How long have you been with your current auto insurance provider? If it’s been 5 years or longer, you have probably maxed out your loyalty discount, which ranges from 5% to 15% depending on your provider. You’re a “platinum member” or a “diamond customer,” but are you getting the level of service and the rates you deserve as a long-time supporter of this company?
At Freedom Insurance, our Maryland auto insurance agents often get calls from car owners unsatisfied with their current rates, coverage or lack of customer service they get from their insurance provider. Many of them have tolerated it for years, and only now decided to shop around. Should you reconsider your current policy as well?
Why Being Loyal May Not Pay Off
The insurance industry enjoys high customer retention rates, because no one likes to shop for insurance more often than necessary. Because they don’t have to worry much about long-term customers, most insurance companies focus on obtaining new customers through aggressive advertising. Just off the top of your head you can probably name at least 3 major insurance companies and their mascots—all from watching TV and seeing their catchy ads.
New customers often get lower rates than loyal customers, whose rates slowly go up due to claims or inflation. A recent study by the Texas Office of Public Insurance Counsel has found that the longer a customer keeps the same policy, the more they are overcharged. And policyholders loyal to their provider for 5 years or longer could save between 10% and 19% by switching.
Who Should Consider Shopping Around
But just because you may be slightly overpaying, doesn’t mean you should switch providers, especially if you are happy with your insurance company otherwise. Not all insurance companies are the same, and some do care to provide exceptional coverage and service to all of their customers, regardless of the loyalty level. Here are a few situations when you should consider shopping around:
- If you have an excellent or good driving record; drivers with bad record are unlikely to see significant savings.
- If you have only your auto insurance policy with this provider. If you have multiple policies, you may be getting good benefits through the mufti-policy discount.
- If you are unhappy with your coverage or customer service. If on numerous occasions you discovered lack of coverage, it may be worth moving your entire insurance portfolio to a new provider.
Before You Switch
If you end up finding a better rate, make sure you are comparing apples to apples. Your goal is to get the same or more coverage for less money. Some low rates are low due to limited coverage, so be careful. It may also be a good idea to call your current auto insurance provider and ask them if they can match their competitor’s rate. Some will, so you won’t have to switch at all!
Why People Are Reluctant to Change Providers
According to the 2010 report by Deloitte Research, almost 60% of policyholders (regardless of the type of insurance) rarely or never reconsider their current policies and look for a better deal. Why is that? Well, comparing different insurance policies and getting multiple quotes can be a time consuming and confusing process. It also requires good understanding of the coverage and the patience to read the small font, which many of us don’t have. Plus, if you haven’t been on the insurance market in the past 5 years, a lot has changed! You will have some catching up to do, which again is time consuming.
Thankfully, you can always rely on your trusted Maryland insurance agent to do all the busy work for you. That’s what we are here for—to save you time and money on insurance. If you decide to shop around for auto insurance, don’t hesitate to contact us!