Shopping for Insurance

Since "regularly shopping for insurance" was #31 on my list of the 52 best money saving tips, I thought I'd follow my own advice and compare our current insurance costs to those offered by other companies. Given the savings some people have seen ($1,400 here and $1,300 there), it seemed like the effort could well be worth it.

It's been a while since we quoted out our insurance. Too long in fact. We haven't shopped for insurance for years. We love the service at AAA (our current provider) and over the years they haven't raised our rates -- they have LOWERED them. So I felt like we were getting a good deal. Then in a discussion at work I mentioned that I had AAA insurance. Someone said, "Really, I always thought they were so expensive." So we decided to find out. If AAA was close to the others (even if they were a bit higher), we would stick with them. But if we found big savings elsewhere, we were ready to move.

My wife did all the hard work -- getting the quotes. I provided her with our current statements from AAA for car, homeowner's, and umbrella insurance to make sure we were quoting the exact same coverage we had now. In addition to asking for a quote given our current status, we also asked for quotes assuming my son was a driver -- which he will be in less than a month.

Next we had to decide what companies we should get quotes from. I prefer to have an agent I can go see if needed. Therefore the GEICOs of the world were out. They may be fine (I'd be interested in hearing from those of you who do/have had experience with them), but if anything happens, I want to have a dedicated person on the task. I've only needed insurance a few times, but when I have, it's been very nice to have an agent to rely on (and stop by their office if need be.)

From there, we asked our neighbors and friends what insurance companies they used and liked. We eliminated the ones we had never heard of and ultimately ended up with State Farm and Allstate as contenders. In addition, we decided we'd try Costco's insurance program just to see what they had to offer.

Over the course of a couple weeks, my wife got the bids. Here are the annual premiums given our current status:

• AAA - $2,253
• Allstate - $2,447
• State Farm - $2,794
• Costco - $3,230

Then with my son as a driver:

• AAA - $2,853
• Allstate - $3,391
• State Farm - $3,284
• Costco - $4,784

A few thoughts on these results:

• Looks like we are getting a good deal with AAA!


• Though I haven't broken out the numbers above, AAA was the cheapest option on each individual type of insurance (car, homeowner's, and umbrella) as well as the total.


• Allstate wasn't out of the realm of reason, but the other two seem high.


• For some reason, State Farm gave us a quote for umbrella insurance that was lower than what we wanted. Since they were already higher, we didn't get a re-quote, but their actual numbers would probably be $50 to $100 higher than what's above.


• My son adds $600 a year to the bill with AAA. This is less than I had expected. He adds only $500 with State Farm, but almost $1,000 with Allstate and $1,500 with Costco. Yikes!


• Looks like Costco is far from the cheapest alternative. I wonder how many people go with them simply because they assume everything at Costco is cheaper.

Of course, these numbers are particular to our vehicles, house, deductibles (which we keep high), area of the country, and so on. So the answers could be different for others based on their specific criteria. To be clear, I am NOT saying that what is cheaper for me will be the best deal for anyone else. I am saying you need to quote out your insurance to find out for yourself.

So we're sticking with AAA, which I am happy to do. They have always treated us quite well and it's good to know they are giving us a good price too.

How about you? Do you shop around for insurance? If so, what have you found? If not, do you feel you're leaving money on the table?

Comments

[cmadler]

Every time I've shopped around, AAA has been much cheaper than other carriers for the same level of insurance. And like you, I've always been happy with their service.

[Matt]

WOW if you are only being charged $600 by tripple pay to add a teen driver you are doing good. We were being charged $1200 by them to add a teen and that basically doubled our premium. After adding another driver two years later it went up to add the next one $1400. That is when I looked around and Allstate gave us an $1800 break from AAA.

All I can say is there are to many variable when it comes to car insurance that is can vary by the hundreds. Heck even your zip code has an influnece because of the crime statistics for that area.

