A Real-Life Example of How to Save $1,300 in Less than Two Hours by Shopping Around for Car Insurance

Travis, a regular Free Money Finance reader, left a comment on this site saying he had saved a bundle by shopping around for car insurance. I emailed him and asked if he would share his story with all of us. He was gracious enough to do so -- here's what he had to say.

Have you ever had the feeling that you’re getting screwed but you don’t have proof yet? That’s how I felt about my wife and I’s insurance policies. The thought had been plaguing me for two years, and yet I did nothing about it. I was once mentored by a millionaire who told me that people always want to learn how to get rich, but the first step should be plugging the leaky holes in your bucket. If you get more money, you’ll just lose it twice as fast as you did before unless you plug the areas where you’re losing money now. And one major area is home and auto insurance. I “knew” this and yet did nothing for two years. I hope this helps you see that the secret in getting rich is not in the “how to”, it’s in the “to” (the actual doing). I just recently got married so changing insurance was on the endless list of things to do, so I explored my intuitive feeling, of being screwed, and here is what happened:

1.) I got out the phone book and called around to all the insurance companies in the area who’s names I recognized (Geico, Allstate, Farmers, Progressive, etc. etc.). Geico had the lowest quote.

2.) I called our current carriers, Statefarm for me, and Farmers for my wife. Explained that we had a lower quote and wanted to see if they could match it (I’ve been with Statefarm for 16 years, talk about loyal). No luck, they couldn’t match it, and to be honest they didn’t even seem to care one bit that I was thinking about leaving. They were very short with me.

3.) I was ready to call Geico and guess what, a had another intuitive feeling that there was more to do so I did a quick Google search for “how to save on home and auto insurance”, searched all of my favorite blogs, and somewhere I found a link to this site. I went there and grudgingly filled in all of my information (I hate filling out online forms). It printed out a sheet of matches for insurance carriers, and said that they would contact me.

4.) About four of the eight contacted me within a day or two and a small local company had the lowest quote. It was a company that I had never heard of before. The name of the company was merely the owner’s last name. His quote was so darn low, I became skeptical. He explained that since he is not under one carrier anymore (Allstate) he can now shop around to different carriers and get the best deal for his customers. We settled on a quote from Safeco.

5.) Because of my skepticism I went to www.bbbonline.org and did a Better Business Bureau search for his company, no complaints (I forgot to check our local chamber of commerce).

6.) I went to http://www.naic.org/cis/index.do to see if the insurance company (Safeco) had any complaints.

7.) I went to http://www3.ambest.com/ratings/default.asp to check out the rating of the insurance company (Safeco). (a shortcut to steps 5-7 is to simply ask the sales agent to send you the information that you want)

8.) I checked out an unusual but helpful site http://www.badfaithinsurance.org/. This is a site that my former millionaire mentor uses.

9.) I called the sales agent back and signed up. I went in to meet him, talked about life, family, and got to know him. I paid for a year up front (it’s cheaper that way).

Oh, and in case you’re wondering the coverage’s are higher than we had before. This was about an hour and a half of work spread out over a week, 10-15 minutes a day. Our deductibles are $1,000 for house and car. I drive a 1989 Honda Accord (my focus is now on riches not reputation). My wife drives a 2005 Suzuki Forenza (she’s jumped on board too).

Old Premiums

• 1989 Honda $176.42 every six months
• 2005 Suzuki $642.80 every six months
• Homeowners $542.75 for the year

New Premiums

• 1989 Honda $77.40 every six months
• 2005 Suzuki $192.60 every six months
• Homeowners $355 for the year

Yearly Savings: $1286.19 or $107 a month that will now go to paying off debt and then to some kind of investment (mutual fund, index fund, ETF, Stock, etc. etc.)

TIPS THAT I PICKED UP ON WHILE SEARCHING FOR CAR INSURANCE

1.) Get a pen and paper and write all of your quotes on the SAME piece of paper. (I used to just grab whatever was near me to write on)

2.) Every time you get a quote ask the sales agent what discounts you qualified for. WRITE THEM DOWN, on the same piece of paper! They will come in handy.

3.) Each new quote you get, ask the sales agent if you qualify for the following discounts: (the ones you wrote down in step 2). If you keep doing this you will notice that some insurance agents don’t automatically apply all of the discounts that you qualify for when they quote you. You have to be proactive.

