Why are some car insurance companies able to offer such a better deal than others?

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judge1905
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Joined: Sat Mar 04, 2023 4:45 pm

Why are some car insurance companies able to offer such a better deal than others?

Post by judge1905 »

I have had USAA insurance for my entire adult life. I have never been in a accident, have only had one ticket that I got expunged, no damage claims etc. I'd think they'd want to keep me, I'm 26 and probably on the downhill as far as risk vs my early 20's. Got my renewal a week ago and it was a nearly $100 increase, up to $580 every 6 months. I was paying around $480. I thought the idea was that as I got older my insurance would go down?

Anyways, I got a progressive quote and it was $333, with increased liability coverage up to 100/300/100 vs 25/60/25 as it's about time I bumped up my liability coverage with increasing income and assets. I do not understand how they were able to cut my rate around 40%. Where is the cost being cut? Or is USAA just raking that much more in? I am wondering how this all works "behind the scenes".
Dregob
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by Dregob »

judge1905 wrote: Mon Mar 20, 2023 4:32 pm I have had USAA insurance for my entire adult life. I have never been in a accident, have only had one ticket that I got expunged, no damage claims etc. I'd think they'd want to keep me, I'm 26 and probably on the downhill as far as risk vs my early 20's. Got my renewal a week ago and it was a nearly $100 increase, up to $580 every 6 months. I was paying around $480. I thought the idea was that as I got older my insurance would go down?

Anyways, I got a progressive quote and it was $333, with increased liability coverage up to 100/300/100 vs 25/60/25 as it's about time I bumped up my liability coverage with increasing income and assets. I do not understand how they were able to cut my rate around 40%. Where is the cost being cut? Or is USAA just raking that much more in? I am wondering how this all works "behind the scenes".
Just a guess but Progressive wanted a new customer. I have a clean driving record. I had good luck with Amica for a many years then received a big rate hike. Progressive was much cheaper for a few years. Then they hiked my rate. I'm with Erie now.
I guess the lesson is shop around every few years. Not fun, but not that big a deal to save a few hundred dollars.
Parkinglotracer
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by Parkinglotracer »

Companies financial situation and risk underwriters and marketing strategy in your location as well as your own individual factors such as credit rating and driving record and claim history may determine what you are quoted.

Shop around three or so companies every few years with similar coverage to see who is offering the best deal. I shop usaa, geico, liberty mutual. Over 40 years the best deal varied greatly especially when we had young drivers.
GeoMetry
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by GeoMetry »

Insurance, Cell phone plans, Credit cards, home internet, these are all sticky services, it is a hassle to research and change so they use low prices to lure in anyone that is actually looking for a change then (like a frog in hot water) they slowly increase the price and most people just stay and get cooked. If you have Umbrella coverage the company will most likely require that you also carry your auto and home with them making it really difficult to change because you must find the best price for all three combined.

As a USAA member myself I don't even know what an insurance agent does but perhaps that is something to explore if you would rather not spend your time researching insurance rates.
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snackdog
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by snackdog »

As long as they provide comparable service, I couldn’t care less why they offer better prices. Maybe their margins are thinner and their volume higher.
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homebuyer6426
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by homebuyer6426 »

Large companies involved in finance run each customer's information through a predictive model. This model tells them how badly they want you as a customer, by weighting different input variables or through other means. Credit scores are one example of this, but there are many others.
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TSR
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by TSR »

I was in your same boat -- USAA my whole adult life. Same with my wife. We had a bad experience shopping for homeowner's insurance with them and we called State Farm and they said "why not bundle your car insurance as well?" We priced it out and the total cost for all three (house, car, car) was about what we were quoted for just the house from USAA. We changed and never looked back. If you own a home, do you also have USAA for your homeowners? I suspect bundling could lower it all even more.

As an added bonus, we no longer spend 45 minutes every time we call our insurance company. It's a SHOCKING difference. Separate and apart from your broader question, I think USAA has gone down hill since they've started advertising heavily.
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judge1905
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by judge1905 »

TSR wrote: Tue Mar 21, 2023 8:14 am I was in your same boat -- USAA my whole adult life. Same with my wife. We had a bad experience shopping for homeowner's insurance with them and we called State Farm and they said "why not bundle your car insurance as well?" We priced it out and the total cost for all three (house, car, car) was about what we were quoted for just the house from USAA. We changed and never looked back. If you own a home, do you also have USAA for your homeowners? I suspect bundling could lower it all even more.