[Lance @ Money Life and More]

I didn't even know that AAA sold insurance so that is news to me. I pretty much just use USAA and the companies they use if they don't offer a particular type of insurance in my area. I do get quotes occasionally from other companies but USAA always seems to be the best overall choice (including by price).

[BJ]

I can guarantee GEICO will be $2000 or less for the first category. I have had GEICO for years and whenever I switch to Statefarm or other insurance companies such as Progressive, I end up coming back to GEICO. And they always pay higher than other insurance companies when it comes to claims. Say you were involved in a no-fault accident and the other parties insurance companies gives you a claim quote lower than GEICO quote, GEICO will give you the option of which claim quotes you want to accept and fight on your behalf for the higher quote if you choose to go with theirs. I don’t see the need for a physical agent and paying 10% or more when you rarely need them. Furthermore, the physical agent won’t do you any good if the company decides to pay less than what you car is worth for example. It will be interesting to see what GEICO will quote you for in both categories.

[Holly]

FMF -
It would be interesting to know the details of all of your coverages for comparison, i.e. how many cars do you insure, what models/makes/year are you vehicles, how high are your deductibles, do you carry comprehensive or just liability, how much umbrella insurance coverage, and for how much is your home and your personal belongings insured?

I doubt you want to get too personal w/details but it would help the readers to know if we are paying way too much for a similar scenario.

I think I need to call around for quotes soon since I have a teen driver and another coming up in 1 year!

[FMF]

Holly --

It doesn't really matter. As Matt says, there are too many variables for my info to be compared to your info (coverages, location, credit score, etc.)

The main point is this: you should shop out your insurance every now and then just to see if you are getting the best deal.

[Bogey]

I suggest to never go through an agent that is actually representing the company and not the customer (AAA, State Farm, Allstate). These agents have the companies best interest in mind.

Instead, always use a 3rd party broker who works for the best interest of the client, and will work on your behalf when you have a claim, instead of working to reduce costs for the insurance company.

Most consumers do not go this route, and not only do they pay more than they should, they do not get the representation that they need in times of severe claims.

I switched from State Farm last year and went through a 3rd party broker. I am now insured by Hanover, which is a good company, but my agent represents me.

I went from having bare bones coverage on my vehicles, to full coverage with much higher coverage limits. Similar coverage on my house. Also added a $1MM umbrella liability policy.

Overall, even with much, much better coverages, the costs dropped pretty substantially.

FMF - I recommend finding a 3rd party broker and getting a quote through them. The company I use is actually a commercial insurance broker in my city, but they have a "private client services" division that does all of their business owner's personal insurance business, as well as other professional individuals like myself.

[Jessica]

I switched from AAA to GEICO to save over $600 a year. I have two vehicles. Most insurance companies treat the single person with two vehicles as two people with regards to liability. I can only drive one vehicle at a time, and now I am charged as such.

[Jon]

This is one area where I am brand loyal. My wife and I have State Farm. Always have. Probably always will. My parents and brother have always had State Farm. Their customer service on the claim side has always been exceptional.
My insurance agent's office is a mile down the road, and I have yearly meetings with him to make sure all of my coverage is still on track.
This is one of the few areas where I just stick with what I know, even if it costs a bit more.

[JayB]

I am in the exact same position as Jon, we have had State Farm for probably 25+ years in the family and with the family bundling, no other insurance companies come even close.

I frequently get cards in the mail with phone numbers to get a quote with other insurance companies, and on a few occasions I have called them. After talking with the people and finding that I already pay $100's less than their quote, they are shocked.

I'm not exactly sure if years of service and/or customer reputation have anything to do with it, but it seems this way.

[Tim]

Check out Amica. We save hundreds per year and great service.

[Matt]

I had AAA for years until I received a quote that cut my insurance bill drastically.

$1800 is not worth brand loyality, it is blind stupidity and rape on the insurers part.

But then agian adding teen drivers gives them the opprotunity to jack your premium all over the place.

[Catherine]

I've got the same agency I had since I started driving.

