Want to Save $1,000?
Many consumers will drive miles out of town to save $100 on a vehicle purchase. Others will travel from supermarket to supermarket to cash in on coupon savings that will net them less than $10 a week. Yet new research shows that a majority of American consumers are reluctant to shop around for auto insurance, despite the fact that a short time spent shopping around could result in a yearly savings of well more than $1,000.
A U.S.-wide telephone survey of 2,000 consumers found that a solid majority of consumers (58 percent) reported being somewhat or extremely unlikely to shop for auto insurance, even though they could save significantly by doing so. As further evidence that many consumers are reluctant to shop around for insurance, some 29 percent of those surveyed reported that they have not shopped for insurance in at least five years.
It seems when it comes to car insurance, lethargy sets in in a big way. The survey, which was funded by Progressive Insurance, found that some consumers are more comfortable simply renewing their current policy than shopping for better rates. Of those respondents who said they have not shopped for auto insurance within the last year, 19 percent have spent more than 10 years with their current auto insurance company and report having never shopped for auto insurance.
Once some consumers settle on an insurance company, they are content to stick with it. According to the research, of those consumers who have been with the same auto insurance carrier for seven to 10 years, 42 percent said they are extremely unlikely to shop for auto insurance. This loyalty (or laziness) could be costing them hundreds of dollars each year.
"Just because you've been with the same auto insurance company for years doesn't mean you're getting the best rate available to you," said Alex Ho, consumer marketing director, Progressive. "We counsel all consumers to be smart about their auto insurance and to talk with their agent, their current insurance company or do online research to be sure they have the right coverage and the right services at the right price."
In addition to the consumer survey, Progressive also conducted an illuminating study of auto insurance "rate variance" -- the average spread between the highest and lowest six-month rates available to drivers for new policies from the country's leading auto insurance companies. The study found that the cost of a six-month auto insurance policy for the same driver(s) with the same coverages varied from company to company an average of $524. That means switching from the highest-cost insurance company to the lowest-cost provider could save you more than $1,000 a year.
The variance was calculated by using rate comparisons provided to more than 90,000 consumers who called or went online to receive a Progressive quote and the rates of up to three other auto insurers between July 1 and December 31, 2001. To highlight the spread that exists in rates available to consumers from different companies, visitors to Progressive can now see comparison rates offered to other visitors in real time on the site's unique "rate ticker." This new feature displays an up-to-the-minute sampling of comparison rates provided to consumers across the country who used Progressive's online service.
"The spread in rates represents a clear opportunity for consumers to save money," said Ho. "Consumers generally don't realize that rates from different companies vary; we've analyzed the data to let consumers know that their potential savings is significant. The rate ticker is one way we can highlight the difference in available rates."
Of course, rates are only one portion of the car insurance equation. You also need to examine various companies' service and claims policies. But, as the old song says, "Shop around." It will cost you a little time, but it could save you thousands of dollars.
Based in Cleveland, auto journalist Luigi Fraschini is fond of saving money.