Shopping for insurance isn't nearly as much fun as shopping for discounted shoes or a smoking-hot deal on a new home theatre setup. However, it's one of life's necessities and like everything else it rewards a diligent shopper. Your existing insurance company might like you enough to give you the best of all possible deals every year, without asking, but probably they don't. It can be smart to look for new coverage each year, if only as a negotiating ploy.
The Cost of Loyalty
Chances are, before you settled on your current carrier you did some serious shopping. You hit Internet comparison sites to get the best rates, sat down with a bunch of brokers to get the benefit of their often, conflicting advice, and finally settled on a policy that felt right. However, it never hurts to take a look around at renewal time. An October 2010 review by Consumer Reports found that some drivers were paying up to twice the rate they might be paying if they had done some comparison shopping.
The Rewards of Loyalty
However, the same October 2010 Consumer Reports review indicates that only 14 percent of drivers who shopped around saved on their coverage. While that might be a result of not comparing enough companies, it's also due to loyalty discounts from insurance carriers. The longer your history with a company, especially if it's a claims-free history, the lower your rates will be. There are often additional discounts if you bundle your auto and homeowner's policies, placing them with the same carrier.
Apples to Apples
When you're getting quotes, make sure you're comparing apples to apples. Get out your existing policies, and make sure the terms and options coincide. Deductibles, liability limits and similar factors can have a huge impact on premiums. Companies also differ widely in their coverage of storm damage on homes, for example, or might pressure you to use lower-cost aftermarket parts to repair your car. Investigate the carrier's complaints history with your state's insurance department. Saving a few dollars a month isn't worth the potential downside of dealing with an unscrupulous insurer.
Before You Buy
Don't neglect strategies that can reduce your premiums with any carrier. When you're deciding on a house or car to buy, think about its insurance costs. A home on a river's flood plain or an exposed coastline might be costlier to insure than other homes, while some vehicles are more expensive to repair after a collision, which mean high insurance rates. Ask your dealer to show you the Relative Collision Insurance Cost Information Booklet, so you can compare the repair cost of vehicles you're considering. Alternatively, the Highway Loss Data Institute provides similar material online.
Good Buying Strategy
Overall, your best bet might be your existing carrier, but don't just renew each year. Ask for the best available rate: you might qualify, but your carrier might not offer it if you don't ask. Get competitive quotes -- and ask your insurer to match them. Compare the cost of bundled home and auto against the best prices for buying separately. Look for factors that lower your rates. If you're a low-mileage driver, or your teenager has left home and no longer drives your car, your rates should drop. Increase your deductibles. If your credit score has improved, ask for your rates to be lowered. Alarms and anti-theft devices can lower both home and auto coverage.
- Consumer Reports: A Guide to Car Insurance
- Consumer Reports: Save on Car Insurance
- Highway Loss Data Institute: Insurance Losses by Make and Model
- Bankrate.com: How to Compare Auto Insurance Quotes
- USA Today: Want the Best Insurance Rates You Can Get? Do These 5 Things.
- CNN Money: Tips on Homeowner's Insurance
Fred Decker is a trained chef and certified food-safety trainer. Decker wrote for the Saint John, New Brunswick Telegraph-Journal, and has been published in Canada's Hospitality and Foodservice magazine. He's held positions selling computers, insurance and mutual funds, and was educated at Memorial University of Newfoundland and the Northern Alberta Institute of Technology.