Sometimes being a loyal customer pays off. Whether it’s airline miles, loyalty reward points, anniversary giveaways, or the coveted platinum his membership level, all of these incentives are designed to keep you going with your favorite brands. I’m here. But when it comes to auto insurance, loyalty is usually a one-way street.
“Insurers are there to make money,” says Michael DeLong, research and advocacy associate at the nonprofit Consumer Federation of America. “Despite having cute mascots, they’re not your friends.” Most likely, your insurance company won’t be loyal to you, so DeLong recommends shopping around for a better deal. I advise you not to hesitate.
However, only 26% of US car owners say they have car insurance at least once a year. 2023 NerdWallet Survey.
Here are three signs that it’s time to swipe left on your current auto insurance company.
1. When the price goes up
It’s normal to pay more over time, whether it’s taxes, rent, or cartons of eggs, and insurance is no exception.
In some cases, a price increase may be justified by your driving history (for example, having an accident or getting a speeding ticket). But sometimes it’s based on things unrelated to driving, such as getting married or changing jobs.
In addition, many auto insurance companies practice what is called “price optimization.” DeLong describes it as “charging higher rates and premiums based on the likelihood that people will accept it, and not shopping around for a better deal.”
Price optimization tends to punish loyal customers the most, Delong says. But it also hurts people who are less educated about insurance, and this is true for many.
Note that some states currently prohibit price optimization, and not all businesses practice it. Still, insurance companies adjust rates for many reasons. So while you might initially be attracted to the low-price policy, by the time you renew (usually he’s 6 or 12 months later), that tempting deal may already have deteriorated. there is.
2. When Life Begins
Insurance companies use all kinds of driving and non-driving-related signals to price their policies, but pricing formulas vary from company to company. For example, some insurance companies charge higher than others for having a recent speeding ticket or simply being a young driver.
Therefore, we recommend that you consult with another car insurance company in the following cases:
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Add drivers to the policy.
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Get a DUI/DWI or traffic violation.
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(Most states) experience significant changes in credit history.
3. When you are treated badly
Insurance is more important than finding the lowest price. JD Power senior director Steven Crudson said:
As such, it is imperative that insurance companies pay attention to how they treat their customers. This is a sign that needs attention. Because, aside from initial account setup, most people don’t deal with insurance companies or agents on a regular basis until they have a ‘bad day’.
As a result of that experience, for example, you may be frustrated because your claim took too long to process or you weren’t able to contact a customer service representative when you needed it. If so, it should serve as a serious red flag, says DeLong. Other companies may rate your business more highly.
keep an open relationship
Shopping for insurance like dating can be a daunting experience for some. , most insurers won’t penalize you for doing so even if you’ve only had a 6-month policy for a week.
Here are some considerations for maintaining a casual relationship with your insurance company.
make a habit of shopping
“You can buy insurance the same way you buy gas,” says Marty Ellingsworth, Executive Managing Director of JD Power. This means that the market is constantly changing, so you should always keep an eye on the price. You can expect prices to increase regularly, but you have the right to ask why and seek transparency.
NerdWallet recommends purchasing auto insurance from at least three different companies once a year. Also, don’t forget smaller regional insurance companies. We may be able to offer more competitive rates and better service. Working with an independent insurance agent is a great place to start. These professionals work with multiple insurance companies to help you find the best insurance for your needs.
buy what you need
Auto insurance is often over or underinsured. Some companies only offer certain features in their packages, so you may end up paying for coverage you don’t need or need. is allowed to drive with shallow insurance coverage.
Most insurance companies or independent agents can help you with this part. However, as a rough estimate, NerdWallet recommends getting enough liability insurance to at least cover your net worth. doing. This is the value of all your cash, investments, and possessions minus your debt.
Buy for quality
Also, read company reviews online and ask family and friends about their experiences. “You can also look up companies to see if they’ve been in the news lately, and if it’s for a good reason or a bad reason,” he suggests DeLong. .