Should You Stay With Your Car Insurance Company?

In a previous article we spoke about why you should always shop around for auto insurance. In this article however, we want to talk about the reasons why it may be a good idea to actually stay with your current company.

Affordability is always important, but quality cannot be forgotten. Company A may charge way less than Company B, but if Company A has a bad claims process, then the headache makes the price seem less worthwhile. Staying loyal to a company can qualify you for benefits such as accident forgiveness and bundling discounts. Lastly, staying loyal to a company also allows you to build a relationship with an insurance agent, which can be vital in processing claims.

Accident Forgiveness

Accident forgiveness can potentially save you thousands, making it a valuable benefit to have on your policy. It is frequently the crux of a car insurance company’s advertisements, but it is not always clear however how to qualify for Accident Forgiveness. Most companies will only allow a customer to qualify for the program after at least three years of business. Is it worth it to stay with a company just for accident forgiveness? As we found in this study, getting into an accident causes your rates to skyrocket, potentially costing you thousands of dollars over the following years.

Of the nation's “Big 5” auto insurers, State Farm, GEICO, Allstate, Progressive, and Farmers, you need an average of 5.4 years of clean driving with a company to qualify for accident forgiveness. GEICO and Allstate do allow you to purchase accident forgiveness to institute it immediately, but it does make your rates more expensive. Once you have accident forgiveness however, you will have three year windows where, if you were to get into an accident, it would be forgiven. Erie, who we name the best car insurance company, takes it one step further and gives you accident forgiveness for life if you stay with them for 15 years. Ultimately, you have to decide how risky of a driver you are, and the likelihood of your getting into an accident. If accident forgiveness is something you really desire in a policy, staying loyal to a company will be the only way to get it.

Car Insurance Loyalty Discounts

The largest discount you can get for staying loyal is a bundle discount. As we discuss here, bundling can save you a good chunk off your yearly premium. At State Farm for example, if you have a homeowners and umbrella policy, you can get 18% off your car insurance premium. Admittedly, GEICO is relatively weak in this regard, only offering a paltry 3% discount by bundling with a homeowner’s policy. The other large companies however, Allstate, and Progressive will get you a good discount if you bundle. It is up to you to decide whether that discount would be greater than the money you can save by switching to another company.

Finally, some companies offer discounts for just being a loyal customer. Called a “Tenure Discount”, a few, but not many, companies offer them. The most well known are Amica and Ameriprise Group, who say they will reduce your rates after staying with them for many years.

A Better Agent/Customer Relationship

When it comes to car insurance, the rapport you form with your agent is actually very important. We spoke with Kristofer Kirchen, president of of Advanced Insurance Managers in Florida, who reiterated the importance of a good agent relationship. Kirchen says the main benefit of forming a relationship with an agent is that they will be the best advocates for you when selecting coverage. They know your driving habits and can use their knowledge to get you the best compromise between cost and coverage. Furthermore, an agent will also work for you to get a claim paid.

Of course, the savings an agent can potentially bring you may be hard to quantify. If you already have a good relationship with your agent, you should try to imagine what your service would be like without them. If you currently do not have a strong relationship with your agent, you could try to forge one, and see if your next policy renewal goes through more smoothly.

Final Thoughts

Loyalty can be rewarding. Staying with your current company rather than always switching companies may actually end up saving you money in the long run. As with anything when it comes to saving money however, you have to diligently weigh the numbers. No matter what, you should comparison shop every year and collect new prices to compete against your current one. After considering what we discuss in this article, you will be able to confidently decide whether you should stay with or leave your company.

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