The Race For Rates: Letting Auto Insurances Compete

Auto insurance is a necessity for all drivers, but it can be challenging to find the right provider and policy. Comparing auto insurance rates and companies is the best way to find car insurance that suits your needs and budget. While most auto insurance companies offer the same basic levels of coverage, they differ in pricing, customer service, discounts, and additional services. It is essential to shop around and consider factors such as customer reviews, claims handling, and personalisation to find the best auto insurance company for you.

Discounts

Multi-Policy Discounts

Also known as "bundling," this discount is offered when you buy multiple policies from the same company. For example, you can bundle car insurance with home, condo, renters, motorcycle, boat, RV, or life insurance. The discount for bundling car and home insurance is usually one of the biggest, ranging from 5% to 25%. State Farm offers an average discount of 23% for bundling, while American Family and Farmers offer an average of 18%.

Vehicle Safety Discounts

If your car is equipped with safety features like anti-lock brakes, airbags, and daytime running lights, you may be eligible for a discount. Airbag discounts for full-front seat airbags can be substantial, up to 40% applied to your medical payments or personal injury protection coverage. Cars that are less than three years old may also qualify for a new car discount, typically between 10% to 15%.

Anti-Theft Device Discounts

If your vehicle has anti-theft features, you can usually get a discount on your comprehensive coverage. This can range from 5% to 25% off. Some examples of anti-theft devices include GPS-based systems, stolen vehicle recovery systems, and VIN etching.

Good Driver Discounts

Insurance companies often reward good drivers with discounts. This may include drivers who have maintained an accident-free driving record for a certain period, typically three years or more. Good driver discounts can range from 10% to 40%.

Defensive Driver Discounts

Taking an approved defensive driving course can also lead to a discount on your insurance. This discount may be applicable to qualified drivers above a certain age, usually 50 or older. The discount typically ranges from 5% to 10%. In some states, this discount is mandated for mature drivers.

Good Student Discount

If you or your student driver is enrolled full-time in high school or college and meets certain requirements, you may be eligible for a good student discount. This usually includes maintaining at least a B average and being between the ages of 16 and 25. The discount can range from 8% to 25%.

Student Away at School Discount

If you have a student on your policy who is away at school and doesn't have access to your car except during school vacations and holidays, you may qualify for a discount. The student's age must be under 25, and the school should typically be more than 100 miles from home.

Payment Method Discounts

Insurance companies may offer discounts if you pay your policy in full upfront. Additionally, setting up automatic payments or paying through electronic funds transfer (EFT) can also result in small discounts, typically ranging from 3% to 6%.

These are just some of the most common types of discounts offered by auto insurance companies. It's always a good idea to review the available discounts with your insurance agent to ensure you're taking advantage of all the savings you qualify for.

Customer satisfaction

• Level of trust
• Price for coverage
• People
• Ease of doing business
• Product/coverage offerings
• Problem resolution
• Digital channels

Trust is the top driver of customer satisfaction, with high levels of trust resulting in increased satisfaction and brand loyalty, even in the face of rate increases. However, only about half of customers report having little trust in their auto insurer. Managing expectations and being transparent about rate increases are essential to building trust.

The claims process is another critical factor in customer satisfaction. Customers appreciate clear and accurate repair timeframes and prefer working with people over digital contact for claims. Digital tools can enhance satisfaction when used for delivering status updates, but may lower satisfaction if used for initial loss reports.

The J.D. Power study also found that overall satisfaction scores were highest when the insurer used straight-through processing technology to automatically approve and route claims. Additionally, satisfaction increased when customers had a single point of contact during the claims process.

Auto insurance companies that consistently rank high in customer satisfaction across different studies include:

• Erie Insurance
• Amica Mutual
• Auto-Owners Insurance
• The Hartford
• State Farm
• Geico
• Progressive
• American Family
• NJM Insurance
• Travelers
• Nationwide
• Farm Bureau Insurance

These companies offer a range of standard coverages, additional policy options, and discounts, contributing to their high customer satisfaction ratings.

Financial strength

When shopping for auto insurance, it is important to consider the financial strength of the insurance company. Financial strength matters because you want to buy protection from a company that is financially strong enough to pay the claims of its customers, especially in the event of a large-scale disaster.

There are several agencies that rate insurance companies' financial strength, including A.M. Best, Standard and Poor’s Corporation, Moody’s Investor Service, Fitch, and Demotech. These agencies consider a wide variety of factors, including financial leverage, management stability, recent performance, and the company’s overall financial situation.