Periodically, I've priced GEICO, StateFarm and others. 15 minutes has never saved me 15% or more. In fact, it has never been financially advantageous to switch policies for Auto, Homeowners and Umbrella.

For heatlh insurance, though, switching to a high deductible policy saved us several thousand dollars per year.

[Oliver]

I learned this process while selling cars - it works. I do it every time my premium increases, and I tell my current insurer I'm doing it to give them the opportunity to keep my business.

1. I make a list of all the insurance agencies in the area who use multiple insurance companies. The agencies act like multipliers (broadcasting my quote request for me to many different relevant insurers). Also, some of these agents even have deals with 'direct' insurers like Geico.

2. I make an Excel sheet with all critical information on my wife and I, our cars, and our policy details (from the current declarations page).

3. I call each agent and offer to fax/email them the sheet. They usually appreciate this, as it saves them time.

I go with the lowest bidder. Takes me about 2 hours altogether every year (or 6 months if doing a 6-month policy winds up cheaper).

[KJ]

We use USAA (and have our banking with them as well as renter's insurance and a very small car loan.) I haven't priced out insurance in several years. We recently had an incident where we needed to use our car insurance. USAA was very easy to work with over the phone and by email.

[Keith]

My wife and I just discussed this last week. A year or more ago we went with an ELP from Dave Ramsey's organization. However, we have never seen him and he has done nothing pro-actively for us. I hate insurance because it is an outflow of money I'd rather spend on something tangible. So we need to shop around. Good reminder.

[Squeezer @Personal Finance Success]

If you have Geico and join the National Military Family Association, you will get an 8% discount.

[Jim]

We have Amica. We haven't shopped around lately. Amica was a little more than other quotes but their service is so good its worth it to us.

[Leigh]

I shopped around for insurance when I first bought my car. I checked out GEICO and also went through a local agent that pulls quotes from multiple insurance agencies. The insurance company I ended up with saved me about $900/year over the next cheapest one.

I shopped around again when I bought my condo and saw the same story. My agent agreed with me that it's not worth the effort of shopping around again until I turn 25.

[Jon]

By the way, with State Farm I pay less than $2200 a year for 2 cars with full coverage, home owners insurance with an earthquake rider (in Ohio), an umbrella policy, and an additional personal property insurance policy for some misc. items.

[Jeffinwesternwa]

USAA...a $2M umbrella ($1K deductibel), homeowners of about $200K~ house ($2500 ded), Auto, 300/500, libility, comp, collision, towing, ($1K ded)...It ALL runs me ONLY $900 a year! :)

And due to uninsured drivers at fault, I've collected off my collision twice, had a collector car stolen (and paid off nicely), so in 25 years w/ USAA, I haven't paid much more in auto premiums thatI've collected vis claims!

[Deryl]

I have Progressive and believe it or not at the age of 19 i pay less than most of my friends. Granted i do not drive the newest car or the most fanciest thing, but it gets me around and still drives like new! My insurance runs me about 167 month but that is with Renters, Car insurance, and a life policy.. Which is great threw Progressive.. I doubt i'll switch from them because i like my local agent and they provide great customer service.

[JimL]

We shopped for rates about 3 years ago when we moved. We went with Travelers for various reasons. This past year, we added a second teen driver to our policy, which caused a big jump and then Travelers increased our various policies (auto, home and umbrella) due to what they described as a new rate table. Homeowners alone went up 40% and we have never had any claims with them. When combining all the policies and changes our total annual cost was $6500. We decided to then shop again for new rates. Almost everyone was cheaper and we are now down to about $3600/year with Erie.

Before switching we did ask Travelers to lower the rate, but they refused. When we cancelled the insurance, they tried to retain us, but it was too late.

[Chris]

I comparison shopped not too long ago and came up with the following for myself (northeast, single, 2 cars, 14 years driving with no accidents). I went with Travelers based on price and one personal reference who had a positive claim experience (or as positive as one could expect). In my particular case, Travelers had the lowest cost for adding an additional vehicle.

