lawsuit because your insurer tried to low-ball a claim. Call any personal injury lawyer in your town and ask who pays and whose insureds get sued unnecessarily. The latter are likely the ones who are spending their money trying to prop up their stock value with advertising-driven new premium dollars while stockpiling their claims.
      • 8 Months Ago
      you get what you pay for. I have several times gone price shopping, long story short when competing Ins CO came in with a cheaper price they had made changes to coverage to what I had requested and quoted me on lesser coverage. The company I work for requires me to carry what they call 100/300/100 when these cheaper insurance companies came in with cheaper price they reduced it to 25/100/25. when I questioned it I was told dont worry it is all you need NOT when I forced them to quote it at 100/300/100 they were more $$$$. Plus there is something for getting taken care of right the first time. when I call and make a request for something to be done it is reassuring to know it is being handled. I have been with Indiana Farm Bureau for over 20 years.
      • 8 Months Ago
      BEWARE OF GEICO!!! I am still waiting for GEICO to settle-up on what was promised after Fla. Keys Hurricane Wilma'****** in 2005! My GEICO totaled-out vehicle still sits in my yard, after ongoing protests to GEICO Natl. & Board of Directors including Warren Buffet, for non-payment on my vehicle claim, & not even paying for auto rental the GEICO Rep told me to rent for transit, incl. my bladder cancer disabled Mother's med/transport! My paperwork they asked for remains MIA via various reps in GEICO La-La-Land!!! MH -- 2005 Hurricane Wilma Keys Victim STILL WAITING on GEICO TO DO THE RIGHT THING !!!
      • 8 Months Ago
      i was insured with geico. was in an accident, not my fault. trooper told me to contact agent and have a letter sent to dmv acknoweleging that i was insured. i called, geico said no problem. a month later i was notified that my drivers license was suspended because the dmv recieved no letter. geico sucks.
      yellowberry3535
      • 8 Months Ago
      geico is serverly overrated, who wants a 6 month policy? thers something about a scam company who features a talking lizard. as well as another sham company with a big headded geek named flo. the real savings on insurance comes from full coverage as well as insurance from a less populated state. insurance for me in nyc is $3,000 a year but in south carolina it is $900 a year. and thats with full coverage.
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