Lizards, caveman, good neighbors, and annoying sales ladies who are super perky and helpful. When a topic gets this much attention on tv you can bet that companies are making a killing selling you car insurance. That means if you have ignored the hype and not looked at what you are paying for car insurance recently you have the opportunity to save some money.
I started out on my dad’s Nationwide policy when I was a young driver and stayed with the same company when I got my first new car at the age of 23. Money was plentiful and partying had priority, so I did not concern myself with trying to lower my expenses. Instead of trying to lower my costs I blindly stuck with my existing insurance provider out of a misguided sense of loyalty and laziness.
It must have been a rude awakening for my insurance provider when a long time customer who has been paying too much for well over a decade wakes up and demands lower rates. No more robbing me blind and putting your family through college at my expense. My driving record is clean and I was getting absolutely fleeced based on the bench marking I did with local friends who had similar driving records and vehicles as myself. After my renegotiation I am saving over 100$ a month on my total bill and will probably be able to save even more once I rebid it out again in 6 months. How did I save all that dough?
Benchmark to see if your car insurance rates are competitive
I knew I was paying a lot but had no idea how much I was being overcharged until I compared my coverage and rates vs what a friend and coworker were paying. Here are some important things to keep in mind when you are looking for people to benchmark with:
- Compare with people that have similar driving records as you
- Compare with people in the same state as you
- Compare with people that have vehicles similar to or newer than your own
- Compare with people that have similar financial situations as you (since your need for insurance protection should be close to identical)
- Make sure to note differences in coverage levels to ensure you are making valid comparisons.
Where are you paying too much?
After doing my benchmarking I was able to isolate specific coverages where I was being charged too much. In my case it was inflated across the board but specifically in the areas of personal injury protection and uninsured motorist coverage. Knowing these facts gave me the specific information I needed to deal with my insurance provider and lower my rates.
Are you over or under insured?
If you benchmark your rates as mentioned above you may notice that you appear over or under insured vs. your peers. This is another good way to pursue savings in your car insurance rates if you notice you are over insured vs. your requirements. I found myself in this situation since I originally based my insurance coverages on my dad’s policy. My father is in a different net worth category than I am so I found myself over insured by not taking that fact into account. I also decided to drop the comprehensive coverage on my older car and assume more of the risk myself.
How did I negotiate my car insurance savings?
My first shot across the bow was fired using email. I informed my insurance company that I had completed my insurance benchmarking and that my conclusion was that I am way overpaying. I highlighted some specific areas that were out of balance but did not mention by how much since I didn’t want to tip my hand and cut my savings short. My insurance company first tried to downplay my case and mentioned all of the discounts I was receiving like multi policy (homeowner’s), good driver, accident forgiveness etc.. standard practice to confuse and confound and have me avoid change. I restated what my benchmarking data said and mentioned that if I couldn’t get a significant change I’d have to reluctantly take my business elsewhere. After passing their test I finally got taken seriously and was presented with significant savings that I knew were possible. I also adjusted my comprehensive coverage for the older vehicle at this time and was presented with my new rate. I am now saving over $100 per month and only wish I had done it years ago.
I plan to rebid my entire policy (including homeowners) in 2012 to 3 large big brands in the industry (probably Geico, Allstate, and one other). If I am able to save significant money that makes the change worthwhile I will make a company switch. No more one way loyalty for me.
When was the last time you benchmarked your car insurance policy?