A.M. Best is the most prominent financial ratings agency for insurance companies and has been in the business since 1906. Each year, Best publishes Best’s Insurance Reports, a multi-volume set in two editions – Life and Health Insurance Companies and Property/Casualty Companies. Best rates each company on either an alphabetical (A++ to F) or a numerical scale. The latter is the Best Financial Performance Rating (“FPR”), with 9 being the highest rating and 1 being the lowest.

Standard and Poor’s Corporation rates insurance companies on their claims-paying ability and publishes “Security Circle” and “Financial Enhancement Ratings”. An S&P Financial Strength Rating is the agency’s current opinion of the financial security aspects of an insurance company, with a specific focus on the company’s ability to pay claims on its insurance policies.

Moody’s Investor’s Services assigns Financial Strength Ratings that measure an insurance company’s ability to meet its senior policyholder obligations and claims. The rating analysis is similar to Moody’s well-known and respected bond ratings. A Moody’s Insurance Financial Strength Rating is an opinion of the insurer’s ability to repay senior policyholder claims and obligations punctually. The ratings are broken down into nine distinct symbols, with each symbol representing a group of ratings with the same quality characteristics.

Fitch offers an Insurer Financial Strength rating (IFS rating) that provides an assessment of the financial strength of an insurance organization and its capacity to meet senior obligations to policyholders on a timely basis. Most companies that are rated by Fitch request the rating and go through an interview process.

Demotech is a financial analysis firm that specializes in evaluating the financial stability of regional and specialty insurers. Demotech’s philosophy is to review and evaluate insurers based on their area of focus and execution of their business model rather than solely on financial size. Financial Stability Ratings (FSRs) are a leading indicator of the financial stability of an insurer and are based on a series of quantitative ratios and considerations that comprise the Financial Stability Analysis Model.

When choosing an auto insurance company, it is important to consider the financial ratings provided by these agencies. While no rating system is perfect, these ratings can give you a good idea of an insurer’s financial stability. By considering the financial strength of an insurance company, you can ensure that the company will be able to pay your claims today, tomorrow, and well into the future.

Affordability

The cost of car insurance can vary significantly depending on a range of factors, including a driver's age, gender, vehicle type, location, credit history, driving record, and claims history. For example, younger or less experienced drivers, as well as those with a poor driving record or credit history, tend to face higher-than-average rates. Additionally, rates can fluctuate due to wider trends in the insurance market and changes in an individual's circumstances.

To find affordable car insurance, it is recommended that drivers compare quotes from multiple insurance companies, as rates can vary considerably between providers. Online insurance comparison sites can assist with this process, allowing drivers to input their details and quickly generate quotes from a range of insurers. However, it is important to be cautious when using these sites, as some may sell users' data to insurance companies, leading to unwanted spam and contact.

Another strategy for keeping costs down is to take advantage of the wide range of discounts offered by many insurance companies. These can include discounts for safe driving, having a good student record, insuring multiple vehicles, or bundling home and auto insurance policies.

It is also worth noting that larger insurance companies do not necessarily offer better rates than smaller ones. While bigger companies may have greater financial stability and more online tools and features, smaller, local companies often provide more personalized service and may have lower rates in certain cases. Therefore, it is beneficial to consider insurers of all sizes when searching for affordable car insurance.

Customer complaints

Customers may have a variety of complaints about their auto insurance companies. The most common issues are related to claims, with 68% of all complaints being about claims handling. This includes unsatisfactory settlement offers, delays, denial of claims, and adjuster handling. For example, in 2019, there were 890 complaints about unsatisfactory settlement offers and 834 complaints about delays.

Other common complaints include issues with car repairs, car valuations, misrepresentation and non-disclosure, problems at renewal, and fault claims and no-claims bonuses.

When customers are unhappy with their auto insurance company, they should first take their complaint directly to the insurance company by phone or email. If the issue is not resolved to their satisfaction, they can write a letter of complaint or contact an ombudsman. If the ombudsman's decision is unsatisfactory, the customer can take the matter to a small claims court, although this can be expensive due to additional legal costs.

Some auto insurance companies have lower levels of complaints than others. For example, Nationwide, USAA, Travelers, and Erie have been rated as the best car insurance companies by Forbes Advisor, with low levels of complaints and high customer satisfaction.

Frequently asked questions