Does Switching Car Insurance Really Save?

You’ve seen the commercials. One large insurance company says, “Customers who switched to us saved hundreds of dollars.” The other company says, “Customers who switched to us saved some large percent.” Is one of them lying? How can both these statements be true? Is this just a scam? How can every insurance company give a lower rate for the same insurance policy than every other company? That’s just not mathematically possible.

The Truth about Switching and Saving

The key to unraveling this mystery lies first in listening carefully to the claim. It generally starts with something like, “Customers who switched…”  That’s the key. They aren’t saying all customers can save. They’re simply saying that those customers who switched saved money. That’s a round-about way of saying that those customers who could save money switched. When stated that way, it’s pretty obvious. If they can’t save money, they won’t bother to switch. So only those who could save money switched.

Wrapping this up, you can conclude that not everyone can save money by switching insurance companies. But for those who can, the savings are significant. You can further conclude that it’s not necessarily switching from Company A to Company B or from Company B to Company A that can save you money, it’s switching to the insurance company that’s right for you.

So which car insurance company is right for you? That’s a little harder to figure out, but we’ll try our best to explain it. If you’re not interested in the explanation and just want to find the right company, skip ahead to Finding the Best Insurance Rate.

Taking Risks

Speeding, going through red lights, tailgating, not signaling lane changes. These can be dangerous. If you do these, you’re taking a risk. You risk having an accident, hurting yourself or hurting someone else. If an insurance company insures you, they are taking a risk too. They risk losing money paying for damaged property, medical expenses and lawsuits in the event you have an accident or hurt someone. If you’ve already had an accident that was your fault, insurance companies will see you as being more likely to have a future accident than someone who has never had one.

Like any business, insurance companies don’t like to lose money. Each time they have to pay a claim they are losing money. Statistically, higher-risk people cost them more money. Therefore, they have to charge higher premiums for higher-risk people. So within any given insurance company, the premium for a low-risk person is lower than the premium for a high-risk person.

Differences in Calculations

How insurance companies calculate the amount of risk (and potential loss) a driver imposes can differ substantially from one company to another. One may consider a single violation to be a small risk. Another may consider even a single violation to be a major risk. One may put more risk on a particular type of violation than another company might. In the case of accidents, the amount paid out by the insurance company can factor into the risk assessment. The amount of time since or between violations or accidents can also contribute to these calculations. Since all insurance companies calculate these factors differently, each driver, with their own personal history of violations and accidents, will have their own unique risk calculations and their own personalized premium for each company. Given all the possible factors and calculations, it is possible for one driver to get a better rate from one company while another driver gets a better rate from another company. So Harry with his single speeding ticket from two years ago may get the best rate quote from Green Lizard Insurance, while Sally with her recent red light violation gets the best rate quote from Any State Insurance.  If Harry and Sally are currently with other companies, they can save money by switching.

Finding the Best Insurance Rate

So how do you find the insurance company with the best rate for your situation? Well, you could find the calculations used by the major insurance companies and figure it out yourself. Assuming you can find the information, this can take a while. Or you can call some of the top companies, give each of them all your information and have them give you a quote. This can take a while too. And if the “right” company is not on your call list, you could be missing out. Your best choice is to come to us.

Click-Quote-Save can help you find the right car insurance company. Just fill out one simple online form and we’ll take it from there. We will match you to insurance companies that have the coverage you need and can give you a competitive rate based on your particular situation. You will receive up to eight insurance quotes, from which you can compare and choose the lowest rate. This service is free and there is no obligation to switch if you don’t want to. But chances are you will get a better rate and save a bundle. To get started, simply enter your zip code in the box at the top of this page. Or click here to start saving.