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.
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.
4 important coverages
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.
New insurer offered better rates
Previous insurer raised premiums
Regularly shop to get the best deal
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Editor's Note: This article also appeared in the November 2019 issue of Consumer Reports magazine.
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