NJ Manufacturers $1,434.00
USAA $1,373.88
AAA $1,204.00
All State $1,800.00
Geico $1,056.00
Travelers $950.00
21st Cent (/Farmers) $1,500.00
State Farm $1,402.00

[Noah]

I have had State Farm ever since I can drive. Insurance is one of those things where you get what you pay for. I've heard many horror stories from friends about Geico, Mercury, etc. where the rate was fantastic, but once they were in an accident or required assistance, the service was horrible. I was in an accident almost 10 years ago and within a week or two I had a check in my hand to help pay for a replacement vehicle. I've always felt like my agent was honest and he has given me advice that helped save me money, like not dealing with State Farm at all when the accident was the other person's fault.

I have vehicle, renter's, and life insurance through State Farm and the rates are comparable with other companies so I will stick with them for the time being.

[Mike B.]

I just shopped around recently as well. I used to have Progressive for car and Progressive Home Advantage for home. I found an independent agent who saved me almost $2K on my home insurance (not from what I had been paying, just from the quote I just got for next year--it went up over 50% based on nothing I did personally, ie. I didn't file a claim or anything). The new insurance is through SafeCo. I stuck with Progressive for car insurance because it wasn't much different cost-wise and I prefer the ability to do everything and see everything online without having to pester someone to get it.

I had had Farmers a long time because I always liked having an agent because I thought they would really help me if I filed a claim. Well, I filed a claim, and he wasn't much 'help', so I dropped him soon after.

PS. When I mentioned that I didn't have a mortgage, that saved me an extra $100/yr on my current home owners' policy.

[Kenny]

GEICO is the best for Adults

AmFam is the best for Kids

Separate out your policies and your cars, and you will get a great deal.

Our Insurance Costs:
Parents:
2 Cars: $330 per 6 months

Kids:
2 Cars (different than above): $360 per 6 months

Kids cars are older, and one of the parents car is a Lexus RX SUV.

So, we have worked out the BEST DEAL bar none, and I do not have ANY loyalty to insurance companies, but these two companies CANNOT be beat with their rates.

Also, AmFam will allow you to put a neat high-tech camera that will record mistakes-ONLY and allow parent and/or kid to replay what happened, with commentary from the Service Provider also ("please do not take sharp turns"; "look on both sides before entering a busy road"; "it is always better not to be distracted while driving"). All of these recommendations come 24 hours AFTER the event is caught, and one can log into a portal to get this. ALL OF THIS IS FREE if you have an AmFam policy for a young driver.

Kenny

[Terry]

If Erie Insurance is available in your area check them out. They have always been cheapest for me and the service is great as well.

[PeteC]

@FMF

You should check out Amica, just for kicks. I've been with Amica since I first stepped behind a wheel, without a single complaint. (we have homeowners, 2 cars, and 2 life policies, identity theft rider, child death rider) Plus, JD Power & Associates has ranked Amica at #1 in customer satisfaction against all of the companies mentioned above for 12 consecutive years:

http://www.amica.com/about_us/awards/awards.html

I'd be curious to see how Amica would compare in price to AAA. I would assume that AAA would be cheaper, but by how much?

[John Egan]

You always should shop around for car insurance. You never know whether another insurer may have a better deal for you unless you get quotes from several insurers. If nothing else, don't be afraid to ask your current insurer if you can get a lower rate.

[Jclimber]

I've had insurance with USAA, Allstate, State Farm, and Geico. Had car insurance with USAA for the last 3 years until this year priced it out again and found it was much cheaper with Allstate. Also saved even more because my home policy was already with Allstate (USAA won't insure my home because of my GSD, lame!). I don't see any reason to not use a firm like Geico, but in my case they weren't cheaper.

[Andrew]

As an independent insurance agent I know first hand how important shopping your car insurance is. One of the biggest tips most customers who are shopping for insurance don't know is that independent insurance agencies offer so many different carriers and further choices then you could imagine. As one of your tips to follow I highly advise using and independent agency. Do your research and you will definitly save money!