Paul Sanchez
There are many reasons why people switch their insurance providers, with the most common reason being to save money. Switching insurance providers can save people up to $90 per month, or $200 or more annually, according to a 2022 study by ValuePenguin. Other reasons to switch insurance providers include moving, bundling policies, poor customer service, and life changes such as getting married, divorced, or having a teenager who starts driving. People can also save money by switching to a pay-per-mile or telematics policy, increasing their deductible, or taking advantage of discounts for safe driving or good grades. However, it is important to note that insurance rates can also increase due to various factors, such as a spike in vehicle prices, higher repair costs, and an increase in distracted driving leading to more claims.
| Characteristics | Values |
|---|---|
| Switching insurance providers | Can save up to $90 per month or $200 or more a year |
| Shopping around for insurance | Can help find coverage that will save the most money |
| Adding a spouse to your policy | Can lead to a discount |
| Getting divorced | Can cause premiums to increase |
| Adding a teenager to your policy | Can be expensive, but some providers offer discounts for young drivers |
| Years of driving experience | More years of experience can lower premiums |
| Senior citizens | Some companies offer lower premiums to seniors |
| Customer service | Switching insurance providers can be beneficial if current customer service is poor |
| Loyalty discounts | Some companies offer loyalty discounts for long-term customers |
| Bundle discounts | Some companies offer bundle discounts |
| Cancellation fees | Some companies charge a cancellation fee |
| Refund for unused coverage | A refund can be provided for unused coverage |
| Switching for small savings | May not be worth it due to the potential for a big increase in the future |
| Independent agents | Consulting independent agents can make it easier to compare coverage and premiums from several insurance companies |
| Increasing deductible | Increasing deductible from $500 to $1,000 can bring annual premiums down by 20 to 25 percent |
| Life events | Significant life changes such as getting married, buying a new car, or moving to a new state may affect insurance premiums |
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What You'll Learn
Saving money on premiums
Saving money on insurance premiums is a common reason for switching providers. According to a 2022 study by ValuePenguin, 26% of policyholders save $200 or more annually after changing providers. CNBC Select recommends Geico for the cheapest car insurance, offering some of the lowest rates and 16 types of discounts. Auto-Owners Insurance is another option for minimum coverage, with highly affordable premiums, although it's only available in 26 states.
If you're looking to save money on your insurance premiums, there are several strategies you can employ. Firstly, it's a good idea to shop around for insurance once a year to ensure you're getting the best deal. Compare the types of discounts offered by different insurers and weigh them against your current benefits. You can also consult an independent agent who represents multiple insurance companies to find the best deal for you.
Life events such as getting married, moving, or having a teenager start driving can impact your insurance premiums. Getting married can lead to potential discounts when adding your spouse to your auto insurance policy, but divorce can cause premiums to increase. If you've recently started driving less, switching to a pay-per-mile or telematics policy could be more cost-effective. Additionally, consider increasing your deductible to lower your annual premiums, but ensure you can afford any potential out-of-pocket costs in the event of a crash.
Before switching insurance providers, give your current insurer a chance to provide a more competitive quote. Ask about new discounts you may be eligible for and inquire about any life changes or property improvements that could lower your premium, such as installing safety and security systems or improving your credit score. If you find a better deal elsewhere, you can request a refund for the unused portion of your current policy. However, some companies charge a cancellation fee, so be sure to calculate whether the savings from switching offset any cancellation costs.
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Discounts for long-term customers
People often change their insurance provider to save money, as insurance rates are on the rise. According to a 2022 study by ValuePenguin, 26% of policyholders saved $200 or more annually after switching to a new provider.
Insurance carriers offer customer retention or loyalty discounts to reward long-term customers for their continued loyalty. By giving discounts to their most loyal customers, carriers can retain more of their existing customers while still bringing new customers in, thereby growing their brand and boosting profits.
The customer retention discount does not require any action on the customer's part other than staying with the same insurance company for a certain period. The savings with this discount can be, on average, 11%, with some insurance companies increasing that percentage year after year. The longer you stay with them, the more savings they may offer. The time period required to be eligible for this discount varies from insurance company to insurance company.
Freeway Insurance, for example, offers loyalty discounts to its customers, helping them save on their monthly premiums.
However, less reputable insurance companies may use customer retention discounts to mask rate hikes across the board. For example, a 10% customer retention discount is meaningless if the overall rate has increased by 20%.
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Lower premiums for seniors
While age is a factor that influences insurance rates, with younger people generally paying less for life insurance than older people, seniors can still benefit from lower premiums in certain cases. This is especially true for car insurance, where drivers in their 50s and 60s may experience lower insurance rates than most other age brackets. According to Progressive's data, car insurance rates for seniors typically only start increasing at age 75 and above.
There are several ways for seniors to maintain or even reduce their insurance premiums. Firstly, staying accident-free and driving responsibly is crucial. Seniors can also enrol in usage-based programs, such as Snapshot® from Progressive, which measure driver behaviour using in-vehicle devices. Safe driving habits can lead to lower rates. Additionally, reducing mileage can help lower premiums, as driving less decreases the odds of being involved in an accident.