4.) My credit score is lower than my wife’s and my lovely banker gave me a secret that has saved us thousands of dollars. Whoever has the better credit put them as the applicant and the lower credit person as the co-applicant. Even though I was on the application they used my wife’s credit score and hers only. My new insurance agent said insurance works the exact same way. So…whoever has the best credit ask the agent to quote you using their name and social. The bad credit person I believe will just be a co-driver. I’m not sure how it works with insurance but I did ask him to run the quotes both ways with me first, then my wife first, and as we expected the quote came back less with her name first (because of her good credit).

5.) I also noticed that on his quote he had the policy effective date about 3 weeks out. I asked him why and he explained that it’s a little insurance trick. He said that with some insurance carriers if you quote the insurance far ahead in the future it triggers another discount. Something along the lines of, you are reward for shopping around early instead of waiting to the last minute and shopping for insurance the day your policy is about to expire.

6.) Have a conversation with the sales agent. Ask them do they enjoy their job, does their family carry the insurance that they are quoting you. Just get to know them. A friend will try to save you money before a stranger will. You’ll be surprised how much “insider information” they will share with you once they get to know you.

Comments

[t3ch]

Awesome story. I try to tell my friends who've had the same people for years to shop around but they're stuck in loyalties. State Farm never seemed even remotely interested in caring whether I was or wasn't with them, either. I have a file with all of my bill informations, account logins, etc, and at the bottom I have a list of every insurance carrier I can think of, and I recheck every 6 or 12 months.

A few more things to consider:

- Don't forget to check places you may not know you're eligible. Credit Unions, military organizations (USAA, etc.) They often

- Check places that offer combo coverage on car, home, boat, etc coverage. It's just like getting internet, TV, and phone service together; usually cheaper.

- Pursue cheaper coverage. When your 6 or 12 month premium is coming to an end, call your insurance company and let them know you've been happy with their service but plan on shopping around. Find out if you have a loyal-customer discount coming up (I all sorts of discounts with Geico), if any of your past incidents should be expired off the policy (I've had companies hold onto these before even though it's past their 3- 5-year date), etc. Not to mention if you've taken defensive driving or a motorcycle safety course, keep the paperwork and fax it in!

[Seth]

I have to take issue with using item 8 as any sort of criteria for selecting an insurance company.

http://www.badfaithinsurance.org/copyright.html

The site is sponsored by Find-A-Lawyer and the disclaimer makes it pretty apparent that the information contained on the site is self-reported and suspect at best.

The rest of your article provides good advice though.

[Travis]

Thanks for the post and keeping your word.

[Mindy]

I had the same thing happen to me! We had been with state farm for years, and a friend of ours told us about AIG insurance for autos. I gave them a call, and they quoted me at $680/six months for 2 cars (a 1997 toyota camry & a 2002 subaru outback-full coverage on both). With state farm we were paying $640/6mo-toyota and $720/6mo-subaru. It's almost half! When I called to cancel, my statefarm agent yelled at me, and told me that "I'd be coming back" I don't think that will be the case. It made me want to look around for a different home owners insurance policy too.

[Kat]

Some states don't allow insurance companies to give rates based on credit scores. Check and see if your state is one of those. Saves you a bunch of time!

[Robin]

Please do not get in a wreck if you have Safeco :(

They 1) Made me drive a rental car on my own dime (I know, I should have had rental coverage) for 2 months while they decided not to total my car, then later decided to total it
2) fought every medical bill I had - we had to sue to get them to pay. It was not an astronomical amount of money, maybe $3500
3) flat out refused to pay the medical expenses of the person that was in the car with me at the time of the wreck - made him file a claim with his own car insurance when he is not related to me and was not driving at the time. (yes, I had the appropriate coverage to cover him in this case)
4) chastised me for not having a policy in the appropriate state - I had moved 6 months before, had Safeco before and after moving, they knew about my new address right away. Isn't it their duty to rewrite my policy for the new state?
5) After 2 months of not knowing whether they would total the car or not, had to wait another 4 weeks to get paid for the car (I owed way less than it was worth)

[Robin]

Just to add - I will be lodging these complaints at the site you mentioned. The case didn't settle until almost 3 years later so I didn't want to post anything until it was done.

