Save money by comparing auto insurance rates

Posted at 15:28 on Monday October 23, 2006 | Filed Under Saving

Like I mentioned last week, I'm going to post ways to save money on recurring costs every Monday. Today: auto insurance.

I discovered from personal experience how easy it is to save money on this. When I first bought insurance, I shopped around and ended up buying 21st Century, one of the worst companies on the planet. They lost my paperwork for THREE MONTHS, overcharged me, and sent me about 3 letters per week in the mail. Leave me alone you horrible company.

Anyway, I feel ridiculous saying this, but I saved a bunch of money by switching to Geico. Seriously. I called up a bunch of places and ended up saving about $175 per 6 months, or $350 per year for a few hours of calls. Plus, I'll save that much every year, making it a pretty good rate.

Now, to today's way to save money: Here are the phone numbers for some of the biggest auto insurers. (I included only phone numbers on purpose, because clicking around all their shiny websites is a great way to get distracted and do nothing. Plus, the best deals come from talking to someone on the phone.) Call them up and spend an hour figuring out which is the best value. Switching is easier than you think, and it's a one-time thing.

Geico: 1-800-861-8380
State Farm: 1-877-734-2265
Allstate: 1-877-572-5268
Progressive: 1-800-776-4737
AAA: 1-877-323-4222

PS--The best line to use is not, "Is that the best price?" but "What other discounts are available?"

Update: Some really great comments below, including points about cost vs. value ("don't just pick the cheapest insurance, pick the best value") and a reminder to re-shop the rates in a year.

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Comments (22)

1.: I worked for a company where employees would often ask why the company wouldn't switch to Geico, and apparently Geico requires all sorts of personal information about every employee.

Posted by jonathan at October 23, 2006 04:51 PM

2.: Too bad I live in Massachusetts.

Posted by Andrew at October 23, 2006 05:10 PM

3.: It's very, very important to remember that an insurance policy is just a piece of paper. If the company cannot back up that piece of paper when claim time comes around then that's all you have -- a piece of paper.

You must always, always ask your would-be insurance company what their A.M. Best rating is. If they feign ignorance -- or, worse yet, if they really don't know -- run away. Take nothing less than an "A" rating. I'll work with nobody with less than an "A+" rating. There's just no need.

Saving money by buying cheap insurance will cost you far, far more in the long run.

Posted by Waldo Jaquith at October 23, 2006 06:49 PM

4.: Check out group rates as well. My university (Canadian) has group rates through TD Meloche Monnex for alumni, and they kick ass compared to everywhere else I looked. I know several friends who have subsequently switched because the group rates are unbeatable.

NG

Posted by NLG at October 23, 2006 06:49 PM

5.: If you qualify, USAA is the way to go. My insurance quote from them was 20% less than the next lowest I got (Geico). Unfortunately, you can only get it if you're in one of three categories:
* Active duty officers and enlisted personnel; National Guard, Reserve officers and enlisted personnel; Officer candidates in commissioning programs
* Adult children and former spouses of USAA auto or property policyholders
* Former USAA auto or property policyholders

I qualified because my parents use it. USAA's service is truly unbeatable. Phone is: 1-800-531-8080. It might be worth it give them a call to see if there is any other way to qualify.

Posted by Elizabeth at October 24, 2006 06:12 AM

6.: It is amazing how literal some of these companies stick to their tag lines. I am with State Farm. I happen to know that they aren't the cheapest auto insurance I could be getting, but I am okay with that for a reason.

One philosophy you subscribe to is to be frugal, not cheap. Spend the money on things that matter to you. well, I was in a car accident earlier this month and as soon as it happened, I realized that I did not have my insurance card on me (this isn't a habit of mine, it just happened). The first person I called (after calling 911) was my insurance agent at State Farm. She gave me my insurance number and asked where I was.

Right after the police showed up and started to survey the scene, my insurance agent pulls up with all the paper work I needed to hand to the officer. As long as this company continues to go that extra mile for me, I will be willing to spend money with them.

