The Smart Way to Save on Car Insurance

Tobie Stanger

In the state of Colorado, steep climbs don’t just happen on Rocky Mountain roads. Car insurance premiums there rose more than 78 percent from 2011 through 2018, according to The Zebra, a car insurance search engine. It’s not much better in Rhode Island, where prices ballooned more than 54 percent during those eight years. And it’s cold comfort to Michiganders that rates there dropped about 6 percent between 2017 and 2018, because the Great Lakes state still has the highest average annual premium in the country: $2,693.

While there are places in the U.S. where car insurance rates have dropped or stayed about the same, the average annual premium nationwide has risen about 23 percent since 2011. It’s now at its highest: $1,470 per year.

If you’re a driver whose premium is careening out of control, how do you put on the brakes? The answer may well be to put your current carrier in your rearview mirror.

Among the 22 percent of Consumer Reports members who told us they’d switched insurers in the past five years, 62 percent said they’d found a better price. And 77 percent of those who switched said they were highly satisfied with their new carrier.

New Car Insurance Ratings

That’s just one takeaway from Consumer Reports’ recent car insurance survey, which is based on the experiences of 90,352 CR members.

CR is now basing its car insurance ratings not only on driver satisfaction with claims settlements—our main gauge in the past—but also on more details about the total consumer experience. Our ratings now encompass satisfaction with claims settlements, premiums, nonclaims service, and other factors. Also for the first time in Consumer Reports’ history of rating car insurance, we asked people who switched to tell us about their current company—and judge the one they left in the past five years. All of this means that some insurers that looked pretty good in the past may seem less stellar now. (See CR's full car insurance ratings.)

Seventy-three percent of members told us they were highly satisfied with the carriers that have covered them in the past five years. A remarkable 86 percent were highly satisfied with the way their company handled claims. But only 51 percent said they were satisfied with the price they were paying. What’s more, 41 percent told us their current insurer increased their premiums in the preceding 12 months. Premium boosts were responsible, at least in part, for 40 percent of moves to a new insurer.

Should You Change the Channel?
These ubiquitous TV commercials might be burned into your retinas. But the bad news for auto insurers is that the megamillions they spend on brand recognition aren’t translating into a superior experience for customers of the insurance itself. CR’s overall satisfaction scores for these top five spenders were just so-so.

What Explains Price Hikes?

A number of forces are behind surges in car insurance prices. An increase in severe weather events that damage cars and cause accidents is to blame in some regions. Vehicle thefts are up 7 percent since 2013. High-tech car features have increased car safety but also driven up repair costs. Distracted driving is up, and getting caught texting may cause your premium to rise. And relatively low gas prices have led to more drivers logging more miles—and raised the potential for more accidents.

Of course, changes in a driver’s personal life and driving record also have an impact. Members who saw increases of $200 or more in the previous year mentioned reasons that included adding a new vehicle or teen driver to a policy, or having one or more recent accidents. The median premium hike for all folks who saw an increase was a whopping 44 percent.

Don’t skimp on these
4 important coverages
Liability insurance
Every state except New Hampshire requires drivers to have a minimum level of liability insurance, which protects your financial assets if you’re sued after a car crash. But experts say it’s smart to go beyond those minimums if you can afford to do so. In a legal judgment, your wages could be garnished. A more protective amount of coverage is $100,000 per person, $300,000 per accident, and $100,000 for property damage. Also consider an umbrella liability policy, which extends coverage for your car and home.
Underinsured coverage
This indemnifies you after a crash with a driver who has only the state’s minimum required liability coverage.
Uninsured motorist coverage
In some states, this coverage is optional. But with 1 in 8 drivers going without car insurance—a statistic that’s been fairly constant for more than two decades—it’s a worthwhile spend. It pays medical bills for you and your passengers after an accident caused by an uninsured, at-fault driver. Why get it in a no-fault state? Because it reimburses for lost wages after a crash. It also covers you and your household as pedestrians, and in hit-and-run accidents.
Full glass coverage
Auto glass that integrates advanced driver assist systems is more costly to replace. A mounted lane departure warning camera, for instance, can add $350 to a windshield's price, plus $300 for recalibration. This no-deductible coverage is useful when insurance won’t fully cover the cost to replace glass. In states where it’s offered, it can cost as little as $10 per year.

