Geico, Progressive and Allstate are just a few of the auto insurers with ads on TV promising they can save you hundreds over the competition. But how can they all be the cheapest?!
Be careful of that quote!
In reality, there are huge differences between insurers based on an individual driver’s circumstances. Each insurer uses its own criteria to assess your level of risk and price your policy accordingly. That’s how each insurer can claim to be the cheapest in its ads; they’re all assessing different motorists and presenting the results as typical!
Consumer Reports put Progressive’s claims to be the cheapest to the test. Flo the Progressive Girl’s ‘name your price’ promise is really more of a ‘name your coverage’ come-on.
Nor is it necessarily the cheapest. In fact, Consumer Reports found Progressive could be twice as expensive for certain motorists. In one hypothetical situation the magazine detailed, Progressive wanted to charge $94 each month on a 2006 Toyota Camry that would have cost $49 for the same coverage with another major insurer.
This is not about bashing Progressive. It’s just to raise awareness that you’ve got to be diligent in shopping over the phone and on the Web to find the best deals. Get out your current coverage statement and compare it apples-to-apples with other insurers’ offerings.
How often should you shop for insurance? Clark recommends you do it every three years or three years after an accident or ticket.
How to shop for car insurance
Looking to shop your auto insurance? Here’s how to start the process…
Begin by identifying solid companies
Clark has long talked about the merits of Amica Mutual and USAA. But those aren’t the only two companies you should look at. Consider buying a one-time subscription to Consumer Reports and checking their latest list of the best auto insurance companies to find others that should make it onto your shortlist.
Get your quotes
Once you have a list of candidates, you’ll want to start getting quotes. This typically takes around 15 minutes on the phone. Have your most recent policy in front of you in case any questions come up about the make and model of your vehicle(s).
Working with an insurance broker is another option. He or she will get multiple quotes for you and you’ll have access to all the insurers they do business with. It’s an easy one-stop shop that lets you still have the flexibility of comparison pricing.
Once you get the quotes back, it’s time to compare them. Each quote should be based on the same amount of coverage so you can do an apples-to-apples comparison. What if a poorly ranked company offers you a great quote? Clark says to avoid them! While the premium might be tempting, you want to be sure your insurer is there for you when the chips are down.
Know when to drop comprehensive and collision
The general rule is when the cost of comp and collision exceeds 10% of your old vehicle’s value, that’s the time to dump it and just have liability coverage. You can determine your vehicle’s value at Edmunds.com, KBB.com or NADA.com.
So let’s take a simple example. Say your vehicle is worth $4,000. If you’re paying anything more than $400 annually (that’s 10% of $4,000) for comp and collision, it no longer makes any financial sense. One notable exception to this rule: If there’s no way you could financially cover the loss of your vehicle, forget the math and keep paying for comp and collision.
Be prepared to take a higher deductible
You should always opt for a $1,000 deductible for the best savings on your policy. At that level, you’ll pay a lower premium and won’t be tempted to file any small piddling claims.