Car Insurance Price Comparison Surges after Rate Hikes

These days the hottest topic is inflation and price increases across many industries. It seems that there are reactionary movements in the market. But this time consumers are proactively trying to reduce their expenses across the board and premiums are no exception. A larger number of policyholders decide to compare car insurance prices because of the unexpectedly higher renewal quotes.

Insurers have been largely getting away with small rate increases in the past due to motorists’ reluctance to look for better deals and switch. The fact of the matter is that so many people have never shopped around for lower rates. Things are a bit different this time for several reasons. First of all, companies face higher than usual claims and business running costs that force their hand to push renewal premiums up a bit more than usual.

The repair expenses have been going up due to higher part and wages payments. Also, vehicle replacement costs have shot up over 40% due to the inflationary second-hand car market. They are now between a rock and a hard place that they have to transfer these costs to customers even though they may lose some of them. This situation may intensify if the trajectory of the inflation remains upwards.

The latest J.D. Power Auto Insurance Customer Shopping study surveyed nearly 11,000 policyholders who recently got a comparison quote from at least one other provider. Here are the highlights of their very interesting findings;

   => Larger Renewal Premium Increases Force More Motorists to Shop around for Cheaper Automobile Insurance. Last year, 51% of drivers surveyed said that they regularly check for better deals. 35% said that they are getting alternative quotes because of increased rates and 64% of those have seen more than an 11% hike. There is no doubt that more than ten percent renewal hike would come as a surprise especially when there were no apparent reasons for it like a recent claim or traffic violation ticket.

And the timing of it is so bad as people are already facing higher gas, home energy, food and essential product and services prices. In some cases, people may have to choose between eating and keeping warm this winter. Furthermore, fast and convenient online quotes are widely available when people are furious about their renewals that they have no reason not to carry out car insurance rate comparison.

   => Customer Satisfaction Falls Slightly Across the Board.Both larger and mid-size auto insurers see a decline in policyholder satisfaction to 862 out of 1000 (a 6 point lower than last year). Price being the part of it and most people seeing hikes, drop in level of satisfaction was probably expected.

   => Direct Automobile Insurers Experience Larger Declines in Customer Satisfactions. They see a 17-point drop to 860/1000 that pushes them behind the tied-agent networks (866/1000). It may be because the agents somehow knew what was coming and cushioned the renewal blow better by offering explanations to calm people down a bit. Independent brokers are gaining ground with 6-points increase to 854 but still trailing closely behind the two outlets.

   => Older Motorists Are More Sensitive to Price Change. 67% of retirees said that they were looking for lower quotes because of the premium increases they faced. In contrast, only 41% of middle-aged and younger drivers give rate hikes as the reason for looking for better deals. Considering the former has to manage living within their pension checks and the latter somehow more confident about their earning potential, this finding is perhaps no surprise. Having more time in hand may be helping but the main reason may be that the older generation is more used to haggling. Maybe they know something youngsters should take notice of.

Car Insurance Price Comparison Works

Another study by Value Penguin shows that 92% of drivers who switched at their recent renewal saved money. 26% of those motorists saved at least $200 or more on their premium. This goes to show that getting a few quotes can reduce your bills. The amount will depend on how expensive your current carrier is, how diligent you are at finding the best deals and when you last shopped around. In general, people who didn’t check for a while are more likely to save.

The same survey shows that the number of people who are trying to improve their terms by checking prices are still just about 1/3 of automobile policyholders. So, 2/3 of them still don’t bother to see who else out there and what they offer. It is very important that people are not putting off auto insurance price comparison shopping because it is a way of keeping an eye on companies and keeping them in check.

Nevertheless, it is actually nice to see that more people are shopping for cheaper vehicle insurance. It is a way of ensuring that your provider isn’t taking your loyalty for granted. They actually don’t need a reason or excuse for it. Motorists should get a few quotes at least once a year. It only takes about 8 minutes to fill in your details online and get an instant quote that not doing it may be shooting yourself in the foot.

This process gives motorists a chance to update their coverage. A lot changes in life and very fast that expecting a policy you arranged 3 – 4 years ago still meets your requirements is a bit naïve. Furthermore, companies continuously look for ways to drive more sales and one of the methods is to offer useful additional coverage to bulk it up and make it stand out. That means, you may be able to find a better policy that gives you another reason to change carriers.

Finally, the last thing that should happen is people drop essential coverage to reduce costs. As mentioned above, second hand automobiles are actually more valuable than you may think these days, so dropping Collision and Comprehensive can be problematic. Instead, you may be able to keep your protection intact and still cut the premium by choosing a usage-based policy. So, it is always worth going over the existing arrangements and doing car insurance price comparison while you are at it.

Sources: J.D. Power, Value Penguin