Prices in the intensely competitive auto-insurance business are based on so many different factors, and they are calculated in so many different ways, that shopping several different companies really could help you save hundreds of dollars every six months. According to Ken Ross, commissioner of the Michigan Office of Financial and Insurance Regulation, even if you don’t change companies, take a test drive and see what’s out there.
Whether you’ve had any accidents or traffic violations in the past few years will matter, as well as what car you drive, how many miles you travel each year, the coverage you want and where you drive. Penalties are heavier if your age is over 70 years than if you are under 20.
Before you start comparing, here are some factors that you need to consider:
Your financial behavior matters. According to Michael Miller, an industry consultant in Carlock, Ill., credit scores in general are one of the top three factors that insurers consider in determining your rates, alongside where you drive and characteristics like age and gender.
You can track some of the information insurers use, but insurance scores are hard to penetrate. As frustrating as it may seem, different companies use different insurance scores, and many of them consider that proprietary information. Many insurance companies have their own models .
Compare prices both with insurers that sell directly and those that sell through agents. Progressive sells both directly and through agents, and it says one isn’t always cheaper than the other. Prices may vary a lot, and though agents receive a commission, they aren’t always more expensive. Having a mix of prices will help you weigh your options and possibly negotiate better deals.
Loyalty cuts both ways. Insurers have learned that people who stay with one insurer tend to have fewer claims. Car-insurance companies want to win over new customers�but at the same time, they reward you for staying put. However, shopping around will help you find the deal that works best for you�even if you stay put.
The discounts are in the details. You’ll qualify for discounts if you have multiple policies with the same company. Many insurers offer good-student discounts and breaks for college students who go to school far from home, because they probably aren’t driving much.
Price matters, but so does service. Once you identify your best deal, check out the company’s reputation. The last thing you want after an accident is an insurer that is slow to respond or pay.