6 Reasons You Should Break Up With Your Current Car Insurance Company
Share this Post
Whether you’ve been with your current car insurance company for 10 days or 10 years, we’re going to give you 6 reasons why you should consider breaking up with them and moving on to greener pastures.
Right now in a big skyscraper, partially built with the profit from your car insurance premium, there is an executive laughing at you. Maybe not you exactly, but definitely the thousands of people just like you. The ones that stay out of convenience. The ones that see a yearly rate increase and pay it because they don’t know any better.
The bottom line is insurance companies are designed to squeeze every possible dollar out of their customers and loyalty is not a factor.
It’s kind of sad to think about it that way, isn’t it? You wouldn’t date a person that wanted you just for your money and spent every waking hour trying to figure out how to shift blame (deny claims) and steal money from you (rate increases), would you?
Unfortunately, that’s the seedy side of insurance.
Without going into to every tiny aspect in detail, it’s best to say it like this – we’ve compiled a list of 6 great reasons you should break up with your car insurance company and we hope it puts a little cartoon light bulb above your head, because no car insurance company is immune and in this industry it’s cheaper to “date” than it is to “marry”.
Reason #1: You’ve been with the same company for over 2 years
2 years is the magic number in the car insurance industry. They know they have you and their data suggests they’ll keep you for a very long time. At this point you can expect rate increases. Not flowers, or a heart-felt reminder that they really love having you as a customer and oh by the way “here’s $200 off as a way of saying thanks!” – nope. Just a bill for a higher amount.
At the two year mark you can expect to see single-digit to double-digit premium increases, but it doesn’t always take two years. It only takes two years when you’re a perfect driver with no tickets or accidents. If you manage to get a ticket or accident, you can expect your premiums to increase at the 6 month mark (policy renewal) and all bets are off as to how much the rate will increase or if they’re even going to allow you to keep your policy!
In both cases. You’re being used. It’s time to shop around for a better policy at a better price. They don’t respect you. They don’t love you for your cooking and ability to remember anniversaries. They simply love your wallet.
Reason #2: You’ve Just Had An Accident Or A Ticket
It’s fairly safe to say that if you’ve been involved in an accident, whether at-fault or otherwise (some states are no-fault states!), or you got a moving violation of any kind (speeding ticket, negligent driving, reckless driving, .etc), you better think about checking out new insurance companies!
Why? Your current insurance company is very likely going to raise your rates. While there are plans such as Allstate’s “Accident Forgiveness Plan” that will allow you 1 accident or violation in a 2 – 3 year span, those plans aren’t necessarily at your current insurance company and you’re not necessarily on it!
If you are, then it might be worth riding it out another 6 months if your rates haven’t changed and you like your current policy. Otherwise, it’s definitely time to shop around because the hammer is about to drop my friend.
Insurance companies absolutely hate, hate, HATE paying claims. They have multi-million dollar legal teams on-staff to fight every claim that crosses their desk like a pitbull with a chew toy, whether you’re at fault or not, they’re looking to dispute any financial liability from day 1. It’s standard operating procedure.
So what happens when a customer that’s been with them for 8 months or 8 years suddenly gets in an accident? Well, it depends. Are they still a profitable client to them? Did paying out that one claim suddenly cost them $50,000? If so, they may get dropped. Nothing personal. It’s business.
The severity of the claim(s) will play a major role in your standing with the company, but be assured that if you don’t have some sort of accident forgiveness clause on your policy, you will see a rate increase at minimum.
What about that speeding ticket? Less serious, sure, but insurance companies don’t look at infractions like this as minor. After all, who do you think helps lobby to create low speed limits, seat belt laws, texting laws, DUI laws & others? Yep. Insurance companies. When they see you’re adding tickets to your driving record, guess what they start doing? Reconsidering your current premium, or depending on the severity of the violation (reckless/negligent) they may just drop you altogether.
Take my advice. Even though you should be checking out new insurance companies every 6 months – 1 year, now is the time to go looking for a new policy. You might just find a better price.
Reason #3: You Bought Your Policy Locally From An Agent
“Hey mom?! Who’s your insurance agent?” – You.
This is how many people shop for car insurance, but really, they shouldn’t.
It’s like buying the first house or the first car they see because a friend recommended it. It’s just absurd. What are the odds that you’re going to find the best policy at the best price with your mother’s/friend’s/brother-in-law’s insurance agent? Probably next to zero.
Dear old mom might be paying rock-bottom pricing for her liability-only policy on her 25 year old Honda Accord, but let’s be real, it’s because she’s 68 years old, doesn’t drive over 55mph and has a car that’s worth a whopping $4,395. That’s the real reason she’s paying such a low price. It’s not about the agent or the company at that point and her recommendation is probably the only worthless advice you’ll get from her in your entire life.
The truth is with car insurance you have to compare rates from at least 3 different companies to get any level of certainty that you’re getting a fair rate on the best policy.
Every car insurance company is different.
