A huge percent of people never shop their insurance needs. That’s not necessarily a good idea considering that modern American business punishes loyalty, rather than rewarding it.
The Wall Street Journal reports that roughly 1 in 3 people never shop their auto insurance. Almost half never their shop home insurance. Yet if you do shop around, particularly for auto insurance, a new report from NerdWallet.com says you’ll likely save a third on your premiums.
Don’t be a data mining statistic
Nearly half of all big auto insurers use a data mining technique called price optimization where they develop a customer loyal index number on you. That number tells them whether or not you shop around or if you’re the kind of person to stay with the same company year after year.
If they determine you’re loyal, they will keep raising your rates year by year to make you more profitable for them. The increases will be incremental, but not enough to drive you away as a customer.
My recommendation is even if you are a loyal person, you should shop your insurance every third year.
If you find a better deal, call your current insurer and tell them. They may lower your rates.
The thing is, insurers steadily beef up profits the longer you stay with them. They exploit creatures of habit. That’s one of the ironies of modern capitalism, as I mentioned. The deals you see, particularly in the technology arena, are typically for new subscribers only! I’ve never understood that.
If you just shop your auto and home insurance, you may save hundreds each year, maybe more than $1,000. You can shop on the web, by phone, or with an independent agent.
It’s your money!
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Take a look at these two insurers
If you’re with a poorly ranked insurer, there’s no question: Shop the market to find a lower price and fire them! That’s a win-win. You can get higher quality at a lower price.
However, here’s the great news: Consumer Reports recently took a look at the insurance industry and determined these two top-ranked companies are cheaper than the competition!
In a 23-state survey, Consumer Reports found USAA was the lowest-cost insurer for the average person. However, USAA is only available to those in the military or affiliated with the military through direct family ties. For everyone else, there’s Amica Mutual. Surveyed in 10 states, Amica Mutual was the second-lowest cost insurer.
The other insurers — the ones you hear advertising all over the place — range to as much as nearly double in premium vs. USAA to 50% more than what average person pays with Amica Mutual.
If you do shop Amica Mutual, I should note that the first year is expensive. Because it is a mutual, that means there are no shareholders and you must buy in to this company. But most customers typically get an annual rebate from the company of 20% of what they paid in premiums — when they have a year with no claims.
So know that quality and low prices can both happen at the same time!
RELATED: Best and worst home insurers
For more money-saving advice, check out our Insurance section.