RATE THEORY GETS WRECKED
GOOD DRIVERS MAY NOT GET BEST INSURANCE DEAL, STUDY FINDS
Getting the best car insurance rates isn’t as simple as keeping your record clean, according to a report out recently that says what you pay may have more to do with how well you pay your bills than how well you drive.
After analyzing more than 2 billion price quotes from more than 700 companies nationwide,
Consumer Reports concluded that premiums are based more on the companies’ own interpretation of your credit score than accident rates or even drunken driving.
For example, single drivers in Florida with a clean record and poor credit paid $1,552 more on average than similar drivers with great credit who had been convicted of driving drunk.
“No consumer would suspect their unpaid bills would have a greater impact than a DWI,” said Margot Gilman, Consumer Re
ports money content development team leader.
“Our investigation shows they need to think again. We’re putting consumers on alert that they need to shop around.”
However, that’s one thing people don’t seem to be doing.
The average American hasn’t changed car insurance companies in a dozen years, according to a survey out July 20 from insurance-comparison site InsuranceQuotes.com. Roughly a quarter have stuck with the same insurer for more than 16 years, and 7% haven’t switched in more than three decades.
“I think it is something that is just sort of looked at as a task,” says Laura Adams, senior analyst at InsuranceQuotes.com. “I don’t think they equate shopping for insurance with saving money.”
Among the survey’s respondents, 36% never shopped around.
They’re missing out: Drivers who switch insurers average $387 in annual savings, according to the 2014 U.S. Insurance Shopping Study conducted by J.D. Power.
Adams recommends searching annually. “Whether it’s on your birthday or after the new year,” she says, “set a day to go through, shop (and) make sure you’re not overpaying.”
“You can shop any time,” Adams says. If you do switch, and prepaid your previous policy, the company will reimburse you.