Article Topics: survey: Price matters most when switching car insurance companies

It’s been said that money can’t buy love or happiness. But that hasn’t stopped drivers from focusing on money when shopping for car insurance.

Among Americans who switched car insurance companies in the past year, 81 percent said price was their primary consideration, according to a survey of 1,000 U.S. adults commissioned by

Michael Barry, a spokesman for the nonprofit Insurance Information Institute, says: “Given the economic volatility of recent years, I’m not surprised that a policy’s price was for many drivers the most important factor.”

Amy Bach also understands why shoppers concentrate on price. The executive director of United Policyholders, a nonprofit insurance information resource for consumers, says auto insurance companies flood the airwaves with ads touting their low prices. That pushes lower costs to the forefront of shoppers’ minds, she says. In addition, few people want to spend big bucks on a product they hope never to use.

PRICE under the magnifying glass“Most people view insurance as a necessary evil they’d prefer not to have to spend money on,” Bach says. “You can’t play, listen to or in any way enjoy this product you’re forced to spend a chunk of your hard-earned dollars on.”

A little work, a lot of savings

However, some Americans still aren’t motivated enough to shop around and look for savings. The survey found that just 21 percent of survey respondents shopped for auto insurance in the past 12 months.

Among those who did shop, 43 percent ended up switching carriers – suggesting that many people are finding better deals simply by taking the time to compare rates.

Shoppers also are getting multiple quotes before settling on an insurer, with 34 percent saying they got three quotes and 26 percent obtaining four or more.

Carole Walker, executive director of the nonprofit Rocky Mountain Insurance Information Association, says today’s insurance marketplace is especially competitive, with insurers offering lower rates and various discounts to attract customers.

“Shopping around for the car insurance that’s the best deal for you is definitely worth the time and effort,” she says.

DIY shopping vs. using an agent

In the modern era, high-tech conveniences such as Internet shopping make it a snap to compare insurers. Face-to-face interaction is no longer is essential to the purchasing process.

People questioned for the survey were allowed to select more than one way they preferred to shop. The most popular way to shop for insurance was by telephone (54 percent). For 48 percent, the Internet was the preferred place to shop.

Bach says those numbers reveal that shoppers may not be aware of the value of having a good agent or broker who can guide them through the process.

“Those results don’t surprise me, but honestly they make me a little sad,” she says. “Insurance policies are complex and confusing, and it’s good to have a translator looking out for you when you buy one.”

Still, 39 percent of those surveyed preferred the old-fashioned method of shopping in person.

“There will always be customers that still prefer that personal interaction with an agent,” Walker says. But, she adds, “what’s great about today’s insurance marketplace is that companies offer a variety of ways to buy insurance that suit all different types of customers.”

Looking beyond price

Although everyone wants a good price, experts such as Barry say it’s a mistake to focus only on saving money.

“Drivers should also assess an auto insurer’s financial strength and its consumer satisfaction ratings,” Barry says.

Barry says it’s easy to find such information online. For example, A.M. Best is a credit rating agency that focuses on the insurance industry, and market research company J.D. Power and Associates provides insurers’ customer satisfaction ratings on its website.

Walker urges shoppers to remember that an auto insurance policy is only as good as its ability to pay out when an accident forces you to repair your car, or pay medical bills or legal fees if someone sues you.

“Peace of mind that you have good insurance coverage with a reputable company should also factor into your purchasing decision,” Walker says.

Survey methodology

The survey was conducted for by Princeton Survey Research Associates International (PSRAI). PSRAI obtained telephone interviews with a nationally representative sample of 1,000 adults living in the continental United States. Telephone interviews were conducted by landline (600) and cellphone (400, including 191 without a landline phone). Interviews were done in English by Princeton Data Source from Nov. 8-11, 2012. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.7 percentage points.

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