|
 How was he rewarded for his disloyalty after nine years? With
savings of about $300 a year and a boost in his under-insured
motorist coverage.
Despite discounts for long-term customers, studies show that you can
get lower premiums on car insurance by shopping around rather than
sticking with one company, and the savings can be significant.
The Texas Office of Public Insurance Counsel did a study showing
that a consumer who has stuck with the same auto insurer for eight
years could reduce the premium by 19 percent by switching.
"It is disappointing to think your loyalty to a company can hurt
you," says Carol Lachnit, features editor for automotive website
Edmunds.com.
Even when rewarding loyalty with a percentage off, insurers may use
a practice called price optimization that considers a number of
factors beyond risk, including what price tag they think you will
tolerate.
"They're sort of measuring how likely you are to resist a price
increase to your premium," Lachnit says.
Still, many consumers stick it out. Jonathan Stein, for one, has
only had three car insurers in his adult life.
"I did get a loyalty discount, but each time I switched, it was
because I received better coverage for less money," he says.
Others take a different view.
Linda Carlson has stuck with USAA for more than 10 years because of
what she considers exemplary customer service.
The Seattle resident ticked off a series of accidents and other
problems over the years, including a crash, and how pleased she was
with the way USAA handled them. Her husband has used the company
since 1970.
Other customers are simply lulled into staying.
A recent survey by customer satisfaction measurement company J.D.
Power and Associates found that even though auto insurance rates
increased by 2.1 percent last year and 2.5 percent in 2013, a
relatively small percentage of customers switched carriers.
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About 39 percent of those surveyed said they did check on other
insurers' prices, but just over a quarter of those who price-shopped
actually switched.
"You have to look at your own pocketbook and your own budget and
decide," Edmunds.com's Lachnit says.
SHOP AROUND
Lachnit says it makes sense to shop around every few years. It is
important, though, to keep a list of your coverage in front of you
to be sure you are comparing apples to apples.
Also keep in mind that not every insurer offers the same level of
service or enjoys the same reputation. It is worth checking on the
complaint history of a particular company through your state's
insurance commission, she says. A list is available (http://www.naic.org/state_web_map.htm)
through the National Association of Insurance Commissioners.
If someone offers you a better rate and you would rather not switch,
Jeanne Salvatore, vice president of the Insurance Information
Institute, says it will not hurt to go back to your insurer and let
them know about the lower quote. Auto insurance it not the same as a
lot of industries that routinely haggle with customers, but there is
no harm in trying, she says.
The only consumers who might not benefit from comparison shopping
are those with bad driving records because they will have fewer
choices, Salvatore says.
She recommends asking for every available discount, whether you are
staying or going. These include such things as bundling multiple
policies, good driving records, certain vehicle-safety features,
paying in a lump sum, being a student with good grades, and
belonging to certain membership or affinity groups.
(The author is a Reuters contributor. The opinions expressed are his
own)
(Editing by Beth Pinsker and Lisa Von Ahn)
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