When it comes to car insurance, you are expected to shop around for the best price. Some companies even promise to show you how their rates stack up against competitors. If you can get a better rate with another company, there seems to be little reason to stay with your current insurer. However, this isn't always the best approach. Just because Company B is cheaper, does not mean Company B is better for you. Before you hit cancel, there are a few things you should consider before leaving your current car insurance company.
You May Lose Many Discounts
Most car insurance companies have numerous discounts built-in which reward years of customer loyalty. For example, Amica and Ameriprise Group, give policyholders a tenure discount. To qualify, they must stay with the companies for a few years.
- Accident Forgiveness. Insurance companies heavily advertise accident forgiveness, but rarely do they tell customers that it usually takes at least three years to qualify for it. Between the "Big 5," State Farm, GEICO, Allstate, Progressive, and Farmers, it actually takes an average 5.4 years to qualify for accident forgiveness. You may speed up the process by purchasing it in the case of GEICO and Allstate. However, this route can be costly. If you want it for free, you will need to stay with a company and be accident free for a few years. Is it even that worth it? Well, as we found before, filing a claim can cause your yearly rates to increase by hundreds of dollars. So yes, accident forgiveness can in fact save you a lot of money.
You Won't Get Bundling Discounts
Most large insurance companies give you a discount if you have several policies with them -- a feature known as bundling. In the case of State Farm, for example, bundling a homeowner's, car, and umbrella liability policy can save you 18% on your car insurance premium. If you have a car insurance policy with Company A, and are looking to insure your home or rental, the bundle discount may make Company A cheaper for your car insurance than any other.
If you are already experiencing a bundle discount, obviously leaving your company will cause you to lose it. This can impact more than your auto policy. If you had homeowners insurance with the company, it was likely discounted as well. You should take that into account, and make sure you aren't actually making things more expensive for yourself by leaving. Paying $50 less for auto insurance may not be worth it, if you're sacrificing a $100 bundling discount.
A Better Customer/Agent Relationship
It's not all about discounts or price tags. Having a strong relationship with your agent goes beyond pure numbers -- though it can save you money as well. When you stay for a while at a company with a strong agent network, you can develop a working relationship over the years. This relationship translates to a smoother claims process. This will be especially useful should you ever get into an accident.
Your agent will also be more familiar with your driving habits, and be able to recommend coverage that is both cost effective and big enough to give you optimal protection. If you are unfamiliar with how car insurance works, you may have been paying for coverage you do not need for years, costing you hundreds of dollars. Working with an agent that knows you well can solve that problem.