Many states in the US mandate mature driver discounts for seniors who enrol in and complete state-approved driving courses. Organisations such as AARP, AAA, and The National Safety Council (NSC) offer qualified classes. Seniors can also benefit from lower premiums by shopping around for insurance and comparing rates from different providers. Switching insurance companies can lead to significant savings, and it is generally recommended to shop around for car insurance once a year to ensure the best deal.
It is worth noting that insurance rates are expected to rise over time, and seniors may find their premiums increasing due to factors beyond their control. However, by being proactive and exploring various options, seniors can often find lower premiums and save money on their insurance.
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Saving after life events
Life is full of surprises, and some of them can prompt a change in your insurance coverage. Whether it's a planned or unexpected event, certain life changes may qualify you for a Special Enrollment Period (SEP), allowing you to adjust your health insurance plan outside of the annual open enrollment period. Here are some common life events and how they can impact your insurance:
Moving to a New Location
Moving to a new residence, whether within the same state or to a different state, can impact your insurance options. This is especially true if you move from a rental to owning a condo or house. You may want to consider bundling your home and auto insurance to potentially save money and simplify your policies. Additionally, moving to a different zip code, county, or state may change your health plan area, leading you to explore new insurance providers.
Changes in Family Dynamics
Family dynamics play a significant role in insurance coverage. Getting married and sharing finances with your spouse calls for insurance adjustments. Losing a partner through divorce or death necessitates separating finances and reviewing life insurance needs, especially if there are children involved. Turning 26 is a milestone birthday, as it often means moving off your parents' health insurance and finding your own plan.
Employment Status and Income Changes
Changes in employment status, such as losing your job or transitioning into retirement, can impact your insurance coverage. Losing your job doesn't have to result in a loss of health coverage for yourself or your family, as you may qualify for a Special Enrollment Period. Additionally, if your income increases, you may want to reevaluate your insurance plans to ensure adequate coverage for your new financial situation.
Life Milestones
Life milestones, such as becoming a parent or starting a business, call for a reevaluation of your insurance coverage. Having children increases your financial responsibilities, and you'll want to ensure they are provided for in the event of any unforeseen circumstances. Starting a business often involves financial risks, and life insurance can provide funds to cover outstanding debts and protect your family's financial future.
Natural Disasters
After a natural disaster like a hurricane, insurance companies may impose moratoriums and temporarily stop writing new policies. Rates may go up as companies try to recoup losses, but switching policies shortly after a disaster could result in lower rates. However, be prepared for a potential jump in rates when it's time to renew.
Remember, when experiencing a significant life change, it's essential to contact your insurer or the Marketplace as soon as possible to understand your coverage options and any necessary documentation.
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Switching for better service
Switching car insurance providers can be inconvenient, but it could save you hundreds of dollars per year. According to a 2022 study by ValuePenguin, 26% of policyholders saved $200 or more annually after moving to a new provider. CNBC Select recommends Geico, which offers some of the lowest rates and 16 types of discounts. Auto-Owners Insurance is another good option if you're looking for minimum coverage, but it's only available in 26 states.
If you're looking for better service, it's important to check your new insurer's customer reviews and industry ratings to ensure they provide reliable service and handle claims efficiently. Payment options and online account management tools may also be important factors in your decision to switch.
Before switching, it's a good idea to see if your current insurer can provide a more competitive quote. If you've been with the same provider for years, your risk of filing a claim decreases, which should lower your premiums. If you're unhappy with their response, you can then consider walking away.
When shopping around for a new provider, it's important to write down your quote reference number, as it may expire after 30 days. You should also consider any new discounts you may be eligible for, such as safe driver discounts or pay-per-mile policies if you're driving less.
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Frequently asked questions
According to a 2022 study by ValuePenguin, 26% of policyholders saved $200 or more annually after moving to a new provider. CNBC Select recommends Geico for the cheapest rates and Auto-Owners Insurance for minimum coverage. A 2010 Deloitte Research study found that 30% of people have never changed insurance companies, but shopping around for insurance can help you save money.
There is no bad time to shop around for a better deal on insurance. However, you are less likely to save money by switching if you have been in an accident or received a ticket since your last policy renewal. Insurance companies generally only refigure your rates at renewal time, so if you have an accident today and your insurance policy renews in six months, you will pay the same rate for the next six months. It is recommended that you shop around for insurance once a year to ensure you are getting the best deal.
Before switching insurance providers, it is important to think about whether you need any coverage changes and if there are any new discounts that you may be eligible for. For example, you may be able to remove collision coverage if the value of your vehicle has dropped. Once you have found a better rate, call your current insurance company and ask if they can match the quote. If they cannot, ask about their cancellation process. Some companies require advance notice of up to 30 days and may charge a cancellation fee. After you have cancelled your old policy, buy your new policy and confirm it is active.