As a side note, my vehicle was totaled and I had to start looking into the new car vs. good used car market. I read your article on the matter (after I purchased my new car) and couldn't agree with you more.

I spend a good 45 minutes in the morning and 30 minutes to an hour every evening commuting so driving is very important to me. I not only got a new car, I got exactly what I wanted and what made me feel comfortable with my purchase.

I couldn't be any happier. But I do miss my old car sometimes.

Posted by Blair at October 24, 2006 07:03 AM

7.: Oddly, my experience was the opposite. I loved 21st Century, tried switching to Geico, and had a horrible time. Took them 3 months to process my application, and then they needed all kinds of personal information about my roommates (who were being excluded from my policy). They were having an issue with one of my roommates because he had an accident on his record. What the heck? I put on there that he was excluded. Told them no thank you and went to 21st.

Posted by Spender at October 24, 2006 08:09 AM

8.: the last line"Switching is easier than you think, and it's a one-time thing." is only half true. the best way to do this is to shop around every few years. It is the same with cell phone plans and other insurances. what seems really cheap now seems to incrementally creep up and in a few years, some other company will be more than happy to beat your current cost.

Posted by david at October 24, 2006 08:50 AM

9.: Great point, David. I just set a reminder to re-check the rates 1 year from the date I signed up.

Posted by Ramit Sethi at October 24, 2006 09:24 AM

10.: I also switched to geico and got a very good rate my first year. They jacked it up the second year telling me I received the initial incentive rate, but this new year's rates were the on-going rates. They assume people won't switch back since it's so much hassle.

Posted by Stefanie at October 24, 2006 10:10 AM

11.: I had a horrible experience with Geico.....

That is the last time I go with an agent that you can only talk over the phone! Everytime u call back, they spend 15 minutes reading your previous comments/conversation and they dont really understand whats going on!

If you are in an accident with another Geico customer.....it becomes a nightmare!!!! They try to screw both parties.

Remember, its NOT about the rates when it comes to insurance.

Posted by sri at October 24, 2006 11:01 AM

12.: I would second the recomendation for USAA - if you qualify they are hands down the best and their service is impecable with quick resolution.

Another USAA bonus is they provide all sorts of the other services such as home / renters insurance, mortgages, etc... and when you start combining a few together with your car insurance you save even more.

Posted by Jonathan at October 24, 2006 11:17 AM

13.: I have had a wonderful experience with GEICO. I purchased my policy online so I didn't run into any of the problems mentioned above. I did not have my rates increased either. On the contrary, my rates went down a bit probably because I moved out of the young and wild drivers group plus keeping my driving record clean.

GEICO is not for everyone though. It has the best value only if you have an excellent driving record. If you have had accidents in the past five years, you are probably better off with other carriers. This is how GEICO stays profitable with lower underwriting volume. There is one additional discount that not many are aware of... If you own Berkshire stock, you get an 8% discount. But you'll need to call for this of course.

Posted by Ye at October 24, 2006 07:06 PM

14.: This is great advice, but unfortunately I can't use it because I live in Massachusetts, the only place where insurance rates are set by the state. So every insurance company has basically the same rates. That said, when I lived in New York I had Geico and they were great.

Posted by erinh at October 25, 2006 06:09 AM

15.: NLG, I second your group rate thing.

I belong to a credit union and I have AAA, and afaik my rate's just about as low as it gets.

However, I learned a lesson with AAA. Do *NOT* call their 800 number - even your local state one - to get set up. You end up having to fax stuff around, and they lost my application. I did not know they lost it until I noticed I didn't have my paperwork back from them and was going on a trip. I waltzed down to their actual local office, and found out that they had not put me through!

Every time I've been there in person, they've taken care of me flawlessly. Even calling on the phone, I get a real human who really works to fix a problem.

Posted by Hawk at October 25, 2006 10:23 AM

16.: We haven't run into any problems with Geico, and I don't know of anyone who has run into problems with USAA.

One thing to beware of is fly-by-night insurance companies. I know a girl who paid a $300 start up fee and then her monthly premium, then the company sent her a letter telling her that her policy was lapsing, and she tried calling them with no success whatsoever. Now she's out several hundred bucks and is scrambling to find affordable coverage. It's a good idea to go with a company you've heard of, and not whoever your dealer recommends.

