How I Saved Over $1500 on Auto Insurance: A Guide to Shopping Around

Many of us are finding that our auto insurance costs are skyrocketing. Over the past two years, my rates with Company X have increased from $3,000 a year to over $4,500 a year. I’ve been with Company X for 40 years and have only submitted claims for glass and comprehensive coverage, mainly for a few deer collisions over the last 20 years. My overall experience with Company X was good until the original owner of the agency retired and put his son in charge.

As my rates began to jump by $200 per vehicle every six months, I decided to dive into online research and explore other options. Here’s what I learned:

1. Avoid Insurance Sites Claiming Multiple Searches: These sites earn commissions from selling insurance, just like an agent. Their convenience can cost you $300 to $500 more per year. The best way to shop for insurance is to spend an afternoon visiting different agencies and inputting your information. Be prepared to invest some time.
2. Agent Commissions: Company agents earn less than private agents. For example, Farmers Agents can claim commissions up to 15%, while most agents are in the 6-10% range. These commissions are hidden in your bill. If an agent feels they aren’t earning enough, they might increase the commission, resulting in a higher rate for you. If you call to complain and they suddenly lower your rate, they are likely reducing their commission temporarily to keep you around.
3. Loyalty Can Be Costly: People who don’t shop around, like me, are often taken advantage of. We assume our agent is giving us the best rates and service. While some do, others don’t. The original owner of my agency was always fair, available, and offered competitive rates. When his son took over, my rates increased dramatically, and the service declined.
4. No Loyalty Discounts: There is no discount for staying with an insurance company for 40 years. In fact, you are probably paying more. Shopping around reveals different policies and potentially better rates.
5. Rising Auto Repair Costs: It’s true that auto repair costs are increasing due to inflation and uninsured drivers. However, Company X raised my rates on three vehicles by over $600 in the last six months, using inflation as an excuse to drive profits.

So, I started shopping around. After spending an afternoon researching, I found an insurance company offering nearly the same coverage for $1,567 less per year than what I was paying. That’s a significant savings. Insurance companies have to refund unused premiums when you cancel, so I decided to cancel my policies with Company X and switch to the new company. Yes, I had to pay upfront to insure three vehicles for six months, but the refund checks will help cover that expense.

The next test will be to see what happens in six months. Is this a welcome special, or will they increase the rates? I’ll keep you updated. They say time is money, and if spending a few hours can save money, it’s well worth it.

If you haven’t shopped around, I suggest you get started.