[AkronOhio Folks]

My wife was rear ended over a month ago and his insurance company was SAFECO. A representative name SHerry called and said to take the car up for an estimate. A while later she called back and said the estimate stated three days for repairs. She asked if she would want a rental or 25 dollars a day. She chose the cash thinking we would have no problem with transportation.

It turned out the car was in the shop for several weeks instead because of unforeseen damage. WHen my wife called and spoke to Sherry, she got an earful from her stating that she wasn't putting money into our pocket. It stressed my wife out so much she talked to her supervisor who said he would take care of it.

Yeah, he talked care of it......today we got a check for 75 dollars instead of around 300. We are honest folks but I guess we learned the next time to fake injuries and whatever else we can do to get money out of them.

[Robin]

AkronOhio - that is bad news, I'm sorry. In my case I was sandwiched between two cars, both of which fled the scene. My absolute most favorite car I've ever had that was 10 months from being paid off was totaled. In cases like this you want your insurance company to help you, not hurt, right?

I found Safeco through Sam's Club insurance up in Michigan before I moved to Texas. To me it is not worth their cheap rates to not be able to count on them in a time of need.

[Eddy]

(Disclaimer: I am an insurance agent.) Sounds like he went to an independent agent. State Farm, Farmers, etc. those guys are what are known as captive agents. In other words, they only write insurance under those companies and their rates are what they are.

An independent agent generally represents several companies, some you may never have heard of. (For example, for auto I represent Progressive, Safeco, Unitrin, AIG, Hartford, Travelers, Zurich, and Chubb just to name a few.) An independent's job is to get quotes through several carriers and see who has a better rate. Some companies have generally better rates than others but not everyone's situation is the same and rates vary from company to company which is why an independent represents several.

As with any company, Safeco is going to have bad customer service issues but they also have good ones so don't give them too bad a rap. Prior to becoming an agent, I had Safeco for two years. I was involved in a rollover accident (slippery road, lost control, no one was at fault) in which my vehicle was totaled. I had only had my policy three months and Safeco paid off my vehicle with about $30 left over which they sent to me. The following year, I struck a deer and damaged my car. Two days later, I had a check for a reasonable amount to fix my car. Each time, my premium went up about $20 for 6 months and then came back down.

Alternatively, when I had State Farm in my younger days under my parents, I got into another accident which totaled the car and State Farm jacked up the rates so high on renewal we couldn't afford it. A common tactic when you cost them too much money. I'm not saying State Farm is a bad company but every company can have bad experiences.

The posters tip about getting to know your agent is a very good one. As an independent agent, I know most of my insureds by first name and on sight. They ask about me and my family and I ask them the same. When it comes time for renewal, I look for a better price for them and let them in on the process for the sake of transparency. Some agents will just renew you as long as the premium is the same and you don't complain.

As a parting tip, don't always go with the cheapest because the old adage, "you get what you pay for", sure can rear its ugly head when a claim arises. In my city, there are several companies that advertise liability only for $25 to $50 a month. What the ad doesn't say is that only the insured can drive the car. If anyone else drives it, there is no coverage. Sounds ok, until your friend borrows your car and causes an accident. What you saved monthly is going to end up costing you dearly.

[Illiterati]

When our auto insurance was up for renewal with Progressive, I checked with our local Allstate agent, who has our homeowner's policy, if she could beat it. She did, but only by around $30/6 months. I called Progressive and asked if they could beat that. The rep did one better and reran a whole new quote instead of a renewal--same terms as the original policy. Because we'd been with Progressive for 2 years, we ended up saving $140/6 months with this "new" policy. Nobody could beat that rate, so we stuck with Progressive.

[Chetan]

I had Geico for 2.5 years till this winter (Feb actually), when I slipped and rear-ended (well, a glancing blow to the right rear fender actually) a Honda in front of me. Geico was real nice - they paid for the damage, which cost them in all about $2400+.

However, though this was my first accident, they increased my premiums by $500 a year. That pushed me to shop around and I got a better deal from AIG - so now I'm paying $40 lesser than what I was paying GEICO in the first place.

Just sharing my personal experience.