We all know that catchy, advertising phrase, but does anyone ever really switch car insurance? I certainly hadn’t for about 10 years, until this week when I realized how silly it was to not even check for better deals. I’m pretty dedicated to frugality and good deals in most areas of life; why hadn’t I bothered to see what sort of options I had for insurance? It turns out that my assumptions and preference for the status quo were holding me back from an easy win, just like they have countless other times in my life and probably in yours as well.
It’s not like I had never thought of the idea. I’ve probably heard a dozen times from various blogs or podcasts that shopping around for better insurance rates is on par with cutting your cable service when it comes to bang-for-your-buck (or rather, return on your time). It takes less than an hour and saves you hundreds to thousands of dollars over time. That’s a whole lot better than the hourly rate I make at the ol’ day job.
On top of that, I have made changes to my car insurance before- just within the same plan. On my last car, when it got to be somewhere around 12 years old I realized it was silly to be paying for “Comprehensive” and “Collision” insurance, which would give me the value of the car if it was damaged/destroyed (minus a deductible). At that point the car was barely worth a couple years worth of premium payments, it just didn’t make any sense. I downgraded my insurance to just have the liability coverage that would protect me in case of an accident I caused and saved a good bit of money.
I did the same thing again on my current car, which is newer. I discovered it was costing about 50% of my premiums for just those “Comprehensive” and “Collision” coverages. Despite the value of the car being a bit higher, it made more sense to pay the lower premiums and “self insure” in case of an accident. This just means that I’d be buying a new car or paying for repairs myself. This may sound crazy to some, but it’s possible for me for two reasons:
- I’ve worked hard to save a large percent of my paycheck for the last few years, which means I could afford to replace the car in that unfortunate case that it was totaled.
- I made a very conscious choice to buy an economical, used hatchback with good gas mileage and a low purchase price. If you buy a fancy, luxury car because you want the status symbol or feel like you deserve it, it unfortunately becomes a lot harder to repair or replace. With a cheap, reliable car, not only are my average monthly costs lower (gas, maintenance, etc.), but it’s a whole lot easier to buy a new one when the time comes.
What Stopped Me
So, yes, I had considered ways to bring down my car insurance multiple times in the past, but I think there were a few small things that kept me from even doing the research to realize how stupid I was being:
- I was holding on to the (baseless) assumption that there really wouldn’t be much difference in costs between one insurance company and the next. This was super wrong…obviously.
- I had generally been happy with the service and other aspects of my current company, so it seemed silly to waste time looking around (given the assumption above).
- I think I was just a bit hesitant to send out all my personal information to one or more companies that would then likely start spamming me with offers and promotions.
- Let’s be honest, there’s probably more than a dash of laziness sprinkled in there- I just didn’t want to be bothered to take the time and search for other options.
As you can see, none of those were really good reasons, but it’s often stupid little excuses and assumptions like those that keep us wedded to the status quo. I think it helps to acknowledge that, most of the time, inertia is the main thing holding us back, not any real, rational benefit from the current situation. By realizing this, it gets a little bit easier to say, “Screw it, I’m going to do something about this…” Then, as is usually the case, you look back and think, “That was easy, why didn’t I do that sooner?”
Finally Making the Switch
So, what finally kicked me in the butt to make the change? Honestly, there wasn’t any amazing revelation or life changing event (I mean, this is only car insurance we’re talking about, after all). I think I just happened to run into one more reference to this type of switch as an easy win at a time when I was thinking about saving money, and that was enough to get me to actually write it down on a to-do list and then follow through.
It sounds silly, looking at it now, but I think that’s the unfortunate reality for a lot of the changes we should be making in our lives- whether it’s exercising more, eating healthy, or improving our personal finances. There are often only a few token reasons that we use to justify our inaction and then there isn’t a really obvious, dramatic reason for finally taking action. This is especially frustrating for someone like me who is interested in self improvement, but also in helping people around me to improve their own lives. If it were as simple as knowing what to do, these types of changes would be easy; but instead, we all seem to come to those inflection points in our own time and often for unpredictable reasons. This makes it unfortunately a bit tricky to reproduce in other areas and with other people.
Those Sweet, Sweet Savings
Finally, let’s look at the actual impact that spending- I don’t know, a half hour?- on switching insurance companies had on my bottom line. When I first compared rates, I kept all coverages the exact same which confirmed that switching was a must. In the end, though, I did make some changes to make sure I was only paying for coverage that I needed/wanted.
- I dropped a couple options that I realized were a waste of my money (“Income Loss Benefits” and “Medical Expense Benefits”- not suggesting that this applies to everyone, but they’re useless for my situation)
- I lowered my coverage on “Uninsured Motorist Property Damage”, because it would pay for damage to my car and I realized my car isn’t worth anywhere near the amount of coverage I had.
- I actually added back “Collision” coverage with the highest possible deductible. I was savings so much and this was pretty inexpensive with the new company (unlike the old one), so I figured it’d be nice to have for replacing my car if it were totaled.
Those changes really didn’t do much though. The biggest change was really just in the what the companies charged for my liability coverage- my new company charges 1/4 of what I was paying for this piece alone and that made a huge difference.
The Final Tally
Those numbers are freaking ridiculous! I’m blown away by the fact that for nearly the exact same product, I am paying 40% of what I had been. Considering the standard advertisements say you’ll save 15% or more, I think saving 60% is pretty incredible.
Going forward, I will definitely be keeping a close eye on how these costs change over time. It’s entirely possible that, as we see in the cable/internet industry, they’ve given me nice low rates to start and will raise them up over time to prey on my inaction (this may have been how my old company’s rates got as high as they did). By staying vigilant and not being afraid to shop around once or twice a year, I’ll make sure that I maintain these nice low rates indefinitely.
A note: Attentive readers will notice that I haven’t named any company names here. Why? For one, I’m not trying to make this an advertisement. For two, it’s probably going to vary by region and by person in terms of which company will offer the best price. I’d suggest doing your own shopping around and see what offers are out there. The internet makes this so stupidly easy that I’m really embarrassed I didn’t do it sooner…
So, ultimately I’m very proud of this very easy win, but again, I feel a little dumb for not taking action sooner. Hopefully you can learn from my lesson. I’d be very curious to hear what experiences you’ve had with insurance rates and switching providers.
The book “Nudge” gets deeper into some of the really interesting ways our brains do dumb things- like having a bias for the status quo, even when a change would be objectively better. Predictably, as I alluded to above, companies are more than happy to take advantage of this to pad their profits by gradually increasing fees over time when they know we’re unlikely to switch.