Posted by Dimes at October 25, 2006 06:54 PM

17.: Find a insurance broker in your area that deals with a bunch of companies, it's their job to find you the best deal..

My broker hooked me up with Eerie Insurance and saved me HALF yes HALF of what I was paying Allstate, and I got better coverage!

They don't advertise and they're not in every state, but if they're in yours be sure to check them out..

Posted by KC at October 26, 2006 11:53 AM

18.: A good "reminder" article, though, not much new information. I have had auto insurance from a few companies over the course of my absolutely clean (no accidents/tickets) three and half years of driving history (I have been in the US for a little over six years...the first three as a graduate student.) I started with Geico, since they offered the "best" rate when I had no driving history at all. Six months later, when it was time for renewal, I moved to State Farm (both auto and renters), saving over 30% on the Geico rate. An year later, I was in the market again, eventually buying insurance (both auto and renters) from Ameriprise (as a Costco member). This saved me 25% on what I was paying with State Farm. Six months into the policy, I added a second car (2006 Honda Civic) to the policy. First car on the policy was a new Volvo S60. Surprisingly, I paid more for Honda Civic, than the Volvo. When this policy came-up for renewal an year later, I checked the rates again, and found 21st Century. I am in PA and 21st Century started doing business in PA about 6 months ago. This coincided with my search, and they saved me another 25% on the overall insurance rate for the 2 cars. I still have Ameriprise for renters, since 21st Century did not offer a better rate for that. Overall, I have had a sterling experience with 21st Century. Their A.M.Best rating is A+. They processed the paperwork efficiently, as have all the previous companies I have bought insurance from. Access to your policy via their website is just plain awesome. I made a slight modification to my policy online, and they followed-up instantly with a phone call and a letter, to ensure it was not a fraudulent activity. I will still shop around next year, but so far, 21st Century has been a good experience. I would love to try Travelers. They do not consider you unless you have at least three years of driving history. Moreover, my employer has an agreement with Travelers...so, better rates. I had renters insurance with Travelers (when my auto policy was with Geico), and they were very helpful to deal with, when my apartment was burgled. To reinforce the message, you need value, not just a cheap rate.

I have heard a bunch of scary stories about Geico's handling of claims.

Posted by Deepak Sharma at October 26, 2006 09:07 PM

19.: I've had GEICO auto (and motorcycle) insurance for over 18 years. It's very affordable and yes, you have to use the phone - no office visits.

They've always treated me fairly and I've had a couple of claims over the years.

Most recently, I tail ended someone who pulled in front of me and stopped. To me, they were clearly at fault. But I was at fault because I hit them. Regardless, I tore their car up.

I called GEICO from the road and after the initial "who are you - who are they" stuff, I was good to go and haven't heard any repercussions about the accident.

I like GEICO - have had it for years and hope to say with it for a while.

Just my 2 cents...

Posted by WearyTraveler at October 31, 2006 08:36 PM

20.: I would suggest carefully evaluating claims settlement practices of any insurance you are considering. USAA (I've used for nearly 16 years) has changed dramatically recently with regard to chiseling away at quality of service by limiting payment to low quality shops and required use of aftermarket parts. Also make sure that 'approved' repair shops are located within a reasonable distance of your home. The anguish of low quality lingers long after the elation of having found the lowest price has passed.

Posted by seventh seal at November 4, 2006 05:59 PM

21.: I agree with Deepak and article in general, Geico is not the only company that will save you on your car insurance. I, too, started with them and now am saving money versus their last offer with another company that is generally considered more expensive than they are-- AND I have better coverage.

Posted by charlesgehman at December 5, 2006 12:14 PM

22.: I agree with seventh seal. The quality of USAA's claims service has diminished. They low ball total loss claims and laugh while they do it. After 21 years, and no claims I have been treated like dirt. They are still the cheapest, but that means little if you need to file a claim.

Posted by wxbriefer at December 8, 2006 02:51 PM

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