As an added bonus, we no longer spend 45 minutes every time we call our insurance company. It's a SHOCKING difference. Separate and apart from your broader question, I think USAA has gone down hill since they've started advertising heavily.
No, I rent. I did get renters insurance though USAA and got rid of that as well, bundled that with my progressive car insurance. Regarding phone customer service, I didn't have a issue with USAA, but then again I hardly ever call. I would do almost everything I could though the online portal. When I went to cancel they were nice enough, if a bit long winded.
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enad
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by enad »

I've been with State Farm for auto for a very long time, and had Amica for home owners insurance until they had a huge rate hike and then have been with State Farm and added an umbrella policy. I stopped shopping a long time ago as no one can come close.
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nonnie
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by nonnie »

We switched back to USAA several years ago because they were price competitive. When we owned a home we were unable to get a suitably high limit to cover replacement as USAA seem to use Midwest replacement prices. We dodged the bullet in the 2O17 California Tubbe fire --My only four houses-- but we would have been underinsured by several hundred thousand dollars had we lost our house.

My husband has been a USAA member for over 50 years but we are pretty disappointed with their service. I'm not sure exactly how to gauge service with other insurance companies? Does one just go with the lowest quotes/bundle?

We did recently switch our Medigap to USAA resulting in $500 a year-each-premium reduction. We had been using a broker and stupidly did not think of getting a USAA quote.
Agent 99
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by Agent 99 »

My Travelers home insurance jumped precipitously this year. Auto went up but not as much. No claims or tickets. I called the my state’s insurance department and found out Travelers requested a rate hike and the state granted it. Perhaps USAA did the same in your state. I switched to Cincinnati with better homeowners coverage but had to increase deductible to $25K to keep the premium tastefully low. The increased deductible with Travelers still didn’t make them competitive.
YERER01
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by YERER01 »

My former insurance agent once told me that I should switch insurers every now and then to get competitive rates.
Normchad
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by Normchad »

YERER01 wrote: Tue Mar 21, 2023 9:34 pm My former insurance agent once told me that I should switch insurers every now and then to get competitive rates.
Absolutely. And honestly, switching auto insurance companies is easy.
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bertilak
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by bertilak »

enad wrote: Tue Mar 21, 2023 10:14 am I've been with State Farm for auto for a very long time, and had Amica for home owners insurance until they had a huge rate hike and then have been with State Farm and added an umbrella policy. I stopped shopping a long time ago as no one can come close.
State Farm is my home and auto insurer.

Some companies may be cheaper, at least on introductory rates, but actual service trumps that. Example:

Someone rear-ended my van. The responsible insurance company would only authorize re-furbished replacement parts. The repair shop said the paint job on thise parts was so bad they would not install them as they could not guarantee the work. A second parts delivery was just as bad. State Farm stepped in and authorized factory-new parts. It would take a lot for me to jump ship.

In any case, I have (very) occasionally priced competitive companies and found there to be little if any savings.
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Kenkat
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by Kenkat »

My experience is that insurance companies are very good at collecting premiums from customers; it is when you have a claim that differences may become apparent. I don’t have any experience with USAA, but I switched from one of the big companies to a regional carrier after some negative claims hassles and have been happy with the service I receive, so I have stayed put even if it may be a bit more expensive.
KeepItSimpleSomehow
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Re: Why are some car insurance companies able to offer such a better deal than others?

Post by KeepItSimpleSomehow »

I am in the process this week in California of shopping auto because GEICO increased my 6 month policy 37% even though MBI rolled off automatically at 7 years. When I called and questioned, told essentially because they can; COVID is over and more cars on the road.
When I said I will now have to compare rates elsewhere she said -- they will be less and then raise them next time. I said, ok but you are raising the rate now :shock:

Used a couple of online sites for multi quotes which was not helpful really because it is not possible to "enter" exactly what you want; can only select from drop downs. One of them sent my request to a local independent agent who called me in minutes. Also I called another local independent to compare.

My result is MERCURY auto + renters bundle. Better coverage for both with some lower deductibles. (27% less for auto that the new GEICO rate for less coverage)

Was told by both independents most of what is in this report; link below; again this is for California. Before they were able to sell at least a dozen companies and now only a couple; MERCURY and TRAVELLERS.
Article quotes:

Auto accidents are up and some insurance companies say they are paying out more than they are taking in. But, the (CA) insurance commissioner says the facts don't support their claims.

In California, some insurers haven't seen a rate increase approved by the insurance commissioner in over 3 years.

California is a very consumer friendly state and insurers must have any rate hike approved. State Farm, AllState and Farmer's are asking the California Department of Insurance for a nearly 7% premium increase. Progressive is asking for more than 19%. A local agent says insurers are now making it harder for him to get drivers new auto policies. They literally say, don't write please,"

Insurers cannot refuse to cover Californians as we are what's called a "take all market," but agents say they are having to go with smaller, lesser known carriers if clients need insurance quickly.


https://www.cbsnews.com/losangeles/news ... alifornia/
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