Every policy, though similar in coverage, will be priced differently. It’s almost like going to a car dealership and seeing different prices on the same car you just test drove at another dealership…wait a second!
Which now segues perfectly into reason #4…
Reason #4: You’re With A Captive Agency
“What the heck is a captive agency? You’re making no sense! Speak English words I understand please!”
Alright, let’s break this down into bite-sized Reese’s Peanut Butter Cups.
Have you ever noticed how some agents represent State Farm, or Nationwide, or Allstate, but never all 3, or even 2 of them? That’s because contractually they are not allowed to represent any other company! These are called captive companies, and they maintain exclusivity with their agents.
If an agent represents State Farm, that agent can’t recommend any other company. Period.
The other type of agent is called an independent agent and they can recommend any of the hundreds of independent insurance companies. Of course, they can’t recommend any of the captive companies, though!
See how crazy this is?
If you talk to a State Farm agent, they can only recommend State Farm. Same with Allstate agents. Same with Nationwide agents.
If you talk to an independent agent they can recommend 10, 20, 30+ companies, but never State Farm, Allstate, Nationwide, .etc.
The downside to using a captive agent at a company like State Farm is that your agent can’t ever help you find a better or cheaper policy at another carrier!
And those independent agents aren’t pure gold, either!
If you were to use an independent agent you could be losing access to great policies from captive companies like State Farm!
“Ughhhhh. It’s so confusing I give up!”
I’ll admit it. Insurance can be confusing.
Luckily you can use our car insurance comparison tool to get quotes from a lot of different companies (no obligation to buy), and there is always the option to go directly to a captive carriers website (statefarm.com, nationwide.com, allstate.com, .etc) and get quotes directly from them!
Oh, and don’t forget those awesome independent agents. Feel free to call them up and get quotes from their network of independent insurance companies and you my friend will have a lot of policies to choose from!
What I haven’t covered yet is the non-agent “Direct Insurance” companies, such as GEICO, Progressive, The General, Esurance, .etc.
These companies skip the middlemen (agents) completely and sell insurance directly. One could argue your best bet is to buy insurance through one of these companies, but again, price is only 1 factor and they aren’t always the cheapest.
The bottom line is that price is secondary, it’s the coverage that matters! There are downsides to literally every insurance company and GEICO, Progressive, .et al are no exception. There is no “perfect” insurance company so you’ll have to do your research.
Again, I’d like to point out our awesome car insurance comparison tool to help you do just that!
Reason #5: Your Teen Just Got A License!
Remember a long time ago when I said insurance companies hate paying claims? Do you know what else they hate? Covering new drivers! That’s right. Just when you thought this boyfriend couldn’t get any crappier, now it just got real – they hate your kids!
The nerve of these people.
Well, let’s look at it from their point of view. Johnny just got his license. He’s a boy. Their data suggest that 16 year old boys are X% more likely to cause significant damage to a vehicle, property or persons within Y months of getting their license.
What would you do if you were the company?
Wouldn’t you be kind of scared that your customer who’s paying you $243/mo could potentially cost you $100,000 in claims damages because their son got a drivers license and now has access to the family death-mobile?
I’m not saying you should feel sorry for them, just understand they have to cover their own butts here.
At this point Johnny is going to cost mom & dad some cash. How much cash is up in the air. Maybe they spin a big wheel in their conference room and give you that number. Whatever the case is, you’re going to pay more and that’s a guarantee.
So, it’s time to (potentially) kick your current company to the curb. You need to start getting quotes, quickly!
You need to see if you can get similar or better coverage for at least the same price including Johnny on the policy. Crazy enough, it may turn out that your current company ends up being the best plan, it happens, but you won’t ever be sure unless you check around.
(note: we’re not suggesting that IRL if your boyfriend didn’t like your kids to potentially stay with him because that was the best you could do! It’s just, insurance can work that way)
Reason #6: You Moved
You didn’t think only tickets & accidents raised rates, did you?!
That lovely process called “moving”, tends to throw a big fat wrench into even the lowest priced car insurance policies. Some of you might be reading this and say “Psshhh. I haven’t moved in 20 years!”, and that’s great, but keep in mind that I don’t necessarily mean moving to another state. You can move to another address, even in the same town and your rates can skyrocket!
For those of you that did not move, will not move, and plan to stick in your house like an Oak tree in an old field. This probably won’t apply to you, but for the rest of you. Those that have moved or are planning to move, take note.
Insurance companies charge you based partially on your address.
There are many data points that go into an insurance premium, and unfortunately, this is one of the largest. Your physical location plays a huge part in where you drive (naturally) and the potential for claims due to accident. Bigger cities? Higher rates. More traffic? Higher rates. No garage? Higher rates.
See the theme, here?
While you can’t necessarily do much about your location after you’ve moved, you can certainly compare rates and try to get a better deal.
These are just 6 reasons you should consider ditching your current car insurance company, but by no means are they all of the possibilities. Just like boyfriends and buses, a new one can be coming around in 15 minutes – all you have to do is get out there and start looking!