Shopping for Car Insurance

The big outfits in car insurance spend a lot of money on advertising, especially television advertising. Every company claims to have the lowest rates. Obviously, that cannot be true. Are their ads dishonest or just deceptive? Let’s examine some of the claims and see what they really mean.

Allstate has a number of ads that say something like “People who switched from Geico saved an average of X dollars.” The claim is probably factually accurate, but does that mean Allstate is cheaper? Another view of that statement is that of course the people who switched saved money. That is often why they switched. Those who did not switch their insurance provider stayed where they are because their current provider offers as least as good a deal as Allstate. The ad does not claim that all the people who compared rates found that Allstate was cheaper. Only the ones who actually changed companies got a better price.

Another claim in Allstate commercials is that the company will make the process of cancelling with your current easier. Maybe they can do that, but the ad comes very close to saying they will do it for you.  That cannot be. An insurance company cannot contact another insurance company and cancel your policy. The ad suggests that an Allstate representative will handle the process for you. They seem to be saying they will be on the phone with you when you contact your insurance company and one of their agents will handle the process. They certainly cannot cancel your other policy for you. Nobody can cancel your policy but you. It may in fact be the case that their representative handles the process for you in a three way call. It is also possible, though, that the representative for your current carrier is forbidden to handle a cancellation when anyone besides the policyholder is on the line.

The purpose here is not to jump one insurance carrier. Allstate was just used as a clear example. You cannot compare companies with any degree of confidence simply from their advertising. Virtually all of them claim to be cheaper than the others, which cannot be true. When you shop for car insurance and compare rates, make sure that you are comparing the same coverage. For example, you might find that one company is $125 a year cheaper than another company. If you examine the details, you may find that the cheaper rate comes with a $1000 deductible, as opposed to a $500 deductible for the other policy. If you have to file a claim any time in the next four years, the “cheaper” policy will actually cost you more money.  

You also need to specify exactly what is covered by your insurance. Do you want coverage if you are hit by an uninsured motorist? Fine, but it will cost extra. The coverage that will pay the costs (minus your deductible) to fix your vehicle if you run a red light and hit another car will not pay for damages if a deer jumps out in front of you. It is fairly simple to price policies online and if you are not sure, call the insurance company. If you can actually save money by switching companies (and still get the kind and level of coverage you want) then do it. You are not under any obligation to your current carrier. Just make sure you understand clearly what you will get and what you will pay.

One more word of advice: when you enter data in order to price insurance, be honest. If you lie about your age or traffic tickets you may have received, you might get the insurance at the price quoted and then find you are not covered if you make a claim. Lying on the application is proper grounds to deny payment.