Be Proactive About Price

In spite of that, many people don’t look past their current insurer for a better deal. More than half of our members—54 percent—have been with their current company for 15 years or more. Among those who switched in the past five years, only 18 percent said they regularly searched for new coverage.

“It’s critical to shop frequently for auto insurance,” says Robert Hunter, director of insurance at the Consumer Federation of America, a nonprofit group in Washington, D.C. To get motivated, consumers need to shelve concerns that a new carrier will drop them when they file a claim. “It’s not true that new insurers treat you worse than old insurers,” Hunter says.

Plus, any loyalty discount you earn may be undermined by an insurance practice called “price optimization.” That’s the mining of data collected about your online and offline shopping behavior to gauge your sensitivity to price. Why would your insurer charge you more even though you’ve been a good driver and loyal customer? Because the data show you won’t bolt. “Your old insurer may offer you a loyalty discount of, say, 10 percent, but it could use price optimization to raise your price 30 percent prior to giving you that ‘great’ discount,” Hunter says.

Price optimization in car insurance is legal in 30 states, but Consumer Reports has joined the Consumer Federation of America in advocating for its elimination. (Sign CR’s petition to stop price optimization in car insurance.)

How to Be a Smarter Shopper

Consider price-shopping annually. Focus on claims-settlement experience and price. In our ratings, those were the best predictors of overall satisfaction. Hunter says to first try “direct writers” that employ their own agents and may have competitive rates. (In CR’s ratings, Amica, Wawanesa, and USAA are examples of highly rated direct writers.) “Then go to an independent agent with a ‘can you beat this’ attitude,” he says.

Also look beyond the big national carriers. A number of insurers toward the top of our ratings are medium-sized or focus on specific regions, professions, or membership groups.

If you decide to stay put, ask your carrier about reducing your premiums based on your car’s depreciation. That’s a potentially money-saving adjustment the insurer may not be doing on its own.

Should You Stay Or Should You Go?
Some larger insurers clearly do better than others at attracting and retaining customers, as the results of our Fall 2018 Auto Insurance Survey of more than 90,000 CR members show. Progressive gained more CR members over the past five years than it lost. At the same time, only 44 percent remained loyal during that time. State Farm lost 12 percent of CR member customers while gaining 5 percent. But 83 percent stayed put. Amica and USAA gained more than they lost and had some of the highest retention numbers. Those companies earned two of our highest overall satisfaction scores.
*In the last 5 years.
Should You Stay Or Should You Go?
Some larger insurers clearly do better than others at attracting and retaining customers, as the results of our Fall 2018 Auto Insurance Survey of more than 90,000 CR members show. Progressive gained more CR members over the past five years than it lost. At the same time, only 44 percent remained loyal during that time. State Farm lost 12 percent of CR member customers while gaining 5 percent. But 83 percent stayed put. Amica and USAA gained more than they lost and had some of the highest retention numbers. Those companies earned two of our highest overall satisfaction scores.
*In the last 5 years.
Reasons People Switch Insurance Companies
Our survey also includes 22 percent who said they switched insurers in the past five years*. They offered a variety of reasons, including:
62 %
New insurer offered better rates
40 %
Previous insurer raised premiums
18 %
Regularly shop to get the best deal
8 %
Problems with courtesy & honesty
5 %
Recommendations of family or friends
5 %
Advertising by other companies
*Source: Consumer Reports Fall 2018 Auto Insurance Survey. Multiple responses were permitted.

Editor's Note: This article also appeared in the November 2019 issue of Consumer Reports magazine.

Consumer Reports has no financial relationship with advertisers on this site.



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