Auto Insurance: Switch and Save or Switch and Lose?

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Unless you have gone entirely off the grid you cannot avoid the invitations to switch your car insurance with the prospect of saving hundreds of dollars a year. It’s an enticing promise, and shopping around may indeed result in substantial savings. Just be sure your expectations are realistic and you’re not giving up more than you get.

When is it time to shop around?

Unless you’re really strapped for cash or feel you’re being gouged by your current provider, price alone is not the best reason to switch. Here are a few other reasons to shop for car insurance.  Have you moved to a new location and left your old hometown insurance agent behind? Has your marital status changed? Did you buy a new car or another car? Can you bundle your car insurance with your homeowners or renters policy for a discount? Is your current policy a little light on discounts? Are you unhappy with a cumbersome claims process or the level of service in general? Knowing exactly why you’re switching can be a big help in deciding which policy you’ll ultimately select. Jeanne Salvatore, senior vice president for the Insurance Information Institute, suggests that you “ask yourself if you’re happy with the cost, coverage and service of your current policy each time it comes up for renewal.”[1] If you’re on the fence, then it’s time to go shopping.

Have realistic expectations

According to the J.D. Power 2014 U.S. Insurance Shopping Study, “a poor experience with their insurer is the leading reason customers shop for, and ultimately switch to a new auto insurance company.”[2] Unfortunately, the research indicates they often end up sorry that they did so because the goal of better service frequently comes at a higher price. The study concluded that while the poor experience drove the search for a new auto insurer, “declining new price satisfaction is the primary reason customers are less satisfied when they do switch insurers.” The study noted that the longer a customer was with an insurer, the greater the savings they were likely to experience by switching, most likely due to creeping rate increases over the years. The take-away here is to have realistic expectations if and when you decide to switch. Prioritize what matters most to you and use that as your guideline for choosing an auto insurance provider.

Switch smart

Ready to look for a new car insurance provider? To avoid any lapse in coverage, follow these three simple steps:

• Review your current situation

You want to make apples to apple comparisons, so take a look at the declarations page of your existing policy. Make a note of anything that’s changed like a new driver on the policy, added safety devices on your vehicle or the number of miles you drive in a year, for example. Also note anything that you want to change like more or less coverage or higher or lower deductible.

Start with your current provider and see if they can meet your new criteria. Churn is a big issue for insurance companies and many would rather cut you a deal than lose you altogether. It never hurts to ask. However, if the situation is totally untenable, see what other carriers can offer. You can compare multiple car insurance quotes online.

This is a critical step to avoid gaps in coverage. You may be entitled to a partial premium refund if you cancel your existing policy before it expires, but be sure to continue to pay for the existing policy until your new policy is confirmed in writing.

Auto Insurance: Switch and Save or Switch and Lose?